[Senate Hearing 106-888]
[From the U.S. Government Publishing Office]
S. Hrg. 106-888
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2001
=======================================================================
HEARINGS
before a
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
on
H.R. 4635 and 5482
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, 2001, AND FOR OTHER PURPOSES
__________
Chemical Safety and Hazard Investigation Board
Corporation for National and Community Service
Department of Housing and Urban Development
Department of the Treasury
Department of Veterans Affairs
Environmental Protection Agency
Federal Emergency Management Agency
National Aeronautics and Space Administration
National Science Board
National Science Foundation
Nondepartmental witnesses
Office of Science and Technology Policy
__________
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
62-813 cc WASHINGTON : 2001
_______________________________________________________________________
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC
20402
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
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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
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Thursday, March 1, 2000
Page
Federal Emergency Management Agency.............................. 1
Thursday, March 23, 2000
Environmental Protection Agency.................................. 41
Thursday, March 30, 2000
Department of Housing and Urban Development...................... 243
Thursday, April 6, 2000
Department of Veterans Affairs................................... 589
Thursday, April 12, 2000
Corporation for National and Community Service................... 663
Chemical Safety and Hazard Investigation Board................... 715
Department of the Treasury: Community Development Financial
Institution.................................................... 745
Thursday, April 13, 2000
National Aeronautics and Space Administration.................... 761
Thursday, May 4, 2000
National Science Foundation...................................... 873
Office of Science and Technology Policy.......................... 873
National Science Board........................................... 873
Material Submitted by Agencies Not Appearing For Formal Hearings
Independent Agencies:
Department of Health and Human Services...................... 923
Department of Defense--Civil: Department of the Army,
Cemeterial Expenses........................................ 928
General Services Administration.............................. 930
Selective Service System..................................... 931
Executive Office of the President: Council on Environmental
Quality.................................................... 936
Neighborhood Reinvestment Corporation........................ 944
U.S. Consumer Product Safety Commission...................... 949
American Battle Monuments Commission......................... 952
Nondepartmental witnesses:
Department of Veterans Affairs............................... 957
Environmental Protection Agency.............................. 984
Department of Housing and Urban Development.................. 1044
Federal Emergency Management Agency.......................... 1087
National Science Foundation.................................. 1094
National Aeronautics and Space Administration................ 1115
Department of Health and Human Services...................... 1128
Corporation for National and Community Service............... 1130
Community Development Financial Institution.................. 1132
Miscellaneous................................................ 1136
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2001
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WEDNESDAY, MARCH 1, 2000
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:36 a.m., in room SD-138, Dirksen
Senate Office Building, Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Stevens, Mikulski, and Lautenberg.
FEDERAL EMERGENCY MANAGEMENT AGENCY
STATEMENT OF HON. JAMES LEE WITT, DIRECTOR
ACCOMPANIED BY GARY JOHNSON, CHIEF FINANCIAL OFFICER
OPENING STATEMENT OF SENATOR CHRISTOPHER S. BOND
Senator Bond. Good morning. The subcommittee will come to
order. This is the first hearing of the VA-HUD subcommittee for
the fiscal year 2001 budget. This morning we will hear
testimony on the fiscal year 2001 budget request for the
Federal Emergency Management Agency.
We welcome FEMA Director James Lee Witt and Gary Johnson,
FEMA's Chief Financial Officer. Director Witt, we are very
pleased that you brought your wife Lea-Ellen along today. We
welcome her and really appreciate all the sacrifices and the
dedicated effort she has made as you have conducted your duties
at FEMA.
Mrs. Witt, I know the very active role that you have played
in many of the Nation's disasters, helping out after the
Northridge earthquake, the Oklahoma City bombing, and the
tornado-related disaster in Oklahoma last year. As one who has
visited an awful lot of disaster sites in my prior incarnation
as a governor, I know how difficult and challenging it is to
stay on the ground and help the people who are most in need,
and your work and your role has been an inspiration to all of
us. As a result, we will try not to be too rough on the
Director today.
The President's budget proposal for the VA-HUD subcommittee
totals about $84 billion in budget authority, an increase of
almost $6 billion above the current year. While it appears that
the caps imposed by the 1997 Budget Act would impose cuts that
are too draconian and we must revisit the numbers, I warn all
the agencies involved, do not pop any corks on any bottles yet.
There is a very strong commitment, which I share, to
maintaining budget discipline, preserving the social security
surplus for social security reform, and also taking care of
absolutely essential items that we cannot control, which are
going to increase, things like VA medical care and things like
section 8.
FEMA's budget request totals $971 million in on-budget
funds, an increase of $98 million over the current year, and an
additional $2.6 billion in disaster relief contingency funds.
That is a sizable increase which I fear we will find it
difficult to accommodate.
FEMA proposes some new programs and some significant
programmatic increases. Included in the budget is a new $25
million grant program for equipment for firefighters in
distressed or needy communities. We have seen little detail on
the program and I have to tell you we are concerned about
initiating a new program under the tight budget constraints
that we face.
FEMA is also requesting almost $24 million to begin the
process of relocating its headquarters. This is an initiative
that is aimed at improving security and enhancing FEMA's
capacity to conduct disaster operations. I need to understand
the costs better and the needs associated with the request.
In addition, the budget calls for an increase of $30
million for the emergency food and shelter program, 27 percent
over fiscal year 2000. While the program seems to be
functioning effectively and meeting a tremendous need for food
and shelter, an increase of this magnitude again will be
difficult to accommodate.
With respect to the disaster relief fund, it appears there
is plenty of money currently in the FEMA bank to manage
disaster costs for the rest of this year so long as we do not
have any truly catastrophic events this year. Including
contingency funds, FEMA estimates approximately $2.4 billion
currently unobligated in the disaster relief fund. While there
have been some really awful disasters this year, such as the
tornadoes in Georgia and the avalanches in Alaska, the scale of
disaster activity has been far less than usual so far this
year, and we can only hope and pray that our luck holds for the
rest of the year.
FEMA's budget proposes two new set-asides within the
disaster relief fund which would set new precedents of using
the fund for other activities: $50 million for the repetitive
loss initiative aimed at eliminating those properties with
significant repeat claims posing the biggest drain on the flood
insurance fund; and $30 million for the flood map modernization
fund to update and digitize FEMA flood maps, in addition to a
new fee proposal projected to generate about $100 million in
revenues next year.
While I would certainly acknowledge the need for funding in
both of these areas, there are strong concerns first about
earmarking disaster relief funds for activities not
specifically authorized in the Stafford Act.
In addition to these fiscal year 2001 budget proposals, the
administration has proposed a fiscal year 2000 supplemental
request of $77 million for additional buyouts in Hurricane
Floyd-affected States. These funds would be in addition to the
$215 million provided already for buyouts in Hurricane Floyd
States. Again, I express my concern and skepticism about the
proposal since as we understand it none of the $215 million has
been allocated to date and there does not seem to be any basis
as far as we can tell for requesting another $77 million.
We have asked the Inspector General and the IG has been
looking at estimates of eligible properties for buyouts, and
preliminary information that we have received is that eligible
properties will be just a small percentage of the original
estimate and that buying out eligible properties in Hurricane
Floyd States likely will cost less than the $215 million
already appropriated. In addition, much of North Carolina's
projected costs appear inflated and inconsistent with the
historic costs of buyouts in other States.
Also, I am worried that this program is not authorized. As
we have discussed before, there has been no debate on what the
appropriate Federal role should be in buyouts of substantially
damaged properties, and I am not confident yet that a system
has been set up to ensure that the most needy individuals and
the most at-risk properties will be assisted. I will have a
number of questions on that later on.
Turning to Stafford Act issues, I continue to have problems
about the escalation of disaster relief costs. I was cast in
the unfamiliar role of a skunk at a garden party a few weeks
ago when the Environment and Public Works Committee marked up
S. 1691, the disaster mitigation bill. There were many feel-
good thoughts and lots of talk about how we need to spend more
money, and I would assure you that I understand investing in
certain projects could lessen future disaster losses. It is a
good policy which I support.
I really fail to see the attention and commitment needed to
tightening up the Stafford Act to provide better accountability
and to assure that we are spending money only where it is most
needed. Our guess is at this point that the bill in its current
form would increase the cost of the disaster relief funds
without providing savings in the near term and, as you and I
know, in our part of the world, Mr. Director, as they say, that
dog won't hunt.
As you know, the Inspector General made recommendations to
improve the bill which would result in savings. I will be
looking to amend the bill when it gets to the floor to improve
the integrity and accountability of the disaster relief fund
and to underscore the Stafford Act principle that Federal
disaster aid is to be reserved for those events which exceed
State and local capacity.
If the bill does not result in near-term cost savings or at
least no net cost to the disaster relief fund, I would not be
able to support it and would urge my colleagues not to as well.
Mr. Director, you have done much administratively to clean
up disaster relief programs over the past several years. I
congratulate and commend you on your recent efforts to develop
a public buildings insurance rule. It is tremendously important
to improve accountability for disaster costs and I urge you to
stay on course to do all you can to finalize the rule before
the end of the year.
But as we both know, there is only so much that can be done
without changes in the law. We have an opportunity to legislate
some much-needed improvements to the Stafford Act and implement
some of the recommendations made over the years by the GAO and
the IG. We look forward to your continued help and cooperation
in those efforts.
Turning to another critical issue, we continue to worry
about the intergovernmental antiterrorism/counterterrorism
program. There does not appear to be a strategic approach
administration-wide on this issue, and the roles of FEMA, DOD,
and the Department of Justice remain confusing, at least to me
and I am afraid to a lot of other people as well.
We are, I think justly, committing tremendous resources in
this area. A total of about $10 billion in the current year is
being expended, up from $6.5 billion in fiscal year 1998, and I
know there are additional increases sought for fiscal year
2001.
According to September 1999 GAO testimony:
``A government-wide strategy that includes a defined end-
state and priorities is needed, along with soundly established
program requirements based on assessments of the threat and
risk of terrorist attack. In addition, a comprehensive
inventory of existing Federal, State, and local capabilities
that could be leveraged or built upon is warranted before
adding or expanding Federal response assets. Without these
fundamental program elements, there can be little or no
assurance that the Nation is focusing its investments in the
right programs and in the right amounts and that programs are
efficiently and effectively designed and implemented.''
As you well know, Senators Stevens, Mikulski, Byrd and I
last year asked the GAO to conduct some additional work on this
issue, with special attention to first responder training
issues and a look at how other countries organize their
antiterrorism efforts. We are anticipating some results from
the GAO by the end of April.
While FEMA has only a small piece of the intergovernmental
antiterrorism effort, it is a very important one. FEMA has
strong ties to State emergency responders and the first
responder community which will be a critical link in this
program, which I think will warrant FEMA playing a very
important lead role.
Director Witt, I am very pleased to learn that you brought
in our old friend John Magaw to head up FEMA's antiterrorism
efforts, but I am really worried that the program seems to have
been downgraded at the Department of Justice and the new DOJ
National Domestic Preparedness Office seems to us to be
floundering. We would like your advice on how to improve this
program to ensure we are investing our resources in the best
possible way.
That concludes my opening statement. Senator Mikulski, are
you ready?
STATEMENT OF SENATOR BARBARA A. MIKULSKI
Senator Mikulski. I sure am. I was listening to every word.
Just we are going so many places today.
Senator Bond. Yes, it is one of those days.
Senator Mikulski. Good morning, Mr. Chairman.
Senator Bond. Good morning.
Senator Mikulski. First of all, I want to welcome our FEMA
Director James Lee Witt and his Chief Financial Officer Gary
Johnson and the entire FEMA staff. Mr. Witt, you are the
longest serving Director in FEMA history, and this morning
marks the eighth time that you have come before this
subcommittee to discuss your budget request. I would like to
thank you for your service to the Nation because I truly
believe under your leadership FEMA has reformed itself and went
through a transition from a cold war agency with an often
confusing domestic policy to where we are now.
But we know behind every great man is a surprised mother-
in-law. I really got that joke from Connie Morella.
But I really want to--I think, one, not only your
management ability, but the way that you responded to America's
disasters, that being on the scene, to be able to work with the
governor, the local FEMA directors. So we are very grateful.
You truly were the 911 for America's disaster relief.
But in all sincerity, all those times when you had to leave
home, be away, often during holidays, for extensive periods of
times, we know that you had the support of a loving family. So
on behalf of the Senate, I would like to thank Lea-Ellen Witt
for her service to the Nation, because had it not been for her
support I do not think you would have been able to support the
United States of America in its time of need. So I would really
like to give you a round of applause.
I would hope that as we go through this appropriations we
would look at how to institutionalize the reforms that have
been made on a bipartisan basis working with you and President
Bill Clinton. When you came--well, actually, after Hurricane
Andrew when FEMA's response was so disastrous and our President
George Bush sent in Andrew Carr, his Secretary of
Transportation, because of his skilled management ability, I
said to Bill Clinton when he was running: You know, I do not
ask for promises, but I am going to ask for one; I need a good
FEMA director; we need to reform FEMA and we need to focus on
the three R's. We need to make sure that the Federal Government
in every State is ready, the readiness training; that we need
to be able to respond when a disaster hits; and also we need to
rehabilitate.
There have been lessons learned in all of those areas, and
I hope that we are now on the path of truly institutionalizing
those reforms. We have gone from rehab to really pre-disaster
mitigation. We want to do prevention, and I am going to commend
you for that role.
I know Senator Bond has concerns about how this is being
implemented, and I share some of those concerns. So what we
really need to do is make sure that we have very clear
guidelines and even, if necessary, regulations on how we can do
the prevention without creating a whole new program that ends
up squandering resources. We need clear lines to be able to do
that.
The other I would hope that is also part of this, we take a
look at the antiterrorism. I am concerned that the hard work--I
am concerned that the hard work of FEMA and other Federal
agencies may be squandered because of the absence of a
coordinated Federal response program. I do not want to go into
this here in this type of forum, but I believe we have too much
talk, too much money being thrown around, and no clear lines of
command and clear roles, command, control, and clear agency
authority.
Our first responders in an event of any type of attack on
the United States will be both FEMA and our local fire
department and our ER's. So I want to be sure that we have
this, and we look forward to working with you.
I understand you have brought out of retirement John Magaw,
the former Director of the Secret Service and ATF. I think this
is great. I think this heartens you, too, Senator Bond, that we
really have a plan. I think HHS has been inept in the way it
has planned for terrorism. We have left a lot at the FBI, we
have given you things, and then there is HHS. They are going to
get real cranky when I say this, but they are wandering in the
wilderness with no clear triggers about what goes into
operation at one standpoint. So maybe we could get them,
everybody between the same white lines.
We also want to look at the emergency food and shelter
grants. I know in my own home State it has meant a lot to poor
people, many of whom have been facing horrendous situations.
The new economy has not been a good economy for everybody. So
we look forward to hearing more about this $30 million increase
and where to do it.
So what we are looking for is if we put the right money in
the right place, but also institutionalize our reforms, because
we are the only one-stop shop on FEMA. It is scattered through
a lot of committees and so on. So we are your one-stop shop.
But you have been our one-stop shop in disaster relief.
So we look forward to your testimony and always look
forward to working with you, and in whatever you choose to do
in what lies ahead I say, God bless and godspeed to both you
and Lea-Ellen.
Thank you.
Senator Bond. Thank you very much, Senator Mikulski. As
always, you are very candid and on point with your comments.
We are pleased to be joined by Senator Stevens.
Senator Stevens. He was here first.
Senator Bond. All right. Actually, I was going to go back
and forth. But at the chairman's direction, it is now my
pleasure to call on Senator Lautenberg.
STATEMENT OF SENATOR FRANK R. LAUTENBERG
Senator Lautenberg. Thanks, Mr. Chairman.
Mr. Witt, it is a pleasure to see you in a non-disaster
environment.
Senator Bond. The best way.
Senator Lautenberg. As I listen to the compliments given
from my colleagues here, I thought that maybe you needed a song
that ``disasters become you.'' But I did not really think that
that would be appropriate.
But I do want to say, Senator Mikulski noted your length of
service here, and excellent service. I think it is fair to say
that each one of us at this table has seen you in a
circumstance that is not the most pleasant. But nevertheless
you have been, as we say, Johnny on the spot. You have been
there, you have gotten there quickly, you have handled yourself
wonderfully in the public eye, as well as doing your level best
to alleviate the problems and the suffering that people have
endured as a result of natural disasters.
So I am delighted to see you here today and hear the
comments of my colleagues on both sides of the political aisle
who share an admiration for the agency and yourself as well.
You and I are now in the next graduating class out of here,
and I am sure that you feel, as I do, satisfied that you have
had an opportunity to do something significant and also with
some nostalgia about leaving to go on to more peaceful lives,
each of us.
We were last together under very unfortunate circumstances.
Last September, Hurricane Floyd had cut a swath through my
State and the heavy rainfall caused rivers, namely the Passaic
and the Green Brook, to overflow, resulting in millions of
dollars of devastation. We flew over Bound Brook in a
helicopter, I remember, and viewed the devastation along the
Green Brook. We toured the Borough of Lodi together, and
witnessed the breakdown of our telephone system for several
days, which was very difficult.
We visited with some of the besieged families and you
pledged the full resources of FEMA to assist my constituents. I
am pleased that in your budget request you ask for funds to
complete the buyouts of homeowners in flood plains who want to
relocate to higher ground.
I noted also in your comments that you view that prevention
ought to be a significant part of the FEMA agenda. I just got
back from a trip to Antarctica and the South Pole, and I am
concerned about what the future may bring us in terms of
weather disturbances. The ice melt is something that I think is
alarming. We are still doing a lot of research before coming up
with specific conclusions, but the fact is that we know from
the early signs in this year that we might be seeing some very
turbulent weather around the country.
So as I look at you and your agency, I can think of few
that have such a direct face to face relationship with the
public.
I would hope, colleagues, that along the way that
communities and States will rethink their policies on building
permits, on engaging people in debates about allowing them to
build in places that bring tragedy with them. I think it is
important that an agency like FEMA, where there is so much
experience, is a significant part of that interface.
People who are flooded out are desperate and need to
rebuild their lives. I had an incident in New Jersey where I
went to a flooded area and met a woman whose husband was in the
hospital, four kids, disaster all over the place. We entered on
the second floor, which was filled with debris from the
flooding.
She had just taken out flood insurance weeks earlier. A
year later I met her, and I asked her where she moved. Oh, she
said, we rebuilt in the same place. So I said: Why would you do
that? She said: Because we could not find anything else for the
price that we were able to pay. What we did is we put in a 16-
foot foundation, so now our first floor is where our second
floor used to be; and it is a few steps up, but it is something
that we can afford.
So it is not simply just a question of covering people with
insurance and saying go ahead and find a different place.
So I say that you have done an outstanding job for New
Jersey and for the country, and we need to make sure that you
have the means to continue to do the job when disaster strikes.
My State just experienced another tragedy. As you may know, on
January 19 there was a terrible fire in a principal university
in our State, Seton Hall University in South Orange, New
Jersey. This fire killed 3 freshmen and injured 54 students, 2
firefighters, and 2 police officers.
The dormitory was equipped with smoke detectors, but was
not required to have a fire sprinkler system. Since FEMA
oversees the U.S. Fire Administration--and we are pleased to
see that they sort of have been resurrected--the agency that is
charged with working to reduce life and economic loss due to
fire, at the appropriate time in this hearing I would like to
ask you a few questions about the Fire Administration's role in
helping our learning institutions ensure that student housing
is safe.
I thank you, Mr. Chairman, and look forward to hearing from
the Director.
Senator Bond. Thank you very much, Senator Lautenberg.
Chairman Stevens.
STATEMENT OF SENATOR TED STEVENS
Senator Stevens. Well, thank you very much.
Mr. Witt, James Lee if I can get personal, and Lea-Ellen,
it is nice to see you here. I do not like the sounds that I
have just heard, though, that indicate that people are ready to
see you leave. I am working on a bill now that converts your
office to one of those that is a 15-year term. No, I am
serious. I think disasters are coming our way so often,
experience is necessary and we ought to arrange something that
gives you a little bit of financial incentive to stay another 7
years and get this thing really put together right.
You know, I am not sure the committee knows, our friendship
started when you came up to the Miller's Reach fire. People who
live in the wilderness were able to get some assistance to live
in town, but they wanted to live in their own places and
rebuild them themselves, and with common sense you modified
those regulations and they actually rebuilt their own houses
and saved the Government money and had the lifestyle they
wanted.
And we had the Kenai River flood, and now we have had I
think the worst avalanches that our State has ever seen in one
year, a train wreck. My own little town was isolated for
several days, shut off from food and fuel and transportation.
We are the most disaster-prone State in the country. Most
people do not realize that.
But you have probably visited our State more than you want.
But the one time you wanted to come up and go fishing with us,
you got there and you had a disaster somewhere else and had to
leave. We have still got the latchkey out there for you and
Lea-Ellen whenever you want to come back and finish that
fishing trip.
But I am really serious. I think you are getting to the
point where you are modifying some of these things so that we
are into prevention rather than disaster relief, disaster
repair, and what Senator Lautenberg has mentioned about
protecting the flood plain. I think that the provisions that
allow people--that we are going to deal with, to allow people
to sell their homes and move out of the flood plain, make a lot
of sense. I hope that you will not mind if I try to put that
into avalanche country, too. You know, there is no lesson in
the second avalanche any more than the second flood. I do think
that we have got to get sensible about moving some of these
areas out of the disaster zones.
What you have done I think is given us the ability, I hope,
in the future to limit some of the cost to the taxpayers by
virtue of prudence and preparation for disasters.
I want to talk to you some more about trying to build into
some of the public facilities the ability to take care of
persons that are suffering from disasters. When we look at the
civil air fleet, we pay those who operate the civil airlines to
put in modifications that would be required if we ever have to
use them for troop carriers, the civil air reserve fleet.
There is no reason why we cannot find some way to pay some
of these people to modify their church basements or their
school basements or their schools so that they can take care of
these people that come in, instead of having them live the way
they do when they have to seek refuge from a disaster, to have
some areas in every part of the country prepared for that.
I really believe that you are on the right course, and on a
bipartisan basis we ought to not only thank you, but sort of
say, what do you need to stay around a little longer, because I
think you have got a good team and there are some things that
we have to do to make changes that your experience would tell
us whether they are right or wrong.
I do not remember us going against your advice, James Lee,
and that is a real significant achievement. I also appreciate
the fact you have been totally bipartisan in your operation.
Disasters should not have any political consideration at all,
and you have carried through in just an absolute way. I have
followed you around the country in many places, as you know, to
see how we have recovered from some of these disasters.
We had the country's worst disaster, I think, in recent
history in the 1964 earthquake. You were not around there then
and we had a tough time, but the laws have changed a lot since
then and I think that we may need to round them out a little
bit more to make sure that you have the flexibility of dealing
with these things so that you can save money and prevent having
to pay the same family twice for recovering from the same type
of disaster. We ought to have some incentives to avoid that.
But I am really serious. I am here to tell you that I think
Alaskans, as all other residents of this country, are indebted
to you and your wife for you have done. You have been a team
and you have got a good team around you. I too applaud you for
getting back into Government service the former head of the
Secret Service, and there is others out there.
I think we ought to give you the opportunity to waive some
of the provisions of the retirement law and give some of those
people that do have a lot of experience to get on board,
because if we are right, if we are right in our predictions
that we are going to be subject to some of these attacks from
some of these chemical and biological weapons in the future,
yours is the agency, along with the National Guard, that is
going to face the brunt of those and I think we ought to be
prepared.
So I do thank you.
Senator Lautenberg. I second the motion, Mr. Chairman.
Senator Stevens. I think we ought to find some way to do
this, and I will have to talk to you privately. Lea-Ellen may
have another plan in mind for you, so we will have to tread
lightly here.
But the concept of having something that goes beyond,
someone that goes beyond the possible end of an administration
and really is in a position to put in motion long-term
solutions to these disaster problems I think is one we have to
explore very thoroughly in this Congress.
Thank you, Mr. Chairman.
Senator Lautenberg. With that, you do not have to say
anything, Mr. Witt.
Senator Bond. Thank you, Mr. Chairman.
That is a real set-up. You really want to go ahead and say
anything, or do you just want to quit with that?
We were supposed to have a vote at 10 o'clock, but, knowing
that things never work exactly as they are scheduled, we will
continue now and invite you to give your testimony.
STATEMENT OF JAMES LEE WITT
Mr. Witt. Thank you, Mr. Chairman, Senator Mikulski,
Senator Lautenberg. Thank you for your accolades and your
comments and your support. I want to thank the members of this
subcommittee for the support that you have given FEMA's
programs and for all the time that the members and the staff
have provided in reviewing our programs. With your continued
assistance in the fiscal year 2001 budget, we hope to
institutionalize many of the things that we have been working
so hard on to this point.
This morning I am accompanied by many of the senior
officials from FEMA including, of course, Gary Johnson, who is
sitting to my right. Gary deserves much of the credit for
putting FEMA's financial house in order. His hard work and
dedication, and the hard work of his staff have truly
straightened FEMA's financial records out.
Last year, for the very first time at FEMA, the fiscal year
1998 consolidated financial statements were given a clean bill.
Just yesterday I was pleased to find out that the IG gave us an
unqualified opinion on the 1999 financial statements as well.
We will provide this accountability report to you.
I also want to take the opportunity to present to you John
Magaw and thank him publicly for coming into FEMA and taking on
the challenges of the antiterrorism program. He is a great man.
He has got a tremendous challenge before him, but I know he is
capable of meeting that challenge. He is well respected
throughout the country by law enforcement, the fire services,
and the other Federal agencies. We are very pleased to have
him.
Senator Bond. Mr. Director, excuse me. We have had our
summons. We want you to continue. Senator Mikulski will stay
here and I will be back as quickly as I can. We will see if I
can do the running through the airport thing. If you do not
mind, I have reviewed and will continue to review your
statement. Excuse me.
Mr. Witt. Thank you.
As many of you here know, today most likely could be my
very last budget appearance before you--but after what Senator
Stevens said, I do not know.
I do want to reflect back very briefly on my career at FEMA
and what FEMA should strive for in the future, I keep coming
back to the principle of responsibility. Today I hope we can
talk about responsibility, not only responsibility in the
fiscal year 2001 budget, but far beyond that.
I want to tell you how important this budget is for FEMA's
future and for the future of our partners, the States, the
local governments, and fire services, and all those people out
there that are our partners that continue to serve communities
on the front line.
The fiscal year 2001 budget and other related legislative
initiatives continue to move down the path of success. I ask
your support during this next year as we try to
institutionalize reforms that underscore responsibility. Before
leaving today, I also want to thank the subcommittee staff
members that have worked so diligently with us and have been
very committed to doing the best that we can for the country
and for the agency. We do not always agree on everything, but I
think in the end there have always been good and positive
outcomes.
So I want to thank Carrie, Jonathan, and Paul for their
very dedicated work with Mike Malone and the Congressional
Affairs staff.
I also thank Senator Mikulski for the guidance she has
given me over the last 7 years. We are here to answer your
questions and would be happy to start any time you are ready.
[The statement follows:]
PREPARED STATEMENT OF JAMES L. WITT
Good Morning Mr. Chairman, Senator Mikulski, and other Members of
the Subcommittee. I appreciate the opportunity to appear before the
Subcommittee today to present our budget proposal for fiscal year 2001.
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. Without your guidance, leadership
and assistance, FEMA would not have been able to accomplish all that we
have these past seven years. With your continued assistance on the
fiscal year 2001 budget, we should be able to institutionalize many of
the things that we have been working on to this point.
This morning I am accompanied by many Senior officials from FEMA.
FEMA is made up of people who entered public service to help others. At
FEMA, we have the privilege of working in an agency whose daily work,
whose enduring mission, is exactly that: helping others. Whether the
moment is the aftermath of disaster--as a family finds a home
destroyed--or the beginning of opportunity--as a community joins
Project Impact--we make a difference in people's lives. When people
praise FEMA, I say a great deal of the praise is due to the hard-
working, dedicated staff.
Sitting next to me is Gary Johnson, FEMA's Chief Financial Officer,
who deserves much of the credit for putting FEMA's financial house in
order. Gary is an excellent example of the selflessness and dedication
that FEMA employees possess. When I arrived at FEMA, the financial
records were not in the best possible shape, to say the least. Although
I don't think Gary sought out the CFO's position, he was willing, as a
good public servant, to take on this assignment and give it his best
effort. Through his hard work and dedication, and the hard work of his
staff, FEMA's books have been straightened out and last year, for the
first time ever, we had financial statements that were given a clean
bill of health by the Inspector General. These improvements are
tangible. They have given you and your staff a clearer picture of FEMA
spending priorities and the historical financial records that support
these positions. These are measurable accomplishments of which we can
all be very proud.
I'd also like to take the opportunity to introduce a person who is
a relatively new face at FEMA but certainly not a new name to you. We
are excited to have had John Magaw, former Director of both the United
States Secret Service and the Bureau of Alcohol, Tobacco and Firearms,
join the FEMA staff. As a well-known and respected official in the law
enforcement community, John is going to help us with our interagency
coordination of terrorism-related efforts. We are pleased to have him
with us today as well.
As many here today know, this very likely may be my last Senate
Appropriations Subcommittee hearing as Director of FEMA. We've come a
long way together. Twenty years ago, President Carter signed an
Executive Order creating FEMA. He recently told me that FEMA has
finally become the agency that he envisioned twenty years ago.
Despite this recent success, it has not always been smooth sailing.
Seven years ago, some people wanted to abolish FEMA. Today, with the
help of President Clinton, Vice President Gore, you and our other
friends in Congress, our dedicated staff, and our partners at the State
and local levels, we have become a model of government success. The
renewal of FEMA is studied in universities, emulated in other
agencies--imitated and admired literally across the globe.
Seven years ago, many of our customers were unhappy and our
partners were frustrated. Today, our customer satisfaction ratings have
climbed steadily to impressive heights. Our partners are reaching out
to us--and we are reaching out to them--in a nationwide network of
people working to strengthen America.
Seven years ago, communities across the nation were locked in a
deadly cycle--caught by disasters unprepared, too often rebuilding
where they were almost certain to be struck again.
Today, Project Impact has placed mitigation and prevention at the
center of emergency management in the United States. We have saved
lives--enhanced communities--and prevented needless pain. We came this
far together by being responsible--responsible to our customers,
partners and taxpayers.
As I reflect on my career at FEMA and think about what FEMA should
strive for in the future, I keep coming back to this principle of
responsibility. Today, I want to talk with you about responsibility--
not only responsibility in fiscal year 2001, but far beyond.
I believe that we have four key responsibilities that we must
address in fiscal year 2001 to ensure that we are well positioned for
the future.
--It is our responsibility to ensure that the impacts of future
disasters are minimized as much as possible.
--It is our responsibility to ensure that wherever possible, people
are moved out of harm's way.
--It is our responsibility to protect people who respond to disasters
and events.
--It is our responsibility to ensure that people have the resources
necessary to address emergency management needs and issues.
MITIGATION RESPONSIBILITIES
First, FEMA's fiscal year 2001 budget proposals are aimed at
further institutionalizing our responsibilities associated with
disaster mitigation. We know natural disasters are going to continue to
occur. We also have learned, through mitigation success stories, that
steps can be taken to mitigate the impacts of future disasters.
In this area, we need to continue programs that encourage
individuals, communities and States to take responsibility for
mitigation. Our Project Impact initiative, now entering its 4th year,
has made significant progress in getting individuals to be responsible
for protecting themselves. With very little seed money to get
communities started, local citizens have taken significant steps to
mitigate against the impacts of future disasters.
In addition to continuing to fund this program, we are very
encouraged by the Senate's efforts to move forward with Stafford Act
amendments which would permanently authorize a pre-disaster mitigation
fund. It is my hope that the Congress' actions would institutionalize
the pre-disaster mitigation concept which will save thousands of lives
by encouraging people to responsibly prepare for disasters.
PROTECTION RESPONSIBILITIES
We also have a responsibility to ensure that wherever possible,
people are out of harm's way. You made a significant investment in this
area when you approved $215 million that could be used to protect
people who are most vulnerable to future floods like those associated
with Hurricane Floyd. Despite this sizable investment in Hurricane
Floyd-declared States, we've got a long way to go to responsibly
address the needs of people who are at risk of flooding.
We know that needs still remain in North Carolina, New Jersey and
other Floyd-declared States. That is why the President proposed an
additional $77 million for buyouts of homes that could flood again.
But I don't feel that it is responsible to only respond to victims
after a flood. We already know that there are many people who are
vulnerable to flooding beyond the Floyd-declared States. That is why
the fiscal year 2001 budget contains an initiative that would allow us
to buyout many of the properties that have had two or more claims on
the National Flood Insurance Fund.
You may ask why such a significant investment on the Federal
Government's part is a responsible course of action. First, I believe
that protecting the most vulnerable people and properties is certainly
a responsible course of action for us to undertake. Second, an
investment now will recoup significant savings to the Federal
Government in the future if we can avoid future disasters from
occurring. Finally, when we buyout properties, we ask the States and
local communities to take responsibility as well. The States must be
involved in providing the non-Federal share and in helping prioritize
where the scarce resources will be deployed. Local communities also
frequently have to provide assistance with the non-Federal share and we
require them to permanently deed restrict any properties that are
bought out. That way, communities take responsibility for keeping
future development out of floodplains.
In addition to providing the funding, we hope that this Congress
will give FEMA ongoing authority to buyout properties at risk of
repetitive flooding. This authority is necessary to further
institutionalize our responsibility to help people at risk of flooding.
We also need to protect people from the risks of fires. America's
fire death rate is one of the highest per capita in the industrialized
world. Fire kills more than 4,000 people and injures more than 25,000
people each year.
We will soon be completing the renewal of the United States Fire
Administration. Twenty-five years ago, the USFA was created in the
aftermath of a report called ``America Burning.'' That landmark study
found America was losing too much and suffering too terribly from fires
that could be prevented. We have commissioned an updated ``America
Burning'' study, and we will complete it this year. We will
reinvigorate USFA, strengthening its roles in training, research and
public education. We want to once again make the USFA an engine of
innovation in fire prevention technology. We're working to prepare the
National Fire Academy to be a leader in the 21st Century.
Other individuals at risk include the working poor, the elderly and
the people in the roughest circumstances who are helped by the
Emergency Food and Shelter Program. During fiscal year 2000 you
acknowledged our responsibility to these individuals by providing
increased funding for this program. However, despite the funding
increase, significant shortfalls remain and thousands more meals and
nights of shelter are needed to help those at-risk individuals.
The proposed increase of $30 million brings the program up to $140
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. The
Local Boards that administer these supplemental funds in 2,500
communities are models of local decision-making and local
responsibility. And it is 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.
RESPONSIBILITIES TO EMERGENCY RESPONDERS
We also have a responsibility to train and protect the people who
must respond to disasters and events. For fiscal year 2001, we are
requesting funding for several initiatives that will help us protect
emergency responders.
Despite our technological advancements and the nation's collective
wealth, firefighters in the United States' frequently fight fires
without the benefit of the most advanced equipment available. To help
address this problem, the President's budget proposes a new $25 million
pilot grant program that would provide funding to fire departments
serving needy and distressed communities. We know that a
disproportionate share of firefighter deaths and injuries occur in
communities that can not afford to provide the most up-to-date
firefighter life and safety equipment. This grant program would be a
way to help protect those individuals who are willing to risk their
lives for the members of their communities.
We also are responsible for protecting people from terrorist acts.
Because emergency responders are likely to be the first officials to
respond to an act of terrorism, it is essential that they receive
proper training. In addition to continuing already-existing terrorism
training opportunities, the President's budget proposes an additional
$3.9 million to further train six Urban Search and Rescue teams so that
they will be prepared to respond to biological, chemical or nuclear
events.
Finally, I feel strongly that we have a responsibility to provide
FEMA employees with a headquarters facility that is safe, secure and
that allows staff to respond to disasters that occur throughout the
United States. The fiscal year 2001 budget contains a request for $23.6
million to relocate FEMA's headquarters facility from the current
location to another location in the Washington, DC area. The current
facility does not meet Level 4 security standards and it is limited in
its flexibility. We need to upgrade our emergency operations center and
the current building keeps us from optimizing our capabilities.
RESOURCE RESPONSIBILITIES
Finally, we have a responsibility to give people the resources
necessary to continue to address emergency management needs and issues.
Last year, you allowed us to streamline the method by which grants
are provided to our State partners. Instead of multiple grants that
required separate administrative overhead, we worked with you and your
staff to create an Emergency Management Performance Grant Program which
reduced State grants to a single funding stream. Initial reports from
our State partners indicate their support for continuing this grant
mechanism. We believe that reducing the red tape for both FEMA and our
State partners allows us to spend more time focusing our efforts on
disaster response and mitigation.
For several years running, we have all agreed that there is a
significant need to modernize FEMA's flood maps. The fiscal year 2001
budget contains two different proposals for funding the first year of
our seven-year Map Modernization plan. Modernizing the current map
inventory and creating new maps for unmapped communities will provide
invaluable tools for emergency managers, floodplain managers, lenders,
insurance agents and FEMA employees. Bringing the map inventories up-
to-date will even reduce the number of cases in which Congressional
offices are asked to get involved. Clearly this program would be a
responsible investment that would pay dividends for the future.
The fiscal year 2001 budget also requests an increase for Salaries
and Expenses. As I mentioned earlier, FEMA has a very hard working
staff that is fully committed to helping others. It is our
responsibility to ensure that the FEMA staff has the resources and
facilities necessary to serve the American public. Without a safe and
secure work environment, staff resources will be hampered. Without an
up-to-date emergency operations capability, we will be limited in our
response to disasters as they occur across the country.
I want to conclude by telling you how important this budget is for
FEMA's future and for the future of all Americans.
I've been fortunate in my career. I've met interesting people and
traveled to fascinating places. I've had the privilege to serve a great
President who is also a great friend. Together with a dedicated
Congress and committed staff, we have been able to strengthen FEMA's
programs and response capabilities.
Despite all of our work, the real measure of our success won't be
realized for many more years. If ten years from now, all States and
local governments take full responsibility for properly insuring or
protecting their buildings, our efforts were successful. If twenty
years from now we are working even harder to protect our emergency
management responders, we created a lasting legacy. If thirty years
from now, all citizens, States and local governments have taken steps
to mitigate against the effects of future disasters, we will have
succeeded in institutionalizing responsibility.
The fiscal year 2001 budget and other related legislative
initiatives continue to move us down this path to success. I ask your
support during this next year as we try to institutionalize
responsibility.
Before leaving today, I also want to say ``thank you'' to the
Subcommittee staff members with whom we have had the privilege of
working. From working with your Subcommittee staff everyday, I'm sure
you know the level of professionalism and commitment to public service
that they bring to their work each day. FEMA has benefited greatly from
their knowledge and expertise. So to Carrie Apostolou, Jon Kamarck,
Paul Carliner and other Subcommittee staff with whom we have worked
these past seven years, ``thank you.''
Thank you for the opportunity to appear before this Subcommittee
and I am happy to answer any questions you may have.
[GRAPHIC] [TIFF OMITTED] T05MA01.001
Senator Mikulski [presiding]. Well, I think that this is a
very good time perhaps for us to recess until we can go vote
and then return.
Mr. Witt. Sure.
Senator Mikulski. So we thank you for your testimony. The
committee is going to stand in recess subject to the return of
either Senator Bond or myself. Before we do leave, I also
wanted to acknowledge, because in my eagerness to talk about
antiterrorism we did not talk about the U.S. Fire
Administration in Emmitsburg, something that I am very
preoccupied with, and also the implementation of the Blue
Ribbon Commission. I think they are a very valued resource and
we need to make highest and best use of what we have. So we
look forward to continued conversation.
Thank you. This committee stands in recess until the return
of Senator Bond or myself.
REQUEST FOR BUYOUTS
Senator Bond [presiding]. The hearing will reconvene. I
thank our witnesses and guests for their indulgence.
Mr. Director, I will, as I said, review your full statement
and I would like to ask a number of questions, a few things
that are very important.
First on the buyouts, the $77 million request, the
Inspector General has suggested that only 2,200 properties in
North Carolina would likely qualify for buyouts and the likely
cost would be less than $140 million, excluding the State costs
here. I would like to know what the basis was for the request
and whether the Inspector General's information was available
at the time of the request, whether it was considered. Would
you comment on that?
Mr. Witt. Sure. I believe that work by the Inspector
General's office is ongoing. They developed an estimate--a
preliminary estimate--and should be finishing that up soon. I
think the important thing is to look at the information
prepared by our inspectors and verifications of houses
destroyed.
I am not saying all 3,144 homes that were destroyed were in
the flood plain, but most of them were. Also, there were 7,469
owner-occupied homes just in North Carolina that had 2 to 5
feet of water in them, and 1,278 that had more than 5 feet of
water in them. So I think it is important that the IG working
with mitigation staff--identify and verify the structures
substantially damaged and destroyed within the 100-year
floodplain. Without that verification I cannot tell you, Mr.
Chairman, whether the funds will be enough or not.
At the present time we have given you figures that we felt
are appropriate.
BUYOUTS AFTER HURRICANE FRAN
Senator Bond. Well, obviously we are going to continue to
work with you on this.
I was disturbed by an AP article earlier this month that
indicated that there were some buyouts of upscale homes and
perhaps second homes, vacation homes, that did not really meet
the cost-benefit test. I wonder if FEMA has looked into this
and what is being done to ensure that the at-risk properties,
the needy individuals, are the ones who are given priority.
Excuse me. It was Hurricane Fran.
Mr. Witt. Yes, I saw that article as well. We are very
cautious about what we target for buyout. The most important
and critical thing is if the property is within the 100-year
flood plain and it is substantially damaged, it needs to be
bought out. I have not seen too many of the houses in the
$400,000 range bought out at all. There may have been one or
two in cases that I am not aware of, but we are very careful
and we do look at these very closely and will continue to.
One thing I want to add, Mr. Chairman. When I was talking
with your staff, the Inspector General's office, the State of
North Carolina, other States and our mitigation directorate, we
are going to prepared a monthly report that lists the
properties for which offers have been made, the amount of that
offer, the pre-disaster value of that property, and the cost-
benefit ratio of anticipated savings.
We are going to require that every month so we can make
sure that we are targeting the right properties, that the
offers are accurate, and that there is a cost savings. We are
going to do that monthly because we know the importance of
this.
PROPERTIES WITH FLOOD INSURANCE
Senator Bond. I trust you are looking at the number of
properties where they have had flood insurance, and it would
seem to me that priority should be given to those people who
are willing to help themselves. I would also appreciate your
comments on the statement you made last year about the agency's
support for requiring homeowners who do not accept a buyout to
pay actuarial rates in the flood insurance program. Is that
still your position?
Mr. Witt. Yes, sir. I took a few arrows on that position,
in some cases, but I feel very strongly about this. I feel that
it is important that the responsibility reside at the local
level and with individuals as well. We are responsible to meet
their needs and requirements if there is a disaster, beyond
their means. We have gone back and looked at the Federal
insurance administration's data and see that 10,000 properties
repetitive loss properties of which 1,300 have had two or more
claims resulting in costs that exceed the value of the
property.
It does not make sense to continue spending $200 million
annually in repetitive flood losses. Legislation has been
introduced to address this and we are hoping that it will pass.
The insurance that has been paid out so far just in North
Carolina is $139 million on flood insurance claims. It probably
will come close to $200 million in flood insurance claims. I
addressed this with Eric Tolbert, the State mitigation director
of North Carolina, to ensure that they are tracking with our
staff the properties that had flood insurance and making sure
that, if that insured property is substantially damaged and
within the 100-year floodplain, that the insurance is offset by
the buyout amount.
PUBLIC BUILDINGS INSURANCE RULE
Senator Bond. Good.
Another aspect of insurance. As I indicated, I commend you
on your work on the public buildings insurance rule. I have
joined you in being the designated javelin catcher on that one.
Nothing like having a specialty on the track team.
When do you expect to have a final rule? What is the
estimate for how much this can save us? And what other problems
do you see, and are you confident that you have addressed the
procedural problems that the GAO identified in the development
of the rule?
Mr. Witt. I think we have addressed the GAO problems in
developing the rule. I think the advanced notice of the rule
allowed 45 days for comments, the published rule 60 days, and
then 90 days for a final rule.
I found out an interesting fact regarding my home county,
Yell County, Arkansas, which is a very poor county. I called my
son, who is the county judge there, our son, and I said:
``Jimmy, are you buying insurance on your public buildings?''
Two courthouses, two county libraries, two county hospitals,
two county jails, and a general detention center. He said:
``Why, yes, dad; we pay $44,000 a year for insurance on our
public buildings.''
I received a letter from the California delegation--every
member of the delegation signed it--opposing this. I talked to
an insurance broker in California. It was interesting to learn
that the requirements, the insurance on public buildings
requirements that we are going forward with, it is interesting
that 51 of 58 counties will already meet those requirements.
Also, 1,500 communities in Texas will meet those requirements.
One hundred and fifteen cities in the West will meet those
requirements by being in this pool.
What my concern is, if we do not do something then all
those counties and cities in the East, in the South----
Senator Bond. They are going to say why bother, yes; save
$44,000.
Mr. Witt. I think it is important that local governments
and State governments have a pool from which to buy the
insurance. If a lot of the communities are already meeting that
requirement we should go on with it.
Senator Bond. That sounds good to me.
Senator Mikulski, thank you for joining us. Do you have
some questions?
REFORMS AND PRIORITIES AT THE NATIONAL FIRE ACADEMY
Senator Mikulski. Yes, I do, Mr. Chairman. And I know our
staffs will be cooperating.
Mr. Witt, my very first question really goes to the Fire
Academy at Emmitsburg, which I believe is a national resource,
but really had not been utilized to its full capacity, and
there are a variety of--it was tattered in some ways. The Blue
Ribbon Commission said that there were three areas that needed
to be improved: leadership, resource management, and
communication.
Could you share with us or perhaps even have your person
heading the Academy speak to really what are truly the reforms
going on at the academy; number two, what do you see are your
priorities for the Fire Academy, particularly in education and
training? Senator Lautenberg gave one. Fires are up in my
State. Could we hear yours, and what resources you need?
Mr. Witt. Senator Mikulski, I think we are moving in the
right direction for the USFA, in the sense that the blue ribbon
panel that I asked to serve as a panel included every national
fire association in America. These organizations came together,
met, developed 34 requirements that they felt were important to
be implemented at the USFA and the Fire Academy. To date, we
have implemented 17 of the recommendations.
One of those was to recommission ``America Burning.'' It is
25 years old. It needs to be brought up to date to reflect
today's threats. Hopefully that will be completed in May. Also,
we found that by reorganizing part of the Emmitsburg Fire
Academy and putting in place a chief operating officer to
facilitate the communications between our Fire Administrator,
our advocate now for our policies and our programs for the
firefighters, the academy has made a huge difference. Hopefully
the rest of the reorganization will be completed by June.
Senator Mikulski. Excuse me. What is being completed in
June, the reorganization?
Mr. Witt. Yes, and I am very pleased with what has been
done so far. Some of the panel's recommendations such as the
distant learning are very important. We have so many
firefighters across the country that cannot afford to come to
Emmitsburg, that we need to take the training to them.
You and I know there are over 53,000 fire injuries a year,
there is an average of 100 firefighter deaths a year.
Firefighting continues to be the most dangerous profession that
we have in this country, and we are going to have to do more to
reduce injuries and save lives for our firefighters. It is very
important.
Senator Mikulski. Well, we want to hear more about that.
You are recommissioning ``America Burning''?
Mr. Witt. Yes.
Senator Mikulski. When does that start and when does that
end?
Mr. Witt. It has already started and should be completed in
May.
Senator Mikulski. May of this year?
Mr. Witt. Yes, ma'am.
Senator Mikulski. So then we will have a blueprint and a
reorganization.
Mr. Witt. Yes, ma'am.
REFORMS AT FEMA IN THE LAST SEVEN YEARS
Senator Mikulski. Well, let us continue that further, but
really there are more fires and more different kinds of fires,
and because of the gallantry and efficiency of our local fire
departments I believe America has gotten complacent. Therefore
we need to be able to support them, not only with best
technology and best training, but also we need to do, I think,
public awareness. We look forward to those recommendations.
Let me go on to another topic that is very important to me,
which is the institutionalizing of the reforms made at FEMA
under your direction. Could you identify what we are doing in
this appropriation to institutionalize those reforms? In the
short time we have available, could you give us the highlights
that you want to be sure that you have left as pillars for
either you to continue to stand on or a new director to be able
to stand on?
Mr. Witt. I think it is very important that the repetitive
loss legislation gets passed and also that we look at the flood
mapping issue in this country. The inventory of flood maps is
in very serious condition. Looking at the repetitive flood
losses and the flood mapping programs is critical if we are
going to cut disaster costs. My goal is to strive to do that,
because I know that dollars are so precious and so tight.
I believe that responsibility is important for locals and
States and ourselves. By doing the things that we are doing
now, we will, I hope, institutionalize responsibility for the
future. The Stafford Act amendments, the repetitive loss
legislation, and the flood insurance proposals are critical. We
are working with OMB to try to get some agreements with them on
other proposed legislation, particularly for the subsidized
rates for secondary vacation homes. A lot of this has to be
cleaned up.
If it is, then I think we will be in good shape going into
the future by cutting costs and saving lives.
Senator Mikulski. Well, I thank you, Mr. Witt. I have other
questions I will submit for the record. Conversations were
amplified both with you and Mr. Magaw. Mr. Magaw, we really
welcome you back and it is nice to see you again, because I
think our conversations on terrorism are left for another
forum.
Is Mr. Burris here from the Firefighting Academy?
Mr. Witt. Ken could not be here today. Ken Burris is the
former fire chief of Marietta, Georgia. He has over 20 years of
service, and is very, very talented. We are very fortunate to
have him.
Senator Mikulski. We are looking forward to meeting him the
next time we are in Emmitsburg, so thank you.
Mr. Chairman, I will submit other questions for the record.
Senator Bond. Thank you very much, Senator Mikulski. We
will of course hold the record open for questions, and I will
have quite a few to submit myself. Thank you very much for your
participation.
Senator Lautenberg.
Senator Mikulski. And I am going to excuse myself to go to
the elementary and secondary markup.
Senator Bond. We will understand. Thank you.
SPRINKLER SYSTEMS IN COLLEGE FACILITIES
Senator Lautenberg. Mr. Chairman, I will be brief.
I just have a couple of questions that I would like to ask
you. They relate to the terrible accident at Seton Hall which I
mentioned. Director Witt, what we find is that it is difficult
to get accurate data about the extent to which all student
housing is equipped with life-saving sprinkler systems. I note
that there was a forum on college fire safety and they said
that only--the report said that only 27 percent of the student
housing had fire sprinkler systems.
It would be useful to get full information about this and
be able to send copies to the various educational institutions.
Could the Fire Administration undertake a study of that for us?
That would be very helpful. And if the study included
recommendations on the best way to encourage academic
institutions to install fire sprinkler systems, all of the
institutions, the facilities that are on the campuses, if we
could do that. And I would like to work with you to begin such
a study and hopefully be finished before at least I--I have a
specific ticket to leave town. It seems that yours maybe
rejected. I have not had that kind of groundswell. You had a
groundswell of three persons here; that is pretty good.
Also, the Fire Administration produced a report on college
fire safety that recommended the establishment of an
information clearinghouse. I think that the Fire Administration
would be an appropriate place for that as well. Would you
agree?
Mr. Witt. Yes, sir.
PUBLIC AWARENESS OF FIRE DANGERS
Senator Lautenberg. The Fire Administration's report
specifically cited a link between fires and the consumption of
alcohol. The report recommended that by associating fire safety
with alcohol consumption it may be possible to reduce some of
these fire losses. Young people will be capricious and
sometimes engage in things that look like they are fun and they
are fun until something happens.
I have been a strong advocate of establishing a nationwide
advertising campaign against underaged alcohol consumption. I
wrote the law to raise the drinking age to 21. Could we get
some help in getting a view from your people or getting a
communications outlet through your department to see if we can
just raise a caution there? I think it would be a good idea,
because the consequence--we know what the consequence is of
drinking and driving, but we are not certain that people are
aware of the consequence of excessive horseplay and so forth as
a result of drinking that might lead to fire disasters on the
campus.
If we can find anything about cause and effect there, that
would also be helpful.
Mr. Witt. Our U.S. Fire Administrator, Ms. Carrye Brown, is
with us today and I know that she has been working very, very
hard on establishing a public awareness program. Also, we have
developed videos and pamphlets that have been shared with the
universities to help address some of the fire-related and
alcohol-related fire deaths.
But, I think a study at the universities, particularly of
the sprinkler systems, is absolutely critical. We know that
across the country there are so many universities that are at
risk for all-hazards. Under our disaster-resistant universities
concept--the University of Berkeley is doing a study on this,
and we will share that with you--we are looking at how
universities can be better prepared before something happens. I
think it will help save lives and save dollars in the future.
So we will be happy to share that with you when it is
completed.
Senator Lautenberg. Thank you.
Thanks, Mr. Chairman.
Senator Bond. Thank you very much, Senator Lautenberg.
Director Witt, we have a number of documents and
information here from the GAO and their testimony a month ago
and the May 1996 report. I think that everybody has that. I
would like to make a copy of the February 15 letter from the
Deputy Inspector General to our committee part of the record as
we discuss S. 1691.
[The information follows:]
As requested, following are the issues that we discussed during our
meeting on February 7, 2000, concerning Senate amendments to the
Stafford Act (S. 1691).
Overall, the amendments have many positive features that we
wholeheartedly endorse, such as the cost estimation procedures, the
conditions for assistance for private nonprofit facilities, and the
emphasis on mitigation. Our concerns are not so much with what the
amendments include, but rather with what they exclude. The amendments
do not go far enough, in our opinion, to control the Federal cost of
disaster assistance and to ensure coordination between FEMA's various
disaster preparedness, mitigation, and relief programs. Specifically:
Under Section 203, PREDISASTER HAZARD MITIGATION, the amendments do
not make any reference to FEMA's Emergency Management Performance Grant
(EMPG) Program. Yet the EMPG Program is the Agency's primary mechanism
through which non-disaster funds are made available to States for
mitigation planning and pre-disaster mitigation initiatives. Language
should be added to this section that recognizes the EMPG program and
its relationship to the technical and financial assistance envisioned
under this section. Also, this section could be strengthened by (1)
providing restrictions or parameters on the type of projects that this
program will support, (2) defining what constitutes an ``effective
public-private natural disaster hazard mitigation partnership,'' and
(3) describing how FEMA will deliver technical assistance to State and
local communities, i.e., with FEMA staff, contracts, or grants.
Under Section 204, NATURAL DISASTER MITIGATION ZONES, add specific
language that would address local community compliance with the
National Flood Insurance Program's substantial damage rule. The
substantial damage rule holds communities responsible for ensuring that
mitigation action takes place whenever the cost of restoring a damaged
structure to its pre-damaged condition is 50 percent or more of its
market value. A legislative mandate, coupled with appropriate sanctions
such as increased cost share or reduced assistance for communities that
do not adequately enforce the substantial damage rule, would contribute
significantly to increased compliance, resulting in more effective
mitigation measures to reduce repetitive losses.
Under Section 204, NATURAL DISASTER MITIGATION ZONES, curtail the
availability of assistance in specified coastal areas. Because of
FEMA's disaster recovery and flood insurance programs, the Federal
government has been criticized for its apparent public policy of
encouraging development in high risk coastal areas. The Stafford Act
Amendments provide a unique opportunity, in our opinion, to specify
disincentives for development in those areas. For example, provisions
could be included in the amendments that eliminate flood insurance rate
subsidies for secondary homes in coastal areas.
Under Section 204(a)(3)(C), AVAILABILITY TO THE PUBLIC, stipulate
that maps and services shall be made available to the public for a
nominal fee to be established each year by the Director. These revenues
would be invested in the Fund.
Under Section 404, HAZARD MITIGATION, add language that provides
statutory guidance for property acquisition and relocation assistance,
such as:
--funding limitations
--eligibility criteria
--cost/benefit requirements
--prohibition on rebuilding in a special flood hazard areas
--basis for amount to be paid to homeowner
--priority ranking system that ties in with eligibility criteria
--post buyout assessment of effectiveness
We believe the need for explicit statutory requirements for the
buyout program is important because of its enormity (expenditures
approaching $1 billion) and the emphasis that has been placed on
buyouts as an essential mitigation tool.
Under Section 404, HAZARD MITIGATION, either eliminate or reduce
the 15 percent (20 percent under the amended version) that is set aside
under this section for hazard mitigation measures. Under the current
funding mechanism, the program has variable and unpredictable funding
levels. Also, it does not ensure that public funds are being spent on
the most pressing national priorities, nor does it ensure that public
funds are being awarded to State or local governments that are
genuinely committed to reducing damages from future disasters and
supporting ongoing non-Federal hazard mitigation measures. Instead, we
proposed that Congress should consider establishing under Section 203,
PREDISASTER HAZARD MITIGATION, a discretionary grant program. The
program would be funded through an annual appropriation that gives FEMA
the discretion to determine, through a competitive process, which
applicants are best suited to address the requirements and priorities
of the Nation's pre-disaster hazard mitigation goals and objectives.
Under Section 406(c), LARGE IN-LIEU CONTRIBUTIONS, add language
specifying that, to qualify for large in-lieu contributions, the cost
to repair a public facility must exceed 75 percent of the pre-disaster
value of the property. Currently, FEMA authorizes the construction of a
new facility whenever the damages exceed 50 percent of the pre-disaster
value of the property. The 75 percent threshold is more in line with
national insurance standards for replacement of damaged facilities.
Repairing a facility would be more cost effective than constructing a
new one.
Under Section 406(e), ELIGIBLE COST, clarify the current language
that stipulates eligible public assistance costs should be estimated in
conformity with current applicable codes. It should be made clear that
codes in effect at the time of the disaster are controlling.
Under Section 408, TEMPORARY HOUSING ASSISTANCE, require disaster
victims who need home repairs in lieu of other types of temporary
housing to seek loan assistance from the Small Business Administration
before receiving grant assistance from FEMA. Home repairs would not be
delayed since SBA processing time has been reduced to about 7-12 days
for home loans. According to FEMA estimates, this would result in
annual cost savings of about $109 million.
Under Section 411, INDIVIDUAL AND FAMILY GRANT PROGRAMS, authorize
FEMA, in consultation and coordination with the State, to provide
direct financial assistance to individuals or families. The Federal
share should be equal to 75 percent of the actual cost incurred and the
remaining 25 percent of the cost should be paid from funds made
available by the State. Also, since assistance for the IFG program will
be provided directly by FEMA, there will be no need for providing the
State a 5 percent administrative fee. According to FEMA projections, an
annual cost savings of $8,756,200 would be realized.
Repeal Section 417, COMMUNITY DISASTER LOANS. Based on our
assessment of the this program in fiscal year 1995, we estimated that
the default rate for these loans would be 97 percent and the rate for
loans subject to the Credit Reform Act would be 100 percent. With these
facts in mind, we believe a disaster grant would be a more prudent and
cost effective means to assist State and local governments that suffer
a substantial loss of tax or other revenues after a disaster and
demonstrate a need for financial assistance to perform governmental
functions. The Credit Reform Act of 1990 imposes complex accounting and
funding requirements for loans. Unlike a grant program, additional
appropriations are required to cover the subsidy and administrative
expenses associated with each loan. In fiscal year 1994, for example,
these expenses exceeded $11 million.
Under Section 705(c)(1), REBUTTAL OF PRESUMPTION OF RECORD
MAINTENANCE, clarify the language that defines the binding nature of
grant requirements. To eliminate any confusion about what constitutes
the ``binding nature of grant requirements,'' we suggest that this
section be revised to read: ``The payment was authorized by an approved
grant agreement specifying the costs. FEMA's estimate of disaster costs
as reflected in a Disaster Survey Report does not constitute an
approved agreement.
Again, thank you for the opportunity to share our concerns with you
regarding the Senate proposal to amend the Stafford Act. Should you
have any questions or wish to discuss our comments in more detail,
please contact me.
HAZARD MITIGATION PROPOSALS
Senator Bond. One of the things that has concerned me about
S. 1691, is the average annual spending in the 404 program has
been $422 million, and as we interpret S. 1691 that would go to
$562 million, or a 33 percent increase. There have been a
number of suggestions from the IG as well as from the GAO. I
would like to know if you think there are any of them that are
not practical or if you see any significant problems with them?
Do you have any comments on the proposals in general?
Mr. Witt. I think some of the proposals are very good. Some
of them I would probably not agree with. I think it is very
important that some form of the 404 program continue to be in
the disaster program because many times pre-disaster prevention
may not address all of the problems after a disaster associated
with rebuilding.
I think the concept that your staff talked to me about is
very interesting as are the IG's recommendations.
Senator Bond. The competitive grant program?
Mr. Witt. Yes, sir. I did share that information with the
NEMA when I visited with them. They agree to work with us and
your staff in looking at this and seeing what the possibilities
are.
WORKING WITH NASA DATA FOR FLOOD MAPPING
Senator Bond. On this and so many others, we would
appreciate your discussion and obviously we will be in
communication with you on that program and the other
recommendations.
Let me turn to flood map modernization. Since this
committee has the unique privilege of funding NASA as well, I
am interested in the collaboration. We had some discussion
about the ability of NASA to work with FEMA and I understand
NASA recently flew a mission involving topographical mapping.
How is your effort to utilize NASA's resources moving and can
we lessen the costs, and have you encountered any roadblocks or
problems in that relationship?
Mr. Witt. Money.
Senator Bond. They are charging too much? Is that what I am
hearing you say?
Mr. Witt. Yes, sir. I think it could have possibilities to
really, truly help us. I have seen a brief overview of the
maps. I am going to go meet with Dan Goldin to look further at
this. Some of their information is classified and they are not
going to be able to release it. But, a lot of it I think we
could be using.
But I think also we need to work on the cost that is
charged for this in order to save money. Federal agencies'
administrative costs vary and some are higher than others.
Senator Bond. We will pursue that. I think we have two
friendly agencies working together and we will want to
encourage them to work more cooperatively.
Mr. Witt. Thank you.
LICENSING FEE FOR FLOOD MAPPING
Senator Bond. Talking about something, though, that has
gone up the flagpole without any salutes, last year's
settlement fee, and this year there is a new $12 licensing fee
proposed. Have you submitted it to the Banking Committee, and
do you really think there is any chance of getting that
enacted?
Mr. Witt. Mr. Chairman, I am always hopeful and we are
always trying to come up with alternative solutions for funding
this including sharing the costs with the people that use them
so that it is not just a burden on the taxpayers. We have hopes
for implementation of the fee, but I cannot guarantee that the
Banking Committee will agree with the proposal that we put in
the 2001 budget.
The proposal moves the process away from the bankers, and
places it with map determination organizations using the
regular tracking system that we have. I am hopeful, but I
cannot guarantee it yet.
FEMA'S ROLE IN COUNTERTERRORISM
Senator Bond. All right. A final question. I would like
your comments on the counterterrorism program. I mentioned
concerns about whether we are focusing adequate attention on
it. I would just like your general comments on how you think
the program is focused, coordinated, what FEMA's role can be,
and how well the concerns we have had for the last year or so
have been addressed.
Mr. Witt. I am very concerned about this program. I am very
concerned that the people out on the front line get exactly
what they need. Attorney General Janet Reno and I talked this
week, and I expressed my concern about the NDPO, including
where it has been put. I feel that it should be elevated to the
level of at least a director or deputy director's office in the
FBI.
We have not come to agreement on that yet. I feel like that
it is very important now, with John Magaw now heading up the
consequence management side, to elevate the anti-terrorism
office in FEMA to a co-chair level with the NDPO--especially
when you look at what we do in the areas of planning,
development, training, and exercises.
Our programs cost across all lines and involve over 15 or
16 partners. I feel strongly about this program and the
importance of it. But I do not think we are where we should be
yet.
Senator Bond. Mr. Director, I think it is safe to say this
committee shares your concerns and we are going to do
everything we can to work with you to address those concerns,
because this is something that cannot be downgraded to an
afterthought or an office in the basement someplace. This has
got to be able to bring together all those resources.
ADDITIONAL COMMITTEE QUESTIONS
With that, I would like to thank you for the cooperation
and wish you well, and maybe if Senator Stevens is successful
and Mrs. Witt does not veto it we may have a chance to see you
back again. But we will be submitting questions for the record.
[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 Christopher S. Bond
BUYOUTS
Question. Please describe the basis for FEMA's $77 million fiscal
year 2000 supplemental request for additional Hurricane Floyd buyouts.
How will FEMA ensure that the most at-risk properties, and the most
needy individuals, will be given priority in this program?
Answer. FEMA derived the $77 million estimate for supplemental
buyout funding needs by contacting the affected States in early January
2000. FEMA requested that the States identify the anticipated need for
buyouts generally meeting the criteria as defined in the previous
Supplemental for Floyd-related buyouts. States based their estimates on
best available information, which in most cases involved letters of
intent, pre-applications, other communication with affected
communities, or information gathered by the State and/or FEMA region
during applicant briefings and fieldwork.
FEMA is working closely with affected States to ensure that the
funding will only go towards valid needs that meet the criteria of the
appropriation law. FEMA is requesting the States to identify the most
heavily impacted structures as candidates for this buyout program.
States will receive funding allocations only after they demonstrate the
number and value of properties that meet the program requirements. Our
implementing regulation stressed to States that assisting low and
moderate income families who suffered major disaster damage is a
priority use for this funding. Also, based on information we have
received so far, nearly all of the properties proposed for acquisition
are relatively low in value for their respective areas. -
Question. Can you estimate how many of the buyout properties will
have had flood insurance? Will priority be given to those properties?
Answer. At this time we do not yet know how many of the potential
buyout candidates have flood insurance. We will better be able to
provide this information as communities provide details about
participating properties. Our estimates show flood insurance coverage
in North Carolina to average approximately 34 percent in the Special
Flood Hazard Area. While a significant number of these policies are in
coastal areas, many buyout participants are expected to live in
slightly inland riverine areas, rather than coastal. States and
communities have the flexibility to determine which properties are the
highest priority for assistance, among those that meet the stringent
eligibility requirements.
Question. Last year you said FEMA supported requiring homeowners
who do not accept a buyout to pay actuarial rates in the flood
insurance program. Do you still support this, what is the status of
this effort, and when will FEMA have a final rule?
Answer. FEMA is developing the program policy and guidance to
support the implementation of the ``Mitigation Offer''. The Federal
Insurance Administration (FIA) published a proposed rule on August 5,
1999 that would apply full-risk premiums for flood insurance coverage
to target repetitive loss properties whose owners decline an offer of
mitigation funding to acquire or elevate their structure. Target
properties include those with four or more insured losses, as well as
those structures that have had two or three losses that cumulatively
exceed the building value. There are currently approximately 10,000
properties on this target list. FEMA has also drafted a Federal
Register Notice that outlines the procedures necessary in making the
official mitigation offer. This draft has been shared with our State
partners, and we are incorporating their comments before publishing the
Notice. We expect to be able to make official mitigation offers by this
summer.
s. 1691
Question. The Inspector General has listed a number of options to
improve S. 1691, the Disaster Mitigation bill, recently marked-up in
the Environment and Public Works Committee. Please describe for each
proposal whether FEMA supports the recommendation, and the rationale
for FEMA's support or opposition.
Answer. Many of the Inspector General's recommendations warrant
additional consideration. As we committed during the Senate
Appropriations hearing, we will consult with our State partners through
NEMA to discuss many of these proposals. The following is a
recommendation-by-recommendation analysis:
--Under Section 203, PREDISASTER HAZARD MITIGATION.--We believe the
recommendations made for this area are worthy of future
consideration as Project Impact matures. At this time, we would
like the communities, and the States that recommended their
selection, to be given an opportunity to shape the program in
ways that fit the individual community. Experience may dictate
that we may want to limit some eligible activities as
suggested, but at this stage of the program's growth we do not
want to limit the approaches various communities may choose.
Also, the connection to EMPG is something that may evolve as
States gain experience with Project Impact, however, given the
unique relationship between FEMA and the communities, that
linkage is probably premature at this point.
--Under Section 204, NATURAL DISASTER MITIGATION ZONES.--FEMA
supports the substantial damage rule and acknowledges that
communities often do not adequately enforce this requirement.
To combat this lack of enforcement, FEMA has developed a
variety of mitigation tools to help communities better
implement the substantial damage determinations and provides
homeowners with Increased Cost of Compliance flood insurance
coverage, as well as other forms of financial assistance. At
the same time, there are sanctions currently in place for
communities that fail to enforce this rule. Currently, a
community that does not enforce the NFIP substantial damage
rule can be placed on probation or even suspended from the
program. While the merits of incentives versus disincentives
may be debated for helping communities better comply with the
substantial damage rule, it is clear that Section 204 is not
the appropriate place in legislation for these measures. It is
not the appropriate place because Section 204, as currently
written, applies to individual buildings and not to
communities; substantial damage determinations are made during
the same period of time in which disaster obligations are made,
making it difficult to change cost share for a particular
disaster; and, consequences for not making substantial damage
declarations should apply to all communities and not just those
that contain Mitigation Zones.
--Under Section 204, NATURAL DISASTER MITIGATION ZONES.--FEMA is
concerned about the increased development in high-risk coastal
areas and the resulting potential for increased costs for
disaster assistance in these areas. While disaster assistance
is currently provided to rebuild infrastructure that existed
before the disaster, FEMA is reviewing whether rebuilding this
infrastructure contributes to a community's willingness to
rebuild, and to make unwise investments in high-risk locations.
If limitations are to be placed on disaster assistance,
however, this should not be done in Section 204 which applies
only to Mitigation Zones. The Inspector General also suggests
that provisions could be included in the amendments that
eliminate flood insurance rate subsidies for secondary homes in
high-risk coastal areas. Because subsidies are only provided to
buildings that were built prior to the NFIP and not for new
construction, this would have little impact on the rate of new
development. For fiscal reasons, however, FEMA agrees that it
is desirable to reduce the subsidy for second homes and other
buildings that are not primary residences. This would, however,
be more appropriately handled as part of a more comprehensive
legislative package of subsidy reduction proposals that would
amend the National Flood Insurance Act. FEMA has proposed
legislation, which is currently under OMB review, to phase out
this subsidy over a seven-year period.
--Under Section 204 (a) (3) (C), AVAILABILITY TO THE PUBLIC.--The
Inspector General recommended that maps and services shall be
made available to the public for a nominal fee to be
established each year by the Director. FEMA believes that this
is a proposal worth considering.
--Under Section 404, HAZARD MITIGATION.--The Inspector General
recommended that Section 404 of the Stafford Act be amended to
give specific guidance on property acquisition and relocation
projects. While we agree that amendment to the current language
regarding property acquisition and relocation assistance may be
desirable, we prefer that it be moved to Title II of the
Stafford Act. FEMA has provided the Committee with suggested
language for Title II to create uniform property acquisition
and relocation project guidelines for all FEMA programs
regardless of funding source. This language addresses most of
the guidance items provided by the Inspector General. We
strongly believe uniform guidance for all programs is important
to reduce confusion for participating homeowners and the States
and communities that implement our programs.
Further, it is important that any of this type of guidance
conform to already existing Hazard Mitigation Grant Program
provisions. Being overly prescriptive could preclude other
important and effective mitigation measures, such as elevation
projects.
--Under Section 404, HAZARD MITIGATION.--The Inspector General
recommended that the Stafford Act be amended to reduce or
eliminate Section 404 hazard mitigation assistance in favor of
pre-disaster mitigation funding authority only. FEMA believes
that the IG's proposal requires careful review and analysis.
FEMA believes in a two-pronged approach to mitigation: (1)
institutionalize preventative planning and measures into daily
activities at the community level; and (2) take advantage of
the opportunities disaster events provide to reconstruct to
higher standards and in safer locations. FEMA is dedicated to
focusing attention to mitigation and disaster prevention before
disaster strikes. However, it is also critical to seize the
opportunities in the post-disaster environment to assist
communities in rebuilding stronger and smarter. Section 404
assistance provides these key resources to communities after
the devastation of a disaster, enabling them to reconstruct in
safer locations and in a sustainable manner.
We have made great strides in improving the effectiveness and
efficiency of the Hazard Mitigation Grant Program. Through our
coordination with both the Inspector General and General
Accounting Office, we are better able to assess and manage
program effectiveness on an ongoing basis. Through our Managing
State pilot initiative, we are working with States to devolve
more authority and responsibility to capable States. The
Stafford Act amendments support this approach. With the
Inspector General's assistance, we evaluated each of the three
pilot States twice. All demonstrated a high level of capability
and professional, effective program management.
--Under Section 406(c), LARGE IN-LIEU CONTRIBUTIONS.--We believe this
is an incorrect citation. The Stafford Act amendments propose
to reduce the Federal contribution for Large In Lieu
Contributions from 90 percent of the Federal share to 75
percent. However, the provision which the IG is addressing is
not in the statute but contained in the regulations at
206.226(d). This section provides that when damages to a
facility are more than 50 percent of replacement cost, the
facility is eligible for assistance for full replacement. The
IG would like to see this threshold raised to 75 percent. The
50 percent threshold is consistent with the substantial damage
threshold of the NFIP and is also the industry standard for
code upgrades. Given that three-quarters of our disasters are
flood disasters, it is important to maintain consistency among
FEMA programs.
--Under Section 406(e), ELIGIBLE COST.--The IG proposal is to specify
in law the meaning of current applicable codes . . . to mean
those codes in effect at the time of the disaster. In as much
as we have recently (February 1999) made the same provision in
our regulations at 206.226(b)(3), we have no problem with this
proposal.
--Under Section 408, TEMPORARY HOUSING ASSISTANCE.--The IG suggests
amendments to the Stafford Act which are at variance from those
proposed by the Administration and endorsed, with only slight
differences, by the House in HR 707. The IG's proposal requires
further review and analysis. We are concerned, however, that
the proposal could lead to delays in disaster assistance.
Programmatic Comparison.--The IG recommends changing Section 411,
to ``authorize'' FEMA to provide assistance directly to individuals or
families. This would seem to create an approach in which FEMA would be
spending State funds. All FEMA accounting, auditing and grant
management systems are set up for the purpose of the Federal government
to monitor and oversee state implementation of Federal grant programs.
The concept of federalism in which Federal money is provided to States
to spend is well established. This proposal runs counter to these
accepted norms of federalism. In addition, since the IG program does
not fundamentally change the structure and makeup of these programs,
the existing problems of providing two checks through two separate
eligibility determination processes remains.
The approach to modification of the individual assistance
authorities proposed in the Administration bill is the result of a
carefully crafted plan to rationalize these programs, improve their
effectiveness, and eliminate confusion and frustration on the part of
disaster victims. One of the common concerns voiced by disaster victims
is the confusion created by the array of programs and agencies they
must deal with to access assistance. For example, in most cases a
victim will deal with FEMA for housing assistance, and then be referred
to either the State for IFG, or to SBA for a loan. Many people referred
to SBA are subsequently referred to the State, if their loan
application is rejected due to their economic means.
We believe that one of the most useful steps we can take to improve
governmental services, and to reduce the stress on disaster victims
created by this system is to reduce the number of agencies a victim has
to deal with, and to reduce the number of different sets of rules under
which governmental assistance is administered. Our solution is to
combine the temporary housing program and the Individual and Family
Grant program into one uniformly administered human needs program that
covers uninsured real and personal property losses. This will allow all
assistance decisions to be made simultaneously and expeditiously, and
with no confusion as to which program will pay for what costs (as it is
now, IFG can pay for personal property as well as some real property
costs. An IFG eligible applicant, therefore, could get real property
repair assistance from both programs, for different parts of the
house.) A combined program would allow the creation of a uniform set of
rules and eligibility criteria, and would allow applicants to get the
sum of assistance for which they qualified in one payment.
Since the IFG program is currently based upon the lack of repayment
ability for a low interest SBA loan, we determined that this concept
should be carried over into the new combined program. We believed this
would be possible because of the great strides that SBA has made in
accelerating their loan approval and streamlining their application
process. Our primary intent was to find a way to improve program
delivery in a manner that was cost neutral. We believed that requiring
those that can afford to repay a loan to take out a loan is good public
policy, reserving grant assistance for those that truly cannot recover
without it. We anticipated that this provision would offset the cost
increases due to the elimination of state participation in funding of
the IFG Program.
If the combination of these two authorities into a single,
integrated human needs program were only cost neutral, we believe it
would be a significant improvement over the current system. We believe
firmly that it will result in measurable simplification of the process
and measurable improvement in the speed of delivery and effectiveness
of assistance to disaster victims.
The net effect of the Administration proposal is that, while the
same amount of SBA disaster loan indebtedness will be created, it will
be offset by improved effectiveness and efficiency of assistance for
those victims that really need it and a reduction in cost to the State.
The IG's proposal does nothing to improve service to disaster victims.
--Repeal Section 417, COMMUNITY DISASTER LOANS.--The Inspector
General recommended repealing the Community Disaster Loans
section of the Stafford Act and replacing it with a grant
program. FEMA had proposed eliminating the program but agrees
with the Senate that a $5 million cap was more appropriate. The
cap will allow the program to return to its purpose of helping
small communities, through limited loans rather than uncapped
grants, to recover their tax base while maintaining services.
Under this limitation, recent loans such as those to the Grand
Forks, ND School District would still be available.
STREAMLINING DISASTER FIELD OPERATIONS
Question. Director Witt, I understand you are looking at
initiatives to streamline disaster field operations, including
developing 3 levels of disasters, utilizing standardized staffing
templates, and State management of small disasters. Can you describe
this initiative in more detail, the cost-savings which could be
achieved, whether legislation is needed, and your timeline for
implementation?
Answer. During the past seven years since I joined FEMA, both FEMA
and the States have been working hard to improve both our disaster
response and recovery capabilities and our delivery of disaster
assistance. While we can be proud of our increased capabilities to
respond to disasters, we continually work toward streamlining disaster
operations to achieve more cost-effective, timely service in all
disasters. Each of the initiatives listed below are being performed
within our current statutory authorities. Cost savings may be realized
by the increased efficiency promoted with each of these initiatives.
Developing 3 Levels of Operational Responses to Disasters
FEMA is developing three levels of operational responses to
disasters. In June 1998, FEMA published the ``Disaster Levels,
Classifications and Conditions Job Aid'', which lays out our three
levels of operational response. These levels of operational response
are similar to how the U.S. Forest Service classifies incidents by the
complexity of the response, such as Type 2 and Type 1. At FEMA, we have
three levels of operational response. In order of complexity, from
least to greatest, they are:
--Level III--Minor.--An event/incident involving minimal levels of
damage, which could result in a Presidential declaration of an
emergency or a disaster. Some Federal involvement may be
requested by State and local jurisdictions, and the request
will be met by existing Federal regional resources.
--Level II--Moderate.--An event/incident involving moderate levels of
damage, which will likely result in a major Presidential
disaster declaration, with moderate Federal assistance. Federal
regional resources will be fully engaged, and it is possible
that other Federal regional offices outside the affected area
may be called upon to contribute resources. Select national
resources may also be utilized.
--Level I--Massive.--An event/incident involving massive levels of
damage, with severe impact or multi-State scope. This level of
event will result in a Presidential disaster declaration, with
major Federal involvement and full engagement of Federal
regional and national resources.
For the most part, categorizing the magnitude of an event and the
resultant level of Federal operations is an evaluative tool that
assists the Federal Government in preparedness activities, and aids in
the evaluation and selection of appropriate resources during the
disaster. The magnitude and impact of an event may change over time
during the course of operations. As a result, the categorization of
events and levels of operational response is a dynamic activity that
occurs as part of the monitoring and assessment activities that occur
continually during each emergency management phase.
Disaster Staffing Templates
The purpose of the Disaster Staffing Templates is to serve as a
planning tool to aid disaster managers in staffing disaster operations
more efficiently, by providing a baseline staffing range. The templates
are based upon the three operational response levels, as well as the
scenario in which FEMA is responding: for example, hurricanes,
earthquakes, tornadoes, floods, and weapons of mass destruction. The
templates will provide a baseline staffing range of numbers of
employees by functional program area for the Emergency Response Team,
Advance Element (ERT-A); the first 72 hours of initial operations; 24-
hour operations, if required; and continuing operations until the
functional program area reaches it's peak staffing. These templates
will assist managers in determining what baseline personnel resources
they need to deploy, and then managers will be able to augment or
deactivate personnel as the situation warrants.
State Management of Small Disasters
We believe that many States are capable of managing small public
assistance disasters, and are now working with States to develop a
concept of operations and an implementation plan. This initiative would
allow States, not FEMA, to assume primary responsibility for managing
their disaster recovery operations. Participation in the program will
be voluntary. We do anticipate some savings to result from streamlined
operations (fewer FEMA staff and lower administrative costs), though we
would expect to pay the State for reasonable management costs. It is
too early at this point to project exactly what the savings will be. We
plan to pilot this initiative this summer, with full implementation
targeted for October 1, 2000.
FLOOD MAP MODERNIZATION
Question. FEMA is proposing a new $12 licensing fee to finance the
flood map modernization initiative. Can you explain why this proposal
is an improvement over the settlement fee that FEMA proposed last year?
How and on whom will this $12 fee be assessed, and does FEMA anticipate
that it will be passed on in its entirety to the prospective homebuyer?
Please provide the basis for the $104 million estimate in revenue
estimated for fiscal year 2001. What is FEMA's current estimate for the
modernization initiative, and what is the basis for that estimate? What
is FEMA doing to collaborate with other agencies including NASA and the
Corps of Engineers to maximize existing federal resources and reduce
the total price tag for this effort? How will mapping activities be
prioritized?
Answer. The new fee proposal differs from last year's Mortgage
Transaction Fee in three significant ways. First, this year's fee is a
true user fee to be imposed on an industry that depends on FEMA-
generated flood maps. Unlike last year's fee, the flood map license fee
would charge the flood hazard determination industry, which profits
from the commercial use of FEMA's flood maps. Second, lenders would not
need to establish an accounting mechanism to track the fee since the
new fee would likely be added to the existing fee charged to lenders by
map reading service providers. Third, the Map License Fee would apply
to use of the standard flood zone determination form regardless of
whether the mortgage is federally regulated. The Map License Fee will
be assessed on the commercial use of the maps pursuant to the National
Flood Insurance Act requirement for mandatory flood insurance
determinations. Non-federally regulated mortgage transactions often
involve completion of the standard flood zone determination form
because these loans are often sold on the secondary market, which
require flood zone determinations. Fourth, the Map License Fee proposal
would likely limit the fee collection activity to those providing map
reading services. Thus, the current proposal affects less than 300
firms, compared to the thousands of lenders that would have been
impacted by the Mortgage Transaction Fee proposal. This should greatly
reduce administrative expense overall, and make the collection process
administratively less complex than last year's proposal. The changes
reflected in the new proposal were made to address concerns raised by
lenders over the Mortgage Transaction Fee proposal.
In addition, map reading service providers realize special benefits
from the flood mapping program in that they use the maps for commercial
purposes but only pay for a portion of reproduction and distribution
costs, which amount to less than 2 percent of the cost of producing a
flood map. Map modernization will allow service providers to do their
jobs more precisely, consistently, and efficiently. It is uncertain
whether the fee would be passed on in its entirety to the prospective
homebuyer, but it seems likely that it would be, just as other expenses
in the mortgage process are passed on to borrowers. Property owners
significantly benefit from the use of accurate flood hazard data,
because these data are used to make decisions on protecting the
investment in a property.
The $104 million in revenue estimated for fiscal year 2001 is based
on Home Mortgage Disclosure Act data, available on the Federal
Financial Institutions Examination Council Web site. These data
indicate approximately 12.9 million loan originations in 1998 and 13.8
million in 1999. The percent change in housing starts for 1999, 2000
and 2001 was used to project the percent change in mortgage
originations. This projection results in 11.3 million mortgage
originations in 2001. This number was multiplied by an adjustment
factor of 0.77 to account for some non-federally regulated lenders
choosing not to require a flood hazard determination. Thus, the
estimate of loan originations generating a license fee would be
approximately 8.7 million. That number multiplied by $12 yields a
revenue estimate of approximately $104.4 million.
The budget finances the $134 million map modernization effort not
only with the map license fee, but also with $30 million in annual
appropriations from the Disaster Relief Fund. This way the taxpayers
will also support a mitigation program that benefits the general public
through decreased disaster relief spending.
Our current estimate for the modernization initiative is for $773
million over the period from 2001 to 2007. This figure derives from our
projection of mapping needs based on community surveys conducted
through July 1999. We project that 20,500 map panels (4,100
communities) need flood data updates; 60,800 map panels (12,150
communities) need routine map maintenance and digital conversion; and
13,700 map panels need to be created for approximately 2,700 unmapped
flood-prone communities.
FEMA is cooperating with NASA's Jet Propulsion Laboratory, the
National Imagery and Mapping Agency (NIMA) and the U.S. Army Corps of
Engineers' Topographical Engineering Center (TEC) to develop new
technologies for mapping the floodplains.
--FEMA is working closely with NASA and TEC in developing Light
Detection And Ranging (LIDAR) and InterFerometric Synthetic
Aperture Radar (IFSAR) technologies.
--With NIMA, FEMA is cooperating in the development of vegetation
penetrating IFSAR at two test sites.
--With U.S. Geological Survey (USGS), FEMA is jointly funding the
purchase of digital orthophotos for use with floodplain maps.
FEMA is developing the first working specifications for LIDAR,
IFSAR, and LIDAR/IFSAR data fusion. FEMA also maintains active
participation in the Federal Geographic Data Committee (FGDC) where
standards, processes, products, and technology are shared and
leveraged. One example is that we use the USGS orthophoto quadrangles
as our base maps.
Development of this type of topographic information and related
engineering analyses account for approximately 60 percent of flood
study costs. We expect these costs to decline as map modernization is
implemented. In the map modernization cost estimate, FEMA modeled a
declining cost base with a maximum decrease of 20 percent of the unit
cost for these study elements beginning in 2005. Also, we reduced the
long-term maintenance costs afforded by the remote-sensing technologies
and by converting the maps to a digital format.
To inventory and prioritize map update needs, we are updating the
Mapping Needs Update Support System (MNUSS) database to include a
ranking module. This ranking is based primarily on a benefit/cost
analysis, with the primary benefit being reduced flood losses for new
structures by designing and siting new buildings based on updated flood
data.
COUNTER-TERRORISM
Question. The Nunn-Lugar-Domenici program is a DOD program to train
first responders how to address a terrorist CB attack. From its
beginning, there was an understanding that this program would transfer
to another agency, and it appears it will shift to the Department of
Justice. Was there any consideration of FEMA taking over that program
given its established expertise in working with state/local government
to deliver training and planning on these topics? Should the program
shift to FEMA?
Answer. Since the inception of the NLD activity, there has been the
suggestion that FEMA would be the best agency to coordinate the overall
domestic preparedness program. Under its authorities, FEMA provides
grants to the States and eligible local jurisdictions and for the
delivery of first responder and emergency management training programs
to support their terrorism-related planning, training, and exercise
requirements. FEMA could assume the program under certain
circumstances, including adequate resources for both manpower and
funding a clearly defined leadership role.
Question. In a May 1999 report, GAO was critical of FEMA's exercise
program. GAO said that most of the FEMA-led exercises were tabletops
that did not involve actual movement or employment of consequence
management response elements. GAO also noted that interagency exercises
generally did not simulate crisis management and consequence management
concurrently, yet both would occur simultaneously in an incident. Have
FEMA and the other agencies made progress in these areas?
Answer. In responding to a terrorism event, FEMA will use the
structures of the Federal Response Plan to implement its lead agency
responsibilities for consequence management. The Plan is used in real-
world situations literally dozens of times a year, and many of the same
capabilities and resources will be used in a terrorism response. FEMA-
led exercises up to this point have emphasized the differences from the
typical natural disaster situation and focused on tailoring the
response to meet those needs.
FEMA has also participated in a number of interagency exercises
where both crisis and consequence management issues have been
addressed. With the upcoming TOPOFF exercise scheduled for May 2000,
FEMA and other agencies will have another opportunity to exercise
concurrent crisis and consequence management scenarios.
Question. FEMA's request represents an increase of $5.9 million and
19 new workyears, for anti-terrorism/weapons of mass destruction (WMD)
efforts. Please provide a detailed description for the record of how
these new resources would be used.
Answer. With the increasing effort of the Federal government to
help build and sustain a viable preparedness and response capability at
the local, State and Federal levels of government, a total of (31)
work-years are requested in fiscal year 2001 to support the Agency's
terrorism-related programs and activities. This includes an increase in
the level of effort of (19) work-years to fully support programs and
activities at Headquarters and in the ten Regional Offices around the
country. A list of the key activities to be accomplished with this
increased level of effort includes the following:
FEMA Headquarters
Coordinate the overall FEMA involvement in terrorism-related
preparedness and response activities in coordination with the
Department of Justice, other Federal departments and agencies, the
Congress, and the States.
Undertake terrorism-related planning and operational response
enhancements under the interagency Federal Response Plan framework.
Support special events planning and preparedness, including support
for the 2002 Winter Olympics in Salt Lake City, Utah.
Develop and implement the time-phased force package concept to
provide expedited logistical support for the deployment of critical
response resources.
Establish an initial group of six Urban Search and Rescue (US&R)
Task Forces with the capability to operate in contaminated
environments.
Update and maintain the Rapid Response Information System (RRIS).
Provide grants and guidance to the States to support terrorism-
related planning, training and exercises.
Deliver and revise courses in the Emergency Response to Terrorism
curriculum, develop terrorism scenarios for the Incident Simulations
Lab and provide instructor training to support the delivery of
terrorism-related courses for fire and emergency services.
Deliver and revise exercise-based courses, including the Integrated
Emergency Management Course on the Consequences of Terrorism.
Support terrorism-related exercises, including a major consequence
management exercise, conduct of tabletop exercises, and support for
other Federal terrorism exercises.
Provide support for the development of terrorism-related materials
to support Congressional and legislative affairs activity.
Conduct emergency public information planning activities to keep
the public informed during a terrorism incident.
Develop and disseminate terrorism-related policy regarding
terrorism-related programs and activities.
FEMA Regional Offices
Support terrorism-related planning, training and exercise
activities in coordination with other regional-level offices of Federal
departments and agencies.
Administer and manage the terrorism consequence management grant
assistance program to the States in support of terrorism-related
planning, training, and exercise activities.
Work with the States to help ensure that terrorism-related plans
and capabilities are developed and available for response.
Serve as the primary FEMA conduit to the States to keep them
informed of Federal initiatives and activities.
Support continuing implementation of the Nunn-Lugar-Domenici
Domestic Preparedness Program activities.
Maintain an interagency forum to support Federal coordination of
terrorism-related preparedness activities, in conjunction with other
departments and agencies and the States.
FIREFIGHTER GRANT PROGRAM
Question. FEMA is requesting $25 million for a new grant program
for firefighter equipment in needy communities. What is the rationale
for this program, and how does it relate Forest Service's fire
assistance program that provides equipment to local fire departments?
Was this program recommended by the Blue Ribbon Panel report of October
1998? Are there higher priority activities recommended by the Panel
that FEMA has not implemented or requested funding for?
Answer. The rationale for the proposed $25M Firefighter Health and
Safety Grant Program is to enhance firefighter health and safety
because fire fighting continues to be one of the nation's most
dangerous professions. In 1999 alone, more than 100 firefighters lost
their lives while on duty. In addition, approximately 90,000
firefighters are injured on the job each year. As fire departments are
being called on to provide an ever expanding and more complex array of
skills such as services related to hazardous materials, search and
rescue, emergency medical, and counter terrorism, local governments and
fire departments are encountering severe budget challenges. A federal
firefighter health and safety grant program will allow financially
challenged jurisdictions and fire departments to address issues that
could contribute to a safer and more efficient working environment for
the firefighter and safer communities for the American people.
We understand that the Forest Service Volunteer Fire Assistance
(VFA) Program is available only to small rural communities, is focused
on operational firefighting and includes a 50/50 matching fund
requirement. The proposed FEMA program targets firefighter health and
safety and is available to needy departments in communities of all
sizes. In addition, the proposed program has a broad focus and is
designed to include training, staffing, equipment and wellness
programs. FEMA's United States Fire Administration will administer the
program at the national level and grants will be made directly to the
needy departments. The VFA program is managed through the State
Foresters, and the criteria and administration may vary by State.
Recommendation # 31 of the Blue Ribbon Panel of October 1998 report
calls for ``. . . the creation of a federal grant/local matching
program to enable fire/EMS departments to acquire training resources,
new technology, specialized equipment and safety resources.'' Since the
fire problem in the United States is multifaceted, we are unable to
determine if there are higher priority activities that should be
addressed first. However, three major fire service organizations that
were represented on the Blue Ribbon Panel have consulted on the
development of the proposed grant program for 2001. These groups are
the International Association of Fire Chiefs, the International
Association of Fire Fighters, and the National Volunteer Fire Council.
DISASTER RELIEF FUND ESTIMATES
Question. Last year FEMA did not accurately identify existing
funding needs for disaster relief, and it came to the Subcommittee's
attention in May that the agency had underestimated projected spend-out
rates resulting in a shortfall of almost $1 billion. The need for this
supplemental funding was due in part to a problem with the budget
methodology that FEMA was using, which did not take into account the
fact that FEMA had been obligating disaster dollars at a much faster
rate than it had been historically. What steps has FEMA taken to revise
its budget methodology, and how is FEMA monitoring the needs associated
with the Disaster Relief Fund to better ensure that it is using
appropriate rates for estimating?
Answer. Around the 15th of each month, FEMA submits a report to the
appropriations subcommittees on the status of the Disaster Relief Fund
(DRF) as of the end of the previous month. This report shows
availability, actual obligations, unmet requirements for disasters that
have occurred to date as well as a projection for disasters in the
remaining months, an estimate for obligations during the remainder of
the fiscal year, and estimates for requirements and obligations in the
next fiscal year. Prior to last April's report (submitted on May 20),
FEMA used one consolidated formula to predict obligations for the
remainder of the fiscal year. This formula, based on 5-year averages
with adjustments for Northridge, consisted of the following:
--58 percent of total current year requirements, including the
projection for disasters in remaining months, adjusted for
obligations to date;
--52 percent of total requirements as of the beginning of the fiscal
year from all prior year disasters, adjusted for obligations to
date and Northridge;
--estimated Northridge obligations for the remainder of the fiscal
year; and
--unobligated funds budgeted for disaster support.
Starting with the April 30 report, FEMA decided to break out
obligation estimates for the remainder of fiscal year 1999 into the
various components in order to better reflect the activities of the
disaster close out teams who were concentrating on those disasters that
occurred prior to 1998. When this was done, it became very obvious that
the amount forecast for 1999 obligations from all prior year disasters,
particularly 1998 declarations, was inadequate and that the shortfall
in projected obligations had been masked by using a single formula.
FEMA then refined the methodology used for estimating obligations. In
this April 30 report, the amount of obligations forecast for the
remainder of the year for prior year disaster declarations was changed
as follows:
--for 1989-1997, 95 percent of total requirements as of the beginning
of the fiscal year, adjusted for obligations to date and
Northridge; and
--for 1998, 65 percent of the total requirements as of the beginning
of the fiscal year, adjusted for obligations to date. During
the remainder of fiscal year 1999, obligations from the 1998
disaster declarations continued to increase at an unprecedented
rate. Each month FEMA continued to increase the percentage for
obligations from 1998 declarations until the percentage used in
the August 31 report reached 86 percent.
For current year disasters, FEMA developed separate percentages for
disasters that had occurred and estimates for disasters during the
remainder of the year. These percentages were based on 1997 and 1998
actual obligations for declarations in each month versus total
projected costs for those disasters. As each month of the fiscal year
goes by, these percentages either remain the same or decrease. For the
April 30 report, these percentages were as follows:
--70 percent for disasters that had occurred to date; and
--40 percent for estimated requirements for the remainder of the
fiscal year.
For the fiscal year 2000 reports, FEMA added 1999 actual data into
percentages used to project obligations from current year disasters on
a monthly basis. In addition, FEMA revised percentages used for prior
year data in the fiscal year 2001 section of the monthly report. The
percentage used for obligations forecast from 2001 declarations
remained at 58 percent of requirements in the first year of a disaster.
FEMA continues to monitor its estimates for obligations for
reasonableness. However, forecasting disasters and projecting when
obligations from these disasters will occur remain inexact sciences, at
best. One very real variable in the estimates continues to be the lack
of a discernible pattern when disasters occur. FEMA projects remaining
requirements for disasters based on the remaining weeks in the fiscal
year pro rated against the five year average obligations for disasters.
For both fiscal year 1998 and 1999, the bulk of requirements from
disaster declarations did not occur until September. In other years,
the big disaster or disasters have occurred earlier in the year (most
notably the Northridge earthquake in January or even the Loma Prieta
earthquake in October). Also, projections in the early stages of large
disasters tend to vary, making it more difficult to forecast
obligations. Nevertheless, FEMA continues to explore ways to improve
its ability to forecast requirements and obligations from disasters.
ACCURACY OF DISASTER COST DATA
Question. GAO has found potential problems in the obligation data
provided to FEMA's Regional Offices for use in preparing the Quarterly
Disaster Financial Status Report. This report represents the ongoing
record of the financial status of each major disaster by program. The
quarterly reports get compiled into a national database which forms the
basis for FEMA's estimate of total federal remaining costs for each
open disaster, as well as FEMA's budget submissions and other
congressional reports. Obligation data errors cause inaccurate
calculations in a disaster's total estimated federal costs and the
remaining costs. What steps has FEMA taken to identify the source(s) of
data errors, and why did FEMA fail to correct these data errors when it
first became aware of them? What actions has FEMA taken to ensure that
future Disaster Financial Status Reports are correct? To what extent
have errors in the Disaster Financial Status Reports impacted FEMA's
budget submissions?
Answer. FEMA is taking a number of actions to ensure that
obligation data, and the resulting projected and remaining cost data,
are accurate. One of the first steps was to identify exactly why the
obligations data used for the Disaster Financial Status Report (DFSR)
did not always agree with data from other automated and manual systems.
The cause of some of the reported differences was due to comparing data
generated at different times (timing differences). The cause of the
other discrepancies, however, was much more difficult to determine.
Identifying which data was inaccurate (i.e., the data extracted from
the Integrated Financial Management System (IFMIS) for the DFSR, or the
data the regions use from various systems) was a time consuming and
labor intensive task that required looking at transactions and records
for over 500 major disaster declarations, 280 fire suppression
agreements, and 60 emergencies totaling almost $28 billion over 11
years and spread across nearly 200 object codes and 350 organization
codes. We recently isolated the problem and began an extensive review
of the methodology used to extract the obligation data from IFMIS. A
new method was developed and is being rigorously tested. So far, it
appears the new methodology is generating accurate obligation data.
Last summer FEMA began intensive work on a new system to collect
projected costs. Recognizing the limitations of the electronic
spreadsheets used for the current DFSR, FEMA began developing a new
system using the Agency's standard Microsoft Access Database software.
The new system will give regional personnel more time to review and
analyze the validity of the data by freeing them from much of the data
entry work, implement certain business rules to ensure the validity of
data when it is entered rather than relying on subsequent reviewers to
identify problems, and improve the timeliness of the data so that
errors are more apparent.
As the new system is introduced to the regional offices, Office of
Financial Management personnel from the Disaster Closeout Teams and the
Disaster Finance Center will work side-by-side with regional personnel
to reconcile any differences in the obligation data extracted from
IFMIS with the various records maintained in the region. Any needed
changes will be made to IFMIS or the regional systems. This process
started in mid-March at FEMA's Philadelphia Regional Office. The
differences that were identified were researched and, for the most
part, will require making ``adjusting'' entries into the regional
records. One discrepancy, appeared to be the result of a transaction
being entered into the regional records, but not into IFMIS--a problem
associated with managing the paper flow rather than the new methodology
used to extract the data from IFMIS.
The introduction of the new DFSR will continue region by region and
include centralized training at workshops or conferences to familiarize
the largest possible number of personnel and further reinforce the
importance of accurate data. We plan to visit FEMA's New York and
Denton Regional Offices starting in April. After the new DFSR is
fielded to all regions, the Disaster Closeout Teams will continue to
work closely with the regions and the Disaster Finance Center to
identify and resolve any subsequent discrepancies in obligations.
The extract report of obligations, provided to the regions on a
quarterly basis, is just one of the tools that the regions use to
develop the DFSR. Even though FEMA is still in the process of
quantifying the effect of any identified problems in the extract
report, the magnitude of errors found to date indicates that any effect
on projections of remaining costs and the budget submission is about
one percent.
PROBLEMS WITH FEMA'S INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEM
Question. FEMA's Office of Inspector General and the GAO reported
on several occasions that FEMA's Integrated Financial Management
Information System (IFMIS) lacks the ability to generate the reports
necessary to properly manage the Disaster Relief Fund. The preliminary
results of an ongoing GAO audit indicate that this shortcoming has
contributed to the erroneous obligation data previously mentioned.
Specifically, the auditors noted that because of this shortcoming, FEMA
must extract and manually manipulate the IFMIS obligation data that the
regional offices ultimately use to develop total estimated federal
costs for individual disasters. What is FEMA doing to correct this
shortcoming in the system's reporting capabilities?
Answer. FEMA acquired the Integrated Financial Management
Information System (IFMIS) from the Digital Systems Group in fiscal
year 1994, and began implementation in fiscal year 1995. It was
selected from the mandated group of commercially available core
financial management systems that had been approved by Treasury and the
GSA for acquisition by Federal agencies. This approval was granted on
the basis of demonstrated satisfaction of government requirements,
including reporting requirements. IFMIS has been on the approved list
every year since then, and has been approved by the JFMIP under its new
process.
For the last six years, FEMA has received unqualified audit
opinions on its annual financial statements of which the last two were
consolidated Agency-wide statements, which include the Disaster Relief
Fund. For the last four years, those statements have been produced
based on reports from IFMIS. This suggests, at least, that the data in
the system is reliable, even if the ``canned'' reports do not readily
support different management approaches. While the statements on
internal control do cite problems with the lack of reconciliations and
oversight, the basic reports are not questioned.
IFMIS is a classical funds control and accounts payable system.
This is largely acceptable because FEMA manages each appropriation that
it controls as if it were a single fiscal year appropriation. That
means that we issue new allocations covering only the current budget
fiscal year, regardless of whether it is a single or multi-year
appropriation. Therefore, the management of all funds is restricted to
the current year, not a multi-year effort based on some other element
of an accounting coding structure. This is fine for funds control
purposes, but it does complicate our ability to report on a
consolidated basis over a period of years.
When IFMIS was implemented for the Disaster Relief Fund (DRF), in
April of 1996, data was converted from the predecessor systems at
current unliquidated obligation balances. This is what was required to
be able to assess available allocations, obligated balances and
evaluate the propriety of additional payments, which was adequate for
most of FEMA's appropriations. Even at that, several million
transactions had to be converted to IFMIS. However, even this level of
detail was insufficient to provide historical information required for
reporting purposes from the DRF.
Over the years, we have refined our approach to capturing data to
support the necessary Disaster Relief Fund reporting requirements. We
have built history records in IFMIS to support the balances that were
converted from the predecessor systems. We have had several task forces
that attempted to reconcile all the varying sources of data used by
Headquarters, the Regions, and others. However, we have not always
modified our approaches to capturing data and reporting it for the
DFSR. We feel that the ``new'' method for extraction of data mentioned
above for the DFSR will satisfy the current requirements.
Data will continue to be extracted from the production IFMIS
database in order to put it into an environment that allows for ``what-
if analysis'' and projections for events that do not yet constitute
accounting transactions. These activities are not appropriate for an
official accounting environment. However, it is expected that the
manual manipulation previously required to move obligations from one
column to another for the DFSR will no longer be required. It occurred
previously due to shifting definitions of object classes or the
addition of new object classes that did not fit the previous columnar
structure of the DFSR.
PROBLEMS WITH DATA TIMELINESS IN DRF
Question. Because FEMA information systems cannot provide data on
the total estimated federal costs of each disaster, the agency must
rely on its Regional Offices to update the Quarterly Disaster Financial
Status Report with those estimates. Also, because FEMA information
systems cannot provide data on obligations to date by program for each
disaster, the data must be extracted and manipulated before it is
forwarded to the Regional Offices. We understand that, as a result of
the time needed to extract, manipulate, and ship that data to and from
the Regions, the Disaster Financial Status Reports may contain
obligation data that can be, at times, three months out of date. What
actions can FEMA take to reduce this delay in order to obtain and
report real time data?
Answer. The FEMA Chief Financial Officer (CFO) established the
current Disaster Financial Status Report (DFSR) reporting process in
December 1995. The quarterly submission dates were timed to provide a
``snapshot'' of the status of disaster funding estimates (projections)
and remaining costs (projections less obligations ``as of'' the report
period) at critical points in FEMA's budget development (e.g.,
submissions to OMB and Congress and for appropriations hearings). In
order to reduce a reporting burden on the regions, and to allow for
more in-depth analysis, the CFO determined that quarterly reports were
sufficient for budget forecasting. However, the projections are updated
with estimates for new declarations that occur between the quarterly
reporting periods.
The regional disaster program officials, Federal Coordinating
Officers, and Regional Directors are ultimately responsible for
estimating what a given disaster will cost over the life of that
disaster. No agency information system could automatically calculate
those costs without field office input, and the input must come from
the officials who manage the disaster. The regions maintain an ongoing
record of their projection data using an Excel Spreadsheet, which they
forward to Headquarters for compilation into a national database (i.e.,
DFSR) for reporting purposes. The obligations data sent from
Headquarters is but one tool that the regions use to calculate their
projections and remaining costs. The regions primarily use program data
available to them to develop their cost estimates for the major
disaster program activities, i.e., Public Assistance, Individual
Assistance, Individual and Family Grant, and Hazard Mitigation
programs. The CFO relies on the regional program expertise to develop
the cost estimates, and the DFSR process provides the reporting
mechanism for the regions to compile disaster estimates for all program
and administrative costs.
Last summer, the CFO's office began an intensive effort to correct
identified shortcomings in the current DFSR reporting process. The
process is time-consuming and susceptible to human error. The agency
has developed a user-friendly version of the DFSR using Microsoft
Access. This new system will rely on a shared database extracted from
IFMIS and maintained in a central location. The regions will be given
password-protected access, based on need, to make modifications to the
central database. The new system will allow the regions to utilize the
tool at any given time, and will facilitate the reconciliation of any
data discrepancies between the regions and headquarters. With the
simplicity of the new system and improved analytical tools, the Agency
plans to maintain the DFSR on a monthly basis, which will lead to a
more frequent updating and analysis of disaster cost estimates. The
Agency plans to field the new system, in a pilot status, with selected
regions beginning in May 2000.
DRF SET-ASIDES PROPOSED
Question. FEMA proposes two new set-asides within the disaster
relief fund: $30 million for flood map modernization and $50 million
for repetitive loss property buyouts following disasters. Please
describe the rationale and the authorization for these set-asides. Will
the repetitive loss buyouts be limited to flood-insured properties?
Answer. Under FEMA's current Stafford Act authority, DRF money may
be used only to generate flood recovery maps to support hazard
mitigation activities following a flood. This includes collecting field
data, conducting engineering analyses, and preparing flood maps for
community use; it does not include updating the Flood Insurance Rate
Maps (FIRMs).
We have asked that our authority under the Stafford Act be
broadened to allow DRF monies to be used to develop up-to-date,
modernized FIRMs, fully compliant with National Flood Insurance Program
requirements, for areas affected by Presidentially declared disasters.
Developing flood recovery data to support hazard mitigation activities
within the present authority has a supplementary benefit in that these
flood recovery data comprise a significant portion of the effort
necessary to update and modernize the FIRMs. The requested authority
would allow the remainder of the work also to be completed under the
DRF.
In the immediate aftermath of a flood, field data (e.g., high water
marks, physical conditions) would be collected and engineering analyses
prepared. These would be provided to the community so that rebuilding
activities, and also future new development, could be based on the most
accurate, up-to-date data. Further, it is imperative that higher flood
elevations than those adopted by the community be formally acknowledged
so that they can be incorporated into existing floodplain regulations.
The information is also used to identify potential hazard mitigation
projects and to conduct benefit/cost analyses for mitigation projects.
DRF funding, in addition to other funding sources, is appropriate
because:
1. The flood recovery scenario provides a unique opportunity,
outside the normal flood map update and prioritization process, to
gather data that exist for only a short time after the floodwaters
subside.
2. In the immediate recovery environment, those that have suffered
property losses are anxious to rebuild their homes as quickly as
possible. Thus, there is a limited window of opportunity to gather the
data, provide these property owners with updated flood data and
positively guide their rebuilding design decisions.
3. Existing funds cannot be reprogrammed quickly enough to respond
to post-disaster needs. Planned contracts have already been funded, and
the DRF will provide needed flexibility to develop data for disaster-
affected areas.
Using DRF funding also makes funding of flood hazard data
collection and analysis more equitable. Through DRF funding, all
taxpayers will participate in the costs, which is appropriate because
all taxpayers will benefit through the long-term reduction of disaster
costs.
The $50 million authorization to mitigate repetitive losses would
be directed at National Flood Insurance Program (NFIP) insured
properties following disaster declarations. FEMA has identified 10,000
repetitive loss buildings that have the greatest risk of flooding and
which account for about $65 million in NFIP claims annually. These
properties have either four or more losses or have two to three losses
that when added together exceed the building's value.
The $50 million will fund the acquisition, relocation, elevation,
of approximately 1,160 of the 10,000 repetitive loss buildings that
FEMA has identified as having the greatest risk.
MITIGATION ISSUES
Question. Last August, GAO issued a report on opportunities for
FEMA to improve cost-effectiveness determinations under the Hazard
Mitigation Grant program. FEMA agreed with the report's recommendations
and noted that they complement activities already under way at the
agency. What specific actions have been taken to implement each of the
recommendations in the GAO report? What is the status of the
independent study the Subcommittee called for to assess the future
savings resulting from the various types of mitigation activities?
Answer. The GAO report made three recommendations.
First, that ``the Director of FEMA should establish an analytical
basis supporting the cost-effectiveness of acquiring substantially
damaged properties in the floodplain''. This is related to the Agency's
policy of exempting from benefit-cost analysis structures that meet
certain criteria. In September 1999, FEMA completed a study of
approximately 2,000 such structures nationwide, about ten percent of
the total number of acquisitions the Agency has funded. Analysis of
structures included in the study produced a benefit-cost ratio of 2.21.
This means that, for the sample, an expenditure of one dollar is
expected to produce $2.21 in savings. The study found that some
individual properties were not cost beneficial, but the projects in the
aggregate were. Since the study was completed, FEMA has also issued a
memorandum asking regional offices to provide data for all projects of
50 or more structures that meet the exemption criteria so that more
studies can be done.
Second, the GAO recommended that FEMA conduct periodic reviews of
projects after they have been implemented to determine if they are
cost-effective. In response to this recommendation, FEMA has begun
studies of projects funded in three categories of projects that are now
exempt from benefit-cost analysis: those funded through the ``5 percent
Initiative'' and the ``Tornado'' and ``Planning'' exemptions. One study
includes the first two categories. It will be completed by the end of
August 2000. The results will be provided to the GAO, Congressional
oversight committees and the FEMA Inspector General.
For the ``Planning'' projects exemption, the FEMA Office of the
Inspector General and the Mitigation Directorate are engaged in a joint
study that will evaluate the overall effectiveness of local mitigation
planning initiatives funded by the Hazard Mitigation Grant Program
(HMGP) and Flood Mitigation Assistance (FMA) program. This study will
assess the quality of mitigation projects completed in the context of
comprehensive mitigation plans, and determine how planning can
contribute to the efficiency of disaster recovery operations. We expect
this study to be completed by December, 2000.
Third, the GAO recommended that FEMA should ``provide the best
available data for analyzing the cost-effectiveness of proposed flood
hazard mitigation projects'' by conducting post-disaster hazard
identification and by making the Agency's data on past insurance claims
more readily available to analysts. As noted in FEMA's initial response
to the recommendations (in the ``60-day Letter''), the Agency has two
initiatives underway in the area of hazard identification, the Map
Modernization Program and the Cooperating Technical Communities (CTC).
Both of these are ongoing, long-term projects. In the area of claims
data, the Agency made the Federal Insurance Administration's claims
data available to FEMA employees on a web site in summer, 1999. The
Headquarters Mitigation Directorate issued a memorandum to all its
regional offices informing them about the web site. This was done in
February, 2000.
SUBSTANTIAL DAMAGE RULE
Question. The IG reported in a September 1999 report that NFIP
communities were not effectively identifying potentially substantially
damaged structures. Only 106 structures were declared in a sample of
603 structures identified as substantially damaged using insurance
claims data. As a result, mitigation efforts (e.g., the requirement to
meet codes and standards) were not taking place. What is FEMA doing to
help NFIP communities do a better job identifying substantially damaged
properties and enforce the substantial damage requirement?
Answer. Along with providing ongoing technical assistance and
monitoring NFIP community compliance both in the pre- and post-flood
disaster environment, we have a variety of tools to improve enforcement
of the 50 percent rule. The role of the community is critical to the
enforcement of the 50 percent rule because the authority to regulate
floodplain development rests with the local government. Claims data is
just one tool that we offer communities to assist them in identifying
possible substantially damaged buildings. There may be legitimate
differences between what the communities determines as the cost of
repairs and market value compared to claims data values.
Post-Disaster Guidance
FEMA's regional staff undertake a multi-faceted, multi-phased
response to provide technical assistance to NFIP communities to ensure
they have the necessary tools and guidance to administer their
floodplain management ordinance and to ensure that citizens with flood-
damaged buildings are protected in the future. This assistance
includes:
--Initial telephone contacts with local officials in the immediate
disaster response period.
--One-on-one meetings and/or workshops with local officials and
workshops to provide detailed guidance and training on the
substantial damage requirement.
--Opening Disaster Recovery Centers to provide assistance to the
general public on retrofitting techniques and on the available
mitigation programs.
--Locating Mitigation staff in the Disaster Field Office to provide
ongoing technical assistance throughout much of the recovery
period.
--Extensive public outreach on our mitigation programs and on
mitigation success stories to the general public through press
releases, FEMA's web site, and through special events including
those sponsored by the State or communities.
We have specialized tools that we provide to local officials and
assist them in their use during the recovery period to help them
identify substantially damaged buildings:
--Training on the use of the Residential Substantial Damage
Estimator, a computerized program to help communities estimate
building value and damages.
--Preliminary Damage Assessment forms, completed by insurance
adjusters during the initial adjustment process provide an
estimate of building value and damages on individual buildings.
We will be implementing procedures this spring to provide this
information more efficiently to local officials.
--Implementing this spring a ``Quick Claims'' process that will
capture initial contacts from the insured about damages. While
the information will not be as detailed as the Preliminary
Damage Assessment form, it will provide preliminary information
on damages earlier. This information will help communities
identify areas that have been damaged.
Financial resources provide opportunities to communities to break
the cycle of damage and repair:
--The Hazard Mitigation Grant Program (HMGP) available following a
Presidentially declared disaster.
--The Flood Mitigation Assistance program which provides pre-disaster
mitigation assistance.
--Since June 1997, the $15,000 Increased Cost of Compliance (ICC)
coverage for insured buildings that have been determined by the
community to be substantially damaged. This past year we have
been assessing this coverage and making appropriate
adjustments, including increasing the amount of the coverage to
$20,000 effective May 1, 2000. We will be implementing several
activities to improve training and education on ICC, outreach
and marketing of ICC, especially to the policyholder, local
officials, and the adjuster, and operational processes to
ensure ICC is integrated into the disaster operation and used
effectively to complement the HMGP.
Pre-Disaster Guidance
FEMA conducts extensive training on the NFIP floodplain management
requirements, including the substantial damage requirement.
--NFIP week long course where over 150 local officials are trained
each year.
--Numerous workshops for hundreds of local officials throughout the
country.
--Recently deployed Independent Study course, which includes detailed
guidance on making substantial damage determinations.
FEMA has published extensive guidance on the substantial damage
requirement and on retrofitting flood damaged property including:
``Answers to Questions about Substantially Damaged Buildings'' and a
new ``Homeowners Guide to Retrofitting''.
FEMA and State Floodplain Management Coordinators also conduct
hundreds of Community Assistance Visits (CAV) each year, which is a
scheduled visit with individual communities to assess their floodplain
management program and to provide guidance and assistance in
implementing effective mitigation measures. A CAV is generally
conducted in communities that experienced a flood disaster several
months after the event to assess the community's effectiveness in
implementing its floodplain management program in response to the
disaster and provide technical assistance if appropriate.
RULEMAKING IMPROVEMENTS NEEDED
Question. In reviewing the public buildings insurance rule, GAO
found some significant shortcomings in FEMA's internal rulemaking
processes. For example, FEMA hadn't designated a regulatory policy
officer and its procedures governing the formulation of proposed
rulemaking hadn't been updated in a decade. What is FEMA doing to
address these internal problems? Please describe for the record how
FEMA will respond to each of GAO's recommendations in the report
``Issues Related to the Development of FEMA's Insurance Requirements.''
Answer. The following are GAO's recommendations and FEMA's
responses:
GAO Recommendation: The Director should designate a Regulatory
Policy Officer as required under Executive Order 12866 and charge that
individual with responsibility for being involved at each stage of the
rulemaking process
Response: Director Witt appointed the General Counsel as the
Regulatory Policy Officer for the Agency on February 29, 2000.
GAO Recommendation: FEMA should update its external regulations and
internal written guidance and manuals governing the rulemaking process
to reflect the current requirements contained in federal laws,
executive orders and OMB guidance.
Response: FEMA's Office of General Counsel has developed updated
regulatory guidance. This guidance is in draft form and is being
circulated within FEMA for comment.
GAO Recommendation: The Director should monitor FEMA's compliance
with relevant federal laws, executive orders and OMB guidance governing
the rulemaking process.
Response: As a result of constructive dialogue with GAO and OMB,
our Regulatory Policy Officer is working to ensure compliance with the
relevant federal laws, executive orders and OMB guidance governing the
rulemaking process.
NEW HEADQUARTERS LOCATION
Question. FEMA's budget includes almost $24 million to begin the
process of relocating. Please provide a complete break-out of the
budget request, as well as the fiscal year 2002 costs we may
anticipate.
Answer. The following shows the breakdown of all the relocation
costs (in thousands of dollars). All estimated costs are based upon the
top range of square footage allowed, i.e., 339,247 rentable square
feet. FEMA has worked closely with the General Services Administration
(GSA) in developing these estimates:
Move costs.................................................... $1,414
Office space (telecom) @ 6.94 per square foot (sq.ft.)........ 1,963
Customization allowance above Tier 3 (build out).............. 1,130
ADP/Special @ $17.45 per sq. ft. for 55,150 sq. ft............ 962
National Interagency Emergency Operations Center (NIEOC)...... 15,048
Sensitive Compartmented Information Facility (SCIF) area @
$120 per sq. ft. for 15,000 sq. ft........................ 1,800
Level IV Security Requirements................................ 1,500
Systems furniture (including installation).................... 5,566
GSA Administrative Fees (fiscal year 2002).................... 3,077
--------------------------------------------------------------
____________________________________________________
Total Relocation Project Costs.......................... 32,460
==============================================================
____________________________________________________
Basic security increase (Federal Protective Service) @ .16 per
sq. ft. ($54,280 for new space less $40,367 for current
space).................................................... 4
Projected rent increase (projected new rent costs, $14,587,621
less fiscal year 2000 estimate of $8,290,000 = $6,298,000) 6,298
--------------------------------------------------------------
____________________________________________________
Net Cost of Move........................................ 38,772
Of the total costs listed above, the 2001 budget submission
includes the following:
[In thousands of dollars]
Office Space (Telecom)........................................ 1,963
Systems Furniture/Installation................................ 5,566
Customization Allowance....................................... 1,130
ADP/Special Space............................................. 962
NIEOC......................................................... 10,000
NIEOC Furniture............................................... 707
SCIF Area..................................................... 1,800
Level IV Security Requirements (initial)...................... 1,500
--------------------------------------------------------------
____________________________________________________
Total................................................... 23,628
Estimated costs for fiscal year 2002 include the following:
[In thousands of dollars]
Move Costs........................................................ 1,414
NIEOC Equipment................................................... 4,341
GSA Administrative Fee for Project................................ 3,077
______
Total cost increases other than rent and security \1\....... 8,832
\1\ Projected rent and security cost increases for the new facility
total $6,312,000. If FEMA remains at its current location, lease
extension will undoubtedly be at a much higher rate than the current
lease (GSA reports that sometimes the rent doubles). GSA suggested that
FEMA estimate the lease extension at $43.00 per sq. ft. for fiscal year
2002. Full year lease extension estimated costs could be as high as
$2,622,308 over current budget. All estimated costs are subject to the
GSA procurement process, which could range from best case to worse case
depending upon building procured and when the build out is completed.
Please note that the fiscal year 2002 costs are preliminary and may
change prior to submission of the fiscal year 2002 budget.
SUBCOMMITTEE RECESS
Senator Bond. I will now recess the subcommittee meeting.
Thank you.
[Whereupon, at 10:53 a.m., Wednesday, March 1, 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 2001
----------
THURSDAY, MARCH 23, 2000
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:39 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Stevens, Mikulski, Leahy, and
Lautenberg.
ENVIRONMENTAL PROTECTION AGENCY
STATEMENT OF HON. CAROL BROWNER, ADMINISTRATOR
ACCOMPANIED BY:
W. MICHAEL McCABE, ACTING DEPUTY ADMINISTRATOR
MICHAEL W.S. RYAN, ACTING CHIEF FINANCIAL OFFICER
OPENING STATEMENT OF SENATOR CHRISTOPHER S. BOND
Senator Bond. Good morning. The Subcommittee on VA-HUD and
Independent Agencies will come to order.
This morning we take testimony from the Environmental
Protection Agency on the administration's fiscal year 2001
budget request, and it is a pleasure to welcome EPA
Administrator Carol Browner, Acting Deputy Administrator
Michael McCabe, Acting Chief Financial Officer Mike Ryan, and
the rest of the EPA team.
We have a great number of issues to discuss this morning,
many of which focus on our concern that the EPA is not
attending to core management responsibilities.
There are votes at 11 o'clock. I have a feeling that we may
not finish up by then, so be prepared to stay with us and we
will try to get through as many of them as we can.
Early this month the Inspector General was unable to give
EPA a clean opinion of its fiscal 1999 financial statements.
According to the Inspector General, EPA failed to provide
complete, accurate and reliable information by the agreed upon
dates. Moreover, none of the recommendations made by the IG 1
year ago to improve financial management at EPA have been fully
addressed.
What does that actually mean? It means the government
auditors could not even issue a judgment on the condition of
EPA's books, as in how much money was spent, for what purpose,
who spent it, what did it do.
I am very much concerned about the Agency's sloppy
financial management practices and whether they exemplify a
systemic problem where Agency leadership does not seem to rank
sound management procedures very high. EPA's unwillingness to
make a priority of critical management challenges, many of
which have been cited by the Inspector General and GAO for
years, such as protecting EPA's computer system from hackers,
effective oversight of billions of dollars in grant funds, and
improving the reliability of data information systems, raise
significant questions about the Agency's accountability to the
taxpayer and its stewardship of resources.
But equally disturbing is the finding of GAO that, contrary
to the well-publicized statements by this administration, that
reinvention has not cut the paperwork burden by more than 26
million hours per year, that in fact not only have the public
claims been vastly overstated, but even using EPA's own flawed
data and overstated savings that the actual burden imposed on
the public has risen at least 10 million hours, from 109
million hours of paperwork burden in fiscal year 1995 to a
total of 119 million hours in fiscal year 1998.
The true increase we now know must be even larger. One
example tells the tale. The goal of the Office of Water
regarding pollution discharge monitoring, the goal of reducing
4.7 million hours of paperwork burden, has over time
transformed itself into an accomplishment, even though GAO now
tells us that EPA officials admit the actual results were
significantly less reduction, that in fact they could not even
say how much, if at all, the burden was reduced.
Only in Washington could we have an agency confuse a goal
with an accomplishment. It is like saying that the goal of my
basketball team was to win the Final Four. Unfortunately, they
got knocked out in the first round, but under this kind of
accounting we would come back and say that next year, that they
achieved their goal of winning the Final Four because that was
the goal. It does not make sense to me or people in the real
world.
Frankly, Madam Administrator, when just this one example is
25 percent of the claimed savings, the whole reinvention effort
is beginning to look like an effort to reinvent the facts. We
cannot accept that.
We cannot accept the fact that the EPA has been laggard in
addressing computer security concerns raised by the IG and the
GAO several years ago, leaving vulnerable to hackers
confidential business information and putting at risk EPA's
core financial systems. GAO in a recent review found EPA's
information security program completely ineffective, with
mission-related and financial programs riddled with security
weaknesses. The GAO found many instances of hackers penetrating
EPA's computer files without EPA even knowing about it.
Correcting this problem should not be rocket science. It
takes some high level attention, a long-term commitment, and
the use of resources now available. I understand that steps are
being taken to implement proper firewalls and I congratulate
you for that.
Ms. Browner. They are installed. They are in.
Senator Bond. That is good to know. It seems to have come
about, however, only after the media attention initiated
recently.
In addition, while EPA seems to be responding to the
immediate crisis, there does not appear yet to be any plan for
addressing and making a priority of long-term computer security
challenges, such as putting in place an effective testing and
monitoring program.
With respect to the issue of environmental data information
systems generally, for the third year the Inspector General has
listed this issue as a key management challenge. EPA's data
systems have been criticized as providing data that is often
inaccurate, inconsistent, and unreliable. While EPA did
establish an Office of Environmental Information, EPA still
does not have an action plan that would address specifically
how they will deal with the myriad of information management
issues that need attention. We were promised that plan 2 years
ago.
An overarching vision of how we address the myriad of
information management issues is critical. It seems very little
has been accomplished in the last year other than reacting to
the crises, as we saw when EPA shut down its web site a few
weeks ago owing to the computer security fiasco.
Moving on to the issue of EPA staffing, as you know, the
fact that EPA's staff has been growing while States have been
picking up more and more of the responsibility for direct
implementation of environmental requirements and while the rest
of the Federal Government is downsizing led us last year to
include in the appropriations bill a limitation on total EPA
staffing and to request a GAO review.
GAO's preliminary findings, which will be included in
testimony for the record today, are troubling. GAO found that
EPA has no work force plan strategy to determine the number and
types of people needed to carry out strategic goals and
objectives. GAO says that EPA has not assessed changes in its
work load resulting from factors such as productivity
improvements and delegation of responsibility to States, and
GAO further says that EPA has not made progress toward its
stated goal of developing a process for continually monitoring
and assessing its work force in light of changes in its
internal and external environment.
GAO also tells us that we do not have reliable information
as to what EPA's 18,000 employees are doing, raising the
accountability question once again.
Now, EPA has toyed with this issue with attempts to gain a
better understanding of the work force requirements, but,
according to GAO, ``They have not received the resources and
senior management commitment needed to bring them to fruition
and they have fallen short of their objectives.''
One final example of continuing management problems. The
Inspector General continues to raise serious concerns about
EPA's oversight of grants, which amount to more than half of
EPA's total budget. Back in 1996 the IG testified that EPA
grantees too often did not provide the products and services
specified in the grant agreements, meet the performance goals,
or comply with procurement requirements. Today the problem has
not gotten much better.
The IG has noted concerns about inadequate monitoring of
grantees to ensure proper performance, noncompetitive grant
awards, and grants being issued when contracts were more
appropriate. A recent audit found that an EPA headquarters
office and EPA regional office awarded grants with identical
work plans to the same recipients. The offices expected
different work products, but the grantee thought one grant
supplemented the other and EPA offices did not respond to the
grantee's requests for clarification. This means that the
recipient received money twice for the same work and EPA did
not receive the product expected.
The IG also found examples of grantees who did not complete
the work promised, but still received all the funds. Now, that
is a problem and that is not acceptable.
The IG's testimony before a House committee last fall sums
up this situation: ``Without determinations of cost
reasonableness, the Agency cannot demonstrate that the level of
funding provided to the grantee is appropriate for the work to
be performed. Without monitoring performance, the Agency cannot
determine whether grantees are successfully carrying out the
purposes of the grants. By diverting grant funds to Agency
responsibilities, fewer dollars are available to obtain the
benefits of grantee performance. Without adequate justification
for noncompetitive awards, the Agency appears to
inappropriately favor a single recipient.''
It should not be too much to ask that we know where the
dollars are going, what the staff is doing, and whether we are
accomplishing the goals which have been set forth.
Now, moving on to the budget request before us today, a
$7.3 billion request for fiscal year 2001, that represents a
decrease below the current level, but I note with grave concern
that the decrease is largely attributable to the
administration's decision once again to slash the Clean Water
State Revolving Fund. While cutting this critical program by 40
percent, EPA again proposes several new unauthorized boutique
programs. I feel like I am experiencing deja vu.
This budget proposal does not seem to be a carefully
crafted budget based on an analytical assessment of EPA
programs yielding the most environmental and human health
protections. Rather than initiating new unauthorized programs,
I would hope EPA would be getting its house in order, focusing
on key management challenges.
It is puzzling to me that EPA would propose new programs
when it has not resolved longstanding material weaknesses, such
as the backlog in the NPDES program. As I understand it, there
has been virtually no progress in reducing the backlog in the
last year and apparently it has grown. Rather than fixing the
problem, EPA proposes tens of millions of dollars in new
programs.
New programs include a proposed $85 million Clean Air
Partnership Fund, resurrected from last year's budget proposal,
with no specific authorization, no specific criteria, no
specific goals. EPA also proposes a $50 million Great Lakes
Grant Program without specific authorization or criteria. What
precipitated the need at this time for a $50 million program is
unclear. If we are going to have a new Great Lakes Grant
Program, why not a Chesapeake Bay, Lake Champlain, or Lake of
the Ozarks Grant Program?
While EPA proposes to start these new activities, as I
said, the Clean Water State Revolving Fund is slated to be cut
by $550 million or 40 percent. As we discussed last year, EPA
itself has found at least a $200 billion nationwide need for
wastewater infrastructure financing, including replacement
costs, and those replacement costs could be over $100 billion.
In addition, EPA's proposed new rules for TMDL's would make
further clean water infrastructure financing even more critical
if States were forced to comply with the new standards. While I
was unable to be at the EPW hearing in the Senate last month, I
understand you cited clean water as one of the top three
environmental programs, so I am very distressed that this
authorized program with a proven track record and a
demonstrated need would be slated for a cut. I think one of our
highest priorities to the extent our allocation will allow
should be restoring the cut to the Clean Water State Revolving
Fund.
The administration has also dusted off the Better America
Bonds Initiative. It would give EPA the authority to select
proposals for $2.15 billion in bonding authority aimed at
creating open spaces and restoring open areas. A new twist this
year, the proposal would earmark $250 million for anthracite
coal-related projects. Why anthracite coal projects have been
singled out for special consideration is not explained in the
budget documents.
Once again, the program is another example of EPA seeking
to pursue new activities and boutique programs, without
specific Congressional direction or authority, while we have
other ongoing activities and management challenges not being
addressed.
Again, the budget proposes a doubling of the Climate Change
Technology Initiative. I do not believe this is a critical
element in the mandate to address core environmental problems.
The decision to increase this program really makes me wonder
about the budget process which is supposed to be based on a
scientific assessment of priorities and activities which yield
the most protection to human health and the environment.
Finally, turning to what is probably the hottest
environmental issue of the year, EPA's proposed Total Maximum
Daily Load, or TMDL rule. The latest acronym in the Federal
alphabet soup to receive notoriety, TMDL refers to EPA's
proposal to require the States to set pollution budgets for
impaired waters and establish implementation plans to bring
these waters into compliance with water quality standards.
The proposal has generated tremendous controversy, as it
seems EPA would require the regulation of certain non-point
sources even while EPA has no authority to do so under the
Clean Water Act. In addition, serious questions have been
raised as to how States would come up with the resources needed
and whether the States would even have the ability to implement
the rule. There are also serious gaps in data, research, and
monitoring to meet the requirements EPA has set forth.
As I traveled around my State, I have heard concerns that
the rule represents a new unfunded Federal mandate, an expanded
Federal role which would undermine EPA's relationship with the
States, and basically a command-and-control approach.
The National Governors Association has said: ``The
regulations fail to properly respect President Clinton's
executive order on federalism, which notes that prescriptive,
inflexible approaches to public policy problems can inhibit the
creation of effective solutions.''
Madam Administrator, at a minimum EPA has many concerns it
must address before it can finalize the rule on TMDL's.
In closing, EPA has many challenges before it. We know the
important role that the EPA must have in assuring that we
continue to clean up our environment. I assure you that we on
this committee are committed to doing everything we can to
improve the environment and to see that the Agency meets the
challenges to ensure a proper stewardship of the taxpayer's
dollar and the environment.
With that, I now turn to my distinguished ranking member,
Senator Mikulski.
[The information follows:]
[General Accounting Office, March 23, 2000]
Human Capital: Observations on EPA's Efforts to Implement a Workforce
Planning Strategy
(By Peter F. Guerrero)
Mr. Chairman and Members of the Subcommittee: We appreciate the
opportunity to present our observations on the Environmental Protection
Agency's (EPA) efforts to determine the workforce it needs to meet its
strategic goals and objectives. During the past decade, when most
federal agencies reduced their staffing, EPA's workforce grew by about
18 percent, even though the states were assuming more responsibility
for carrying out federal environmental programs and enforcement
activities. EPA officials attribute much of the growth during this
period to additional statutory responsibilities given the agency, such
as the Clean Air Act Amendments of 1990. Concerned about such growth,
the Congress, in its deliberations on EPA's fiscal year 2000 budget
request, expressed its expectation that the agency, while remaining
flexible to meet its program requirements, would not exceed a personnel
level of 18,000 full-time equivalents (FTE) \1\ by the end of fiscal
year 2001, a reduction of about 100 FTEs from EPA's estimated level for
fiscal year 2000.
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\1\ An FTE represents 2,080 work hours, the equivalent of one
person working full time for 1 year.
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This Subcommittee has also expressed concern that increases in
EPA's personnel levels may reflect incremental responses to meet the
demands of new environmental initiatives, rather than the results of a
workforce planning strategy linked to the agency's strategic planning
efforts. Such a strategy would identify EPA's current and future human
capital needs, including the size of the workforce, its deployment
across the organization, and the competencies (knowledge, skills, and
abilities) needed to meet the agency's strategic goals and objectives.
In response to the Subcommittee's interest in EPA's workforce planning,
we reviewed (1) how EPA determines the number of employees and the
competencies needed to carry out its strategic goals and objectives and
(2) what actions, if any, EPA is taking to improve its workforce
planning activities.
In summary, our findings are as follows:
--EPA does not now have a workforce planning strategy to determine
the number of employees and competencies needed to carry out
its strategic goals and objectives. In preparing the agency's
annual budget request, EPA assistant administrators, regional
administrators, and other senior officials determine the
increases or decreases in the FTEs requested by the agency. The
senior officials make their decisions on the basis of
information provided by program managers, who identify
incremental changes in their needs from the prior year.
However, EPA does not have the detailed workforce planning
information it needs to inform such decisions, including (1)
information on the linkage between the FTEs requested and the
agency's ability to meet its strategic goals and objectives and
(2) any excesses or gaps in needed competencies within the
agency's various headquarters and field components.
Furthermore, EPA has not assessed the accuracy of its existing
data to ensure that its employees are being used in ways that
are consistent with the intent of its congressional
appropriators.
--Although EPA does not currently have a workforce planning strategy,
it has taken steps to identify its current and future human
capital needs, including the size and competencies of its
workforce. In May 1999, EPA completed a study that identified
(1) the competencies needed to meet the agency's current
missions, (2) possible alternative missions that EPA may face
in the future, and (3) new competencies that may be needed
under each of the future mission scenarios. While a step in the
right direction, the study was not detailed enough to identify
in total or in individual organizational components the number
of employees who need to possess the competencies identified.
Furthermore, citing budget constraints, EPA discontinued its
efforts to implement a workforce planning strategy, which was
to include a continuous process to monitor and assess the
agency's workforce in light of internal and external changes in
its environment. Although EPA currently has no resources
designated for implementing a workforce planning strategy, the
agency recently prepared a draft human resources strategic
plan. According to EPA officials, a workforce planning strategy
would be developed and implemented as part of this plan. EPA
officials plan to meet in April 2000 to consider whether to
approve the draft plan.
We met with EPA officials, including the Associate Director of
EPA's Annual Planning and Budgeting Division, Office of the
Comptroller, to discuss this statement for the record. They told us
that the information reported is a fair assessment of EPA's workforce
planning activities. They provided several technical comments and
clarifications, which we incorporated as appropriate.
BACKGROUND
EPA is organized into 13 major headquarters offices, located in
Washington, D.C., that receive administrative, investigative, and
laboratory support from various headquarters' field entities located
throughout the country. EPA also maintains 10 regional offices to
implement federal environmental statutes and to provide oversight of
related state activities. While total federal employment was reduced by
about 17 percent from fiscal year 1990 through fiscal year 1999, the
FTEs available to EPA to carry out its programs grew from 15,277 to
18,078, an increase of about 18 percent. (See fig. 1.) Most of the
growth occurred from fiscal year 1990 through fiscal year 1993, when
the FTEs increased from 15,277 to 17,280, an increase of about 13
percent. Since then, EPA has grown at a more moderate rate, averaging
less than 1 percent a year.
EPA's employees possess a wide range of educational backgrounds and
skills. Figure 2 shows the occupations that represent the largest part
of the agency's workforce. EPA also makes extensive use of contractors
to perform its work. The agency estimates that it would need an
additional 11,000 to 15,000 employees if it did not receive
appropriations to fund contractors. Thus, EPA's workforce must be adept
both at delivering services directly and at effectively managing the
cost and quality of mission- support services delivered by third
parties on the government's behalf.
Figure 2.--EPA Employees by Major Occupational Category, as of September
30, 1999
Percent
Engineers......................................................... 13
Scientists........................................................ 24
Attorneys......................................................... 6
Environmental protection specialists.............................. 15
Clerical.......................................................... 7
All others........................................................ 35
Source: EPA.
The Government Performance and Results Act of 1993 (the Results
Act) requires EPA and other federal agencies to set goals, measure
performance, and report on their accomplishments as a means of
achieving results. Effective implementation of performance-based
management, as envisioned in the Results Act, hinges on senior
managers' willingness and ability to strategically manage all of the
agency's resources--including human capital--to achieve missions and
goals. Specifically, this requires aligning strategic and program
planning systems with an explicit workforce planning strategy that
includes (1) identifying the current and future competencies needed and
any gaps, (2) developing a workforce action plan designed to address
the gaps, and (3) monitoring and evaluating the workforce planning
actions taken. Workforce planning is a key component of a human capital
self-assessment checklist we published as a discussion draft last
September.\2\ (See attachment I.)
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\2\ Human Capital: A Self-Assessment Checklist for Agency Leaders
(GAO/GGD-99-179, Sept. 1999.)
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EPA DOES NOT NOW HAVE A WORKFORCE PLANNING STRATEGY TO ASSESS ITS HUMAN
CAPITAL REQUIREMENTS
Although EPA's senior managers are closely involved in decisions
concerning the agency's annual budget requests for staffing, the agency
has not developed and implemented a workforce planning strategy to
systematically and comprehensively assess its human capital
requirements. Consequently, EPA cannot determine whether it has the
appropriate number of people and competencies needed to effectively
carry out its strategic goals and objectives. Furthermore, although EPA
collects cost-accounting data on the amount of time its employees spend
in carrying out the agency's strategic goals and objectives, it has not
assessed the accuracy of the data. Thus, EPA lacks assurance that its
employees are being used in ways that are consistent with the intent of
its congressional appropriations legislation, which identifies the
number of FTEs approved for each strategic goal and objective.
During most of the 1980s, EPA used a workload model for calculating
the total number of FTEs needed and for allocating them among its
various headquarters and regional offices. The model was based on
studies of the amount of time required to perform key functions of the
agency. The agency used the model to allocate its staff among its
various organizational units but did not use it for determining the
number of employees. An EPA official explained that the number of
employees needed, according to the model, consistently exceeded the
personnel ceilings established for the agency by the Office of
Management and Budget. In 1987, EPA froze the workload model because it
believed it was spending an inordinate amount of time each year
negotiating the distribution of marginal staffing increases. Although
the model continued to be used for allocating staff resource levels
into the early 1990s, it was not updated to reflect new circumstances,
became outdated, and was discontinued.
EPA's current process for preparing its budget request involves
identifying funding and staffing increases, (``investments'') in areas
it considers to be priorities, which are usually offset by decreases,
(``disinvestments'') in areas of lower priority. For example, for
fiscal year 2000, EPA identified investments totaling 311 FTEs and the
same number of disinvestments. Increases were identified for program
priorities such as clean air, climate change, information management,
and children's health. To accommodate the increases, decreases were
identified in other agency activities, such as those for assessing
chemical risks, enforcing clean water regulations, and cleaning up
contaminated waste sites. Through such reallocations, EPA focuses on
the number of staff available and does not consider the types of skills
needed for program activities. We did not review the basis for EPA's
decisions on the reallocations.
After the Congress reviews EPA's budget request and appropriates
resources to the agency, senior officials allocate the available FTEs
to EPA's organizational units. Because EPA does not have a system in
place to assess its human capital requirements and to allocate
resources accordingly, the allocations are based primarily on the
number of FTEs that were allocated in previous years, with increases or
decreases made incrementally to reflect the agency's ``investments''
and ``disinvestments.'' However, an approach based on historical data
may not accurately reflect the conditions facing EPA today and those
likely to face it tomorrow. For example, over the past decade,
technological changes have had a major impact on the skills and
technical expertise needed to carry out federal programs. In addition,
changes have occurred in EPA's regional environmental responsibilities
as states have accepted more responsibility for the day-to-day
implementation of federal environmental statutes. For example, in 1993,
only eight states had accepted responsibility under EPA's delegation
process for implementing provisions of the Safe Drinking Water Act. By
1998, 36 states had done so. The Environmental Council of the States,
an association representing state environmental administrators, has
pointed out that the states now assume responsibility for more than 75
percent of federal environmental programs. Such changes may reduce
EPA's activities in some areas, such as carrying out inspections, but
may in turn create the need for additional people and competencies in
other areas, such as providing technical assistance and reviewing and
measuring the effectiveness of state programs.
Fact-based human capital management requires data on how EPA's
current workforce spends its time. However, the agency's efforts to
account for the time spent to carry out its various tasks have been
hampered by inaccuracies in existing data. For example, although each
of EPA's regional employees is assigned to a specific work area, such
as pollution prevention or groundwater protection, the employees may be
directed to perform tasks in other areas. In a September 1996 report,
EPA's Inspector General stated that in two regions reviewed, employees
spent a significant amount of time working in areas unrelated to the
program areas to which their time was charged. In October 1998, EPA
modified its cost-accounting system to account for tasks related to its
strategic goals and objectives. EPA officials told us that the accuracy
of the data collected under the new system has not been assessed,
although they said the agency recognizes the need to do so. Assessing
the data is crucial for their use under the agency's plans to develop
and implement a workforce planning strategy. For example, an official
representing EPA's Office of Enforcement and Compliance Assurance,
which relies extensively on regional employees to carry out its
functions, told us that it is important that the office have an
accurate system of accounting for time spent in order to determine
appropriate personnel levels.
EPA HAS BEGUN TO DEVELOP AND IMPLEMENT A WORKFORCE PLANNING STRATEGY
EPA's decentralized organizational structure and the size and
deployment of its workforce have long been issues of concern among
outside reviewers of the agency. For example, in an April 1995 report
to the Congress, the National Academy of Public Administration (NAPA)
\3\ commented that EPA has little data to determine the day-to-day
activities of its regional employees. NAPA recommended that EPA
complete an analysis of the activities of the regional offices,
determine their appropriate size, and add or reduce staff accordingly.
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\3\ NAPA is a nonprofit, nonpartisan, collegial organization
chartered by the Congress to improve governance at all levels--federal,
state, and local.
---------------------------------------------------------------------------
During the past decade, EPA has attempted to improve its workforce
planning but has fallen short of implementing an effective strategy for
doing so. As previously mentioned, EPA stopped using its workforce
analysis model in the early 1990s, partly because the model required
more resources than EPA considered appropriate to spend. For fiscal
years 1995 through 1997, the agency conducted annual surveys to analyze
the human capital needed to achieve its mission. Once each year,
employees estimated the time they spent on various tasks for the first
several months of the year and projected how they would spend their
time during the remainder of the year. The purpose of the survey was to
gain an understanding of where the workforce was deployed, ensure that
the budget reflected this deployment, and make certain that resources
were directed toward high-priority objectives and performance goals.
EPA officials told us that the survey was discontinued after fiscal
year 1997 because of data collection flaws that caused EPA to lose
confidence in the validity of the survey data. They said that the
survey did not clearly define terms and reporting requirements, causing
inconsistencies in the data reported by various employees and
organizational components. In analyzing the results of the 1997 survey,
EPA found that the workforce data differed substantially from the data
reported to the Congress in EPA's fiscal year 1997 operating plan. For
example, the survey data showed that the amount of time spent on
activities of the Office of Enforcement and Compliance Assurance was 23
percent less than the amount reported by EPA in its operating plan,
whereas the time spent on activities of the Office of Policy, Planning,
and Evaluation was nearly three times the amount reported in the plan.
EPA has recently attempted to address the need for a more credible
strategy to determine its workforce requirements. In June 1998, EPA
initiated a project to assess and act upon the implications of
strategic change for the agency's workforce. Through this project,
which was completed in May 1999, EPA (1) developed a workforce profile
identifying the competencies of the people employed by the agency and
(2) estimated what competencies it would need in the future under
various scenarios. By comparing the current workforce with estimated
future needs, EPA identified potential gaps.
While the workforce assessment was a step in the right direction,
it was a limited measure toward needed actions to implement a workforce
planning strategy capable of meeting the agency's diverse goals and
objectives. For example, the assessment focused on the competencies,
such as communication and computer skills, needed to carry out EPA's
missions. However, the study was not designed to determine how many
employees needed such competencies or how employees should be deployed
among strategic goals and objectives, across program areas, and in
various areas of the country. Furthermore, although EPA has identified
the competencies that it believes are vital and difficult to obtain and
maintain, it has not used this information to develop an integrated
workforce strategy for recruiting, developing, and maintaining needed
competencies in its current and future workforce.
EPA had intended to build on its workforce assessment by developing
and implementing a workforce planning strategy to (1) continually
monitor and assess its workforce in light of internal and external
environments and (2) monitor and evaluate workforce actions taken.
Although EPA had contracted for the development of the strategy, EPA
officials terminated this work in February 1999, citing budget
constraints. Nevertheless, the director of EPA's Office of Planning,
Analysis, and Accountability told us that, while the agency currently
has no resources allocated for implementing a workforce planning
strategy, it recognizes the need to complete the job. He said that EPA
is considering linking a workforce planning initiative to its strategic
planning efforts. However, little time remains for implementing a
workforce planning strategy before EPA's current strategic plan is
scheduled to be revised and issued by September 2000.
EPA officials told us that in terminating the contractor's work for
the development of a workforce planning strategy, EPA decided to
develop such a strategy itself. Such an initiative is being considered
under the auspices of EPA's Human Resources Council, which consists of
senior managers in EPA's headquarters and regional offices. At the
direction of the Council, a multifunctional group of program office
executives and representatives of EPA's Office of Human Resources and
Organizational Services has prepared a draft strategic plan for human
resources. The plan calls for securing essential competencies through a
workforce planning strategy aimed at recruiting and developing staff
and providing incentives to retain highly competent employees. EPA
officials told us that this strategy in essence would continue the
efforts that EPA had planned to do under the contract. The Human
Resources Council is scheduled to meet in April 2000 to discuss the
plan.
OBSERVATIONS
The growth in EPA's personnel levels during the past decade has
been accompanied by substantial changes in the roles and
responsibilities of the agency and its state partners. In addition,
technological advances during this period have provided opportunities
for efficiencies to carry out the agency's strategic goals and
objectives. While EPA has implemented several initiatives during the
past decade to gain a fuller understanding of the demands facing its
workforce, these initiatives have not received the resources and senior
management commitment needed to bring them to fruition, and they have
fallen short of their objectives. Without a workforce planning
strategy, EPA is not able to identify the size of its workforce and the
competencies that need to be deployed among its organizational
components to effectively and efficiently carry out its strategic goals
and objectives.
EPA's current efforts to develop and implement a human resources
strategic plan, including a workforce planning strategy that is focused
on continually monitoring and assessing its workforce and evaluating
the effectiveness of actions taken, is a step in the right direction.
If the plan is adopted, its ultimate usefulness will depend largely on
the extent to which EPA's senior management remains committed to and
provides the resources needed to ensure its success. Furthermore, as
part of its workforce planning strategy, EPA will need to ensure that
it collects and analyzes accurate data on the amount of time being
spent on various programs and activities. Without such data, EPA cannot
accurately determine the costs of carrying out its strategic goals and
objectives and ensure that its workforce is being used in ways that are
consistent with the intent of its congressional appropriators. In
addressing these concerns, it is important that EPA identify the
resources that would be necessary to implement a workforce planning
strategy and to assess the accuracy of its cost-accounting data on the
amount of time employees spend in performing tasks related to the
agency's strategic goals and objectives.
We performed our review from October 1999 through March 2000 in
accordance with generally accepted government auditing standards. If
you have any questions about this statement, please contact me on (202)
512-6111. Major contributors to this statement were Ed Kratzer, Bill
Roach, Ken McDowell, and Rosemary Torres-Lerma.
Attachment I
THE HUMAN CAPITAL FRAMEWORK
We recognize that there is no single recipe for successful human
capital management. But we have identified a number of human capital
elements and underlying values that are common to high-performance
organizations in the public and private sectors. The five parts of the
human capital framework are as follows:
1. Strategic Planning: Establish the agency's mission, vision for
the future, core values, goals, and strategies.
2. Organizational Alignment: Integrate human capital strategies
with the agency's core business practices.
3. Leadership: Foster a committed leadership team and provide
continuity through succession planning.
4. Talent: Recruit, hire, develop, and retain employees with the
skills for mission accomplishment.
5. Performance Culture: Enable and motivate performance while
ensuring accountability and fairness for all employees.
STATEMENT OF SENATOR BARBARA A. MIKULSKI
Senator Mikulski. Thank you very much, Mr. Chairman. Mr.
Chairman, I know that it is about 5 of 10:00. I note that the
chairman of the full committee is here, so I am going to ask
unanimous consent that my full statement be included in the
record and just make a few highlights because also other
colleagues want to make a few statements and questions.
First of all, I really want to welcome Carol Browner and
her team to this hearing. I know that for Ms. Browner this is
her eighth appearance before this subcommittee, and I would
like to thank you for your service to the Nation and all of the
much help that you have given to my own State of Maryland,
because in Maryland the environment really is tied to economic
development. We feel good environment is good business in
Maryland.
You have had to deal with the alligators in the Everglades
and you have had to deal with the alligators in Congress and
you have had to even deal with alligators at OMB. So I know
alligators are an endangered species, but we really want to
compliment you for that.
I think the chairman has laid out a road map that he would
like to pursue, but I think when we have someone who has served
the Nation for 8 years--we have had continuity in leadership,
therefore continuity in policy, and this is why we could get
into those details.
I would like to thank you and President Clinton for what
EPA has meant to the State of Maryland. The ongoing funding for
the Chesapeake Bay, its cleanup, and all the aspects of it
related to clean water and safe water are very much
appreciated. It was begun by Senator Mac Mathias and now
through President Carter, President Reagan, President Bush, and
President Clinton. We want to say thank you.
We want to thank you for your help in issues related to
smart growth, because we in Maryland believe in development,
but we have very serious concerns about encroachment and what
that means to the environment.
We also want to particularly acknowledge your role in
working in a partnership with our governor and our mayor on the
devastating effects of lead poisoning, which is really a
killer. We have children within the very shadow of Johns
Hopkins University that are so loaded with lead, one little boy
on his way to school just lay down on the street and said: I am
too sick to go any further. So we thank you for your
relationship with our governor, with our mayor, and his health
teams, because we believe in a couple of things: one, that
there is a direct linkage between the environment and public
health, and that our environmental policies should always be
strengthening the public health of our community.
Second, environment tied to economic development. Certainly
the Chesapeake Bay, other bay initiatives, and so on, where
really our natural assets need to be preserved, which is why
people want to live and work near there.
In addition to a good environment for economic development,
it is really the brownfields issues, and I am going to talk
about it. In my own home town there are 3,000 acres of
brownfields surrounding the water, and when we clean them up it
offers homes, commercial real estate, and we are now turning
our Inner Harbor--everybody knows the glitz and the stadiums,
but we are taking old factories and turning them into digital
economic development parks. We are really digitalizing our
harbor, where it is no longer appropriate to use for shipping.
These are some of the areas that I want to go over with you
and talk with you in more detail, as well as the pfisteria
research that caused problems. But again, many thanks. I
personally am grateful to have you as a constituent in downtown
Takoma Park, and I have been--really, I want to compliment you
for your professional relationship certainly with me and I
believe the Congress and your service to the Nation.
With that, I will submit my statement and wait for my time
for my questions.
Senator Bond. Without objection, the statement will be
accepted, and thank you very much, Senator Mikulski.
Now I turn to Chairman Stevens.
STATEMENT OF SENATOR TED STEVENS
Senator Stevens. Well, thank you very much.
I do not have a prepared statement. I do greet the
Administrator with thanks before I ask a couple of questions. I
am not going to ask them; I will submit them. I do thank you
for the fact that the President's budget this year has a $15
million request for Alaska sanitation problems in rural Alaska.
I have been working on this now for a series of years and we
have had earmarks in the past, and at this time we have got a
request. I cannot guarantee you we will not try to increase it,
but I do appreciate the request.
I do have some questions I would like to submit. Let me
just outline two of them. One concerns the Red Dog Mine that is
north of Kotzebui above the Arctic Circle, a very unique
arrangement, owned by the Alaska Native people and operated by
a very fine Canadian company. They have a unique arrangement
for employment. At least two, perhaps three, people share one
job. With a two-shift mine, it means that they have got two and
a half times the employees of any other mine operating in
similar circumstances.
They have asked for and received State approval to expand
that mine through the use of an additional generator. Your
section 10 reversed the State finding that this was the best
available control technology, and I am just sort of appalled at
that because in this region of the world I do not think your
people have the capabilities that we have. Our State is
probably the number one State in terms of protecting air
quality.
It really has been a shock to the State. I know that you
have talked to the governor. But I hope you will answer the
questions I have got to submit. I cannot ask questions right
now.
But the second one concerns the Fairbanks carbon monoxide
problem. Fairbanks, again located the farthest north major city
in our State, it has a national ambient air quality standard
problem for carbon monoxide. It has tried its best to achieve
that, but we note that the automobile manufacturers have not
produced the cars that they were supposed to produce to reduce
both the carbon monoxide emissions and other forms of
pollution, and yet the cities now are being put in the position
of sanctions because they cannot meet the goals that should
have been attainable had the automobiles been modified as
contemplated by the basic law.
I think that the clock is ticking. As I understand it, it
runs out in April and our second largest city is going to face
sanctions which will lead, strangely, to reduction in the use
of automobiles in an area that you cannot walk and you cannot
take buses and there are no other forms of transportation. We
do not quite understand that.
I would urge you to take a look at that. In both instances,
your Agency has reversed our State in areas where they had
delegated authority under the law to make these decisions, and
people made plans based on long, long conferences and working
these things out with the State and now they cannot continue.
So again, I thank you for what you have done in the past,
but I would urge you to take a look at this. I think in those
two instances--I will tell you what. Why do you not send your
people up and have them live in Fairbanks or in Kotzebui for a
year, okay? In Fairbanks its 68 below, 70 below in Kotzebui.
They work all year long. Your people come in the summer time
and try to understand this. It is just not fair.
Thank you.
Ms. Browner. Mr. Chairman, I understand that Chairman
Stevens will have to leave. If I might respond quickly before
he leaves.
Senator Stevens. I do have to leave. I am going to submit
the questions.
Senator Bond. I think if you have got just a minute I would
be happy to, if nobody objects, to allow her to respond.
Ms. Browner. I want to say something about the mining
issue. I did have a very good meeting with your governor. Since
that time we have been able to reach an agreement so that the
construction schedule for the company can be taken into
account. We are trying very hard to get this resolved as
quickly as possible. I thought the meeting was very helpful.
Senator Stevens. Good. That is good news.
Ms. Browner. I think we will be able to find the
resolution.
Senator Stevens. It has the highest level of unemployment
of any area in the country.
Ms. Browner. Yes, I understand.
Senator Stevens. Thank you very much.
Senator Bond. Thank you very much, Chairman Stevens.
Now I turn to Senator Leahy.
STATEMENT OF SENATOR PATRICK J. LEAHY
Senator Leahy. Thank you, Mr. Chairman.
I am delighted to have Administrator Browner here. I am a
big fan of hers and I think she has done a superb job in
running the EPA. I also am pleased that she has had a number of
occasions to come to Vermont.
I was going to try to talk to Senator Stevens about who
gets colder weather, but the 70 degrees did kind of top our 45
degrees below zero this year and I realized I had lost all
bragging rights and will stay away from that.
You have shown a great deal of leadership on environmental
and public health issues, from lawsuits against dirty power
plants to recommendations to Congress regarding toxic fuel
additives. And you have done it even though you know that in
some of those you would face from different special interests a
lot of criticism.
But I think that, because you have been persistent in this,
you have improved our environment and the public health. That
helps not just us today, but it helps people like your own
children, who will live most of their lives in this century, my
grandchild who will, and others.
In my case--once in a great while we get parochial on this
committee. I know that the Senator from Maryland is shocked to
hear that, but it is true. And I have considered the
environment, the unique environment of my own State of Vermont,
preserving it to be one of my highest priorities. The funding
that EPA has consistently requested for the Lake Champlain
Basin program has allowed Vermonters to form some very long-
term good commitments and programs and partnerships with our
communities, our State agencies, nonprofit organizations, and
it has helped all of us, because they have focused on pollution
reduction and toxic hot spot cleanup, and have also benefited
the hundreds of thousands, even millions, of people who during
that time have visited that area from other parts of the
country.
A lot remains to be done, but I think we can continue to
protect precious water resources in Lake Champlain and
throughout the State, from our lakes and our ponds, major
watersheds like the Connecticut River.
I am pleased to see you sponsoring grants for smart growth
pilot projects in urban and rural communities. In Vermont we
have two of these pilot projects, one in a small city, one in a
rural watershed. They are rapidly gaining attention. They
integrate economic and natural resource data into web-based
interactive tools for city planners. I think that I could see
this, especially with the Internet spreading throughout our
State, I think that you are going to see these kind of things
promoting smart growth initiatives all over the country.
We have a unique project in Vermont on acid rain that
monitors the on the ground ecological and human health effects
of continuing acid deposition in the Northeast. We know there
is a lot of transport of atmospheric pollutants from the
Midwest to the Northeast, but we have to know what the long-
term damage of that is, and I hope we can continue these kind
of studies.
A final note. I want to go on record with my strong support
of your recent announcement with Secretary Glickman that you
want to significantly reduce or eliminate the use of the fuel
additive MTBE and to increase use of safe, renewable
alternatives. I strongly support that. I think it is something
that will benefit all of us and it reinforces some legislative
strategies promoted earlier this year by Vermont and seven
other States in the Northeast. So I commend you.
I have to go to Judiciary and I will leave, with your
permission, Mr. Chairman, a number of questions for the record.
But I did want to highlight those areas.
Senator Bond. Thank you very much, Senator Leahy, for
joining us. We will, of course, as usual have questions
submitted for the record that we will forward to the
Administrator. I think Senator Stevens had some, and we will
ask that the Administrator and the Agency respond as quickly as
possible. Thank you very much for being here.
Now we turn to Senator Lautenberg.
STATEMENT OF SENATOR FRANK R. LAUTENBERG
Senator Lautenberg. Thanks, Mr. Chairman. I start by
congratulating you and Senator Mikulski for your work on the
VA-HUD bill.
I also want to extend my congratulations to Carol Browner
for her leadership on issues affecting public health and the
environment. I congratulate you also, Madam Administrator, for
creating an excellent team around you, for providing the kind
of inspired devotion to duty that we see with the folks that
all of us have occasion to work with at EPA.
I see a record of successes that I do not think are really
matched, if we look over history, of an Agency that was taken
over at a period of relatively troubled times, had been through
defaults by leadership, programs not working, and what I see is
that you have taken the broad authority given you to protect
the public health, to use it effectively to develop programs
that clean the air and to respond to emergencies.
When I look at the list of things that have happened under
your administration, the information that is provided through
to the public through the web site is so valuable that we have
heard complaints from both public and industry when you had to
shut it down. You have used the opportunity to exercise
leadership on so many fronts and that is respected. That is
what I would have wanted of an executive when I ran a company
and that is what I want of the head of a department in my role
here with my public responsibility.
I look at the success of Superfund. Ninety-one percent of
the sites listed on the NPL are undergoing cleanup,
construction, or are deleted. I note that over the life of
Superfund EPA has reached settlements with private parties of
an estimated $16 billion. So challenges to whether the
polluters should pay or should not pay is really moot. The
question is--the outcome is they pay. They have committed a sin
that they have had to pay for, they have committed a public
affront, and they pay for it.
We see brownfield successes: generated 1,580 cleanup
programs, 4,300 redevelopment jobs, and leveraged $1.6 billion
in public and private investment. Clean water, increasing the
public's right to know about health risks at beaches by
completing a database of beach monitoring programs, a program
close to my heart and my interests; and increased the number of
communities to 11,000 that have programs in place to protect
drinking water sources.
So Madam Administrator, I am proud of the work that you
have done. I am proud of the work that this committee has done
to support it, and I am delighted to see you in this, our
mutual kind of swan song here.
In recent years the bill sent by the President has
allocated scarce resources in a sensible manner, it has been
relatively clean of controversial language, and it has moved
through the process in a timely manner, and I appreciate this
and hope that we will be able to work together to ensure that
if any such language, restrictive language, is included that we
are wary of that, but the language that permits us to balance
the use of our resources will enjoy, I hope, bipartisan
support, and I am confident the chairman will agree with that.
We welcome the opportunity to learn more about EPA's budget
request. I remain particularly interested in providing adequate
funding, though, for core EPA programs. There is a temptation
to get attracted to new initiatives, but we dare not lose sight
of the programs that are the backbone of the Agency. We have to
continue to fund and support those.
Whether the issue is cleaning up Superfund sites,
addressing the ongoing hazardous waste sites so that they do
not become future Superfund sites, reviewing the safety of
pesticides, setting standards for toxins in the air, EPA's core
programs have proven over the years to be of tremendous benefit
to the health and well being of our constituents, and we dare
not ever lose sight of them.
In addition, I have been encouraged by the accomplishments
of the EPA brownfields program, as I earlier mentioned. I want
to assure you that we will do everything we can, we want to, to
foster those efforts.
Mr. Chairman, once again I do thank you for holding this
hearing and look forward to the presentation from the longest
serving Administrator in EPA history, one who did not go down
with the ship, but took over the helm and did it masterfully.
Senator Bond. Thank you very much, Senator Lautenberg.
We have raised a lot of questions, so, Madam Administrator,
we would be happy to give you 10 minutes for your opening
statement and comments you want to make, and then obviously we
will have, we hope to have a number of very productive rounds
of questioning. Welcome.
STATEMENT OF CAROL BROWNER
Ms. Browner. Thank you, Mr. Chairman and Senator Mikulski,
Senator Lautenberg, for the opportunity to appear again before
this committee in my eighth year as Administrator of the
country's Environmental Protection Agency. I am pleased to be
here today to present the Clinton-Gore Administration's budget
request for the EPA.
Accompanying me today are the Agency's senior managers,
including Mike McCabe, our Acting Deputy Administrator, and
Mike Ryan, our Acting Chief Financial Officer.
I would like to begin by saying, Mr. Chairman, Senator
Mikulski, Senator Lautenberg, we look forward to working with
all of you and the other members of this subcommittee to craft
a budget that will allow us to meet the very important public
health and environmental needs of the people of this country. I
believe we have fostered a productive working relationship
which has enabled us to meet the mutual goal of protecting
public health and the environment. Together, once again, we
have a great opportunity to work in partnership to provide the
American people with strong public health and environmental
protections that they want and that they have every right to
demand of us and that they deserve.
The budget that we put forward achieves that goal. The
President has presented a budget that maintains fiscal
discipline while making essential investments in environmental
priorities. This administration has repeatedly demonstrated
that we can enjoy enormous economic prosperity, including the
longest economic expansion in history, while aggressively
cleaning up the air we breathe, the water we drink, the land we
live on, the communities where we raise our families.
Over the past 7 years of unprecedented economic progress,
this administration, working with this committee, has
distinguished itself through unprecedented environmental
protections. We have done it through common sense, cost-
effective measures that emphasize partnerships and cooperation
with businesses, State and local governments.
The 1996 amendments to the Safe Drinking Water Act are an
example of what we can do together, bipartisan work on behalf
of the American people to provide clean, safe water to drink.
Working with this subcommittee, we have supplied the first ever
funding, a $3.2 billion loan program, for communities to
upgrade their drinking water systems.
We set up the first public right to know program for
ensuring that all consumers of tap water know the source and
the quality of that water. We have announced new measures to
protect the health of 140 million Americans by strengthening
protections from emerging threats like cryptosporidia.
As a result of these efforts, efforts we have undertaken
together, 89 percent of Americans now get tap water from
drinking water systems that meet public health standards. That
is an increase of 6 percent since the standards went into
effect in 1994.
We have tripled the pace of cleaning up toxic wastes under
the Superfund program. More toxic waste sites have been cleaned
up and cleaned up more affordably in this administration than
in all previous years combined. At the end of 1999, a total of
670 Superfund sites had been cleaned up. Of those sites, 515
were completed under this administration.
We have taken important steps to reduce emissions from
autos and small trucks by up to 95 percent. For the first time
ever we have ensured that the very popular sport utility
vehicles, minivans, light duty trucks will meet the same
stringent air quality standards as other passenger vehicles.
We have required reductions in sulfur levels in gasoline.
We have cut toxic air pollution from municipal combusters and
other important source categories by 90 percent or more, and we
have unveiled new efforts to improve our air quality in 156
national parks and wilderness areas. As a result of these
efforts, some 43 million Americans are breathing cleaner air.
At the same time, we have dramatically increased the
public's right to know about toxic chemicals released into
their local communities and into their neighborhoods. The
Clinton-Gore Administration has nearly doubled the number of
chemicals that must be reported to communities and required
over 6,000 new facilities to report releases of their
emissions. As a result, in the past decade toxic pollution has
fallen by nearly 50 percent, partly as a result of simply
arming local citizens with information about local pollution,
about local conditions.
We have revitalized communities by accelerating the cleanup
of brownfields, abandoned or contaminated property. Senator
Mikulski, I visited one of those sites in Baltimore. DAP
Company has moved into a wonderful old warehouse. It has been
cleaned up and restored. Every time I am able to visit a
brownfield site it just gives me----
Senator Mikulski. 400 jobs.
Ms. Browner. 400 jobs. A huge sense of accomplishment for
the community and of a program that really is working on the
ground to meet the needs of local communities.
Across the country, communities are gaining new hope with
nearly $70 million in seed grants awarded to over 300
brownfield projects. Senator Lautenberg, as you pointed out,
this has leveraged new investments, over a billion dollars. It
has created thousands of jobs. It has expanded the tax base for
local communities and it has brought decaying areas of the
cities back to vibrant life.
Working with Congress in a bipartisan manner, we also
passed the new Food Quality Protection Act that for the first
time sets pesticide safety standards that are clearly
protective of our children. We have taken action to reduce
significantly special risks posed to children by limiting the
use of two pesticides most widely used on foods found in the
diets of our children.
While ensuring strong environmental protection, we have
also reinvented government in innovative ways to achieve
greater environmental results at less cost. We have vigorously
pursued common sense, cost-effective solutions to today's
environmental problems.
The budget before you requests $7.3 billion for the
Environmental Protection Agency. We are also requesting $2.2
billion for the Better America Bonds Program. This builds on
and continues 7 years of environmental achievement under this
administration.
In terms of our core programs, and Senator Lautenberg, you
spoke to this, the budget before you provides for an 11 percent
increase in EPA's core programs. We do everything from setting
air and water quality standards, drinking water standards, food
safety, scientific research, and most importantly, we enforce
the environmental and public health requirements. This is the
single largest increase in our operating programs under this
administration.
The administration's request provides for such programs as
President Clinton's Clean Water Action Plan. It provides for a
new initiative to protect and improve one of our Nation's
greatest shared treasures, our Great Lakes. It provides for the
President's program for cleaner waters across America, which
for the first time targets individual waterways for cleanup
plans tailored specifically to meet their needs.
This part of the budget gives States the flexibility that
they need to fight polluted runoff. Again, Mr. Chairman, we are
going to ask this committee for specific language to allow
States the flexibility to set aside up to 19 percent of their
Clean Water Revolving Fund to address the needs of polluted
runoff. Not a requirement for the States, but an opportunity
should they choose to address their water pollution problems in
this way.
The President's budget provides the necessary funding for
one of the administration's top environmental priorities,
protecting our children. Senator Mikulski, you mentioned the
very serious problem of lead. There is no reason why any child
in this country should experience lead poisoning. It is a
preventable disease, and we are investing in our ongoing
efforts to prevent this very horrible disease. We are also
seeking money in our children's program for asthma and for
dangerous levels of pesticide residues in foods.
The President's budget does provide for a Creative Clean
Air Partnership Fund. The partnership fund promotes early
reduction in air pollution, and it fosters partnerships and
flexibility between State and local governments to encourage
new ideas for improving air quality. Some of the best ideas
happen at the local level. This program is designed to
encourage those local ideas, to give life to those ideas, to
make them possible.
The budget calls for continuing to expand the public's
right to know, including a new effort to develop a network for
key environmental data with our State partners. The States are
looking at modernizing their computer programs. It is part of
everything from one-step permitting to better environmental
management. We are asking for $30 million to support the States
in that effort.
We continue our commitment to Superfund cleanup.
Mr. Chairman, I see my time is up. Let me say in closing--
--
Senator Bond. If you need another minute or two, please.
Ms. Browner [continuing]. We are presenting a budget that
builds on the work that we have been doing over the last 7
years, under the President and the Vice President's leadership,
that prepares us to meet the emerging challenges.
Unfortunately, in the work of public health and environmental
protection, the job is not really done. As we solve one
problem, a new problem emerges. This is a dynamic budget that
allows us to speak to the ongoing problems, to resolve them,
but also to meet the challenges of the future.
Thank you.
[The information follows:]
Prepared Statement of Carol M. Browner
Mr. Chairman and Members of the Committee, I am pleased to be here
today to present the Clinton-Gore Administration's fiscal year 2001
budget request for the Environmental Protection Agency. Our $7.3
billion request, and the $2.15 billion Better America Bonds program,
continue and strengthen the Administration's commitment to the
environment and public health by providing our children, our
communities with cleaner water, cleaner air and an improved quality of
life.
I would like to express my pleasure to have worked with this
distinguished Committee over these past seven few years. I believe we
have fostered a productive working relationship, which has enabled us
to work together towards our mutual goal of protecting public health
and the environment. Although we may not have agreed on every issue and
policy, the Agency has benefitted in many ways from the support given
by this Subcommittee. For that, we are grateful to you, Mr. Chairman,
Senator Mikulski, and the members of the Subcommittee. I again look
forward to working with you this year, Mr. Chairman, and Senator
Mikulski, as I know the strong bond between our Agency and this
Committee will continue.
I am particularly proud of this budget request. Seven point three
billion dollars will directly support our operating programs, air and
water infrastructure, and the trust funds. Two billion, one hundred and
fifty million dollars are for the Better America Bonds program, to help
communities invest in green-space preservation, water quality
improvements and brownfields cleanup. Most importantly, this budget
includes an 11 percent increase, or $384 million, for EPA's core
environmental programs.
Once again, the President presents a budget that maintains fiscal
discipline while making essential investments in environmental
priorities. This Administration repeatedly has demonstrated that we can
enjoy enormous prosperity--including the longest economic expansion in
history and a plan that will eliminate our national debt for the first
time since 1835--while implementing important environmental and public
health protections. The American people know that our Nation does not
have to choose between a strong economy and a healthy environment.
Over the past seven years of unprecedented economic progress, this
Administration, working with this Committee, has distinguished itself
through unprecedented environmental progress.
The 1996 amendments to the Safe Drinking Water Act, a fine example
of what we can achieve when we work together, coupled with the
President's Clean Water Action Plan, have contributed greatly to
cleaning up the Nation's waters and to making drinkable, fishable and
swimmable water a reality for all Americans.
We have set the tightest emissions standards ever for cars and the
first such standards that apply equally to SUV's and minivans.
We have placed special emphasis on protecting our Nation's greatest
resource--our children--through actions like working for, winning and
implementing the Food Quality Protection Act, that for the first time
puts emphasis on protecting the health of infants and children from
pesticide risks.
We have provided communities with new access to more information
about toxic chemicals released into their communities by greatly
expanding the public's right-to-know.
Under this Administration, more than three times as many toxic
waste site cleanups have been completed than were completed in the
previous 12 years of the Superfund program.
And we have taken the unprecedented step of revitalizing
communities by accelerating the cleanup of Brownfields and returning
the land to productive use.
The budget we are announcing today preserves this record of success
and builds on it.
As it has since the inception of the Clinton-Gore Administration,
the EPA budget builds upon those core environmental programs that are
the backbone of this agency. This includes: setting environmental
standards; environmental enforcement and compliance; and direct
implementation programs for the states.
In fiscal year 2001, the Clinton-Gore Administration is requesting
an 11 percent increase, or $384 million, over last year for core
environmental programs, which allows the Agency to meet the American
public's expectations for a safe and healthy environment. The increased
is directed at programs for cleaner air and water, safer food and sound
science.
For water, the President's fiscal year 2001 budget bolsters the
successes we have achieved by providing $495 million in Clean Water
state grants, including a $50 million increase to specifically address
polluted runoff, the largest current threat to our Nation's water
quality.
The Great Lakes, among our Nation's most revered and beautiful
water resources, receive $50 million in the President's Budget for a
new initiative that will continue the progress we have made in their
cleanup and restoration. Through this initiative, states and
communities will be eligible for competitively-awarded matching funds
to improve water quality through stormwater pollution control, wetlands
restoration and remediation of contaminated sediment.
We are stepping up our efforts to identify and restore polluted
waterways by providing an additional $45 million in state grants for
the Administration's new Cleaner Waters Across America program. The
program is aimed at waterways still in need of improvements. Resources
will be used to develop specific restoration plans for some 20,000
waterways across the Nation.
Consistent with our goal to provide sufficient capital so that,
over the long-term, $2 billion in average annual assistance will be
available to localities, the President's Budget provides $800 million
for the Clean Water State Revolving Fund--a flexible funding mechanism
designed to help communities provide clean, safe and healthy water.
This year, we are requesting authority to give states the option of
using 19 percent of their Clean Water SRF in the form of grants to
fight polluted runoff. I am asking this Committee to join us in
providing states with this additional flexibility to provide clean and
safe water for the public.
The Administration has taken the most aggressive actions in history
to provide cleaner, healthier air for all Americans, and this budget
continues that effort.
The President's Budget is providing $85 million for the Clean Air
Partnership Fund--a fund that will provide resources to states, cities
and tribes to help reduce air pollution. This initiative will foster
public-private partnerships to help communities achieve their own clean
air goals in ways that make the best sense for them.
In addition, to continue reducing the air pollution that
contributes to global warming, $227 million has been proposed for the
third year of the Climate Change Technology Initiative. This program
promotes voluntary measures that reduce energy use and bring down the
energy bills of all Americans, while also reducing greenhouse gas
emissions.
Furthermore, to continue to strengthen our relationships with our
state and tribal partners, this budget provides $215 million in state
and tribal grants to help find solutions to air pollution. Of these
resources, $5 million will be granted to states and regional planning
bodies specifically to combat the problem of regional haze--one of the
most obvious effects of air pollution.
The Administration remains dedicated to improving children's health
by providing $68 million for the Children's Environmental Health
Initiative. These funds go for critical programs that fight such
threats as lead contamination and childhood asthma. We also are
continuing our dedication to food safety through the Food Quality
Protection Act by providing $75 million for its implementation so that
the American public will continue to enjoy one of the safest, most
abundant, and most affordable food supplies in the world.
The President's Budget continues expanding the public's right-to-
know about toxic releases in their local communities through several
initiatives. One of those new efforts is a new environmental
information system that will provide the public more critical
environmental information than ever before. Under this Initiative, the
Administration will provide $30 million to work with the states to
provide one of the Nation's greatest sources of shared, key
environmental information.
To better protect America's communities, the Administration is
again proposing the Better America Bonds Initiative. This Initiative,
which has increased by more than a billion dollars over 5 years from
last year's proposal, will help communities grow in ways that ensure
sustainable economic growth by providing them the resources they need
to address local smart-growth challenges like protecting water sources
and shrinking parklands as well as cleaning up brownfields. Through
this initiative, the Administration will provide the authority to issue
$2.15 billion for investments by state, local, and tribal governments
in 2001.
This budget provides almost $1.45 billion to continue our progress
in cleaning up the Nation's Superfund toxic waste sites. The Agency
plans to complete construction at 75 sites for a total of 830
construction completions by the end of 2001. This will keep EPA on a
path towards meeting the President's goal of 900 construction
completions by 2002. In the Clinton-Gore Administration, about three
times as many Superfund sites have been cleaned up as in the 12
previous years of the program. The new budget proposal will continue
that progress. In addition, to help communities return their abandoned
or idled industrial properties to productive use, the President has
committed $92 million for the extremely successful Brownfields
redevelopment program.
The Clinton-Gore budget request for fiscal year 2001 protects
public health and the environment by ensuring that we will be able to
provide America with cleaner water, cleaner air, better protection of
children, more protection for individual communities and a continuing
cleanup of toxic wastes and restoration of Brownfields.
The Clinton-Gore Administration's budget protects the health and
the environment of the American public. Last year, however, Congress
``earmarked'' from EPA's budget some $470 million for more than 320
special projects in individual congressional districts. These earmarks
direct money away from the Agency's core programs--the very programs
that keep the environmental cops on the beat, use the best science to
set standards to protect our children, and support the work of our
partners, the states, tribes and local governments. That is why we have
continued the Administration's policy to not carry over earmarks into
the new budget, and that is why we will continue to oppose earmarks
this year.
We also remain strongly opposed to any legislative riders that
undermine our country's basic environmental laws. Our goal is to work
with Congress to provide real protections for the Nation. I strongly
believe that the authorizing committees, the traditional forum for
discussing these issues, should again guide the process.
By providing our children and our communities with cleaner air,
cleaner water and an improved quality of life, this budget maintains
the Administration's dedication to the protection of public health and
the environment. It ensures that the Environmental Protection Agency
will have the funds to continue the seven years of unprecedented
environmental progress built under the Clinton-Gore Administration.
These are the highlights of our fiscal year 2001 request. I look
forward to discussing with you, as the year progresses, these
initiatives and innovative financing mechanisms. I would be happy to
answer your questions at this time.
ENVIRONMENTAL INFORMATION: DATA GAPS
Senator Bond. Thank you very much, Madam Administrator.
You may recall 2 years ago, then-Deputy Fred Hansen
indicated that environmental information issues would be a high
priority. I am disappointed in the progress to date. We still
do not have any overarching plan. A comprehensive error
correction process is still not in place, as we understand it.
We still do not have an inventory of key data gaps.
What is the problem? Why have not these things been done?
And what has been accomplished in the last year?
Ms. Browner. Mr. Chairman, this is a very high priority for
the Agency, and we have been working on it. For example, we
have created a new Office of Information Management. One of the
challenges, and you understand this, that we face that we had
historical databases of environmental information in a variety
of areas within the Agency which were collected under a variety
of statutes. We are now in the process of bringing all of that
together into one program. We are also looking at how to
modernize ongoing data collection and how to better make that
available to all of the parties that need it, which would
include the States.
It is not without its challenges; it is an enormous
undertaking. I would hope that the committee could look very
seriously at our request for funding for the States. We will be
able to do all of this information integration and management
in a much better way if the States are able to move along.
The interesting thing, Mr. Chairman and other members of
the committee, is that this is not an issue of simply States
that we would all perceive to be with the older environmental
agencies or the more sophisticated environmental programs. It
is a variety of States that are already doing it. We are
providing some modest funds. We are asking for money so that
all of the States can begin this kind of information upgrade,
this kind of computer systems upgrade, and allow us to better
manage environmental information across the country.
Senator Bond. Certainly assisting the States is a very,
very important part and something that we would be supportive
of, sure. But we do not see the plan of how it is going to
work, how this is going to fit in with your plan. In last
year's committee report, we noted that several action items,
including establishing an agenda of information products,
published semiannually, that would identify information
products EPA is preparing for the public, establishing
procedures to engage the public in development of information
products that it offers the public, and we asked for a report
by March 1 on policies to protect confidential business
information. What progress has been made on these items on page
80 of the report from last year?
Ms. Browner. We will provide a status of the report to you
within the next week. And I apologize for our tardiness in
doing that. We do have a number of actions underway. For
example, we are working with NACEPT to develop a long-term
action plan. We will, next month, be putting out a short-term
action plan. The first step was to integrate the office, and
now we are developing those plans.
We are also working with NACEPT to develop external
guidance on how best to approach our data needs and gaps. We
would be happy to provide for you a full list of all of the
things we have underway.
[The information follows:]
Report On Confidential Business Information
As we reported to Committee staff in the Quarterly report on
appropriation requirements, submitted March 17, EPA is reviewing claims
of confidentiality, including ``those claims that are based on the
argument that multiple pieces of publicly available data can be put
together to form a `mosaic' picture of trade secrets.'' EPA held
discussions with stakeholders about the mosaic effect as part of the
EPA/State Stakeholder Forum on Public Information Policies, in Chicago
on November 15-16, 1999 (for summary see EPA's Web site at www.epa.gov/
oei/issuepapers). No consensus was reached on whether the mosaic effect
exists, how extensive or serious it is, or how EPA could address it; in
fact, no examples of harm where EPA was involved were noted. This lack
of consensus was also reflected in the General Accounting Office's June
1999 report, citing the range of views expressed by industry
representatives and competitive intelligence professionals.
OEI is now in the process of examining the mosaic effect in the
broader context of revising the confidential business information (CBI)
regulations (40 CFR, Part 2, Subpart B). This review will strive to
ensure that the regulations are up-to-date, adequate, and effective.
The Agency will also examine how different program offices categorize
and protect various types of sensitive information, including
confidential information.
As part of this effort, EPA will examine its statutes, regulations,
and policies to determine the extent to which they may limit CBI
claims. We plan to publish an advance notice of proposed rulemaking in
late spring that will seek public comment on possible CBI revisions,
including potential mechanisms for addressing the mosaic effect. The
Agency also will convene a public meeting in early summer to solicit
further stakeholder comment on its CBI regulations. We believe the
Agency can best address the issues raised in the Senate Committee
report (106-161) through these efforts.
Information Management Activities
Following are descriptions of other specific information management
activities EPA has underway.
Agenda of Information Products
The Senate Subcommittee's request that EPA establish ``an agenda of
information products'' was raised and discussed at our Forum. Forum
participants agreed that providing advance notice of significant
products in planning and development stages, as well as opportunities
for public comment and stakeholder involvement, would be very
beneficial. They were concerned, however, that EPA not delay product
development unnecessarily by developing a process that was too
complicated. As a result, the Agency and our State and tribal partners
have committed to establish a workgroup to explore the concept of
developing an ``information products bulletin'' that would report on
significant upcoming information products and provide opportunity for
public comment and stakeholder participation in our product development
process. The workgroup has been tasked with finalizing its
recommendations on the scope of such a ``bulletin'' by this Fall and
making the first ``bulletin'' available in early 2001. In addition, to
assure some opportunity for notice on significant information products
currently underway, an interim products bulletin is planned for this
Fall.
Procedures to Engage the Public in the Development of Information
Products and Error Correction
As part of the development of our information products bulletin,
the workgroup will recommend the process and appropriate means for
members of the interested public to participate in the development of
significant information products. In fiscal year 2000, the Agency will
implement a web-based error reporting and tracking process for use by
the public, States, and other EPA data users. The process will allow
data users to report suspected errors in EPA data to the Agency and
will track the error resolution process from initial report through
final resolution.
ensuring information security--firewall, training, and verification
EPA has taken a number of steps to install a full firewall system
to protect EPA information systems from unauthorized intrusion. On
February 20, 2000, the third and final component of the Agency's full
firewall system was installed. The first two components, the network
gateway firewall and the public access firewall, were already
operational. The third component separates the rest of the EPA Wide
Area Network from the Internet and includes automated intrusion
detection technologies, as well as logging and analysis of accepted
inbound traffic.
EPA has completed additional measures to strengthen its information
security and plans to continue to expand and improve upon these
efforts. These efforts include increasing Agency training on
information security and the dissemination of information security
policies and procedures via an Intranet site, through all-hands memos,
and by means of seminars and conferences. EPA also is conducting
analyses of its network architecture and investment review process to
ensure that information security is adequately addressed. Finally, the
Agency has expanded its testing and verification of computer security
measures, including the use of independent analyses.
ENVIRONMENTAL INFORMATION: BURDEN REDUCTION
Senator Bond. We are concerned about this, because we have
been working on this for 2 years. I have a memo that is getting
a little yellow with age here, talking about sharing high-
quality environmental data. It is from back in April 1998. And
we are anxious to see all of these good things come to
fruition.
In an EPA memo just 1 year ago, called ``The Framework for
Early Action Projects for the New Information Office,''
reducing reporting burdens is listed as a priority activity.
But, again, when we get the GAO report on the EPA, GAO says EPA
has been playing games with the numbers and that the paperwork
burden has increased. So I have questions about how much has
been accomplished in this area.
Ms. Browner. Mr. Chairman, one of the responsibilities we
have as the Environmental Protection Agency is to not only
streamline requirements. We also have a number of ongoing
efforts underway which you are very familiar with. They are not
things that are achieved overnight. In some instances, we have
to look to the States to implement them on a daily basis. We
have to wait for the permits to come through the process.
On the other hand, and I want to be clear about this, this
administration has been very committed to reinvention and
burden reduction. We have also been committed to setting tough
standards, requiring new reductions in pollution, and expanding
the public's right to know. Thus, so when you talk about
increases, a large percentage of those increases are tied to
the very aggressive work we have had, for example, in our air
pollution program, under the Clean Air Act. This is a new
statute that we are implementing.
Under the Safe Drinking Water Act, the Consumer Confidence
Report, which we worked with this committee and members of
Congress to develop, requires time and energy for water systems
to report to their consumers the condition of drinking water.
We have also expanded the public's right to know, under
TRI. You are right in some instances, the numbers have grown.
However, we believe that is part of how we better do our job,
by requiring facilities that perhaps did not need them
previously to get permits, to reduce their pollution, and by
answering the public's right to know.
At the same time, we remain absolutely committed, within
existing and new programs, at looking at how to streamline any
information requests, and burdens that may be put on reporting
industries.
Senator Bond. We will continue on that later. I just would
note that we had been advised that there was a reduction, a 27-
million-hour reduction. That did not happen. There are many
aspects to that. We will deal with them later on.
I will turn now for questions to Senator Mikulski.
CORE BUDGET ITEMS
Senator Mikulski. Thank you very much, Mr. Chairman.
Ms. Browner, this is your eighth appearance and we do not
know if it will be your final appearance. It is conceivable
that a Gore administration would ask you to continue in the
outstanding job that you have done. And that will be up to
President Gore and you to decide.
I know Chairman Bond might have an alternative viewpoint on
this. But, either way, when we pass our appropriations for
fiscal year 2001, it will be the final days of the Clinton
administration. And I would like to ask you what would you say
are the three top things that are the must-do in this budget,
to be able to stay the course and all the way through the first
year of a new Administrator? What core budget items would you
really feel is a must-do, that we really look at and ensure
adequate funding to be able to continue the important mission
of the EPA and have the tools for either you or the next
Administrator to have? What would be your top three?
Ms. Browner. First is to honor the President's request for
an increase for the EPA core programs. As I said previously,
this is the nuts and bolts of public health and environmental
protection. EPA core programs are where we do virtually
everything that results in a cleaner environment and more
public health protection. It is an 11-percent increase.
Second, we are asking for fairly significant increases in
money to the States to manage various water pollution programs.
An example is the non-point source programs, the Section 319
grants. States are good partners in this effort, but they need
Federal financial assistance in running their day-to-day
programs. We have significant increases in this budget.
Finally, we have been very pleased that over the last
several years this has not happened and will not happen this
year, to have a bill that is essentially rider-free. One that
does not restrict how we might go about or how the next
administration might go about doing its job of public health
and environmental protection.
Senator Mikulski. Well, I appreciate those. Let me then go
to some specific things. Let us go to the brownfield issue. You
visited something called the American Can property.
Ms. Browner. Right.
BROWNFIELDS
Senator Mikulski. This was an old factory that made tin
cans, really. We had a cannery row in Baltimore. That moved out
of the community and eventually out of the State. This factory
has been recycled into a digital building. And now, 400 people
work in it. So we are pretty brownfields exuberant actually.
My question to you is, what should we be doing to, number
one, stay the course on brownfields and what improvements would
you recommend that we could do through the appropriations, both
in funding and fine-tuning some of the directions? Because I
believe not only in my own community--3,000 acres, 3,000 acres
of waterfront property that could be recycled into what now are
dead zones, into prosperity zones. And I wonder what your
recommendations for that.
Ms. Browner. We strongly recommend that the committee
maintain the split in funding that we are requesting. If you
think about the brownfields program, there are three big pieces
to it. There are the site assessment grants which is what was
used at the American Can site that you mentioned. There are the
showcase communities. We are preparing a second round of those
and, we would like to be able to continue those activities.
Showcase communities are brownfield sites where not just EPA
works, but we bring in a whole host of Federal agencies that
can be helpful.
Finally, Mr. Chairman, if I might just take a moment,
because I think this will be a source of some discussion in
your future meetings, the revolving loan program. What you are
going to hear, and this is absolutely true, is that only a
handful of loans have been made. It is a new program. It takes
a little bit of time to get these loans up and out the door.
But, we are up and running now. Once we are running, the worst
possible thing to have happen would be to miss a year of
funding.
It would be extremely important, once Congress made that
decision. We asked for several years before you made that
decision to continue funding the revolving loan program. I
think it is a half-million dollars that goes out to local
communities. The communities then loan the money out to perhaps
a developer who cannot find a bank in the initial phases. The
developer pays back the loan and another developer can become
eligible.
SAFE DRINKING WATER ACT
Senator Mikulski. In my last few minutes, we talked about
local cooperation. That takes me to the Safe Drinking Water
Act, which is so crucial for our communities. A significant
component of that Act was the new State revolving fund for the
Nation's drinking water needs. Could you share with us the
experiences you have had in implementing that? How would you
assess it? And what improvements do you think you could make?
Ms. Browner. We think it has been incredibly successful
since its inception in fiscal year 1997. Working with Congress,
we have provided $3.6 billion in funding for the SRF program.
And we really appreciate this committee's commitment and
leadership on this issue. The States will soon make their one-
thousandth loan under this program. In other words, 1,000
communities are benefitting from the work that we have been
able to do together.
I think it is also important to understand that we are
fulfilling the goals of the Safe Drinking Water Act with
respect to assistance for small systems. Three-quarters of the
loans made to date have gone to small water systems. These are
systems that serve fewer than 10,000 people. It is not
necessarily Baltimore which has the rate base and the
expertise. It is the small systems where I think has been
hugely successful. I just hope that we can continue to provide
the funds to the States so that they can meet the needs of the
smaller systems.
Probably the single greatest reason why we are seeing the
upswing in the rate of compliance in drinking water systems
across the country is the fact that these smaller systems have
access to resources that they did not have previously.
Senator Mikulski. Thank you.
Senator Bond. Thank you, Senator Mikulski.
Senator Lautenberg.
KYOTO PROTOCOL: KNOLLENBERG LANGUAGE
Senator Lautenberg. Thanks Mr. Chairman.
Administrator Browner, it was nice to hear the testimony to
you coming from both sides of the aisle, from the chairman of
the committee, the chairman of the appropriations committee.
So, be careful, it may cost you some money, but we have to take
it whenever it comes.
EPA has been accused of kind of back-door implementation of
the Kyoto Principles on Climate Change. Some people think the
Agency is developing rules and regulations despite the fact
that the Protocol has not been ratified. How do you respond to
that?
Ms. Browner. We are absolutely in compliance with what I
think is routinely referred to as the Knollenberg language.
First of all, I think, as everyone knows, there is no Kyoto
Protocol in effect in the United States. We are not doing
anything at the Environmental Protection Agency to implement a
protocol which is not in effect in the United States.
Having said that, we do believe that climate change is
probably the most significant environmental challenge the world
will ever face. We do have programs, many of them started under
the Bush administration, where we work in partnership with the
business community to help develop energy efficient products.
In fact, I was able to present awards to 25 new Energy Star
partners, everybody from I think the State of New York to the
private sector, who are investing in energy efficient
technologies, which are good business, air pollution, and
climate change decisions. This budget seeks an increase for
those programs.
Senator Lautenberg. Thank you. If anybody has any doubts
about the changes in the climate that we kind of see around us,
I would suggest that all members of the Senate take the trip
that I took just 2 months ago to go to the South Pole and see
what is happening and watch the water run where ice used to be
solid. And today they noted that an ice break was taking place
that would result in an iceberg twice the size of Delaware
floating in shipping channels out there. So keep up that focus.
Do we do anything to coerce developing countries into
accepting the standards of the Kyoto Protocols? Because India
and the President came to an understanding to protect the
environment and develop clean energy resources. Is there
anything that your Agency is doing?
Ms. Browner. No, absolutely not. We do work in partnership
with countries around the world who are interested, for
example, in exploring American technologies that may bring them
clean air and clean water. But in no way do we have anything
that ``coerces''. I cannot imagine how we would go about doing
something like that. We do not.
BEACH PROTECTION LEGISLATION
Senator Lautenberg. You are aware of the fact that I have
introduced legislation to improve water quality at our
country's beaches. And we are working hard to pass a bill this
year which would authorize funds for EPA, beginning in fiscal
year 2001, to implement the legislation. How would the EPA go
about implementing that if we were able to provide you with
these funds?
Ms. Browner. We would be thrilled to accept the
responsibility for implementing the program. One of the most
important things I think that we can do is make sure, because
of the way various States have handled beach monitoring, is to
make sure there is some continuity, so that we can put in place
what are the monitoring protocols and what are the reporting
requirements. Your State is very successful and aggressive, but
not all States are. We have a real disparity in the quality of
the information. One of the first things we want to do is to
put in place the requirements so that we are getting even
information across the country.
You mentioned in your opening statement our web site. The
effort is not because of any specific requirement that we are
imposing, but rather through the public's right to know, to
help local health departments or States really upgrade the
quality of their information. We are starting to see some
effect from that, but we certainly think your bill would be
very helpful.
DOD'S APPROPRIATIONS BILL: ENVIRONMENTAL VIOLATIONS
Senator Lautenberg. There is a provision that was added to
the conference report for fiscal year 2000 in the DOD
appropriations bill. It said, ``No funds appropriated may be
used for the payment of a fine or a penalty imposed against the
Department of Defense arising out of environmental
violations.''
Now, how has this worked in practice? I find it incredible
to say that such an important part of our government, our
Defense Department, our military installations, is exempt from
monitoring and maintaining under environmental standards that
we ask of everybody from the bakery shop, the cleaning store,
on to giant industrial companies.
Ms. Browner. We share the concern. The Governors are
equally concerned. The Governors feel it is extremely important
that they have all of the tools available to them that the
Federal laws give them under the Clean Air Act to enforce the
environmental requirements and to collect penalties if there is
a violation.
A Governor said to me recently, ``It is just ridiculous'';
we are out there enforcing against our cities and yet we cannot
enforce against a DOD facility. They are very troubled.
The administration and the President, in signing the DOD
appropriations bill last year, did so with objections to this
provision. As I understand it, the administration has told DOD
that they are to come to Congress and seek the authorization to
pay the penalties, particularly where the States are asserting
their rights to collect a penalty.
We strongly encourage Congress to reconsider the language.
The administration has prided itself, and the President signed
an executive order very early on, that Federal agencies would
not be above environmental requirements. For example, under the
President's leadership, for the first time ever, Federal
facilities, including EPA, report under the Toxic Release
Inventory.
We need to be good neighbors. Part of being good neighbors
is honoring environmental requirements. If we fail to, then we
should be subject to the penalties that any other business is
subject to. Exempting DOD we think really flies in the face of
that.
Senator Lautenberg. Mr. Chairman, thank you.
Thanks very much, Administrator Browner. I will miss you,
even if you stay here with the Gore administration.
Ms. Browner. Well, I will certainly miss you. You have been
a wonderful friend to the Agency.
Senator Mikulski. Mr. Chairman, if I could make some
comment. I know that you are going to be at many other hearings
on this subcommittee, but I would just like to acknowledge for
the record the champion that Senator Lautenberg has been both
on the authorizing and the appropriations for the environment,
particularly his steadfast support for the SuperFund cleanup of
toxic waste and the innovative approach on brownfields. So,
really, you very much are going to be missed. And I would like
to personally and professionally thank you for your
contribution.
Senator Lautenberg. Thank you.
Ms. Browner. Mr. Chairman, if I might just second that, and
say to Senator Lautenberg, frequently over the years, when I
have tried to understand why something is done at EPA, I will
say, well, where did that come from? Who did that come from?
More often than not, the answer would be, Senator Lautenberg's
provision in this or that bill. You really have been a
tremendous friend to the environment and to public health
protections, particularly to the EPA. I thank you on behalf of
all of my colleagues at the EPA.
Senator Lautenberg. Thank you.
Senator Bond. Thanks, everybody. I will miss Senator
Lautenberg, too.
Senator Lautenberg. That is the sweetest thing you have
ever said to me.
ENVIRONMENTAL INFORMATION INTEGRATION
Senator Bond. Madam Administrator, to come back to your
last answer, you talked about the extensive information that
you are getting in. And that is really why I am so concerned.
Last year, we directed EPA to provide us with assurances, with
verification from the I.G., that appropriate steps were being
taken to install firewall systems, train staff and management
on computer security, to test the integrity of the computer
security measures on a periodic basis.
We need to be able to ensure good environmental information
and we need to be able to protect from inappropriate disclosure
the confidential business information that is reasonably
disclosed to EPA. And when you have hackers getting in there
and learning that information, perhaps changing or messing with
the environmental information, we have got a problem. Clearly,
according to the GAO testimony of last month, after more than 3
years, EPA has not fixed the critical problem of computer
security.
And beyond dealing with the immediate crisis, we believe
EPA needs a long-term plan for ensuring computer security. EPA
must be on top of determining whether its intrusion detection
systems are effective. The threats are changing very rapidly.
The Office of Environmental Information, for example, must set
standards and enforce them for computer security throughout the
Agency.
I would like to know how we can be confident that EPA will
put the staff and the contractors on board to address the
problems. We need to know what assurances that you can give us.
We know that EPA is requesting $30 million for a new
environmental information integration initiative, yet we have
received few details about that. So I would also like to know
how the funds will be allocated, what will be the
accomplishments this year, and is this a multi-year funding
requirement?
Ms. Browner. Let me answer the last question first and then
go to your earlier point. On the issue for the States, I will
come back to it. While a lot of money, $30 million will not
upgrade all of the States, it will take more resources.
Senator Bond. So it will take more. I just want to know, do
you have a plan in place for how the first $30 million will be
spent?
Ms. Browner. Yes, we do. I do not know if your staff has
participated in this planning, however, other staff on the Hill
have participated. We have had some States that have already
developed programs come in and do a presentation of these
programs. We would be happy to do that again. They are quite
significant and really quite remarkable. They bring with them
burden reduction for the reporting community and better data
quality. We would be happy to do that.
[The information follows:]
Environmental Information Integration Initiative
The Agency's integration effort is foremost a partnership effort
with the States to create and sustain a national environmental
information exchange network. The scope of the effort is great. The
States and EPA currently operate with a vast array of individual data
and information relationships. Building these individual relationships
into an integrated whole will involve developing and implementing
smaller components (i.e., individual data standards, program specific
data models, etc.). While each of these components will have work plans
with detailed milestones and assignments of responsibility, there will
also be an overarching blueprint or road map that ensures consistency
and cooperation among the individual efforts.
We are currently working with the States to develop that blueprint.
A critical part of our active dialogue with the State (though the
Information Management Workgroup under the auspices of the
Environmental Council of the States) is to ensure that we are prepared
to make meaningful progress toward the network in fiscal year 2001.
Together, we have identified a number of key areas for fiscal year 2001
action, which the President's $30M budget request will support:
defining the functional and technical requirements of a data exchange
network, jointly developing and implementing essential data standards--
the core engine of information exchange and integration, developing the
technical exchange protocols that allow web-based data exchanges across
a variety of differing state and federal data systems. Even as we work
on these foundation pieces, we will identify and pursue opportunities
for establishing a number of State-EPA electronic data flows through a
central exchange function. We anticipate that implementing the ever-
advancing information technologies and the modernization efforts
underway in a number of states will allow us to see a significant
volume of data flowing in the emerging network in the next year. This
approach, building the broad foundation even as we work with individual
states on specific data exchanges will require us to provide resources
to individual states (to take bold steps forward in electronic data
exchange as well as to build capacity to participate in the network) as
well as resources to broader collective efforts (like data standards
and technical exchange protocols).
In order for EPA to be a full partner and equal peer in a State/EPA
data exchange network, we will continue our efforts in fiscal year 2001
to modernize and integrate our internal information systems. EPA's role
in this joint venture requires that our systems be integrated
internally. Data contained in EPA's unlinked stove-piped information
systems will not support a type of network that we and the States
envision. In fiscal year 2001, we will build on efforts initiated in
fiscal year 2000 to build a secure core of high quality integrated
information. We will integrate across traditional program lines to
allow multi-media geographic views of our information assets. The broad
categories for this integration are: facility and place information,
regulatory information (permitting, compliance and enforcement),
chemical and pollutant information and ambient information. In fiscal
year 2000 we brought together technical staff from EPA's programmatic
information systems to define the requirements for an integrated system
and plan for its creation. By bringing a diverse staff representing the
Agency's main programs together, we have begun the important work of
building Agency-wide support as well as identifying the priorities for
integrating our internal information assets.
COMPUTER SECURITY
Senator Bond. We have had some summary briefings. We have
not seen the plans. We would like to see the plans.
Ms. Browner. We will do that.
Mr. Chairman, on the issue of confidential business
information and security, it is a fast-moving, dynamic world
out there in the Internet. Like many in government and the
private sector, we are constantly looking at how to upgrade our
systems. There were members of Congress aware of our plans.
Specifically, they were aware of equipment to be installed,
firewalls to be built, and the schedule for doing these.
Unfortunately, after some statements made, we were advised that
we had become a particular target for hackers and that the best
thing we could do would be to bring our system down while we
installed the firewalls. We were already planning to install
these firewalls and had a schedule for installing and people
were aware of that appropriately.
It was a difficult decision, because we do service a lot of
people in industry, the public, and the States. But, we did
make the decision.
I think it would be important to note here that we have no
information, GAO has presented us with no information that I am
aware of, that CBI information has been inappropriately
accessed through our Web site. We are vigilant about that. We
have to remain vigilant about it. We did have an issue with
paper copies, and reported it several years. These were not in
our Internet system.
Second, a number of the stories or reports about
inappropriate access, or hackers as they are sometimes referred
to, are situations which we ourselves found and disclosed to
the GAO. That is the way it should work. It is not to say that
we do not need external experts or external advice. We do have
that.
Mr. Chairman, we would be happy, if we have not done so, to
meet with your staff in a more private setting to go through
with you a detailed description of the firewalls. There are
reasons why that might be something we would not discuss
publicly.
Senator Bond. Well, I think it is important. We certainly
accept that opportunity. And it is important that we have, I
think, the GAO and the I.G. involved, because they have done
significant operations in this.
Ms. Browner. They have been involved.
Senator Bond. Three years ago, we said you have to have
firewalls. And I am very disappointed that we are still----
Ms. Browner. We had firewalls, and we have been upgrading
the firewalls. Mr. Chairman, as I am sure you know, this is a
fast-moving world that we do this in. We have been upgrading
our firewalls. We had a schedule to further upgrade them and
those upgrades are now all in place.
Senator Bond. The other thing I understand from the GAO
report is that you said there has been no access to
confidential business information but, in reading the reports,
I get the real sense that there is no means of detecting
whether there has been unauthorized access. And that is one of
the problems.
Ms. Browner. As far as I know, the GAO has not notified us
that they are aware of access to CBI through our Internet. If
they are, then it is news to me.
Senator Bond. Well, I am not saying that there is. I am
saying that there is no means of determining whether there has
been or not.
Ms. Browner. Part of the firewalls are enhanced intrusion
devices. I do well to turn on my computer.
Senator Bond. I have to have help.
Ms. Browner. That is why I have a 12-year-old. He comes
around to help.
Senator Bond. Let me turn to Senator Mikulski. Further
questions?
Senator Mikulski. Mr. Chairman, I had to step outside for a
minute. Were you going over the information security system?
Senator Bond. Yes.
Senator Mikulski. Do you feel that you have covered the
ground that you needed to?
Ms. Browner. Pretty good.
Senator Bond. We are going to get together again.
Ms. Browner. We are going to have a private meeting on the
firewalls.
Senator Bond. We are going to open some sodas and cook some
hamburgers and talk at length about this.
Senator Mikulski. You better watch about those emissions
when you do that killer grilling.
INTERNET SECURITY
I, too, am concerned about the information security
aspects. First of all, we were glad that we got through Y2K.
And I think while we are looking at what we need to really
develop, I think it has really served the Nation well that we
did not have the computer glitches that could have caused
serious problems in our water supply and our waste water and so
on had that not worked at the State and local level. And I know
that you, as well as the President's task force, worked very
hard with the Governors and FEMA on that. So that was very,
very good news.
But I, too, am concerned about these security issues. More
and more people are going to be turning to EPA and they are
going to be wanting to go to your Web sites and so on. In many
ways, that really can help a lot with the right to know. Then
they can get back to you on the right to be heard. But, again,
there are these security concerns. And when you have this
private meeting, either I or my staff would like to participate
in them.
Ms. Browner. Thank you.
PUBLIC HEALTH
Senator Mikulski. I would like to be able to go to the
issues related to your interagency help. Because I am really
tremendously interested in the public health linkages. EPA, in
your strategic plan in 1997, found that there were over 25
Federal agencies that require greater integration and review of
efforts in terms of public health. Could you tell me what you
have been doing on the issues of asthma, and then, if we have
time, on the issue of lead paint? Because this cuts across what
EPA needs to be doing.
You are not meant to be a public health--I mean we have Dr.
Satcher, who is the Surgeon General, but so much of this goes
across community lines, I mean agency lines.
Ms. Browner. We agree. I think one of the real successes of
this administration has been the increased work across agency
lines. Two things that I will mention. One is regarding asthma.
I co-chair the President's Kids' Health Task Force and many
other agencies participate in. Together we have put forward a
coordinated asthma strategy, bringing together the expertise of
the various agencies. We do seek funding in this year's budget
for implementation of that strategy.
Second, we have developed a coordinated lead strategy. It
goes beyond agencies you might even think would be part of a
lead solution. Obviously HUD needs to be an important part. We
work very closely with them in terms of enforcement. But we are
also bringing in the Department of Energy. A lot of lead
contamination in older housing is a product of opening and
closing old windows. The dust comes down, the kids play in the
dust, and they ingest it.
As you look at energy efficiency, as upgrades in these
older housing stock, you can replace the window, resulting in
increase energy efficiency and lead abatement. And we are
continuing to expand our efforts with other agencies on lead
abatement.
Senator Mikulski. What have you found to have been the
major causes of asthma? And what has been the role of EPA in
dealing with this? Asthma, particularly among children, and we
see this both among the children of the poor, but as well as
the children of the middle-class, that it has in many of our
schools, reached epidemic proportions. Many of the children who
require medication during school are asthma kids. The question
is always, who can give the medication? Those are legal issues.
But I am really worried about this, and our school system is
really worried.
Ms. Browner. We have worked with Hopkins on the asthma
issue. The role of the Environmental Protection Agency is in
setting outdoor air quality standards. What the scientists and
the public health experts tell us is that we do not necessarily
know why one child is an asthmatic and another child is not an
asthmatic. They cannot answer that question yet.
What they do know and the many studies that have looked at
this, is for an asthmatic child, when the air pollution reaches
certain levels, the quality of their attack will be worse.
There are extensive studies involving what are called the
summer camp kids in New Jersey, where it actually charts their
breathing at any given moment. The air pollution goes up and
the severity of their attack goes up.
This has been our primary focus. We recognize that it is a
crisis and an epidemic. It is the single largest cause of
childhood hospital admissions in the United States today. We
are also working through our indoor air program and through our
Tools for Schools Program, to provide some advice and some
ideas on how to help reduce the children's attacks and some of
the exposures beyond the work we do on outdoor air.
Senator Mikulski. Thank you.
Thank you, Mr. Chairman.
CLEAN WATER: GAP ANALYSIS
Senator Bond. Thank you, Senator Mikulski.
Madam Administrator, in our hearing last year, we talked
about the gap analysis that EPA was working on for water
infrastructure funding needs, which identified a $200 billion
need, excluding replacement costs and operation and
maintenance. One year later, it still is not out. We have a
copy of a presentation the EPA made recently on the gap
analysis. It lays out a few critical facts: Waste water capital
investment is declining, but it needs to double; the annual gap
in capital spending for waste water treatment is increasing;
the amount paid by consumers in waste water treatment user fees
has doubled in a little over a decade. It recommends increasing
SRF authorizations and Federal grants.
In view of the funding gap for water infrastructure
financing of at least $200 billion, coupled with the prospect
of new TMDL requirements, and your own analysis would suggest a
larger Federal role is needed, why is the President's budget
cutting, once again, the Clean Water SRF by 40 percent?
Ms. Browner. Mr. Chairman, we discussed this last year. We
continue to believe that we have to modernize and reauthorize
the Clean Water Act and then, with that, provide the
appropriate funding. The administration made a commitment at
the beginning of the administration to have the Clean Water
SRF, which is one large and important part of solving water
pollution challenges in this country, but it is not the only
part.
We made a commitment to have that portion of it revolve at
$2 billion annually, in terms of loans going out annually, by
the year 2002. We are going to be there before that. The money
is moving at the rate that we promised the cities. We think it
is now time to focus all of our efforts on modernizing the
Clean Water Act. It has not been reauthorized in a significant
period of time. We know a lot more about remaining water
pollution problems and how to create a funding mechanism for
States and local governments that speak to the whole host of
remaining issues, from upgrading sewer plants to dealing with
polluted runoff.
We have money in this budget request outside of the SRF for
the dollars that go to States. As I mentioned in the previous
answer, the Section 319 money gets increased as well as the
TMDL money. TMDL is a base of $115 million. We would increase
that by $45 million. Section 319, the non-point, or polluted,
runoff money would get a 25-percent increase. It would go from
a base of $200 million to $250 million.
We are asking for specific money for the States. You and I
do not have a disagreement over the long-term infrastructure
funding needs. We simply would request that that be done
through a reauthorization process, to look at all of the
issues.
Senator Bond. It is interesting that not having an
authorization is given as a reason OMB has not submitted to us
requests for adequate funding. At the same time, we get
requests for funding for clean air partnerships and a host of
other unauthorized programs. We have fought to raise the amount
spent on the Clean Water Revolving Fund each year, and that is
the only reason we are getting up close to $2 billion. But even
that $2 billion fund, given the information that we have, is
woefully inadequate.
Your own Agency officials have said the United States now
spends about $9.4 billion annually on waste water and wet
weather infrastructure, but needs to spend $15 billion. And by
the year 2020, the annual investments needed will be $21
billion to meet the projected waste water treatment needs
alone. Are you saying that having a $6 billion annual funding
gap is acceptable in this?
Ms. Browner. No, we are not suggesting that. We want to
work with Congress, to modernize the law and the funding
programs.
I am not sure what copy you have. I think it may be a copy
we provided to your staff of our initial gap analysis. We are
finalizing that, as I promised you we would do. We will be back
up in April to give you the final report. Hopefully, that can
form a basis for working together, through this committee and
the authorizing committee, to find the appropriate legislation
and then the appropriate funding.
Senator Bond. Again, I would like to see the Clean Water
law reauthorized. As far as I know, there are not any problems
in the SRF's related to the authorization.
Senator Mikulski, do you have any further questions, or can
we finish it up?
Senator Mikulski. No, Mr. Chairman. We can finish it up.
TMDL
Senator Bond. Okay, we will go very quickly, and I will try
to summarize these things.
Senator Mikulski. Very good.
Senator Bond. We appreciate very much your participation.
Ms. Browner, you support flexible approaches to achieving
environmental standards. Yet the EPA TMDL approach is the old
style, command and control, one size fits all. As an example,
concerns have been raised by experts that EPA's proposal
discourages a cap-and-trade system for reducing nutrients in
surface water. Is not a cap-and-trade system one of the most
promising means for meeting water quality standards?
Ms. Browner. If someone has suggested that we are opposed
to cap-and-trade and TMDL's, they are categorically wrong. We
are not. They provide a huge opportunity for finding cost-
effective solutions. I have been a big proponent of them in the
air pollution programs where they are used to great success. We
would like nothing better than to see States use them as a very
efficient tool for addressing remaining water pollution
problems.
Senator Bond. We had the testimony of Leonard Shabman and
Kurt Stephenson, agricultural economists in Virginia Tech's
Department of Agriculture and Applied Economics. They were the
ones who said it would.
Ms. Browner. I do not think they work for EPA. EPA likes
these programs.
Senator Bond. No. That is why I said experts, people who
are looking at it from academia.
EPA determined the proposed rule does not contain a Federal
mandate that would result in expenditures of $100 million or
more for State, local and tribal governments. Most of us here
are absolutely astonished at that conclusion. The States have
indicated to us that the estimate is at least $600 million per
year, based on the average cost of TMDL's developed to date.
What has been your experience with the TMDL's developed to
date? Do you have a cost on that or do you want to get back to
me with that?
Ms. Browner. Yes, I think we should do that.
One of the reasons, Mr. Chairman, just quickly, we had
proposed this--well, there are many reasons in the Clean Water
Act, of course.
But second, we are being sued. The cause of action, as
created in the Clean Water Act lies against EPA not against the
States, for failing to set these loads and developing sensible
plans to achieve the load reductions. So one of the reasons we
have come forward with a rule is to get out from under this
litigation. What we have are judges saying, do it more quickly,
do it in 7 years. We are proposing 15 years for the States.
So we have now done some of these. So we would be happy to
give you a figure on what any individual one that we have done
has cost.
[The information follows:]
Analysis of the Incremental Cost of Proposed Revisions to the TMDL
Program Regulations
INTRODUCTION
This report estimates the incremental costs of EPA's proposed
revisions to the TMDL program regulations. The costs estimated here are
the costs of the revised TMDL program beyond those that will be
incurred for the base program--beyond those that would be necessary to
meet the requirements of current regulations, consent decrees and State
commitments. For the purpose of estimating incremental costs, the
proposed regulatory revisions can be grouped into Five categories:
I. Changes affecting the listing program.--The changes clarify or
revise the format and content of the State 303(d) submissions, and also
require additional public participation. The proposed regulations also
request comment on options that may alter the required frequency of
submissions ranging from leaving the frequency at the current two years
to reducing it to once every four or five years.
II. Changes affecting the development and content of TMDLs.--The
proposed regulations specify elements that must be included in each
TMDL, including an implementation plan. Enhanced public participation
in developing TMDLs is also required. Most of the specified TMDL
elements are already required by existing regulations. The new required
elements for TMDLs do not mandate additional monitoring, data
acquisition or analysis, but specify that existing information that
must be obtained anyway for other ongoing water program purposes should
be organized, formatted or reported in a new manner.
III. Changes affecting the schedule for completing TMDLs.--The
proposed regulations specify that all required TMDLs must be developed
within 15 years, and that TMDLs for high priority waterbodies must be
developed first. For those few States that have not already committed
to a schedule of 15 years or less, this requirement will mandate an
acceleration of program effort.
IV. Changes affecting Agency effort.--The proposed changes in the
listing program for States will result in increased EPA effort, and
proposed changes in the content of TMDLs will increase the Agency's
effort in reviewing TMDLs. The proposed regulations highlight an option
for the public to petition EPA to take a desired action rather than
proceeding directly to litigation. EPA also will propose to provide
reasonable assurance for implementation of a TMDL when a State does not
do so--the specific procedures are included in the proposed revisions
to the Agency's permitting regulations, and a separate analysis
addresses the incremental costs that may result.
V. Summary of the impact on the Agency's Information Collection
Request.--The Agency is in the process of renewing its Information
Collection Request for the 305(b) and 303(d) programs. The proposed
regulations increase the level of effort estimated by the Agency for
States and for EPA. However, the savings that can result from adopting
an option to reduce the frequency of the required 303(d) lists could
more than compensate for the increased burden from the other changes
affecting the listing program.
In no case do any of these proposed revisions require any new
monitoring or data collection. States are already collecting the needed
information as part of this program or under other parts of the water
program. In some cases, it may be necessary to accelerate the
development of information that is already required. By and large, the
intent of many of these requirements is to improve efficiency and
national consistency by establishing uniform formats, eliminating
ambiguities, encouraging prudent planning, improving information for
public participation, and perhaps by extending the intervals between
required 303(d) lists. However, we recognize that States meeting these
requirements for the first time will likely require additional effort
in the near term, while the benefits will accrue in later years.
The remainder of this introduction summarizes the estimated costs
of the proposed regulations and outlines the general procedures we used
to develop the estimates. The remaining chapters of the report are
organized according to the five categories described above. In each
chapter, each proposed regulatory change is described in terms of its
effect, its relation to the baseline, and its potential incremental
cost.
SUMMARY OF ESTIMATED COSTS
The following summarizes the results of this analysis for those
aspects of the proposed rule that are expected to result in incremental
costs or savings to States and to the Agency. In addition, these
incremental costs are placed into perspective by comparing them to the
cost of ongoing State, Territorial and authorized Tribal programs for
water quality.
Overall Summary
The following table summarizes the results of this analysis for
those aspects of the proposed regulations that are expected to result
in incremental costs or savings to States. As shown in the table, the
proposed regulations are expected to increase the costs to States by
approximately $10.3-$24.4 million annually from the present through
2015. As shown in the summary table, the bulk of the additional costs
($10.1-$23.8 million) are associated with the proposed requirements
affecting the content and development of TMDLs. For the listing
program, if the listing cycle is lengthened, then the resulting savings
could offset the increased listing costs associated with the proposed
regulations.
The Agency anticipates that its costs will increase significantly
in the future, primarily as a result of the increased State activity
for developing TMDLs that is expected to occur in the baseline. As
reflected in the Agency's proposed Information Collection Request, the
Agency anticipates that its annual burden for the 303(d) program will
increase from about 600 hours annually to about 6,600 hours annually.
The bulk of this increase (5,600 hours) is for increased Agency effort
for approving or disapproving TMDLs that are developed by States--this
burden will occur regardless of the proposed regulation. As already
reflected in the EPA's proposed ICR for the period 3/1/99-22/28/01, the
Agency anticipates that the proposed regulation will further increase
its burden by about 450 hours annually at a cost of about $18,000
annually. If the listing cycle is lengthened, then the savings that
result to the Agency would offset the increased burden associated with
the proposed regulation.
Perspective on the Magnitude of These Incremental Costs
The requirements of the proposed revisions will impose a relatively
small additional cost to ongoing State, Territorial and authorized
Tribal programs. In fiscal year 1999 States, Territories and authorized
Tribes will receive $200 million for nonpoint sources under section
319. This represents an increase of $100 million dollars specifically
targeted for implementation of the Clean Water Action Plan. Identifying
impaired and threatened waterbodies and initiating activities designed
to attain water quality standards is a key part of establishing TMDLs.
In addition, States, Territories and authorized Tribes will receive
$105 million under section 106 for implementing their water quality
management programs, including the development of lists of impaired and
threatened waterbodies and establishment of TMDLs as required by
section 303(d). Thus, the proposed regulation's incremental costs of
$10.3-$24.4 million represent only 3-8 percent of the amount of support
provided annually by the federal government for these programs, and
undoubtedly a much smaller proportion of the total State spending for
these activities.
The proposed regulation is expected to increase EPA's costs by
$18,000 annually. This is an insignificant increase compared to the
overall annual cost of $279 million budgeted by EPA for water quality
program management.
As the number of waterbodies identified stabilizes and increasing
numbers of TMDLs are established, the additional annual costs
associated with the proposed regulation are expected to decrease. At
the same time, water quality will improve as TMDLs lay the groundwork
for more cost-effective and improved controls.
Summary of the Incremental Costs and Savings To States Associated with
the Proposed Regulations
[In millions of dollars]
Changes to the Listing Program: Annualized Cost
I.5. Listed waterbodies are grouped into 4 Parts. Only
Part 1 waters require TMDLs. H/M/L priorities must be
set for Part 1. (Additional public part. cost is
included in 7).......................................... 0.02
I.6. A State's list must include a schedule for
establishing each TMDL.................................. 0.01
I.7. Listing methodologies must be subject to public
review and submitted to EPA by January 31 each year a
list is due............................................. 0.19
I.8. A new format is prescribed for the listing
methodology............................................. 0.01
--------------------------------------------------------------
____________________________________________________
Subtotal Annualized Cost............................ 0.23
I.10. Option C: Changing to a 5-year cycle from a 2-year
cycle after the 2000 listing............................ (0.32)
--------------------------------------------------------------
____________________________________________________
Subtotal Annualized Cost Including Option C......... (0.09)
==============================================================
____________________________________________________
Changes Affecting the Content and Development of TMDLs:
II.1. TMDLs must include specified elements (costs are for
implementation plan).................................... 5.3-14.3
II.2 Minimum required public participation in TMDL
development............................................. 4.8-9.5
--------------------------------------------------------------
____________________________________________________
Subtotal Annualized Cost............................10.1-23.8
==============================================================
____________________________________________________
Changes Affecting the Schedule for Completing TMDLs:
III.2. TMDLs for all Part I waterbodies must be developed
within 15 years of listing.............................. .01-.4
--------------------------------------------------------------
____________________________________________________
Subtotal Annualized Cost............................ .01-.4
==============================================================
____________________________________________________
Total Annualized Cost (Excluding Savings from I.10.
Option C)...........................................10.3-24.4
METHODOLOGY--GENERAL PROCEDURES FOR DEVELOPING THE COST ESTIMATES
This section reviews several general elements of our cost
estimating methodology. We use the approach described in this section
to develop, in subsequent chapters, estimates for the costs of the
individual provisions of the proposed regulations. This section covers
the following topics:
--Definition of the Baseline
--Data Sources
--Time Period for Cost Estimates and Annualization Procedure
--The Number of TMDLs to Be Developed
--Labor Rates and Costs for Supervisory and Clerical Functions
--Affected Entities
--Costs When EPA Performs a Function Rather Than a State
Definition of the Baseline
Estimates of the incremental impact of some of the proposed
revisions are sensitive to how the baseline of current program
requirements is defined. The more that is said to be already required
in the baseline, the less is the incremental burden of the proposed
regulations. For this report, the baseline has been defined as the
greater of:
1. The requirements of existing TMDL regulations, other existing
water program regulations, and consent decrees affecting the program;
and
2. Current State program practice, as reflected in the combination
of recent State TMDL program performance and commitments the States
have made regarding future performance.
Practices called for by EPA's TMDL program guidance materials--to
the extent they go beyond existing regulatory requirements and to the
extent State performance falls short of them--are therefore not
included in the baseline.
Several examples will clarify the application of this definition.
First are instances where State practice falls short of existing legal
requirements:
--In some cases, existing Federal regulations require States to do
something that they may not have done in practice. For example,
existing regulations \1\ require each State to describe the
methodology it used to develop its 303(d) list. Despite the
existing regulation, in some cases some States have not
provided this description of their listing methodology. The
proposed regulations restate and clarify the requirement to
describe the listing methodology. Under our definition of the
baseline, we attribute no incremental cost to this provision of
the proposed regulations. States are required by existing
regulations to describe their listing methodology. The cost of
doing so is associated with the current program; it is not a
cost of the proposed revisions.
---------------------------------------------------------------------------
\1\ 40 CFR 130.7(b)(6).
---------------------------------------------------------------------------
--The proposed regulations go further to specify the format of the
State's description of its listing methodology. This does not
appear in existing regulations, and few if any States have
described their listing methodology in this manner. In our
view, this proposed requirement does impose incremental costs
beyond the baseline. The incremental costs we estimate,
however, are not the entire costs for a State to describe its
listing methodology, but the added costs of describing the
methodology in this particular manner. A description of the
State's listing methodology and the on-going costs of preparing
the description are part of the baseline. The costs of this
proposed regulatory provision are whatever additional costs
accrue in providing the description in this more specific
format rather than in the less specific format that would
suffice under the existing regulations. Further, the effort to
reformat the description would only be a one-time cost.
In other cases, State practice exceeds what is called for by
existing legal requirements (current regulations and existing consent
decrees). Here we assume that States will continue their current
practice, and the proposed regulations will impose costs only to the
extent that they require more than what States are currently doing.
Here are two examples:
--Existing Federal regulations do not explicitly require an
implementation plan as a part of each TMDL. The consensus among
TMDL practitioners, however, is that a thorough TMDL should
include such a plan, describing how the TMDL decisions will be
implemented and how progress will be monitored toward
attainment of the water quality standards. Accordingly, many of
the TMDLs that States have developed recently (perhaps roughly
\1/4\ of them, as discussed in chapter II) have included an
implementation plan, even though EPA regulations have not
required these plans. The proposed regulations will now
explicitly require implementation plans for all waters for
which TMDLs will be developed. We assume in the baseline that
States will not backtrack on their current practice of
preparing these plans for about \1/4\ of the TMDLs. In the
absence of the proposed regulations, States will continue to do
this. We therefore estimate that the incremental cost of the
proposed regulations requiring these plans will be roughly the
average cost of preparing such plans for a typical TMDL
multiplied by \3/4\ of the total number of TMDLs to be
prepared.
--Existing Federal regulations do not specify the time by which a
State must complete TMDLs for all its listed waters.
Nevertheless, due to public pressures, legal action and other
factors, most States have now committed to complete their TMDLs
within some specified time frame. Eleven States have signed
consent decrees committing to deadlines for completing all
their TMDLs, and 40 additional States have made other deadline
commitments to EPA. States have chosen a variety of time frames
for completing their TMDLs, ranging from as little as three
years to as many as twenty. The proposed regulations will now
require all States to complete their TMDLs within 15 years
after listing, thus effectively requiring that all TMDLs for
waters listed in the year 2000 (the first list to which the new
regulations would apply) must be completed by 2015. We assume
the existing State commitments to be part of the baseline--we
assume that State practice will match what they have committed
to. All but 4 of the States have committed through consent
decrees or otherwise to complete TMDLs for all their currently
listed waters by 2015--3 states are in the process of making
their commitments and one state planned on completing its TMDLs
by 2018. Thus, the proposed regulations may have an incremental
impact on these four States to the extent it requires them to
accelerate their planned pace for completing their TMDLs.
To summarize, the baseline we define for purposes of incremental
costing is the greater of existing legal requirements (regulations and
consent decrees) and existing practice (recent State performance and
commitments).
Data Sources
Most estimates of the amount of staff level of effort (LOE) needed
to perform a new task required of States by the proposed regulations
have been provided by a State representative. Estimates of the State
LOE associated with the baseline 303(d) listing program have been drawn
from EPA's analysis of the respondent burden for this program as
reported in the Agency's most recent approved Information Collection
Request (ICR) submission. Similarly, estimates of the Federal LOE
required for tasks under the baseline listing program are also drawn
from the ICR.
Other information is drawn from a review of State 303(d) list
submissions, TMDLs submitted to the Agency, and a data base of listed
waters prepared by Tetra Tech, Inc.\2\ This information was current as
of early December, 1998. It includes those State list submissions and
TMDLs received by EPA Headquarters and entered into the data base as of
this time. For most States, this means their 1998 lists, but for some
States that had not yet submitted their final 1998 lists or for which
data base entry was not yet complete, our information is based on their
1996 lists. This information can be updated as more 1998 lists are
submitted and analyzed. The cost estimates will likely change slightly
as this newer information is incorporated.
---------------------------------------------------------------------------
\2\ Kevin Kratt, Tetra Tech. ``Updated memo on TMDL listing and
development questions relating to EPA's new regulations.'' November 20,
1998.
---------------------------------------------------------------------------
Time Period for Cost Estimates and Annualization Procedure
The first 303(d) lists to which the proposed regulations will be
fully applicable will be the lists to be submitted in 2000. The
proposed regulations will require TMDLs for all listed waters to be
completed within 15 years, by 2015. We have chosen the time period for
the cost analysis as extending from the beginning of 1999 through 2015
so as to encompass the full cycle of program activities for this set of
waters--from initial work on the listing through completion of TMDLs
for all these waters. We estimate the incremental costs associated with
each provision of the proposed regulations over this 17 year period.
Some of these costs will occur once during this period (such as the
one-time costs associated with adopting a new format), some will occur
several times (e.g., under one option proposed for the listing program,
lists will be required to be submitted every 5 years, starting in 2000
and then in 2005, 2010 and 2015), and some will occur each of the
thousands of times a TMDL is developed during this period. In each
case, we estimate the amount of the cost and how often and when it will
recur during this period. Projected costs are then summed for each year
from 1999 through 2015 and discounted back to the beginning of 1999
using the OMB-recommended real discount rate of 7 percent annually.
When discounting, we assume that all of the costs incurred in a year
occur at the beginning of the year--this is a conservative assumption
that tends to increase the present value cost of the proposed
regulations. We then annualize this present value figure over the 17
year period of analysis. The result is the estimated annual cost of
each proposed regulatory requirement.
The Number of TMDLs to be Developed
One of the most important data elements needed in estimating the
costs of the proposed regulations is the number of TMDLs that will need
to be developed over this time period. Some of the proposed regulatory
requirements increase or accelerate the cost of developing a typical
TMDL. The total cost of such requirements can generally be estimated by
multiplying the cost increase for a typical TMDL by the number of TMDLs
to be developed. Unfortunately, there are several unknowns in
estimating the number of TMDLs to be completed.
The best initial indicator of the number of TMDLs is the number of
waters listed by States in their 303(d) lists. By combining the most
recent lists from each State, we estimate a current national inventory
of some 20,198 listed waters. The ultimate number of TMDLs needing
development will differ from this number for several reasons:
--Several sorts of waters must be included on States' 303(d) lists
even through they will not in the future need TMDLs developed
for them. These sorts include: (1) Waters that are impaired or
threatened by pollution (e.g., flow alteration or exotic
species) rather than pollutants and that are thus not amenable
to TMDLs; (2) Waters that have already had TMDLs developed for
them, but for which WQS have not yet been attained; and (3)
Waters that are impaired, but for which planned activities
other than TMDLs will bring them into attainment. Under the
proposed regulations, these three sorts of listed waters not
needing TMDLs would be classified in separate parts of a
State's 303(d) list.
--Many additional currently listed waters will eventually prove not
to need TMDLs. States often list waters on a conservative
basis, choosing to list a water even though the information
suggesting that it is impaired is very limited. Subsequent
monitoring may find that the water is not impaired and need not
be listed.
--On the other hand, not all the waters that will eventually need
TMDLs are currently known and listed. States have monitored or
assessed only a fraction of their waters. As assessment and
monitoring efforts expand to more of the Nation's waters, more
impaired waters needing TMDLs will be found. The States' 303(d)
lists submitted in 2000 will undoubtedly include some waters
recently discovered to be impaired that were not on the 1998
lists. Similar additions will occur in the lists due in future
years after 2000.
Some perspective on the likely balance between the factors tending
over time to increase the number of listed waters and other factors
decreasing it is provided by the change between 1996 and 1998 in the
number of waters listed by States. For the 38 States for which 1998
list data has been tabulated, the 1998 lists in total are about 35
percent longer than the 1996 lists. This suggests that the discovery
over time of new impaired waters that should be added to the lists has
had a greater impact than the process of paring the lists down by
eliminating waters that really do not need to be listed (in effect,
that the third of the bulleted factors mentioned above has outweighed
the second).
Additional factors complicate the relationship between the number
of listed waters and the number of TMDLs that will need to be done:
--Many listed waters have more than one cause of impairment, and a
TMDL may be needed to address each cause. For the 1998 303(d)
lists, there are about twice as many causes of impairment as
waters. If each cause were to require a separate TMDL, then
about twice as many TMDLs would be required as there are
waters. However, it is often possible to develop a single TMDL
that simultaneously addresses multiple causes of impairment in
a water.
--The geographic scale at which TMDLs are developed may not match the
scale at which waters are listed. Some listed waters are very
large, and multiple TMDLs will likely need to be developed for
different portions of a single listed water. Conversely (and
probably more commonly) some listed waters have water quality
problems and potential solutions that are very closely related
to those for adjoining listed waters, and a single TMDL can be
developed on a watershed basis addressing a set of several
listed waters.
In sum, there are large uncertainties about how many currently
listed waters will not need TMDLs done for them, about how the number
of listed waters will change over time, and about how many TMDLs will
be needed per listed water. Assessing the combined impact of the
various factors affecting the relationship between the number of
currently listed waters and the number of TMDLs that will eventually
need to be done through 2015 is extremely difficult. Our rough guesses
are that:
--The three factors we cited initially--the three sorts of currently
listed waters that will not need TMDLs, the deletion from the
lists of waters that ultimately prove not to be impaired, and
the addition to the lists of additional waters found to be
impaired--on balance will result in a number of waters
eventually needing TMDLs that is somewhat greater than the
current number of listed waters.
--The ``causes'' information suggests that a minimum of 1 and a
maximum of 2 TMDLs on average will need to be developed per
listed water.
--The frequency of geographic consolidation of TMDLs (developing one
TMDL on a watershed basis that covers several listed waters)
will prove much greater than the frequency of geographic
disaggregation (developing multiple TMDLs to cover disparate
sections of a single listed water).
On balance, we will assume, we believe conservatively, that the
roughly 20,000 currently listed waters will result in the need to
develop between about 20,000 and about 40,000 TMDLs over the period
from the present through the year 2015.
Labor Rates and Costs for Supervisory and Clerical Functions
A State representative provided an estimate of $80,000 as the
typical current fully loaded cost (including salary, all benefits and
indirect costs) of a technical State FTE with typical qualifications
for performing TMDL work. This is generally consistent with estimates
made by states that have prepared workload estimates for their water
quality and TMDL programs.\3\ By contrast, the cost of an EPA FTE
working on the 305(b) or the 303(d) program has been estimated to be
somewhat higher, at $83,971 per year.\4\
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\3\ For example, the Washington State Department of Ecology
developed a detailed workload model for their TMDL program. For this
model, they estimated that the current annual cost of an FTE is roughly
$80,000 per year. (Total Maximum Daily Loads Workload Model, Program
Definition and Cost. Department of Ecology Publication # 98-26, July
1998, page 9).
\4\ EPA's recent ICR for the 305(b) and 303(d) programs assumed
that work was done by staff at an average salary level of Grade 10 Step
7, and applied an overhead rate of 110 percent. Using 1998 salary
rates, this amounts to a loaded labor rate of $83,971 per FTE.
---------------------------------------------------------------------------
The State representative also expressed some concern that EPA's
proposed TMDL program regulations might slightly increase the average
quality of the State technical staff needed (e.g., the increased public
participation requirements would increase the need for skilled public
meeting facilitators) and increase States' needs for travel money and
laptop computers. He suggested that, in order to be conservative in our
cost estimates, we might want to assume that the additional State LOE
required by the new regulations, with support, might cost slightly more
than the $80,000 figure for the fully loaded average cost of an FTE
under the current program. In response to this suggestion, we have
assumed that the additional State LOE required by the new regulations
will cost as much as an EPA FTE, or $83,971 per year. EPA's recent ICR
makes the same assumption that State FTEs cost the same as EPA FTEs. On
an hourly basis, this is the equivalent of a fully loaded cost of
$40.37 per hour. In this cost analysis, therefore, we assume that
incremental State technical LOE required by the proposed regulations
costs $40.37 per hour.
This accounts for the cost of the incremental technical staff
hours. To this we add the costs of clerical and supervisory support for
the technical staff hours, as follows. The State representative cited
the detailed study conducted by the State of Washington that found that
one clerical worker was needed for every 8.5 technical staff and one
supervisor was needed for every 7.7 technical staff. Together, clerical
and supervisory personnel needs are thus approximately .25 FTE for
every 1 technical FTE.\5\ We thus added a 25 percent factor for
clerical and supervisory support to the estimates provided for the
technical LOE needed to accomplish a task required by the proposed
regulations. All the LOE estimates provided in this report include this
25 percent factor, they therefore include both the technical and the
clerical/supervisory support needed to meet the requirements of the
proposed regulations.
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\5\ 8.5 technical staff per 1 clerical staff means 118.5 or 0.1/8
clerical per technical. 7.7 technical staff per 1 supervisory staff
means 1/7.7 or .130 supervisory per technical. Summing the two gives
.248 clerical plus supervisory per one technical.
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Affected Entities
In this document, we use the term ``States'' for convenience to
include the 50 States plus the District of Columbia, Puerto Rico, the
Virgin Islands, American Samoa, Guam, and the Commonwealth of the
Northern Marianas. When we refer to the cost for a typical State to
perform an activity, we mean the average cost that will be incurred
across these 56 entities. We will often then multiply this average cost
by 56 to obtain a national cost estimate. In the future, Tribes may
apply and be authorized to implement the TMDL program for their waters.
If so, the average cost per ``State'' would need to be multiplied by
more than 56 to obtain a national cost estimate.
Costs When EPA Performs a Function Rather Than a State
Many TMDL program activities must be performed by EPA in instances
when a State fails to perform a required function. When this happens,
it is likely that EPA's cost of performing these functions will be
higher than the State's costs for several reasons: EPA's performance in
stepping in for a State will likely be less efficient than the State's
performance would have been; EPA personnel will be less familiar with
the particular State context and because of increased travel needs,
EPA's LOE would probably be greater than the State's would have been.
We have not estimated in this report the likely increased costs for
EPA to perform a required TMDL program function when a State does not
perform it. There are several reasons why we have not made such
estimates:
--Most importantly, it is EPA's expectation that in virtually all
cases the States will perform the functions that are being
asked of them. Two primary purposes of the proposed regulations
and supporting draft guidance are to clarify and bring
consistency to the TMDL program and to provide States with the
necessary information so that they will fully and successfully
implement the program.
--Apart from the reasonable assurance issue, we have no reason to
foresee any instances in which a State is unlikely to perform a
required function, and no basis for estimating quantitatively
how often States might not perform required functions.
However, in the case of the reasonable assurance requirement,
States may occasionally be unable to meet a specific requirement of the
proposed regulations. The specific procedures for this requirement are
included in the proposed revisions to the Agency's permitting
regulation, and a separate analysis addresses the incremental costs
that may result.
i. proposed revisions affecting the listing program
The proposed revisions that alter the listing program in ways that
might be thought to affect cost are:
1. Clarifying the definition of ``threatened.''
2. Codifying the scope of the lists to include waterbodies that are
impaired or threatened by atmospheric deposition, and by all
combinations of point and nonpoint sources (i.e., point sources only,
nonpoint sources only, and a combination of point and nonpoint
sources);
3. Expanding the scope of the lists to include waterbodies that are
impaired or threatened by pollution (as well as pollutants);
4. Requiring that waterbodies remain listed until standards are
attained (rather than only until TMDLs are approved);
5. Changing the format for specifying priorities by requiring that
listed waterbodies be grouped into 4 categories (Parts 1 through 4,
with TMDLs required for Part 1 waterbodies only), requiring that Part 1
waterbodies be prioritized into three groups (as either high, medium or
low priority), and requiring that Part 1 waters with certain
characteristics be assigned high priority;
6. Eliminating the requirement that states identify the TMDLs to be
completed within 2 years, and replacing it with a requirement for
comprehensive, TMDL-specific schedules as part of the listing:
7. Requiring that a State's listing methodology be subject to
public review and submitted to EPA by January 31 prior to each
submission;
8. Changing the format for a State's required description of its
listing methodology; and
9. Changing the date by which lists must be submitted to EPA to
October 1 from April 1.
The incremental impact of each of these revisions is discussed
below in Sections I.1.-I.9. The combined incremental impact of these
revisions is summarized at the conclusion of this chapter.
In addition, the proposed regulations ask for public comment on
options for further altering the frequency with which lists must be
submitted:
10. Options for altering the listing cycle, ranging from leaving it
a 2-year cycle to changing it to a 4-year or 5-year cycle, either
effective immediately or subsequent to the next listing due in the year
2000.
The incremental costs (which in this case amount to savings rather
than costs) associated with some of these options are evaluated in
Section I.10.
Some provisions in the proposed regulations affecting the listing
program are not addressed in this chapter because they clearly have no
or minimal incremental cost or savings associated with them. These
include:
--Revising the definitions of TMDL, wasteload allocation and load
allocation, as well as adding definitions for the terms
pollution, pollutant, impaired waterbody, thermal discharge,
and waterbody. These definitions are intended to clarify
meaning rather than to change the substance of the definitions,
and do not affect the listing program. To the extent that any
of these revisions might affect the cost of developing TMDLs,
they are discussed in the next chapter (II. Proposed Revisions
Affecting the Development and Content of TMDLs.)
--Requiring a georeference for each listed waterbody does not affect
incremental cost because EPA already has a program nearing
completion that provides this capability at no cost to the
States.
--Additional revisions that do not affect cost include:
--Eliminating the existing regulatory provision that a rationale be
provided for any decision not to use some existing and
readily available data and information.
--Clarifying that violation of a narrative criterion is a basis for
placing a waterbody on the Sec. 303(d) list.
--Clarifying the steps and time frames for actions that EPA will take
if the Agency disapproves a State submittal (list or TMDL).
This chapter focuses on the incremental costs or savings that
States may realize due to the provisions of the proposed regulations.
Chapter IV includes the impact of the proposed regulations on the
Agency's workload.
I.1. The definition of ``threatened'' waterbody is clarified.
Requirement
The proposed regulations clarify ``threatened'' to mean that
adverse declining trends for a waterbody currently meeting water
quality standards indicate that standards will be exceeded by the next
listing cycle.
Baseline
The existing regulations include the requirement to list threatened
waterbodies, but do not define ``threatened.''
Incremental Cost
The additional costs of this clarification are expected to be
minimal for two reasons. First, no additional data or information are
needed for States to apply this definition. Second, the time horizon
specified in the definition only requires a very near-term focus (one
listing cycle), and likely represents the minimum time horizon that
States might use to comply with the existing requirement to list
threatened waterbodies. Further, this clarification may reduce costs in
those cases where States previously interpreted ``threatened'' to
require a longer term assessment, such as projecting a decade ahead.
I.2. The scope of the lists is codified to include waterbodies that are
impaired or threatened by atmospheric deposition, and by all
combinations of point and nonpoint sources.
Requirement
The proposed rule codifies EPA's existing policy that waterbodies
impaired or threatened by atmospheric deposition be listed. The
proposed regulations also codify the Agency's long-standing
interpretation that the Sec. 303(d) listing requirement applies to
waterbodies that are impaired or threatened by any combination of point
and nonpoint sources (i.e., point sources only, nonpoint sources only,
or a combination of point and nonpoint sources).
Baseline
The proposed regulations arc consistent with the Agency's long-
standing interpretation and policy regarding atmospheric deposition and
combinations of point and nonpoint sources.
Incremental Impact
No additional costs are anticipated since the proposed regulations
do not alter existing requirements.
I.3. Expanding the scope of the lists to include waterbodies that are
impaired or threatened by pollution.
Requirement
This proposed revision requires States to use existing and readily
available data and information to list waterbodies that are impaired or
threatened by ``pollution'', in contrast to only those impaired or
threatened by ``pollutants''. States are not required to obtain any new
data or information to comply with this requirement. The revision adds
cases where impairments or threats cannot be linked back to any
specific substance or parameter added to the water (i.e.,
``pollutant'', including chemicals, sediment, BOD, bacteria, heat,
etc.), such as for flow alterations. Waterbodies that are listed as
impaired or threatened by pollution but not pollutants will be listed
as Part 2 waterbodies (discussed further below in Section I.5.) and
TMDLs are not required for them.
Baseline
Waterbodies impaired or threatened by pollution are already
identified as part of the 305(b) reports that States provide. Many
States have gone further and include on their 303(d) lists some of
their waterbodies that are threatened by pollution. For example, during
the 1996 listing cycle, 35 of the States' lists identified at least one
water listed because of a pollution cause, and 16 of these States'
lists identified many waterbodies listed due to pollution causes. From
available information for the 1998 listing cycle for 38 States, at
least an additional 6 States have identified pollution causes, of which
4 states identified many causes.
Incremental Cost
EPA does not anticipate that these proposed revisions will
significantly increase the resources needed to prepare listings. States
have already identified all impaired and threatened waterbodies in
their 305(b) reports whether due to pollution or pollutants. Further,
States that have already listed many waterbodies that are impaired or
threatened by pollution should be only minimally affected by this
requirement.
As discussed above, at least 20 States have already listed many
waterbodies for such causes. The 36 States that have not listed
waterbodies for such causes previously, or who have done so only to a
limited extent, may feel it appropriate to hold a public meeting
regarding their new policy for listing waterbodies affected by
pollution. This public meeting might be in addition to the public
participation that already occurs as part of the State's listing
process. If needed, this additional public participation effort would
only occur once in support of the State's 2000 listing. However, as
discussed below in Section I.7., the proposed regulations already
require that all States hold an additional public meeting that could be
appropriate for this purpose. The additional public participation cost
that might be associated with this requirement has been included in the
incremental cost estimated in Section I.7. below.
I.4. Waterbodies are listed until standards are attained.
Requirement
Currently, most States list waterbodies until TMDLs are approved,
then drop them from their lists. The proposed revision requires that
waterbodies remain listed until water quality standards are actually
met. This only affects when waterbodies are removed from the list, and
does not require the development of any information that wouldn't
otherwise be available anyway. These waterbodies will be listed as Part
3 waterbodies, as discussed later in I.5.
Baseline
In most States, a water is removed from the list when all required
TMDLs for that water are approved. However, the Agency's current
guidance allows waterbodies to remain on a State's list until standards
are attained. Some States, such as those in Region 10, have already
been following this practice.
Incremental Cost
No additional costs are anticipated as a result of keeping
waterbodies listed until standards are attained.
I.5. Waterbodies must be grouped into 4 Parts (1-4), with only Part 1
waterbodies requiring TMDLs and these must have high, medium
and low priorities set for them. Part 1 waterbodies with
certain characteristics must be classified as high priority.
Requirement
The proposed revision requires that waterbodies be grouped into 4
categories as follows:
Part 1: Waterbodies impaired or threatened by one or more
pollutants requiring the development of TMDLs.
Part 2: Waterbodies impaired or threatened by pollution rather than
pollutants. A TMDL is not required for waterbodies on this part of the
list.
Part 3: Waterbodies for which EPA has approved or established a
TMDL, but for which water quality standards have not yet been attained.
Part 4: Waterbodies that are impaired, but for which planned
activities other than TMDLs will bring them into attainment. If such a
waterbody does not attain water quality standards by the next listing
cycle, the waterbody must be included in Part 1.
Only Part 1 waterbodies require TMDLs to be developed and
priorities to be established. The proposed regulations further specify
that, starting with the 2000 listing, Part 1 waterbodies must be
grouped into three classes of priorities: high, medium and low. The
proposed regulations specify that high priority Part 1 waterbodies must
include all waterbodies for which the designated use is public drinking
water supply or that contain or serve as habitat for endangered or
threatened species under section 4 of the Endangered Species Act. The
definition of medium and low priority is left to the States'
discretion. High priority waterbodies must have TMDLs completed for
them before low and medium priority waterbodies, and all of the Part 1
waterbodies must have TMDLs completed for them within 15 years of being
listed as Part 1--the impact of requiring that TMDLs be developed
within these specified time frames is evaluated in chapter III (III.
TMIDLs Must Be Completed Within Specific Time Periods).
Part 2 waterbodies were discussed earlier in Section I.3. and Part
3 waterbodies were discussed earlier in Section I.4.
The proposed regulations do not alter the current requirements for
Part 4 waterbodies. The proposed regulations do clarify that the time
horizon over which attainment must be achieved for these waterbodies is
15 years plus the length of one listing cycle.
Baseline
There is no current requirement to group waters. However, no new
data or information is needed for States to group their waterbodies in
accordance with the four categories (Parts 1-4) as now specified in the
proposed revisions.
With regard to setting priorities, States are already required to
set priorities for listed waterbodies under the current program. About
75 percent of the States in their 1996 lists assigned some type of
priority to their impaired waterbodies, and an additional 10 percent
assigned some type of priority in their 1998 lists. Some States
assigned explicit high, medium and low priorities to each water. Some
States separated their lists into several tiers (e.g., First, Second,
Third) and waterbodies in each tier were assigned the same priorities.
Some States actually ranked all their waterbodies or watersheds in
numerical priority order. Some States set priorities using a rotating
basin approach, planning to develop TMDLs at the same time for all
waterbodies located in the same basin. Overall, about 10 of the 56
States used approaches for setting priorities that are essentially
equivalent to high, medium and low priorities or that can readily be
grouped in this manner.
Incremental Cost
Setting priorities is already a statutory requirement and an
ongoing process under the current program. The cost of developing and
applying approaches for setting priorities is part of the cost of the
existing program, even for States that have not yet developed or
applied approaches for setting priorities. Therefore, it is not
appropriate to attribute any of the cost of this existing requirement
to set priorities to the proposed revisions. The proposed regulations
do specify the way that priorities must be set, adding modestly to the
cost of setting priorities, as discussed below.
The proposed revisions require a change in the way that waterbodies
and priorities are grouped. It is anticipated that the additional
effort to group waterbodies into the 4 Parts would be small. Further,
it is anticipated that there would not be much additional effort needed
to identify the small number of high priority waterbodies (i.e., those
for which the designated use is public drinking water supply or that
contain or serve as habitat for endangered or threatened species).
States that are not already grouping waterbodies according to high,
medium and low priorities may require an additional one-time effort to
re-orient their approaches for setting priorities for Part 1
waterbodies. On average, about 100 hours of effort should be adequate
for revising an existing priority setting system to meet the
requirements of the proposed regulations. Since 10 of 56 States already
employ approaches that provide the equivalent of high, medium and low
priorities, perhaps 46 listings may require the additional 100 hours of
effort to revise their priority setting systems. However, since the 10
states that already have appropriate priority setting systems may still
wish to re-evaluate their systems in light of the proposed regulations,
we conservatively assume that all 56 states will require, on average,
an additional 100 hours of effort. This one-time effort amounts to an
additional 5,600 hours (about 2.7 FTE) at $40.37/hour for a total one-
time cost of $226,075 to be incurred in 1999. The present value of this
cost is $226,075 \6\ and the annualized cost of this one-time effort
through 2015 is $21,641.
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\6\ As discussed previously in the methodology section, all costs
are discounted to January 1, 1999 and all costs incurred in a year are
conservatively assumed to occur at the beginning of the year. Thus, the
present value of any costs incurred at any time in 1999 ($226,075 in
this case) is the same as the undiscounted cost ($226,075). This is a
conservative simplifying assumption because it maximizes the present
value of any costs incurred.
---------------------------------------------------------------------------
In addition, States that are substantially revising their priority
setting systems as a result of the proposed regulations might wish to
hold an additional one-time public meeting for this revision. This
additional public participation has been included within the
incremental cost for the new requirement for public participation
discussed below in Section I.7.
Finally, it is not anticipated that the proposed regulations will
result in additional costs for Part 4 waterbodies. Part 4 waterbodies
are cases where States expect attainment of standards without TMDLs.
If a State's expectation for a waterbody proves wrong, the existing
regulations would require the development of TMDLs. The proposed
regulations' requirement to reclassify Part 4 waterbodies as Part 1
waterbodies if they fail to achieve attainment within one listing cycle
only clarifies that there must be a reasonable time horizon for the
expectation that standards will be attained. This requirement limits
the time horizon to one listing cycle plus 15 years (the time limit for
completing TMDLs that are newly listed as Part 1 waterbodies), Thus, a
waterbody that is classified as Part 4 in the 2000 listing, must
achieve attainment by the next listing--2002 for the current two-year
cycle, 2004 if a 4-year cycle is adopted and 2005 if a 5-year cycle is
adopted; if the waterbody is not in attainment by then, it must then be
classified as a Part 1 waterbody, and therefore it must either achieve
attainment or have a TMDL developed for it within 15 years--2017 for
the current two-year cycle, 2019 for a 4-year cycle, and 2020 for a 5-
year cycle. The time frame that States currently apply when
anticipating that waterbodies will achieve attainment without the need
for TMDLs should be well within the 17-20 year time horizon as
clarified by the proposed regulation.
I.6. A State's list must include a schedule for establishing each TMDL,
replacing the existing requirement to target only those TMDLs
that will be completed within 2 years.
Requirement
The proposed regulations require that States develop comprehensive
schedules for developing TMDLs for all waterbodies included on Part 1
of the list. This requirement would replace the existing requirement to
identify only those TMDLs to be developed within two years. Further,
the workload for establishing TMDLs must be reasonably paced over the
duration of the schedule. As time passes, States may alter the sequence
of TMDL development from the original schedule as technical and
analytic needs demand. Therefore, the comprehensive schedule commits
States more to the overall pace of TMDL development, rather than to a
rigid schedule for specific TMDLs.
Baseline
The proposed provision replaces the current requirement that States
identify those waterbodies for which TMDLs will be developed over the
next two years.
Past and ongoing litigation has and will likely continue to result
in States preparing comprehensive schedules for developing TMDLs. 11
States representing about 30 percent of the national total of listed
waterbodies have already developed comprehensive schedules as part of
Consent Decrees. Plaintiffs have filed litigation for another 15
States, representing 33 percent of the national total of listed
waterbodies; and notices of intent to sue have been filed in 5
additional States. Thus, it is likely that, due to current litigation,
comprehensive schedules for developing TMDLs would be prepared in the
baseline for perhaps half of the States, representing a substantial
portion of the TMDLs.
About half of the States use a rotating basin or watershed approach
to water quality management, in which States work sequentially through
each of their basins on a five year cycle, and schedule all their
activities in these basins or watersheds accordingly, including
establishing TMDLs.
Incremental Cost
States with Consent Decrees already have comprehensive schedules
for developing TMDLs. States that use a rotating basin or watershed
approach to water quality management should be able to readily schedule
TMDL development in accordance with their existing basin schedule of
activities, especially given the flexibility in the regulations
regarding the specific sequencing of TMDL development. States without
Consent Decrees or States that do no use a rotating basin or watershed
approach may require the most planning effort to develop realistic,
comprehensive schedules.
For the purpose of estimating incremental cost, we conservatively
assume that all 45 States without existing Consent Decrees will need to
develop new comprehensive schedules. The task of developing a
comprehensive schedule is simplified since all these States will
already have developed high, medium and low priorities for Part 1
waterbodies (the incremental cost for this effort was included above in
Section I.5.). The task is further simplified because the regulations
emphasize primarily the pace of TMDL development rather than the
precise sequence (the proposed regulations provide States with the
flexibility to alter the sequence of the specific TMDLs that are to be
developed). Tbus, it is anticipated that the additional effort needed
to develop a comprehensive schedule for each of the 45 States would be,
on average, about 20 hours. The total effort for all 45 States for
developing the initial comprehensive schedule would amount to 900 hours
(.4 FTE) at $40.37/hour for a total cost of $36,333 to be incurred in
2000. However, it is anticipated that the schedule would also need to
be reviewed with each listing cycle and revised as needed. These
revisions might require perhaps half of the original effort or an
average of about 10 hours per listing cycle per State for a total cost
of $18,167 in each subsequent listing cycle. Across all the States, the
present value cost of preparing the initial schedule and revising it
through 2015 (8\1/2\ listing cycles under the existing regulations)
would be $108,764 and the annualized cost through 2015 would be
$10,411.
I.7. Requiring that the listing methodologies be subject to public
review and submitted to EPA by January 31 for each submission.
Requirement
States' listing methodologies must be subject to public review and
submitted to EPA eight months prior to the deadline for submission of
the list (which the proposed regulations shift from April 1 to October
1 of the listing year as discussed later under Section I.9.).
Baseline
States currently must submit their listing methodologies to EPA for
review. The current program requires public participation and review of
all aspects of the listing submission, which would include the listing
methodology. In compliance with the Paperwork Reduction Act, EPA has
periodically prepared Information Requests (ICRs) for the National
Water Quality Inventory Reports, which include the estimated burden
associated with the TMDL listing process for respondents and for EPA.
EPA's current approved ICR (in effect through 2/28/99) estimated the
States' effort to conduct public participation for the 303(d) program.
For EPA's current ICR, the total State effort for public participation
(for the listing program) per listing cycle per State was estimated to
be, on average, about 120 hours.
Incremental Cost
The requirement to submit the listing methodology to EPA eight
months before submitting the list should not increase the level of
effort needed by a State to develop the listing methodology. This
requirement may result in the need for some States to shift forward
their effort for developing or revising their listing methodology by a
few months. Generally, it is not anticipated that the cost of
developing the methodologies will be affected by this requirement.
However, separating the public review of the listing methodology
from the State's public participation activities regarding the list
itself by eight months would likely result in the need for States to
increase their public participation effort. This additional effort for
public participation would occur for every listing cycle. Further, as
discussed previously (in Sections I.3., and I.5.), more extensive
public participation would likely be required for the first listing
cycle under the proposed regulations to review changes in the listing
methodology regarding ``pollution'' causes, changes in the priority
setting approach, and perhaps changes regarding how atmospheric
deposition and combinations of point/nonpoint sources are covered. In
addition, the proposed regulations emphasize the importance of public
participation. Therefore, the resulting increased State effort for
public participation is estimated as follows:
--For the first listing cycle under the proposed regulations (i.e.,
for the year 2000), we anticipate that the additional public
participation effort for a State might range from 200-800 hours
depending on the level of interest in the State and the extent
of the revisions in the listing methodology. This is considered
a conservative estimate, given the Agency's current estimate
that the on-going State effort for all public participation for
the listing program is on average about 120 hours per listing
cycle per State. To estimate the national one-time cost for the
first listing cycle, we conservatively assume that, on average,
the increased level of effort across the 56 States and
Territories would be 500 hours per State (i.e., over four times
the estimated current average for all public participation
activities), for a total increased effort of 28,000 hours or
13.5 FTE for the year 2000 listing cycle.
--For subsequent listing cycles, we anticipate that public
participation would likely be more routine in nature and
require far less effort than for the first listing cycle under
the proposed rules. Nevertheless, to conservatively estimate
national cost for subsequent listing cycles (beyond the year
2000), we assume that the average State effort for public
participation will nearly double from current levels, with the
average level of effort increasing by 100 hours for a total of
5,600 hours or 2.7 FTE per cycle subsequent to the year 2000
listing.
Therefore, the overall incremental cost for the additional State
effort for public participation for the first listing cycle (January,
2000) would be $1,130,373 and would drop to $226,075 for subsequent
cycles. The present value of this additional cost through 2015 (8\1/2\
listing cycles under the existing regulations) would be $1,987,363 and
the annualized incremental cost through 2015 would be $190,239.
I.8. New format for the listing methodology.
Requirement
The proposed revision specifies a new format for describing the
listing methodology. This new format will not affect the methodology
that States use.
Baseline
The current regulations already require that the listing
methodology be described. About 69 percent of the 1998 State lists
explained their listing methodology (up from 56 percent for the 1996
listing cycle). Because the existing regulations require that the
listing methodology be described, the cost of describing the listing
methodology is considered to be part of the baseline, regardless of
whether a State is currently 20 complying With this requirement.
Incremental Cost
Describing the listing methodology is an on-going requirement of
the current program. However, changing the format may result in some
additional one-time effort to repackage and clarify the description of
the listing methodology in accordance with the new format. An
additional one-time effort of 40 hours in the year 2000 should be
adequate for adopting the new format. For all 56 listings, the total
additional level of effort would be 2,240 hours (1.18 FTE), amounting
to a one-time cost of $90,430 assumed to occur in the year 2000. The
present value of this cost is $84,514 and the annualized value over the
period of analysis is $8,090.
I.9. Changing the listing cycle so that lists must be submitted to EPA
on October 1 instead of April 1.
Requirement
The proposed regulations will require States to submit their lists
to EPA on October 1 instead of April 1 in each year that lists are due
to be submitted.
Baseline
The current regulations require that States submit their
Sec. 305(b) water quality reports and Sec. 303(d) lists on April 1 of
every even-numbered year.
Incremental Cost
Shifting the due date for listing submissions by six months to
October 1 is expected to ease any difficulties that States may have in
completing both Sec. 305(b) water quality reports and Sec. 303(d) lists
for submission at the same time. This revised due date is not expected
to result in increased costs.
I.10. The proposed rule requests comment on options for changing the
listing cycle from a 2-year cycle to a 4-year or 5-year cycle,
either effective immediately or subsequent to the listing due
in the year 2000.
Requirement
The proposed revision asks for comment on options for altering the
listing cycle. These options include:
--Option A.--Retain the current 2-year listing cycle,
--Option B.--Adopt a 4-year or 5-year listing cycle immediately,
--Option C.--Require that the first list submission under the new
rule occur no later than October 1, 2000, with subsequent list
submissions occurring every 4 or every 5 years.
If the listing cycle is lengthened (Option B or C, then fewer lists
would need to be prepared and approved in the future, For example, the
current listing cycle (Option A) would require 8\1/2\ lists to be
prepared and approved through 2015, while switching to a 5-year cycle
after the 2000 list (Option C) would require 4 lists. From a cost
perspective, lengthening the listing cycle would result in savings for,
both States and the Agency. Potential savings to States are evaluated
in this section, while potential savings to the Agency are evaluated in
chapter IV. For simplicity, we have only assessed the savings that
States would realize from Option C where a listing is required for
October, 2000 and subsequent listings are required every 5 years
(instead of every 2 years as currently required).\7\
---------------------------------------------------------------------------
\7\ Generally speaking, the savings associated with a four-year
cycle would be somewhat less than for a five year cycle--for Option C,
for example, a four-year cycle through 2015 requires effort for 4\3/4\
lists as opposed to the 4 lists needed for a five-year cycle. The
savings associated with Option C would be somewhat less than for Option
B--for example, for five-year cycles through 2015, Option C requires
effort for 4 lists as opposed to the 3\2/5\ lists needed for Option B.
---------------------------------------------------------------------------
Baseline
In compliance with the Paperwork Reduction Act, EPA has
periodically prepared Information Collection Requests (ICRs) for the
National Water Quality Inventory Reports, which include the estimated
burden associated percent with the TMDL listing process for respondents
and for EPA. EPA's current, approved ICR (in effect through 2/28/99)
estimates the current respondents' burden of preparing a 303(d)
listing, and is summarized in the following table. Over the time
horizon for this analysis (1999-2015), the current program would
require 8\1/2\ listings. At 25,424 hours per listing cycle, the
Agency's total effort through 2015 would be 216,104 hours or 103.9 FTE.
These estimates are also the basis for the Agency's submission to renew
the existing ICR.
CURRENT STATE LISTING PROGRAM EFFORT PER LISTING AS ESTIMATED IN EPA'S
INFORMATION COLLECTION REQUEST
------------------------------------------------------------------------
Effort
ICR Effort all
activity Description of activity per State States
number (hours) (hours)
------------------------------------------------------------------------
Identify waters needing TMDLs 215 12,040
Prioritize waters needing TMDLs 118 6,608
Conduct 303(d) participation 121 6,776
-----------------------
Total Hours 454 25,424
------------------------------------------------------------------------
When analyzing the impact of Option B or Option C, it would
appropriate to include the incremental effort associated with the
proposed regulations as part of the baseline. As discussed in previous
sections, the proposed regulations will likely result in increasing
States' efforts as follows:
INCREMENTAL EFFORT FOR ALL STATES DUE TO THE PROPOSED REGULATIONS PER
LISTING AS ESTIMATED IN THIS CHAPTER
------------------------------------------------------------------------
Total effort for all
Chapter States
I Description of proposed regulatory ----------------------
section revision Year 2000 Subsequent
number listing listings
(hours) (hours)
------------------------------------------------------------------------
I.5.Revise the listing methodology 5,600 ..........
I.6.Develop comprehensive schedules for TMDLs 900 450
I.7.Provide additional public participation 28,000 5,600
I.8.Revise the format for the listing 2,240 ..........
methodology
------------------------
Total Hours 36,740 6,050
------------------------------------------------------------------------
Thus, over the time horizon for this analysis (1999-2015), the
proposed regulations would increase the effort of the current listing
program by 36,740 hours for the 2000 listing and by 6,050 hours for
each subsequent listing.
The total listing effort for all States per listing cycle for both
the current and proposed regulations is summarized in the following
table:
TOTAL STATE LISTING PROGRAM EFFORT PER LISTING FOR ALL STATES DUE TO THE
CURRENT AND PROPOSED REGULATIONS
------------------------------------------------------------------------
(Hours--all States)
------------------------------------
Increment
Listing year Current due to Total
program proposed resulting
regulations effort
------------------------------------------------------------------------
2000 listing....................... 25,424 36,740 62,164
Each subsequent listing............ 25,424 6,050 31,474
------------------------------------------------------------------------
Thus, under the current 2-year listing cycle, the States' total
listing effort through 2015 would be 62,164 hours for the year 2000
listing and 31,474 for each of the 7\1/2\ subsequent listings. The
total effort through the year 2015 under the 2-year current listing
cycle would amount to 298,219 hours or 143.4 FTE.
Incremental Cost
The current 2-year listing requirement would result in 8\1/2\
listings, occurring biennially starting in 2000 and continuing through
2015. As shown above, taking into account the requirements of the
proposed regulations, the total effort under the current 2-year listing
cycle would be 143.4 FTE.
Option C would lengthen the listing cycle to 5 years, requiring
only 4 listings over the same period (i.e., for 2000, 2005, 2010 and
2015). It is not anticipated that a 5-year listing would require more
effort than a 2-year listing. In addition, Option C does not affect the
effort needed for the 2000 listing. Consequently, the total effort
associated with Option C is 62,164 hours for the year 2000 listing and
31,474 for each of the subsequent 3 listings, for a total of 156,586
hours or 75.3 FTE.
Therefore, Option C results in substantial savings compared to the
current 2-year listing cycle, as summarized in the following table:
SAVINGS TO STATES ASSOCIATED WITH OPTION C: LENGTHENING THE LISTING
CYCLE TO 5 YEARS THROUGH 2015 FOR TWO CASES: (1) THE CURRENT PROGRAM
ONLY AND (2) THE NEW PROGRAM
------------------------------------------------------------------------
Total effort for all Savings
States through 2015 through 2015--
------------------------ Option C: 5-
(hours--all States) year cycle
Applicable regulations ------------------------ over current
Option C: cycle (hours--
2-year 5-year all States)
cycle cycle
------------------------------------------------------------------------
Current Program................. 216,104 101,696 114,408
Including Proposal.............. 298,219 156,586 141,633
------------------------------------------------------------------------
Including the proposed regulations, Option C amounts to a savings
over the baseline of 141,633 hours or 68.1 FTE. Furthermore, even with
the increased effort that results from the requirements of the proposed
regulations, the resulting effort of 156,586 hours is still less than
the current effort of 216,104 hours under the existing regulations--
this amounts to a savings through 2015 of 59,536 hours or a 27 percent
reduction of effort.
The cost associated with the 31,474 hours for each list beyond the
year 2000 is $1,270,621. For the current 2-year listing cycle, the
present value of completing the 7\1/2\ lists from 2002 through 2015
would be $5,232,210. The present value for the Option C listing cycle
for the three lists on 2005, 2010 and 2015 would be $1,880,734.
Therefore the present value of the savings associated with the 5-year
cycle of Option C is $3,351,476 and the annualized incremental savings
through 2015 would be $320,818.
I.11. Summary
The costs and savings associated with the proposed revisions
discussed in this chapter are summarized in the table on the following
page. As shown in the table, the proposed revisions affecting the
listing program through 2015 are expected to amount to an annualized
cost of about $230,000.
If Option B or Option C for the listing cycle were selected, then a
savings would result that would offset some or all of the additional
listing program costs of the proposed regulation. Using Option C as an
example, switching to a 5-year cycle after the 2000 listing would save
about $320,000 annually, more than offsetting the additional listing
program costs of the proposed regulation, and resulting in a net annual
savings over this period of about $90,000 per year.
Summary of the Incremental Costs and Savings Associated with the
Proposed Revisions to the Listing Requirements
[In thousands of dollars]
Proposed Revision Annualized Cost
I.1. Clarifying the definition of ``threatened''........................
I.2. Codifying the scope of lists to include waterbodies impaired
or threatened by atmospheric deposition & all combinations of
point and nonpoint sources..........................................
I.3. Expanding the scope of the lists to include waterbodies
impaired or threatened by pollution (as well as pollutants).
(Additional public participation cost included in # 7)..............
I.4. Requiring that waterbodies remain listed until standards are
attained............................................................
I.5. Listed waterbodies must be grouped into 4 Parts, with only
Part 1 waterbodies requiring TMDLs. Part 1 waterbodies be
prioritized into high, medium and low priorities. (Additional
public participation cost is included in 7)................... 22
I.6. A State's list must include a schedule for establishing each
TMDL.......................................................... 10
I.7. Listing methodologies must be subject to public review and
submitted to EPA on January 31 before each submission.
(Includes public participation cost of 3 & 5)................. 190
I.8. New format for the listing methodology....................... 8
I.9. Requiring, lists to be submitted October 1 instead of A............
______
Total Annualized Incremental Cost (19,98 $)................. 230
I.10. Option C: Changing to a 5-year cycle from a 2-year cycle
after the 2000 listing........................................ (320)
______
Total, Annualized Cost (1998 $) Including Option C (Net
Savings).................................................... (90)
ii. proposed revisions affecting the development & content of tmdls
The proposed revisions affect how TMDLs are to be developed and
what must be included, as follows:
1. All TMDLs must include each of the following elements: Waterbody
name and geographic location; Target pollutant load; Deviation from the
target; Sources, Wasteload allocation and load allocation; Margin of
safety; Seasonal variation; Allowance for future growth; and
Implementation plan.
2. States must meet minimum requirements for public participation
in TMDL development.
These provisions potentially add to the tasks that are typically
performed for each TMDL. We estimate the cost of these provisions by:
(1) estimating the additional LOE needed to perform each new task for a
typical TMDL; (2) converting this LOE into a corresponding cost; and
(3) multiplying this unit cost by the projected number of TMDLs for
which this task will have to be done.
The incremental impact of each of these revisions is discussed
below. The combined incremental impact of these revisions is summarized
at the conclusion of this section.
II.1. All TMDLs must include specified elements
Requirement
The proposed regulations require that a TMDL include: (1)
identification of the name and geographic location of the waterbody;
(2) identification of the pollutant load that may be present and still
assure attainment and maintenance of water quality standards (WQS); (3)
identification of the amount by which the current pollutant load
deviates from this target; (4) identification of the source categories,
subcategories and individual sources of the pollutant; (5) WLAs for
pollutants from point sources, and LAs for pollutants from nonpoint
sources, including atmospheric deposition and natural background; (6) a
margin of safety, expressed as unallocated assimilative capacity or
conservative analytical assumptions used in calculating the TMDL; (7)
seasonal variation such that WQS will be met during all seasons of the
year; (8) an allowance for future growth that accounts for reasonably
foreseeable increases in pollutant loads; and (9) an implementation
plan, including 8 minimum elements described below.
Baseline
Items (1) through (7) in this list of required elements are
explicitly required by existing regulations (40 CFR 130.2(i) and
130.7(c)(1)). Item (8) requires a State to reserve an amount for future
growth in their allocation strategy that accounts for reasonably
foreseeable increases in pollutant loads and explain this decision.
This is not currently an explicit requirement for TMDLs, although many
TMDLs have included such reserves for future growth. This new
requirement is discussed further in section II.1a., below. Item (9), an
implementation plan, represents another new requirement that many
previous TMDLs have nevertheless included. It is discussed in section
II.lb., below.
Incremental Cost
Each of the proposed required elements (1) through (7) represents a
reiteration and clarification of existing regulatory requirements and
common TMDL practice. As such, these proposed requirements add no
incremental costs. The costs of the new requirements, items (8) and
(9), are discussed below.
II.1a. All TMDLs must include an allowance for future growth that
accounts for reasonably foreseeable increases in pollutant
loads
Requirement
The proposed regulations require that a TMDL provide, in the
allocation strategy, for foreseeable increases in pollutant loads. The
State must document its decision-making process in determining the
amount of this allowance for growth, and should explain to stakeholders
the implications of the growth allocation decision.
Baseline
In developing TMDLs, States have pursued a variety of approaches
with respect to projected future growth in pollution loads:
--In some cases, a portion of the target load is reserved--not
allocated to any source or category of sources--for future
growth. In these cases, the sum total of the WLAs, the LAs and
the margin of safety is less than the target load that will
assure attainment and maintenance of WQS.
--In other cases, the full target load is allocated across all
sources and categories of sources, but the allocations to such
categories as natural background, upstream loadings and air
deposition reflect their projected load growth over time. In
these cases, the allocations to the remaining sources and
categories are sufficiently limited that WQS will be attained
and maintained even when the projected future loadings growth
from natural background, etc. occurs.
--In other cases, inadequate or no provision is made for growth.
Sometimes likely growth in nonpoint source category loads is
ignored, too much of the target loading is allocated to point
sources, and the WLAs given to point sources eventually prove
to be too high when growth in nonpoint source loads occurs.
The first two of these common approaches will be allowable under
the proposed regulations, the third will not be. No information is
available on the relative frequency with which recent TMDLs have
employed one or another of these approaches.
Incremental Cost
The proposed provision requiring an allowance for foreseeable
growth will necessitate changed practice only for the portion of TMDLs
like the third category. In our view, the requirement to provide for
foreseeable growth will result in cost savings for these TMDLs. A TMDL
that does not properly account for likely growth will ultimately prove
insufficient to attain and maintain WQS when the growth occurs, and the
TMDL will need to be redone. Much of the TMDL process will need to be
repeated, and the WLAs and/or LAs for some sources or categories will
need to be ratcheted down. Sources will need to implement control
measures to meet the original WLA or LA, and then to implement
additional controls to meet the subsequent, tighter requirements. This
two-step process that becomes necessary when growth is not properly
accounted for will likely be more costly to both the State and to the
sources than it would have been to account for likely growth and get
the TMDL right the first time. We are unable to estimate the likely
magnitude of this savings.
II.1b. States must develop an implementation plan for each TMDL,
including 8 required elements
Requirement
The eight elements required in implementation plans include: (1) a
description of the control actions and/or management measures needed to
implement the TMDL; (2) a timeline for the implementation activities,
including a schedule for revising NPDES permits, implementation of
BMPs, etc.; (3) reasonable assurance that the implementation activities
will occur; (4) a description of the legal authorities under which
implementation will occur; (5) an estimate of the time required to
attain water quality standards; (6) a monitoring plan to determine the
effectiveness of the implementation actions; (7) a description of
milestones that will be used to measure progress in attaining WQS; and
(8) a description of when failure to meet milestones will trigger a
revision of the TMDL.
The proposed regulations will allow a State substantial flexibility
regarding the scale at which these implementation-related components of
a TMDL must be developed. In general, the scale at which an
implementation plan is written should match the scale at which the
TMDLs have been done. Thus, it may sometimes be appropriate for a State
to develop an implementation plan for each particular TMDL for each
specific water. Other times, it may be appropriate to develop a broader
implementation plan that covers multiple waters in a watershed if all
these waters had their TMDLs developed in an aggregated watershed-wide
process or if all the waters suffered from similar problems caused by
similar sources. In some cases, it might even be appropriate for the
State to develop a single broadly applicable State-wide implementation
plan if there was substantial similarity in how the State planned to
implement the TMDLs in all the State's listed waters of some particular
variety.
The proposed requirement that a State provide reasonable assurance
that implementation activities will occur merits further explanation. A
State must demonstrate with a high degree of confidence that WLAs and
LAs will be implemented. For point sources, this means that NPDES
permits must be revised consistent with any WLA contained in the TMDL.
For nonpoint sources, reasonable assurance can be demonstrated if the
planned nonpoint source controls are specific to the pollutant of
concern, implemented according to an expeditious schedule, and
supported by reliable delivery mechanisms and adequate funding.
Examples of reasonable assurance for nonpoint sources might include
State regulations or local ordinances, performance bonds, memoranda of
understanding, contracts or similar arrangements.
Baseline
These proposed requirements are new in the sense that current
regulations do not explicitly require TMDLs to include implementation
plans. They are not new, however, in the sense that most of these
elements have long been understood to be included in thorough TMDLs,
and perhaps roughly \1/4\ of the TMDLs in fact have included them.\8\
Also, all of these elements are currently required to be addressed in
State WQM plans, albeit on a more aggregated State-wide or basin-wide
basis than would be required by the proposed regulations. In essence,
States currently generate most or all of the information needed to
prepare TMDL-specific implementation plans, but usually generate such
plans at a higher level of aggregation.
---------------------------------------------------------------------------
\8\ Discussions with a State representative and consultants who
have assisted in preparing a great many TMDLs for States suggest that
perhaps roughly a quarter of the TMDLs that have been developed
recently have included all eight required implementation plan
components. This is consistent with the results of a recent review of a
sample set of TMDLs received by the Agency, in which \1/3\ of the
States that submitted TMDLs included ``good'' implementation plans.
---------------------------------------------------------------------------
With respect specifically to the required demonstration of
reasonable assurance, States currently do so for all TMDLs involving
point sources, but do not necessarily now do so for TMDLs involving
nonpoint sources only. For TMDLs involving nonpoint sources only, the
baseline of current State TMDL practice falls somewhat short of the
proposed reasonable assurance requirement:
--For TMDLs involving point sources only. States currently
demonstrate reasonable assurance regarding WLAs for point
sources by providing the schedule by which NPDES permits for
the relevant point sources will be revised to incorporate their
WLAs. Existing regulations require NPDES permits to incorporate
effluent limitations consistent with an applicable TMDL (40 CFR
122.44(d)).
--For TMDLs involving both point and nonpoint sources. EPA's 1991
TMDL program guidance provides that if a point source NPDES
permit limit is based on a WLA that relies on nonpoint source
load reductions, then the NPDES permit record must include (1)
reasonable assurance that the needed nonpoint source controls
will be implemented and maintained, or (2) a monitoring program
to demonstrate the nonpoint source load reductions. NPDES
permits must provide for more stringent limits on the point
source if the expected nonpoint source load reductions are not
demonstrated. In effect, reasonable assurance for
implementation of an entire TMDL involving both point and
nonpoint sources is provided by existing, mandatory regulatory
controls over point sources.
--For TMDLs involving nonpoint sources only. Current regulations do
not require States to have or demonstrate assured controls over
nonpoint sources. In practice, States have a wide variety of
workable mechanisms for control of different sorts of nonpoint
sources.\9\ For probably the majority of nonpoint source TMDL
situations that arise, States likely have within this tool kit
of mechanisms and authorities some that can provide reasonable
assurance. States have developed many TMDLs that do include
effective measures to assure achievement of LAs for nonpoint
sources. However, the pattern of potential State authorities
over nonpoint sources is widely varied, and there are
undoubtedly TMDL situations that arise in one or another State
where that State does not currently have an assured means of
controlling the load from some category of nonpoint sources.
For example. State authority to control air deposition to
waters, particularly when the sources of the air emissions are
dispersed or from other States, is limited. As another example,
State mechanisms for control over agricultural nonpoint sources
also often do not rise to the level of reasonable
assurances.\10\
---------------------------------------------------------------------------
\9\ See, for example, this summary: Environmental Law Institute.
Enforceable State Mechanisms for the Control of Nonpoint Source Water
Pollution. October, 1997.
\10\ The Environmental Law Institute study cited above observes,
for example:
``Agriculture is the most problematic area for enforceable
mechanisms. Many laws of general applicability, as noted above, have
exceptions for agriculture. Where state laws exist, they often defer to
incentives, cost-sharing, and voluntary programs. Nevertheless, about a
fifth of the states have some statewide sediment requirements
applicable to agriculture, often administered by local governments or
soil and water conservation districts. Even more states (about a
fourth) authorize individual soil and water conservation districts, as
a matter of local option, to adopt enforceable `land use regulations'
for the control of erosion and sedimentation, but most of these require
approval by landowner referendum, with approval requiring a super-
majority (ranging from 66 to 90 percent) in order for such regulations
to become effective.''
---------------------------------------------------------------------------
In short, for TMDLs involving nonpoint sources only, current State
practice often falls short of the requirements of the proposed
regulations. There are two reasons for this. First, most commonly,
States often develop TMDLs without including an Implementation plan. In
these cases, the issue of demonstrating reasonable assurance for
nonpoint source controls never arises. Second, less commonly, for some
nonpoint source TMDL situations, the State does not have an authority
or mechanism for a relevant category of nonpoint sources that would be
sufficiently effective as to constitute reasonable assurance. The first
of these shortcomings relative to the requirements of the proposed
regulations would obviously be easier for a State to rectify than the
second.
Incremental Cost
For a typical TMDL that does not include an implementation plan, a
State representative estimates the average additional LOE necessary to
meet the requirements of the proposed regulation as:
--Preparing a monitoring plan--75 to 100 hours; and
--Preparing the remaining eight required elements of an
implementation plan--75 to 100 more hours. Some of the
remaining eight elements are prepared as a matter of course in
developing TMDLs currently, including the description of
planned control actions, reasonable assurances for point source
controls, and at least a rough timeline, estimate of the time
required to attain WQS, and set of milestones. Other elements,
such as the required description of the legal authorities under
which implementation will occur and reasonable assurance for
nonpoint sources can typically be developed easily from
existing materials in the State's WQM plan and section 319
plan. Other elements, such as the required description of when
failure to meet milestones will trigger a revision of the TMDL,
can rely largely on State-wide policy that needs only little
tailoring for adaptation to a particular TMDL.
In total, the eight required elements of an implementation plan
would add $6,056 to $8,074 (150 to 200 hours at a cost of $40.37 per
hour) to the cost of a typical TMDL that did not include them.
In addition, for some sorts of nonpoint source TMDLs in some
States, no adequate authorities or mechanisms will exist allowing
demonstration of reasonable assurance. In such instances, the State
would have a choice between: (1) developing adequate authorities; or
(2) developing a TMDL that does not include reasonable assurance and
that is therefore not approvable by EPA. For these States, the first
course would likely be difficult (the State would presumably need to
establish new legal and enforcement authorities or find adequate
funding to ensure compliance by the nonpoint sources with their LAs)
and the outcome would be unpredictable (the State might not succeed in
establishing the new authorities). Under the second course, in the
absence of an approvable TMDL from the State, EPA would need to develop
the TMDL itself. The proposed regulations include revisions to EPA's
NPDES permitting rules that describe how EPA will proceed in such cases
where EPA must develop a TMDL because the State cannot provide
reasonable assurances for implementation. For cost estimating purposes,
we assume the second of these courses. We have no basis for estimating
what the costs might be for States to develop the additional
authorities necessary so they can provide reasonable assurance for
implementation for all nonpoint source TMDLs. Instead, in the portion
of the cost analysis addressing the proposed changes to the permitting
rules, we estimate the costs for EPA in cases where States have
inadequate authorities for reasonable assurance. That analysis is
provided in a separate report. Thus, the incremental costs for meeting
the reasonable assurance requirements of the proposed regulations are
not covered in this chapter.
II.2. States must meet minimum requirements for public participation in
TMDL development
Requirement
The proposed regulations require States to provide the public with
at least 30 days to comment on TMDLs prior to their submission to EPA.
In addition, the State must provide EPA with a written summary and
response to public comments.
Baseline
Existing regulations (40 CFR 130.7(c)(1)(ii)) require ``that
calculations to establish TMDLs shall be subject to public review as
defined in the State CPP''. EPA has long encouraged States to carry out
full public participation in establishing TMDLs consistent with States'
administrative procedures requirements. All or nearly all States now
routinely provide for public notice and comment and the opportunity for
a hearing in their TMDL processes. It is not known how many States
develop a written summary and response to public comments.
Incremental Cost
A State representative has estimated that providing for additional
public participation consistent with the proposed regulations and
beyond that which routinely occurs (i.e., developing a written summary
and response to public comments, and increasing the proportion of TMDLs
for which a public hearing is held) might require an average of 100
hours (or $4,037 at $40.37 per hour) per TMDL.
II.3. Scaling Up the Cost Estimates From a Single Typical TMDL to All
TMDLs
In this section, we have estimated the following incremental costs
for a typical TMDL to meet the additional requirements of the proposed
regulations:
--7 required elements of a TMDL--No cost
--Allowance for future growth--Savings, not estimated
--Implementation plan--$6,056 to $8,074 (150 to 200 hours)
--Reasonable assurance (some nonpoint source TMDLs)--EPA's cost is
estimated in the permit rule analysis
--Additional public participation--$4,037 (100 hours)
These costs represent unit costs that must be scaled up by the
number of TMDLs for which these additional elements will need to be
developed.
In the Methodology section, we estimate that 20,000-40,000 TMDLs
will need to be developed during the period of analysis. If we assume
that implementation plans sufficient to meet the proposed new
requirements are routinely developed now for about one quarter of all
TMDLs and that this baseline practice will continue in the future,
three quarters of all future TMDLs (roughly 15,000-30,000 of them) will
face incremental costs for implementation plans under the proposed
regulations. The estimated additional costs for enhanced public
participation will apply to all 20,000-40,000 future TMDLs.
To the extent that the required implementation plan and public
participation requirements are met on an aggregated watershed basis
rather than individually for each TMDL, the number of instances in
which these additional activities will need to occur will be less than
shown above. We have no adequate basis for estimating the likely extent
to which such geographic aggregation will occur and reduce the
incremental workload. To be conservative, we will assume no geographic
aggregation. We assume that the additional workload for implementation
plans will be necessary for three quarters of all TMDLs (15,000 to
30,000 of them), and the additional workload for enhanced public
participation will be necessary for all TMDLs (20,000 to 40,000 of
them).
Multiplying these numbers of TMDLs needing additional work by the
added cost for a typical TMDL and annualizing over the 17-year period
of analysis, we estimate the cost of the proposed new requirements to
be $10.1-$23.8 million per year.
II.4. Summary
The costs of the proposed revisions discussed in this chapter are
summarized below:
Summary of the Incremental Costs Associated with the Proposed Revisions
Affecting the Content of TMDLs
[In millions of dollars]
TMDLs must include 9 elements: Annualized cost
7 elements..........................................................
Allowance for future growth............................... ( \1\ )
Implementation plan....................................... 5.3-14.3
......................................................
(Reasonable assurances) ( \2\ )
Minimum required public participation in TMDL development..... 4.8-9.5
--------------------------------------------------------------
____________________________________________________
Total....................................................... 10.1-23.8
\1\ Savings.
\2\ Estimated elsewhere.
---------------------------------------------------------------------------
tmdls must be completed within specific time periods
As discussed previously in chapter I, the proposed regulations
require that TMDLs be developed for Part 1 waterbodies and that States
must determine the priority of these TMDLs as either high, medium or
low priority. All Part 1 waterbodies must have TMDLs completed for them
within 15 years as described below:
--TMDLs for high priority Part 1 waterbodies must be completed before
low and medium priority waterbodies. When feasible, EPA
encourages States to adopt a goal of completing the development
of TMDLs for high priority waterbodies within 5 years. However,
EPA recognizes that a 5-year time frame may not be feasible for
all States.
--TMDLs for all Part 1 waterbodies must be completed within 15 years
of being listed as Part 1 waterbodies. Thus, for example,
waterbodies that are newly listed Part 1 waterbodies in the
year 2000 must have completed TMDLs by 2015; similarly, TMDLs
for waterbodies that are newly listed, for example, in 2010
must be completed by 2025.
Requiring that TMDLs for Part 1 waterbodies be developed within
specific time periods might result in the acceleration of the
development of some of these TMDLs relative to the pace that might have
occurred in the baseline. Accelerating the development of a TMDL
results in its cost of development being incurred sooner, and therefore
increases the present value cost of TMDL development.
The potential cost impacts of accelerating the development of TMDLs
that might have otherwise taken longer than required by the proposed
regulations are estimated in this chapter for the following proposed
requirements:
--Requiring that TMDLs for high priority Part 1 waterbodies be
developed first, and requiring that high priority waterbodies
include all those for which the designated use is public
drinking water supply or that contain or serve as habitat for
endangered or threatened species.
--Requiring that TMDLs for all Part 1 waterbodies, regardless of
priority, be developed within 15 years of listing as Part 1.
The incremental costs of these requirements due to resulting
changes in the listing process were covered in chapter I.
II.1. TMDLs for high priority Part 1 waterbodies must be developed
first.
Requirement
The proposed regulations require that States identify all Part 1
waterbodies for which the designated use is public drinking water
supply or that contain or serve as habitat for endangered or threatened
species under section 4 of the Endangered Species Act. These must be
classified as high priority, and TMDLs for these waterbodies must be
completed first. States are encouraged to adopt a goal of completing
TMDLs for high priority waterbodies within 5 years of being listed as a
Part 1 waterbody.
Baseline
As discussed further in section III.2. below, nearly all States
have committed to completing TMDLs for all of their Part 1 waterbodies
within 15 years. Of these States, 21 States have committed to schedules
of 10 years or less. To accomplish any of these schedules, substantial
portions of the States' TMDL workload would need to be completed within
the first five to ten years in the baseline.
Incremental Cost
It is not anticipated that this proposed requirement will result in
incremental costs to the States for several reasons.
--To the extent that States have waterbodies for which the designated
use is public drinking water supply or that contain or serve as
habitat for endangered or threatened species, the Agency
believes that States would have scheduled prompt development of
TMDLs for these waterbodies in the baseline anyway.
--The proposed regulation allows waterbodies which have endangered
species present to be assigned a medium or low priority if the
State has an approved Habitat Conservation Plan or other
specific, enforceable mechanism developed in accordance with
the Endangered Species Act.\11\
---------------------------------------------------------------------------
\11\ This regulation, however, does not require consultation with
the U.S. Fish and Wildlife Service.
---------------------------------------------------------------------------
--The goal of completing TMDLs for high priority waters within 5
years will likely be feasible for many States. Given the
States' current commitments to complete their TMDLs within the
next 10-15 years, States will generally be developing an
appreciable fraction (perhaps \1/4\-\1/3\) of their TMDLs
within the next five years anyway. Therefore, it should not be
difficult for many States to sequence TMDL development
schedules to ensure that TMDLs for high priority waters be
developed first, and completed within 5 years. EPA recognizes
that this time frame may not be feasible for all States.
Therefore, the 5-year completion time frame is only a goal, not
a requirement.
Thus, the proposed regulations' requirement to complete TMDLs for
high priority waterbodies first will not result in increased costs
because the Agency believes that TMDLs for these waterbodies would
likely have been scheduled for priority development by States anyway in
the baseline; and if not, overall TMDL development schedules could
readily be re-sequenced within the States' current commitments in the
1998 listing program to address the high priority TMDLs first. Finally,
the goal of completing TMDLs for high priority waters within 5 years is
a goal, not a requirement.
III.2. All Part 1 waterbodies must have TMDLs completed for them within
15 years.
Requirement
The proposed regulations require that TMDLs for all priority Part 1
waterbodies be developed within 15 years. This schedule will be
required for all Part 1 waterbodies starting with the 2000 listing--
TMDLs for these waterbodies must be completed by 2015. Waterbodies
listed in 1998 actually have a 17-year maximum schedule, since the 15-
year time-limit does not apply until the 2000 listing. In listings
subsequent to 2000, TMDLs for newly listed Part 1 waterbodies will need
to be completed within 15 years from their listing date. The following
calculations focus on the cost of this requirement for the TMDLs that
will need to be completed within the 17 years through 2015.
Baseline
Most States have already committed to completing TMDLs for their
currently listed waterbodies prior to 2015--i.e., they will not be
affected by the proposed revision. Based on EPA's December 11, 1998
``Status of 1998 303(d) Lists,'' 48 States have committed to schedules
and sent them to EPA. Schedules are anticipated soon for the remaining
8 States. Draft schedules are available for 5 of these States.
Therefore, at this point, we have a basis for estimating the TMDL
completion schedules for 53 States, which represent 95 percent of the
listed waterbodies. Over the next few months, the remaining 3 States
will submit their schedules, eliminating the need for any assumptions
regarding their schedules.
For the 53 States (having draft schedules or final schedules),
commitments for completing TMDLs for their 1998 listed waterbodies
range from 3 years to 20 years (i.e., completion by 2001 to 2018). Only
two of these States have scheduled TMDLs to be completed past 2015:
Missouri and New Mexico. However, New Mexico's Consent Decree
specifically allows it to develop TMDLs for its 1996 listed waterbodies
through 2018, and therefore New Mexico is not subject to the 15-year
requirement of the proposed revision. Missouri has listed about 77
waterbodies. Assuming that Missouri will develop TMDLs uniformly
through 2018, then TMDLs for about 12 waterbodies are currently
scheduled to be developed past 2015.
It is more difficult to determine the baseline for the remaining 3
States whose schedules are still pending. Therefore, we provide a range
of possibilities. Based on the schedules for the 53 States, it would be
reasonable to anticipate that all of the TMDLs for 1998 listed
waterbodies for the remaining 3 States will be completed by 2015. This
assumption provides the basis for our ``low'' estimate. To provide a
``high'' estimate we assumed that all of the remaining 3 States will
complete their TMDLs by 2020 instead of by 2015, exceeding by two years
the longest of any of the State schedules that have been submitted.
This is a very conservative assumption since only 2 of the 53 States
with schedules extend to even 2018. Assuming that these 3 States
develop TMDLs uniformly through 2020, then under the ``high'' estimate,
TMDLs for an additional 249 waterbodies are scheduled to be developed
past 2015.
Thus, given current State commitments, at least 52 States will not
be affected by the proposed revision requiring that TMDLs be developed
by 2015 (51 States with current or expected schedules prior to 2015,
and New Mexico). 1-4 States may need to accelerate the development of
TMDLs for as many as 12-249 1998-1isted waterbodies. This range should
narrow over the next few months as States submit their schedules for
developing TMDLs. The details of this baseline analysis of TMDL
development are shown in Attachment 1, which provides State-by-State
schedules and projected year-by-year TMDL development by State past
2015.
As discussed in the Methodology section, it is important to note
that the number of listed waterbodies requiring TMDLs is only an
indication of the number of waters needing TMDLs, not the actual number
of TMDLs that will be done.
--To some extent, the number of 1998 listed waterbodies can overstate
the number of waterbodies that will require TMDLs, because not
all 1998-1isted waterbodies will be considered to be Part 1
waterbodies. In the 2000 listing, some of these waterbodies
will be classified as Part 2 waterbodies (which do not require
TMDLs because they are not impaired due to pollutants), some
will be classified as Part 3 waterbodies (for which a TMDL has
been completed) and some will be classified as Part 4
waterbodies (which do not require TMDLs because other measures
will address the problems). Therefore, since the 12-249
estimate of waterbodies for which TMDLs that might be developed
past 2015 assumed that all 1998-listed waterbodies would be
Part 1 waterbodies, it is likely that this estimate is
overstated.
--On the other hand, most listed waterbodies have more than one cause
of impairment and a TMDL may be needed to address each cause.
For the 1996 listings there were slightly more than twice as
many causes as waterbodies, and for the 1998 listings there
were slightly less than twice as many causes as waterbodies. If
each cause requires a TMDL, then about twice as many TMDLs
would be required as waterbodies. However, TMDLs that handle
multiple causes can be developed.
For this analysis, we have assumed that the number of TMDLs to be
completed ranges from the number of listed waterbodies to twice this
number of waterbodies. Thus, the number of TMDLs that in the baseline
would be developed past 2015 would range from 12 to 499: \12\
---------------------------------------------------------------------------
\12\ From Attachment 1, the low end is 11.6 waterbodies rounded up
to 12, and the high end is 249.3 2 = 498.6 rounded up to 499.
---------------------------------------------------------------------------
--The low end of the range (12 TMDLs) assumes that all 3 States
without schedules submitted yet will choose schedules
completing TMDLs for their listed waterbodies prior to 2015.
The low end of the range also assumes that the number of 1998
listed waterbodies likely significantly overstates the number
that will eventually be categorized as Part 1. This also
assumes that multiple causes for a listed water will not
commonly necessitate multiple TMDLs for that water.
--The high end of the range (499 TMDLs) assumes that all 3 States
will submit schedules that reflect even longer time frames than
those that have been submitted to date (i.e., completion by
2020). It also assumes that separate TMDLs will generally be
needed to address every cause.
This broad range provides the basis for analyzing the incremental
cost of the acceleration of TMDL development caused by the proposed
rule's requirement that TMDLs must be completed within 15 years after a
water is listed.
Incremental Cost
In the absence of the proposed rule, we assume that approximately
12-499 TMDLs would be developed (we assume at a steady rate) between
2016 and 2020. As a result of the proposed rule, the development of
these TMDLs will need to be accelerated, and we assume they will be
rescheduled to be developed at a steady rate between 1999 and 2015. The
incremental cost of accelerating the development of these TMDLs is the
time-value of incurring these expenditures sooner. This is just the
difference between the present value of completing the TMDLs under the
baseline schedule versus the present value of completing the TMDLs
under the new schedule required by the proposed rule.
Thus far, we have estimated the number of TMDLs and their alternate
schedules. The remaining key element that is needed is the average cost
of developing these TMDLs. Studies estimating the cost of TMDL
development have shown a wide range of potential cost. For example, one
study \13\ examined fourteen TMDL case studies in which the costs
ranged from about $4,000 to $1,000,000. The costs for six of the TMDLs
were under $22,000 and the costs for the remaining eight were over
$145,000. The cost for a given TMDL can depend on a wide range of
factors including the watershed size, the complexity of the analytic
work needed, the number and type of pollutants addressed, and the level
of public interest. There are reasons to expect that the average cost
to develop a TMDL will be at the lower end of the range found in this
study, and that the average cost will decline over time:
---------------------------------------------------------------------------
\13\ EPA, TMDL Development Cost Estimates: Case Studies of 14
TMDLs. EPA-R-96-001, May 1996.
---------------------------------------------------------------------------
--The cost depends on the extent to which TMDLs for similar
circumstances have been developed and on the extent of the
State's experience in developing TMDLs. The first TMDLs to be
developed tend to be the most costly because staff is less
experienced and many technical issues will be addressed for the
first time. As more TMDLs are completed, staff will become more
experienced and the work routine, so that the cost of
developing TMDLs will tend to decline.
--Recent experience has shown that once a ``template'' is created for
developing TMDLs for a pollutant, that approach can often be
applied to other waterbodies at a relatively low cost.
--The technology for developing TDMLs has steadily improved over the
years and its cost has declined.
--As States increasingly adopt a watershed approach, some costs, such
as for public participation, can decrease dramatically on a
per/TMDL basis. For example, a single public participation
process at the watershed level, costing, say, $50,000, might
serve to take the place of similar efforts for perhaps ten
TMDLs, resulting in a cost of $5,000 per TMDL.
Thus, while the cost of developing a specific TMDL might be at the
higher end of the range, the average cost of developing TMDLs across
the program is expected to be at the lower end of the range.
For this report, the average cost of developing a TMDL is assumed
to be $25,000. This includes the increased costs that were identified
in chapter II of this report as likely to result from the proposed
regulations. Note that the cost estimates for accelerating the
development of TMDLs depend directly on this assumption: if the assumed
average cost of developing a TMDL were increased to $50,000 the
estimated incremental cost of accelerating TMDL development would
double; if the assumed average cost of developing a TMDL were decreased
to $12,500, the estimated incremental cost of accelerating TMDL
development would decline by 50 percent.
The detailed calculations for the cost of accelerating the
development of 12-499 TMDLs so that they are completed by 2015 are
shown in Attachment 2--Attachment 2 shows the step-by-step calculations
that use the specific TMDL development patterns derived in Attachment
1. The results are summarized below:
--Low estimate.--The total cost of developing the 12 TMDLs over the
period 2016-2020 is about $300,000 and its 1999 present value
is about $85,000. Developing these 12 TMDLs over 1999-2015 has
the same total cost, but a 1999 present value of about
$175,000. Thus, the incremental cost of accelerating the
development of these 12 TMDLs is about $90,000. The annual cost
of acceleration as annualized over 1999-2015 is about $9,000.
--High estimate.--The total cost of developing 499 TMDLs over the
period 2016-2020 is about $12.5 million and its 1999 present
value is about $3.5 million. Developing these 499 TMDLs over
1999-2015 has the same total cost but a 1999 present value of
about $7.7 million. Thus, the incremental cost of accelerating
the development of these 499 TMDLs is about $4.2 million. The
annual cost of acceleration as annualized over 1999-2015 is
about $400,000.
In summary, given the assumptions made in this report, accelerating
the development of 12-499 TMDLs from the period 2016-2020 to the period
1999-2015 results in an increased annualized cost ranging from about
$9,000 to about $400,000 through 2015.\14\
---------------------------------------------------------------------------
\14\ Note that the incremental cost of accelerating TMDL
development from the period 2016-2020 to the period 1999-2015 roughly
results in doubling the cost of TMDL development. For example, for the
low estimate of 12 TMDLs, the 1999 present value cost is roughly
doubled from about $85,000 to about $175,000, for an incremental cost
of about $90,500. This is not surprising, since on average, TMDL
development is accelerated from about 2018 (the midpoint of the
baseline period) to about 2007 (the midpoint of the accelerated
development period), an average acceleration of about 11 years. At 7
percent annually, time-value doubles in ten years and increases to 210
percent in eleven years. Conversely, delaying TMDL development by 10
years halves its cost.
---------------------------------------------------------------------------
iv. increased costs for epa resulting from the proposed regulations
The proposed regulations alter the requirements for States for the
listing program and for the content and development of TMDLs. These
requirements have implications for the Agency as well:
--1. Proposed revisions to the listing program and for the content of
TMDLs will also result in increased costs to EPA for reviewing
and approving lists and TMDLs.
--2. Options for reduced frequency with which lists must be submitted
will reduce the number of State lists EPA must review and
approve and thereby reduce cost to EPA.
--3. The suggestion that the public petition EPA for action to
establish TMDLs rather than proceed directly to litigation will
likely reduce costs for both EPA and the public.
Each of these proposed requirements is evaluated in this chapter.
This report does not evaluate the incremental costs to EPA in cases
where EPA must develop portions of a TMDL if a State cannot provide
reasonable assurance for implementation of the TMDL. The specific
procedures for this are included in the proposed revisions to the
Agency's permitting regulation, and a separate analysis addresses the
incremental costs that may result.
IV.1. Proposed revisions to the listing program and for the content of
TMDLs will also result in increased costs for EPA for reviewing
and approving lists and TMDLs.
Requirement
EPA's new requirements under the proposed revisions (as described
in chapters I, II and III) will result in changes in the content of
list submissions as well as of TMDLs.
Baseline
The Agency's current activities regarding the listing program and
for reviewing/approving lists are identified in the Agency's current
approved Information Collection Request (in effect for the three year
period ending 2/28/99). The Agency is in the process of renewing the
ICR for the next period (ending 2/28/01) and has developed new
estimates for the Agency burden associated with these activities. The
estimates for the current ICR and its proposed renewal are shown in the
following table.
The Agency has estimated that its burden will increase
significantly over the next three years, primarily due to the increased
pace for developing TMDLs that States have committed to in their 1998
lists. This increase in the expected Agency burden is part of the
baseline--as detailed in chapter III, States have already committed in
their 1998 list submissions (in the baseline) to increasing the pace of
TMDL development, and the State schedules are consistent with the
requirements of the proposed regulation for nearly all of the States.
This factor accounts for the bulk of the expected increase in the
Agency's effort as anticipated in the ICF, amounting to 5,580 hours
(out of the total increase 6,032 hours). This expected increase also
includes consideration of any increased effort that might be associated
with the proposed regulation's new requirements for the content of
TMDLs.
COMPARISON OF EPA'S CURRENT AND EXPECTED BURDEN FOR ACTIVITIES
IDENTIFIED IN ITS INFORMATION COLLECTION REQUESTS FOR THE 303(D) PROGRAM
------------------------------------------------------------------------
ICR burden estimate
(annual hours)
Frequency --------------------
Description of activity and number (years) Existing
(to 3/ Renewal
99) (to 3/01)
------------------------------------------------------------------------
8. Prepare 303(d) guidance.............. 1 62 62
9. Provide technical assistance to 1 96 236
States for 303(d)......................
10. Review draft 303(d) lists........... 2 96 236
11. Send TMDL approval/disapproval 1 20 5,600
notices to States......................
12. Review final 303(d) lists. Negotiate 2 328 500
to resolve disapprovals................
--------------------
Total Annual Agency Burden........ ......... 602 6,634
Expected Increase in Total Annual ......... ........ 6,032
Agency Burden....................
------------------------------------------------------------------------
Increment
The new estimates for the Agency's effort for 303(d) activities
also take into account the provisions of the proposed regulation for
the listing program. As shown in the following table, the Agency
anticipates that its activities for preparing 303(d) guidance,
providing technical assistance to States, reviewing draft lists, and
reviewing final lists and negotiating to resolve disapprovals will
increase by 452 hours annually--an increase of nearly 80 percent. At
the average loaded hourly rate of $40.37/hour used in the ICR to
estimate the cost of the Federal burden, the increased effort is
estimated to cost $18,247 annually.
IV.2. Options for altering the listing cycle will affect EPA's workload
by changing the number of lists EPA must evaluate.
Requirement
As discussed in Chapter I, the proposed revision asks for comment
on options for the listing cycle. These options include:
--Option A--Retain the current 2-year listing cycle,
--Option B--Adopt a 4-year or 5-year listing cycle immediately,
--Option C--The first list submission under the new rule would occur
no later than October 1, 2000, with subsequent list submissions
occurring every 4 or every 5 years.
As shown in Chapter I, using Option C as an example, lengthening
the listing cycle would result in savings for States because fewer
lists would need to be prepared. This assessment of the corresponding
savings to the Agency also focuses on Option C, where a listing is
still required for October, 2000 and subsequent listings are required
every 5 years.
Baseline
The current listing cycle requires the submission of lists every 2
years.
Incremental Cost
Altering the listing cycle would not be expected to affect the
annual burden for EPA's activities for preparing 303(d) guidance,
providing technical support to States, or sending TMDL approval/
disapproval notices to States. Altering the listing cycle would affect
the Agency's annual effort for reviewing draft and final 303(d) lists
and negotiating to resolve disapprovals. The Agency's total effort for
these activities for a list submission is 1,472 hours. Switching from
the current 2-year cycle to a 5-year cycle would lower the Agency's
annual effort from 736 hours to 295 hours annually, for a savings of
441 hours annually as shown in the following table.
COMPARISON OF EPA'S BURDEN FOR 303(D) PROGRAM ACTIVITIES FOR THE CURRENT
2-YEAR CYCLE VERSUS A 5-YEAR CYCLE
------------------------------------------------------------------------
ICR burden
estimate
Current (annual hours)
Description of activity and number frequency ---------------
(years) 2-year 5-year
cycle cycle
------------------------------------------------------------------------
10. Review draft 303(d) Lists................ 2 236 95
12. Review final 303(d) lists. Negotiate to 2 500 200
resolve disapprovals........................
---------------
Total Annual Agency Burden............. ......... 736 295
Expected Decrease in Total Annual ......... ...... 441
Agency Burden.........................
------------------------------------------------------------------------
This savings of 441 hours annually would essentially offset the
increased annual burden of 452 hours identified in the previous
section. The value of the undiscounted savings is $17,803. However,
since the bulk of these savings would be realized after the year 2000,
the actual savings is slightly less as explained below.
Putting it another way, the current 2-year cycle through the year
2015 would require the Agency to provide 1,472 hours for 8\1/2\ listing
cycles for a total effort of 12,512 hours. Option C, which maintains
the 2000 listing but requires only an additional 3 listings through
2015 would result in a burden of 5,888 hours. Thus, switching from a 2-
year to a 5-year cycle would save the Agency 6,624 hours after the 2000
listing through the year 2015. Taking into account the pattern of
savings through 2015, the present value of the savings would be
$156,744 and the annualized savings over this period would be $15,004.
IV.3. The proposed regulations suggest that the public petition EPA for
action to establish TMDLs rather than proceed directly to
litigation.
Requirement
The proposed regulation clarifies that the public must petition EPA
prior to filing a lawsuit seeking to compel EPA to carry out TMDL
program actions that States are directed to perform. The petition
requirement applies only to discretionary EPA actions under CWA Section
303(d). The petition requirement does not apply to non-discretionary
EPA actions under Section 303(d) (i.e., to approve or disapprove a TMDL
or list after it is submitted by a State, or to establish a TMDL or
list if EPA disapproves a State's submission). For non-discretionary
EPA actions, no petition is necessary and a party seeking to compel EPA
action may proceed directly to litigation.
The petition requirement will apply to discretionary EPA actions
such as establishing TMDLs for a State in the alleged absence of State
TMDL activity. Several groups objecting to what they view as slow State
progress on TMDLs have filed lawsuits to compel EPA to step in and
develop TMDLs or lists for a State. In such cases, EPA feels that
litigation is premature because the Agency has not yet made a final
decision whether or not to establish TMDLs or lists in place of the
State. Absent a final Agency decision, EPA believes that courts lack a
factual record to evaluate. If instead a party petitions EPA to take
the desired discretionary action, EPA's response to the petition will
constitute final Agency action and the record established by the Agency
in responding to the petition will provide a record that is reviewable
by courts in any subsequent litigation.
Baseline
Groups dissatisfied with State progress on TMDLs or lists have
filed more than 40 cases involving about 34 States. High costs have
been incurred by all litigants: plaintiffs in preparing and arguing the
cases, and States and EPA in defending and settling them. EPA believes
that petitions filed under the Administrative Procedures Act provide an
opportunity to resolve many TMDL program issues in a less costly
manner, without litigation.
Incremental Cost
EPA believes that compliance with this requirement will reduce
costs for both the Agency and the public. Preparing and filing
petitions will cost the public far less than preparing and filing
lawsuits, and it is far less resource-intensive for the Agency to
respond to petitions than to lawsuits. The Agency believes that many
issues can be resolved through the petition process, avoiding
litigation and the unnecessary expenses that all parties would
otherwise incur. To the extent that petitions do not avoid lawsuits,
the Agency believes that most of the effort to prepare and respond to
petitions would have occurred anyway as part of the litigation process.
The Agency acknowledges the possibility that the low cost of preparing
petitions might result in more petitions being filed by parties that
otherwise would have been deterred by the cost of litigation.
Nevertheless, on balance, the Agency believes that compliance with this
existing requirement would benefit all parties, and reduce the overall
cost that otherwise would be incurred.
V. IMPACT ON THE AGENCY'S INFORMATION COLLECTION REQUEST
The Agency is proposing a revised Information Collection Request
for certain activities under the 303(d) program to replace the existing
3-year ICR which expires on 3/1/99. As discussed in chapters I and IV,
the Agency's ICR estimates the burden for States' preparation of 303(d)
lists, and for the Agency's activities regarding the listing program as
well as for reviewing and approving TMDLs. This chapter summarizes the
information developed earlier in this report regarding the extent to
which the proposed regulation affects the burden of both the States and
the Agency for those activities identified in the proposed ICR, which
covers the period from 3/1/99 to 2/28/01.
Estimated Change In State Burden
The next ICR will encompass the next listing which is currently due
in the year 2000. As discussed extensively in chapter I, the proposed
regulation increases the total State effort for the year 2000 listing
by 36,740 hours. As estimated in the ICR, at a cost of $40.37 per hour,
this amounts to a total cost increase of nearly $1.5 million for the
period.
Since the next ICR covers the period ending 2/28/01, a portion of
the increased effort for the next listing after the year 2000 listing
should also be considered. However, this additional burden depends on
whether the current 2-year listing cycle is continued, or whether a 4
or 5-year listing cycle is adopted instead:
--If the current 2-year listing cycle continues then half of the 2002
cycle would need to be included in the ICR as well. As
discussed in chapter I, the proposed regulations increase the
total State effort for listings subsequent to the year 2000
listing by 6,050 hours. If half of this effort occurs in 2001,
then the proposed regulations increase the burden in the ICR by
3,025 hours or about $122,000.
--If a 4 or 5-year listing cycle were adopted it does not seem likely
that those activities that account for the increased burden due
to the proposed regulations would take place as early as 2001.
Therefore, an additional adjustment for an increased burden
associated with the next cycle would be unnecessary.
Therefore, the total adjustments to the respondent burden as
estimated in the Agency's ICR for the period ending 2/28/01 for the
303(d) program range from an additional 36,740 hours at $1.5 million if
the listing cycle is lengthened, to 39,765 hours at $1.6 million if the
current 2-year listing cycle is maintained.
However, for future ICRs, as discussed in chapter I, if the listing
cycle is lengthened, savings that result from avoiding future listing
cycles (i.e., under Option C, States would only be required to submit 4
lists instead of 8\1/2\ lists through 2015) would more than cover the
increased burden to States that results in the near term from the
proposed regulations. As summarized at the end of chapter I, through
the year 2015, the proposed regulations would increase the States'
annualized costs by $230,000 but this would be more than offset by the
$320,000 annually that States would save if the listing cycle were
lengthened. The net annualized savings would be about $90,000 per year.
Estimated Change in Agency Burden.
As discussed in chapter IV, EPA's estimates of its ICR burden for
the period ending 2/28/01 for, the 303(d) program already include
consideration of both:
--1. Increases in the States' baseline level of activity which
results in an increased annual burden for the Agency of 5,580
hours, and
--2. Increases in Agency activity that might result from the proposed
regulations, amounting to an additional annual burden of 452
hours or $18,247.
Altogether, the Agency has proposed to increase its burden estimate
in the proposed ICR by a factor of 11 from the current ICF,
representing an increase in burden from 602 hours annually to a total
of 6,634 hours annually. Since the Agency's estimates already reflect
expected changes in burden, no additional revisions to the estimates
for the Agency's burden are needed to further reflect the proposed
regulations.
However, as noted in chapter IV, if the listing cycle were
lengthened, then the Agency would realize savings that would offset the
increased burden associated with the proposed rule.
Attachments 1 & 2 (Worksheets for Chapter III)
CURRENTLY LISTED WATERS SCHEDULED FOR TMDL DEVELOPMENT AFTER 2015 \1\
----------------------------------------------------------------------------------------------------------------
Schedule Current commitments after 2015 \2\
Number ----------------------------------------------------------
EPA region & State listed End
waters Years year 2016 2017 2018 2019 2020 Total
----------------------------------------------------------------------------------------------------------------
I. Connecticut............................. 134 12 2010 ..... ..... ..... ..... ..... ........
Maine...................................... 257 13 2011 ..... ..... ..... ..... ..... ........
Massachusetts.............................. \3\ 1,00 15 2013 ..... ..... ..... ..... ..... ........
0
New Hampshire.............................. 171 12 2010 ..... ..... ..... ..... ..... ........
Rhode Island............................... \3\ 100 12 2010 ..... ..... ..... ..... ..... ........
Vermont.................................... \3\ 200 \4\ 1 2013 ..... ..... ..... ..... ..... ........
5
II. New Jersey............................. 1,048 9 2007 ..... ..... ..... ..... ..... ........
New York................................... 576 11 2009 ..... ..... ..... ..... ..... ........
Puerto Rico................................ \3\ 140 6 2004 ..... ..... ..... ..... ..... ........
U.S. Virgin Islands........................ 9 13 2011 ..... ..... ..... ..... ..... ........
III. Delaware.............................. 174 13 2011 ..... ..... ..... ..... ..... ........
DC......................................... \3\ 38 12 2010 ..... ..... ..... ..... ..... ........
Maryland................................... 197 10 2008 ..... ..... ..... ..... ..... ........
Pennsylvania............................... 1,035 3 2001 ..... ..... ..... ..... ..... ........
Virginia................................... \3\ 939 12 2010 ..... ..... ..... ..... ..... ........
West Virginia.............................. 696 10 2008 ..... ..... ..... ..... ..... ........
IV. Alabama................................ 114 7 2005 ..... ..... ..... ..... ..... ........
Florida.................................... 712 16 2014 ..... ..... ..... ..... ..... ........
Georgia.................................... 571 7 2005 ..... ..... ..... ..... ..... ........
Kentucky................................... 231 13 2011 ..... ..... ..... ..... ..... ........
Mississippi................................ \3\ 700 \4\ 1 2008 ..... ..... ..... ..... ..... ........
0
North Carolina............................. 477 10 2008 ..... ..... ..... ..... ..... ........
South Carolina............................. 658 12 2010 ..... ..... ..... ..... ..... ........
Tennessee.................................. 351 11 2009 ..... ..... ..... ..... ..... ........
V. Illinois................................ 738 15 2013 ..... ..... ..... ..... ..... ........
Indiana.................................... 153 \5\ 2 2020 7.0 7.0 7.0 7.0 7.0 34.8
2
Michigan................................... 312 \5\ 1 2011 ..... ..... ..... ..... ..... ........
3
Minnesota.................................. 155 13 2011 ..... ..... ..... ..... ..... ........
Ohio....................................... 839 \5\ 2 2020 38.1 38.1 38.1 38.1 38.1 190.7
2
Wisconsin.................................. 541 \4\ 1 2011 ..... ..... ..... ..... ..... ........
3
VI. Arkansas............................... 52 14 2012 ..... ..... ..... ..... ..... ........
Louisiana.................................. 195 12 2010 ..... ..... ..... ..... ..... ........
New Mexico................................. 189 \6\ 2 2018 ..... ..... ..... ..... ..... ........
0
Oklahoma................................... 533 13 2011 ..... ..... ..... ..... ..... ........
Texas...................................... 147 10 2008 ..... ..... ..... ..... ..... ........
VII. Iowa.................................. 54 \5\ 2 2020 2.5 2.5 2.5 2.5 2.5 12.3
2
Kansas..................................... \3\ 771 8 2006 ..... ..... ..... ..... ..... ........
Missouri................................... \3\ 77 20 2018 3.9 3.9 3.9 ..... ..... 11.6
Nebraska................................... \3\ 112 10 2008 ..... ..... ..... ..... ..... ........
VIII. Colorado............................. 85 12 2010 ..... ..... ..... ..... ..... ........
Montana.................................... 877 10 2080 ..... ..... ..... ..... ..... ........
North Dakota............................... 133 13 2011 ..... ..... ..... ..... ..... ........
South Dakota............................... 171 13 2011 ..... ..... ..... ..... ..... ........
Utah....................................... 205 12 2010 ..... ..... ..... ..... ..... ........
Wyoming.................................... 63 10 2008 ..... ..... ..... ..... ..... ........
IX. American Samoa......................... 1 \4\ 5 2003 ..... ..... ..... ..... .....
Arizona.................................... \3\ 102 13 2011 ..... ..... ..... ..... ..... ........
California................................. 512 13 2011 ..... ..... ..... ..... ..... ........
CNMI....................................... 2 4 2002 ..... ..... ..... ..... ..... ........
Guam....................................... 3 12 2010 ..... ..... ..... ..... ..... ........
Hawaii..................................... 18 9 2007 ..... ..... ..... ..... ..... ........
Nevada..................................... 38 13 2011 ..... ..... ..... ..... ..... ........
X. Alaska.................................. 65 \4\ 1 2008 ..... ..... ..... ..... ..... ........
0
Idaho...................................... \3\ 728 8 2006 ..... ..... ..... ..... ..... ........
Oregon..................................... 1,168 1 2008 ..... ..... ..... ..... ..... ........
Washington................................. \3\ 631 15 2013 ..... ..... ..... ..... ..... ........
--------------------------------------------------------------------
Totals............................... \3\ 20,1 ( \7\ ( \7\ 51.4 51.4 51.4 47.5 47.5 249.3
98 ) )
........ ( \8\ ( \8\ 3.9 3.9 3.9 ..... ..... 11.6
) )
----------------------------------------------------------------------------------------------------------------
\1\ Based on current commitments as reflected in the 1996 TMDL lists as of 12/11/98 and interim default
assumption of a 22-year time frame where schedule is not available.
\2\ Assuming proportionate development over the life of the schedule--estimates are shown to nearest \1/10\.
\3\ Approximate.
\4\ Estimate based on draft schedule
\5\ Temporary and conservative default assumption of 22-year schedule ending 2020.
\6\ ``Grandfathered''--Consent decree allows 20 years.
\7\ Including default.
\8\ Excluding default.
Attachment 2
ANALYSIS OF COST IMPACT OF TMDL ACCELERATION
For low-high assumptions for the TMDL development for States
w/o schedules and low-high assumptions (1-2) for the
number of TMDLs per water:
Discount rate (percent)................................... 7
TMDL cost................................................. $25,000
TMDL'S THAT WILL BE ACCELERATED DUE TO THE PROPOSED REVSIONS \1\
----------------------------------------------------------------------------------------------------------------
Assumption 2016 2017 2018 2019 2020 Total
----------------------------------------------------------------------------------------------------------------
High................................................ 102.791 102.791 102.791 95.091 95.091 498.555
Low................................................. 3.850 3.850 3.850 ........ ........ 11.550
----------------------------------------------------------------------------------------------------------------
\1\ The level of precision shown is not intended to indicate degree of accuracy, but rather to facilitate the
ability of reviewers to check the calculations. No rounding was done for the projections from Attachment 1.
COST OF TMDL'S THAT WILL BE ACCELERATED DUE TO THE PROPOSED REVISIONS ASSUMING AN AVERAGE COST OF $25,000 PER
TMDL
----------------------------------------------------------------------------------------------------------------
Assumption 2016 2017 2018 2019 2020 Total
----------------------------------------------------------------------------------------------------------------
High................................... 2,569,773 2,569,773 2,569,773 2,377,273 2,377,273 12,463,864
Low.................................... 96,250 96,250 96,250 .......... .......... 288,750
----------------------------------------------------------------------------------------------------------------
1999 PRESENT VALUE FOR CURRENT SCHEDULE FOR POST-2015 TMDLS AT 7 PERCENT
----------------------------------------------------------------------------------------------------------------
Assumption 2016 2017 2018 2019 2020 Total
----------------------------------------------------------------------------------------------------------------
High................................... $813,524 $760,303 $710,564 $614,332 $574,142 $3,472,866
Low.................................... 30,470 28,477 26,614 .......... .......... 85,561
----------------------------------------------------------------------------------------------------------------
YEARLY COST AND 1999 PRESENT VALUE COST OF DEVELOPING THESE TMDLS PRIOR TO 2015
----------------------------------------------------------------------------------------------------------------
High Low
----------------------------------------------------------------------------------------------------------------
Uniform development starting in 1999 through 29.3 0.7 TMDL/year.
2015.
Cost per year from 1999 through 2015.......... $733,168 $16,985 Yearly Cost.
1999 PV cost for TMDLs that have been $7,659,153 $177,439 1998 PV.
accelerated.
----------------------------------------------------------------------------------------------------------------
INCREMENTAL PV AND ANNUALIZED COST OF ACCELERATING TMDL DEVELOPMENT
----------------------------------------------------------------------------------------------------------------
Assumption PV current PV accel Incr PV Cost Annualized
----------------------------------------------------------------------------------------------------------------
High............................................ $3,472,866 $7,659,153 $4,186,287 $400,730
Low............................................. 85,561 477,439 91,878 8,795
----------------------------------------------------------------------------------------------------------------
Ms. Browner. The numbers that we looked at, Mr. Chairman,
and we made public as part of the proposal, are the costs to
the States of managing the program. It is the cost in terms of
what the States have to do, the science they would do to set
the load, and the work they would do within a community to
actually develop the plan.
TMDL PROPOSAL VS. NPDES BACKLOG
Senator Bond. That is where the States are very much
concerned. And I am also very much concerned with EPA and the
States taking on the new requirement and, at the same time, we
have a large and growing backlog in the NPDES program, is not
this TMDL workload going to limit EPA's ability to eliminate
this material weakness?
Ms. Browner. No. We are continuing our efforts to address
the NPDES backlog. We agree we need to do a better job, as I
said last year when I appeared. These are the most complicated
permits, which is why we are stuck with them and why we are
managing them. We are providing additional funds to the States.
For example, the State of Texas had a very large backlog. We
provided funds to them. We are addressing this program.
It is separate and apart from TMDL's. In fact, in the
future, TMDL's will allow you to better manage our NPDES
process where a State makes a choice to use that as a tool. It
is not a requirement. We are not saying that permits for non-
point source will be required to meet TMDL requirements. But
some States may use portions of their NPDES permitting program.
TMDL PROPOSAL: NPS AND FORESTY
Senator Bond. It seems rather apparent when you look at the
statute that EPA does not have the authority to regulate the
non-point source pollution. And I just wonder where you have
that authority.
Ms. Browner. We have been very clear that when it comes to
agriculture, we do not have authority to regulate non-point
source pollution.
Senator Bond. And forestry as well?
Ms. Browner. The statute does not speak to forestry in the
same manner. Well, in terms of non-point source, we do not have
authority. In terms of agriculture, to require permits, we do
not have authority.
It is sometimes the practice in the forestry community to
divert water from their lands into for example, which culverts
becomes a point source.
Having said that, Mr. Chairman, I want to be very clear
about something. There are many forest companies that are
engaged in good best management practices to address their
water pollution problems. I have been up here three times
talking in committees about the fact that the TMDL proposal has
created a lot of misunderstanding. I am the first to admit this
is a problem for us.
One of the misunderstandings has been whether or not we
would give credits, if you will, to a State program that relied
on best management practices. The answer is yes. With
reasonable assurances, absolutely, positively yes. Best
management practices can be hugely successful.
Senator Bond. We still have a long way to go on this one.
One of my particular areas of interest, we have funded research
experiments on the use of agro-forestry buffer strips along
stream banks, riverbanks, to use revenue-producing sources for
farmers to capture the nutrients that they apply to the fields
or that come from a livestock operation. So we are very much
concerned. But I am also very much concerned about the TMDL
proposal. And we will have further questions for the record.
Ms. Browner. If I can just say one thing, Mr. Chairman. It
is not a one size fits all proposal. The point of TMDL's is to
give the States 15 years to develop these plans and to give
credit for the very kind of stream buffers you are talking
about.
EPA STAFFING NEEDS
Senator Bond. We are reading just some of the comments you
are getting. The comments that are coming in that we are seeing
are that it is one size fits all, it is command and control.
And there is a real lack of confidence in what the EPA is doing
in the perceptions out there.
Let me just say that I will submit questions for the
record. But we are concerned also about the GAO report, saying
that EPA lacks assurance that its employees are being used
consistent with the intent of congressional appropriations. The
I.G. reported 3 years ago that in two regions it reviewed, 42
percent of the employees worked in areas unrelated to the
program areas to which their time was charged. And we are
concerned about that and how we know that the money is going to
the programs for which it has been appropriated.
Finally, in making staffing decisions, EPA apparently has
not taken into consideration whether the activities at the
State level have altered EPA staffing requirements. States now
assume responsibility for more than three-quarters of the
Federal environmental programs, a much greater proportion than
they did previously. Also, EPA does not consider whether
technological advances have altered the EPA staffing needs. We
see this as another concern with respect to staffing.
If you would like to take a minute to respond to that.
Ms. Browner. Very quickly. I think you made reference to an
increase in FTE's from 1990 to 2001. I hope you can appreciate
that the vast majority of that did not happen under this
administration; it happened under Mr. Bush. There was a big
growth at the end of the Bush administration at EPA.
Senator Bond. But it has continued to go up since then.
Others are coming down.
Ms. Browner. That is because this President has said
repeatedly that one of his priorities is strengthening
environmental protection. It is, in part, a response to the
fact that this Congress has given us two new laws to implement,
the Safe Drinking Water Act and the Food Quality Protection
Act. I am not saying that it has gone down, but I am saying
that the rate of growth over the last 10 years, the lion's
share of it, has not been under this administration. We are
doing more, effectively, with less.
Senator Bond. Thank you, Madam Administrator. Due to the
press of the floor action, we now declare the hearing
adjourned.
Ms. Browner. Thank you.
Additional committee questions
Senator Bond. We will submit further questions for the
record.
[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 Christopher S. Bond
TOTAL MAXIMUM DAILY LOAD (TMDLS): WORK LOAD AND FUNDING REQUIREMENTS
Question. Is it true that one TMDL would need to be approved each
workday for the next 15 years by each of the 10 EPA regional offices to
complete all of them? If not, what is EPA's estimate, and will EPA be
requesting a sufficient increase in funding to accomplish this
requirement? What will this cost over the next 5 years?
Answer. Current state Section 303(d) lists would encompass about
40,000 TMDLs. Approving all these TMDLs over the next 15 years would on
average translate into one TMDL being approved each workday in each EPA
Regional office. This is a significant workload for EPA and is beyond
what we are now devoting to the TMDL program. We are encouraging states
to realize efficiencies by ``bundling'' TMDLs for segments on a
watershed basis, thus reducing transaction costs associated with
administrative processes and providing for more meaningful public
involvement. These efficiencies can reduce EPA review and approval
costs as well. The Agency analysis of its outyear resource requirement
is ongoing.
TMDLS VS. NPDES PERMIT BACKLOG
Question. How will EPA and the states both take on this new
requirement, as well as eliminate the large and growing backlog in the
NPDES permit program?
Answer. The President's request includes a substantial increase
(+$45 million) explicitly to assist states in the development of TMDLs.
This increase, coupled with the required state contributions for this
increase, state flexibility to use up to 20 percent of their also
increased Section 319 grant, and other available financial assistance
would provide sufficient resources to allow states to substantially
meet their TMDL obligations in 2001 based on the estimated cost of the
new TMDL regulation proposed in August 1999. While earmarked for TMDL
development, this increase in grant funding should allow states to
reallocate existing base grant funds to their most significant
priorities, including addressing their NPDES permit backlog. The
President's 2001 request also includes an increase of $5.3 million for
the NPDES program, a portion of which should help to address the permit
backlog. The Agency also provides substantial technical support for
state TMDL development and NPDES permitting efforts in our operating
programs. Resources are also used by the Agency to address the backlog
of expired permits in non-delegated states and are instrumental to the
development of state water quality standards which serve as the
environmental endpoint to which TMDLs are geared.
TMDL EFFECT NPDES BACKLOG
Question. Won't the new TMDL workload limit EPA's ability to
eliminate the backlog, an area which has been declared a material
weakness and an area where no progress has been made in the last year?
Answer. EPA is committed to reducing the NPDES permit backlog as
expeditiously as possible. For 2001, EPA has established a performance
goal, under the Government Performance and Results Act, that the
backlog of permits for major point sources will decrease from the
current level of 28 percent to 10 percent. While striving to meet these
targets, EPA and the states must ensure that permits are consistent
with the core NPDES regulations, demonstrate that appropriate permit
development procedures were followed and documented, and ensure permit
conditions are consistent with national policy and guidance. The fiscal
year 2001 budget requests an additional $5 million to address the broad
range of NPDES program activities, including work to address the
backlog.
TMDLS: ASWIPCA CONCERNS
Question. According to the Association of State and Interstate
Water Pollution Control Administrators, ``state program budgets and
staffing levels are not sufficient to implement the regulation as it
now stands and even with significant increases in funding they will not
likely grow in order to meet an ambitious waterbody restoration agenda
merely because an arcane federal regulation is changed.'' How do you
respond to that concern?
Answer. We appreciate that states face a significant workload to
carry out the TMDL program. We are working with the states to determine
overall state needs versus available resources to carry out all their
Clean Water Act responsibilities, including TMDLs. States are now
completing their accounting of what they are currently spending.
EPA wants states to succeed in implementing the TMDL program and is
fully prepared to work with them to assure that all states are able to
effectively carry out their responsibilities. EPA has proposed to
substantially expand fiscal year 2001 funding for grants to states for
water pollution control. The President's Budget proposes increased
funding of $45 million for grants to states to identify and address the
remaining polluted waters around the country. This increase, coupled
with the required state contributions for this increase, state
flexibility to use up to 20 percent of their also increased Section 319
grant, and other financial assistance would provide sufficient
resources to allow states to substantially meet their TMDL obligations
in 2001 based on the estimated cost of the new TMDL regulation proposed
in August 1999.
TMDLS: NONPOINT SOURCE DATA
Question. GAO testified recently that only 3 states have a majority
of the data they need to develop TMDLs for nonpoint sources. How will
states get the information they need to develop TMDL's for Nonpoint
sources?
Answer. EPA recognizes that state ambient monitoring activities
have not always kept pace with growing data needs, including those for
the TMDL program. We have requested a substantial increase in Section
106 funds in fiscal year 2001 [+$45 million] specifically for states to
help improve their Section 303(d) lists and TMDL development. Also,
with our requested $250 million for Section 319 grants and our
continued 319 grant policy allowing states to use up to 20 percent of
their 319 funds for nonpoint source (NPS) program development
activities including TMDLs, States will have the ability to use up to
$50 million of these funds to develop NPS TMDLs including necessary
data collection.
We believe States can take needed actions based on the data they
have collected. The proposal does not change what is already required
in the existing TMDL regulation; namely, that listing of waterbodies
and establishment of TMDLs be based on all readily available existing
information. In addition, some widespread kinds of water quality
impairments can be identified without sophisticated measurements, such
as nutrient over-enrichment and sedimentation. The later and more
complex steps of quantifying the extent to which these pollutants
exceed the assimilative capacity of a listed water and apportioning
load reductions needs to occur when a TMDL is developed--which under
our proposal may be as long as 15 years after listing allowing
sufficient time to obtain any necessary additional data.
NEPPS PROGRAM
Question. The TMDL proposal raises serious concerns about EPA's
commitment to working in partnership with the states. Concerns about
the State-EPA relationship is reinforced in a recent independent
analysis of the National Environmental Performance Partnership or NEPPS
program. The analysis by Ross and Associates, a well-known and widely
respected consulting firm, found that ``progress to date falls
substantially short of the overall promise and potential of NEPPS to
improve the state/EPA partnership and enhance the achievement of
environmental results.'' They found continued disagreement about the
role of EPA in enforcement and compliance, the level of necessary
oversight, the types of data states should report to maintain
accountability, and the amount of work sharing that should occur. EPA
and the States signed the NEPPS partnership agreement in 1995, yet five
years later major barriers continue to exist. Why?
Answer. With respect to your comment on the TMDL proposal, EPA and
the states are close partners, as well as co-regulators, who ensure
water quality standards are maintained throughout the country. EPA
values its partnership with states and spends much time to foster it.
For example, EPA has committed many hours and resources to working with
the states on the TMDL proposal. In addition to numerous one-on-one
discussions, EPA and states have had lengthy discussions of TMDLs at
every meeting of both the Association of State and Interstate Water
Pollution Control Administrators (ASIWPCA) and the Environmental
Commissioners of the States (ECOS) for the past few years, both to help
craft the proposed rule, and to discuss changes needed for the final
rule. EPA also held a special two-day co-regulators TMDLs Forum with
the states in December to discuss the proposed rule and the states'
views on how it should be changed, and another one-day forum in March.
While the 50 states have varied perspectives about, and resources to
support, TMDLs, EPA has taken care to discuss each concern and is
crafting the final rule to ensure it provides states the flexibility
needed to implement the Rule to meet their particular conditions and
ensure attainment of water quality. At the ECOS Spring meeting this
past April, several State Commissioners were highly complimentary of
EPA's partnership work with the states on TMDLs. We also note that EPA
has been successful in acquiring additional resources for states to
support their TMDL work: an additional $5 million in fiscal year 1998-
2000, and a Presidential request of an additional $45 Million in fiscal
year 2001.
With respect to your question on barriers to NEPPS, we are familiar
with Ross and Associates' summary of NEPPS evaluations. In their
summary, Ross and Associates conclude that both state and EPA staff
believe that NEPPS has not reached its full potential, given underlying
problems with NEPPS implementation. We agree with their conclusion, and
continue to work closely with state agencies and ECOS to resolve those
underlying problems. We would point out, however, that the quote you
have cited does not reflect all of Ross and Associates' conclusions
about NEPPS. Ross and Associates also concluded that:
``The majority of those interviewed for these reports supported the
philosophy and objectives of NEPPS. All the reports found that
participants in the NEPPS process believed that it had been beneficial
and had improved the state-EPA relationship. In particular, the
evaluations identified improved communications between EPA and the
states, as well as greater senior management attention to program
priorities and issues, as frequently cited NEPPS benefits.''
In addition, within the past month, both EPA and ECOS have
reaffirmed their commitment to the principles of NEPPS. These
reaffirmations signify the intention of EPA and states to build on the
progress that NEPPS has fostered over the past five years. EPA has
planned several activities for the next several months aimed at
improving NEPPS. EPA's goal for NEPPS for the remainder of fiscal year
2000 and beyond is to build upon earlier successes by focusing on four
objectives. These objectives are:
--continued improvement of Performance Partnership Agreements between
regions and states;
--increasing use of Performance Partnership Grants to support NEPPS;
--reducing reporting burden on states; and
--greater use of results measures to manage programs.
By pursuing these objectives, EPA and the states will develop the
institutional capacity for NEPPS that is necessary for further progress
in performance partnerships. EPA and ECOS already have taken steps
toward these objectives. In April 1999, the ECOS membership voted in
favor of the fiscal year 2000 Core Performance Measures (CPMs). These
latest CPMs, designed by joint EPA-state committees, include more
results measures and fewer activity measures than ever before. EPA has
planned further joint activities, such as training of EPA staff on
NEPPS principles, that also will help us build the institutional
capacity for NEPPS.
EPA RELATIONSHIP WITH STATES: ACHIEVEMENTS AND IMPROVEMENTS
Question. What specific examples can you cite of achievements and
improvements vis-a-vis the state-EPA relationship in the five years?
Answer. In addition to working jointly with state agencies and the
Environmental Council of the States (ECOS) on the National
Environmental Performance Partnership System (NEPPS), EPA has several
ongoing joint ventures with state agencies that demonstrate
achievements and improvements in the state-EPA relationship. In 1998,
EPA and ECOS created the State-EPA Information Management Workgroup.
This workgroup developed a set of operating principles which now govern
our data and information management activities. Recently, the
Information Management Workgroup developed an agreement and charter for
a Data Standards Council. Recently adopted by ECOS membership, the Data
Standards Council is tasked to develop data standards that will ensure
that EPA and state environmental programs can share data
electronically. EPA's Office of Enforcement and Compliance Assurance
established a State-EPA Enforcement and Compliance Forum to involve the
states in establishing priorities and to examine the effectiveness of
new directions in these programs. States also participated on FACAs to
advise the Agency on how to implement Title VI of the Civil Rights Act,
and how to improve the TMDL program.
The Office of Air and Radiation provides an in-depth example of
EPA's efforts to strengthen partnerships with the states. Highlights
over the last year include the following:
--In September 1999, a workshop was held in Chicago on strategic
directions for the National Air Program over the next 10 years.
The joint planning session was attended by 27 senior managers
from agencies charged with air quality management, including
representatives from ECOS, State and Territorial Air Pollution
Program Administrators (STAPPA), Association of Local Air
Pollution Control Officials (ALAPCO), the Executive Committee
of the National Tribal Environmental Council (NTEC) and EPA.
The workshop's focus was on developing a collective national,
strategic approach to the challenges facing air quality
managers at all levels of government over the next 10 years.
This collective agreement on the air program's vision and goals
reached at the workshop has been used to inform revisions made
to EPA's Strategic Plan to be published in the Fall of 2000. A
document entitled ``National Air Quality Program: Joint
Statement on Vision and Goals'' is in progress and will be
published in the near future. The Chicago meeting and resulting
Joint Statement are the first milestones in what is intended to
be an ongoing strategic dialogue among the Nation's air quality
management partners.
--In February 2000, the Office of Air and Radiation convened its
first National State and Local Air Roundtable in Florida. The
purpose of this forum is to bring together leaders in state and
local air program administration three to four times per year
to assess how we are working together to achieve air quality
goals and to discuss issues of mutual concern.
Objectives of the Roundtable include: (1) creating a sounding board
for early identification of and feedback on important issues; (2)
promote early engagement of state and local air administrators as
policies and programs develop and evolve; (3) encourage creative,
collective problem-solving; and (4) enhance trust among Federal, state,
and local partners. The next meeting is scheduled for June 2000.
FINANCIAL AUDIT: IG OPINION
Question. Why did the IG not give EPA's 1999 financial statements a
clean opinion, and where are you in tracking down the funds which could
not be accounted for?
Answer. Toward the end of the audit, the IG questioned amounts in
two of our financial statements that could not be resolved and audited
before the statutory due date of March 1. The issues in question did
not relate to a loss or misappropriation of funds, but rather to the
sources or composition of aggregated amounts. One of the questioned
amounts was reflected in a footnote to our Statement of Changes in Net
Position and the other in our Statement of Financing. KPMG, the
accounting firm that assisted us in preparing our 1999 financial
statements, has developed documentation to respond to concerns raised
by the OIG on the Statement of Net Position. We also engaged a general
ledger expert from the Treasury's Financial Management Service who
confirmed our analysis of the amount questioned in our Statement of
Financing.
FINANCIAL AUDIT: TIMELINE FOR IG RECOMMENDATIONS
Question. The Inspector General made a number of recommendations
last year to improve financial systems at EPA. None of the
recommendations have been implemented, the IG told my staff. Why, and
what is the time for doing so?
Answer. We have taken important steps to address financial systems
concerns raised by the IG. For example, we made significant
improvements in the security plans for our major systems, as
recommended by the IG; increased resources devoted to security; tested
and updated disaster recovery plans for our agency-level financial
system; reviewed, updated and re-certified user access to financial
systems; improved coordination on security issues between various
offices in EPA, including the offices that own systems with financial
information, the new Office of Environmental Information, and others;
and upgraded security awareness training for our system users.
We are now in the process of implementing an on-going risk
assessment program based on the GAO model. We engaged the National
Security Agency to assess our overall financial system security
controls for compliance with Agency and federal security policy and to
make specific recommendations for strengthening our controls. Almost
concurrently with the completion of the NSA review, the General
Accounting Office conducted a review of the Agency's computer security
infrastructure and made constructive suggestions. We then had a follow-
up meeting with GAO to discuss implementation of their risk assessment
model for the Agency financial systems.
integrated financial management system (ifms) replacement
Question. The I.G. indicates that EPA's Integrated Financial
Management System is an outdated and inefficient system. The CFO had
identified IFMS in its budget in previous years, but replacement has
been put off for other operational priorities. They further indicated
that EPA's financial systems costs were 38 percent more than other
federal systems and 9 percent higher than the private sector. Why
hasn't replacing IFMS been a priority, and what are the plans and
timeline for replacement?
Answer. We agree that IFMS is an old system and it remains a
priority for the Agency to begin looking at alternatives for
modernizing or replacement. However, we delayed our replacement efforts
in fiscal year 2000 until fiscal year 2001 to ensure we adequately
address other key system challenges such as security, and successful
resolution of the Y2K issue. We also took into consideration that there
were new commercial off-the-shelf federal systems currently being
introduced and tested by the Joint Financial Management Improvement
Program. We thought our business case decisions would be better
informed waiting for the results of the new system tests. And while
IFMS is an old system, it currently performs our core functions in a
reliable manner because of our continuous upgrades.
In addition, the financial systems cost figures cited by the IG
should also be put in proper context. The figures were taken from a
benchmarking study initiated by EPA Office of the Chief Financial
Office through the governmentwide CFO Council. The study compared our
financial processes to the processes of other government agencies and
large corporations. The figures cited by the IG show only part of the
story. In fact, EPA ranked significantly higher in most measures of the
efficiency of financial operations and that our overall financial
management costs are well in line with the average.
PEER REVIEW
Question. For quite some time there have been concerns about the
adequacy of EPA peer review procedures, leading to potential questions
about the reliability of EPA science. In 1997, GAO reported that
implementation of EPA's peer review policy was uneven across the
agency. In response, EPA put out some guidance to clarify the peer
review requirements. But a September 1999 IG report identified problems
where in some cases peer review leaders did not effectively attempt to
determine whether conditions existed which would compromise an
independent review. Why hasn't EPA made a higher priority of getting it
right with its peer review procedures? Are you confident the problems
identified by GAO and the IG have been corrected?
Answer. Consistent Agency-wide application of peer review policy
and procedures has been an EPA priority for several years. Pursuant to
the Administrator's June 7, 1994, Peer Review Policy statement, EPA in
1998 issued its Peer Review Handbook. The Handbook outlines peer review
principles and procedures including issues raised in the 1997 GAO
Report. GAO cites the Handbook in its 1999 report on peer review at
federal agencies. The 1999 IG report notes that the Handbook ``provides
a format that offers all users a focused reference on peer review
issues.'' The IG also notes that EPA's Program offices and Regions
provided Handbook training to staff and managers in 1998.
The concerns in the IG's 1999 report focused on potential conflict-
of-interests concerns of peer reviewer candidates, although the IG
found no case of actual conflict of interest. The IG recommended that
EPA's Office of Research and Development provide supplemental guidance
directing contractors and peer review leaders to inquire whether a
potential reviewer has or had a financial relationship with the Agency.
The IG agreed with EPA that providing supplemental guidance, rather
than revising its 1998 Peer Review Handbook, would be an effective way
to address the IG's concerns.
EPA will currently drafting the supplemental guidance to address
this issue, as well as other secondary issues. We are confident that
these additional actions address GAO and the IG's concerns.
mexico border: obligations and projected end of year balance
Question. How much of the funds appropriated for border
infrastructure projects have been obligated, and what do you anticipate
the year-end balance to be?
Answer. Of the $475 million appropriated for border infrastructure
projects since 1995, $359.7 million has been obligated. EPA expects to
obligate all of the current unobligated balance of $115.3 million by
year-end. Except for $54 million awaiting Congressional action on the
San Diego/Tijuana international wastewater treatment project spending
cap, processing of grants/amendments to obligate all except $2.2
million of this unobligated balance is under way.
MEXICO BORDER: FUNDED PROJECTS AND NEEDS
Question. Please provide a break-out of all projects funded under
this program to date, and the remaining needs that have been identified
(including funding requirements).
Answer. Since 1995, the border projects funded with EPA assistance
to date, either through direct grants or through its Border Environment
Infrastructure Fund (BEIF) grant to the North American Development Bank
(NADBank), are shown in the attached table. In addition, the NADBank
has estimated the project costs for work to be certified between June
2000 and the end of Year 2002 in which EPA is likely to participate.
Those project costs total $466.5 million of which the EPA share is
anticipated to be $233.8 million.
MEXICO BORDER: MEXICAN CONTRIBUTION
Question. What has been the Mexican contribution to projects
already funded, and what is anticipated for future projects?
Answer. The Mexican government participates in those projects in
Mexico listed in the attached table that are funded through the Border
Environment Cooperation Commission (BECC) certification/NADBank funding
system. That group, as shown in the attached chart, totals $369.3
million. The Mexican share as reported by NADBank is approximately
$109.3 million, the EPA share $106.8 million and the balance locally
funded. EPA anticipates that it will continue its agreement to a one-
for-one match of Mexico's federal and state grant shares, on a
cumulative basis, for projects in which the U.S. has an interest. The
grant amounts are arrived at after the local debt capacity of a
community is reviewed by the NADBank.
MEXICO BORDER: FUNDED PROJECTS AND RESULTS
Question. What is the status of projects to date, and what
environmental results have been produced?
Answer. Some of these projects are in operation, some under
construction and some in the final design/procurement for construction
stage. Any project that has been certified by the BECC has had its
environmental review and financial package completed, so that
preconstruction time has been minimized. All are for either municipal
wastewater collection and treatment or public water supply and
distribution, some are for both. Wastewater and drinking water
infrastructure investments in the Mexico Border area will yield
environmental and public health results. For example, operation of the
international wastewater treatment plant (ITWP) in San Diego, that
manages sewage from Tijuana, significantly reduced beach closures in
Southern California last summer. Several other plants are about to come
on-line. By the end of 2001, 600,000 more people (cumulative total of
11 million people) in the Mexico Border area will be protected from
health risks because of adequate drinking water and wastewater
sanitation systems funded through the Border Environmental
Infrastructure Fund.
MEXICO BORDER: ADDRESSING GREATEST THREATS
Question. What assurances are there that EPA funds for border
activities are directed at the greatest environmental threats?
Answer. EPA funds for water and wastewater infrastructure on the
border are directed to those projects that have been developed to the
level at which they are ready for final design and construction. All
projects for EPA participation are screened under an EPA policy
applying funding eligibility criteria, which includes an affordability
index used to determine whether a community may be unable to provide
the needed improvements without assistance. Finally, the BECC
certification and process is the mechanism to assure that, after public
participation and input, only high priority projects relating to public
health and the environment are brought online.
MEXICO BORDER: NADBANK
Question. It appears that EPA grants have provided the major source
of assistance provided by NADBank. What efforts are underway to make
the NADBank work independently of federal grants? What are the major
impediments to a more successful NADBank and Border Projects?
Answer. The concept of the Border Environmental Infrastructure Fund
(BEIF) grant is to make the project affordable for the community. By
providing grant assistance as part of multi-agency funding package, a
community is able to implement revenue sources, including user rates
and reserves, that results in financial sustainability of its water and
sewer services. Historically, EPA grant fund participation in a project
using the BEIF has averaged about one-third of the costs for projects
that meet out funding criteria. No commitment of EPA grant funds from
the BEIF are made until the NADBank identifies funding commitments from
all other sources and notifies EPA of the amount needed to complete the
multi-agency funding package. EPA expects the rate of its participation
to increase as additional projects in poorer communities as well as
larger projects come to the forefront. Without EPA grant funds, most of
these projects would simply not be completed.
DRINKING WATER SRF: STATE MATCH
Question. Have all states established and provided the requisite
matching funds for DWSRFs? If not, which states have not?
Answer. All but two states, Rhode Island and Louisiana, have
provided the required 20 percent match for Drinking Water State
Revolving Fund (DWSRF) capitalization grant funds. Rhode Island, which
had difficulty obtaining the match for its fiscal year 1997 and 1998
grants, is now having difficulty obtaining the match required for its
fiscal year 1999 grant of $7.5 million. The Regional Administrator for
EPA's Region I office has communicated her concern to the Governor of
Rhode Island that the State could lose the opportunity to fund
important drinking water projects should it fail to provide the
required match. Louisiana is having difficulty providing the match for
its fiscal year 1998 and 1999 grants. Louisiana also does not have
matching funds committed for its fiscal year 1999 grants that, to date,
has not been awarded.
DRINKING WATER SRF: UNOBLIGATED BALANCE BY STATE
Question. What is the unobligated balance in this program, by
state?
Answer. EPA obligates funds to the states through the award of
capitalization grant funds. States have two years to apply for and
receive a grant award from a specific annual appropriation. As of April
13, 2000, EPA had awarded $2.4 billion of the $3.6 billion appropriated
to the program in fiscal years 1997, 1998, 1999 and 2000. Attached is a
state by state breakout of this unobligated balance.
CLIMATE CHANGE TECHNOLOGY INITIATIVE
Question. How much of your appropriation for fiscal year 2000 and
your request for fiscal year 2001 is targeted to publicizing the
benefits of energy efficiency and how much is targeted to recruiting
new participants?
Answer. The majority of EPA's fiscal year 2000 funding is used to
deliver technical information to program participants so that
organizations and consumers can choose energy efficient solutions that
save money while reducing air pollution. EPA's appropriations are
strategically focused on removing market barriers that impede
organizations, businesses, governments and consumers from investing in
cost-effective energy-efficient technology. EPA's appropriations are
used to develop essential decision-making information and tools such as
previously non-existent information on product performance, strategic
plans for whole building upgrades, product specifications for energy
efficient equipment, building performance assessment tools, and
financial assessment tools. Less than 5 percent of our fiscal year 2000
funding is targeted to education and outreach on the benefits of energy
efficiency. Also, less than 5 percent of our fiscal year 2000 funding
is targeted to recruiting new participants. Similar portions of our
fiscal year 2001 request would be targeted to these activities.
CCTI: EMISSION REDUCTIONS
Question. The budget justification states that in fiscal year 2000
your programs will achieve reductions of 58 million metric tons from
projected levels. How do you know that participants are reporting
reductions from their projected levels, rather than reductions from
historic levels? Are participants in these programs required to report
their net reductions in energy use and greenhouse gas emissions, as
opposed to their gross reductions? To what extent do you verify reports
independently by participating companies?
Answer. A variety of information and a number of factors are taken
into account to determine the emissions reductions associated with
EPA's programs. Taking Energy Star products as an example, emissions
reductions are estimated directly from product sales data that are
readily available for a range of products. Combined with regional
emissions factors and operational data, EPA can estimate the savings
and emissions reductions from the increased presence of more efficient
equipment in our homes and buildings. These are net savings and
emissions reductions that would not exist without the program. A number
of the programs get information directly from reports from program
participants. Estimates of net savings and emissions reductions are
derived from these partner reports while taking account of other
important factors such as free ridership (i.e., some organizations
would have taken some action without the program) and free drivership
(some organizations have benefitted from the information made available
by the program without joining as a participant and reporting results).
EPA expends considerable effort checking the reports that participants
provide to ensure accuracy.
HIGH PRODUCTION VOLUME CHEMICAL TESTING
Question. This voluntary testing program will provide enormous
amounts of information about chemical hazards. What process will EPA
use and what money has the Agency set aside for using that information
to evaluate the risks for those chemicals?
Answer. The screening level human health and environmental effects
information being developed by industry sponsors under the High
Production Volume (HPV) Challenge Program will be provided to the
Agency in what is called ``robust summary format,'' a format developed
for the HPV Challenge Program and accepted for international data
sharing by the Organization for Economic Cooperation and Development
(OECD) in its HPV Screening Information Data Set (SIDS) Program. This
information will be posted to the Internet for review and assessment by
both Agency personnel and outside interested parties.
Once this basic hazard information is available on a chemical, it
may be used to provide a platform to begin to address the question,
``how safe is this chemical?'' EPA has existing risk assessment
guidelines to prepare and prioritize chemicals for risk assessment. It
must be noted that the hazard information being provided through the
HPV Challenge Program is screening level data intended only to support
the initial stage of assessing chemical hazards. HPV data would not be
sufficient on its own for the preparation of formal risk assessments;
additional hazard data (e.g., carcinogenicity; neuro-toxicity; etc.)
and exposure data would be needed to conduct risk assessments. The
resources requested for of the Chemical Right-to-Know Initiative will
be fully encumbered in collecting, managing, and disseminating the
limited hazard screening data and will not be used to develop formal
risk assessments on any HPV chemicals.
In fiscal year 2000, the Operating Plan for the CRtK Initiative is
$11.1 million, with approximately $10 million directed at HPV chemicals
and $1.1M supporting the start-up of the program to address chemicals
of special concern to children. EPA's fiscal year 2001 President's
Budget Request contains a $12.6 million request for the CRtK-HPV
program. During the initial data collection phase of the HPV program,
the bulk of these resources must be dedicated to managing and reviewing
the incoming data. Public outreach efforts in these early years of the
program will include a dialogue with stakeholders to determine how they
will use the data in order to identify the most appropriate formats,
tools, and vehicles for effective public hazard communication. Public
outreach will assume a steadily higher profile as data actually become
available and are reviewed, and as additional resources are provided.
HIGH PRODUCTION VOLUME CHEMICAL TESTING: COMMUNICATION
Question. Beyond simply ``posting'' the numbers and test results on
the internet, what steps are you taking and resources are you
allocating to ensure that the information voluntarily provided by
industry will be communicated to the public in a way that means
something to them?
Answer. Using established risk assessment guidelines, EPA plans to
use the toxicity data to produce plain English chemical information
profiles, Chemical Advisory notices, website enhancements, and other
information tools as appropriate on individual chemicals of concern.
EPA will work with the Consumer Product Safety Commission, the
Occupational Safety and Health Administration, and other agencies to
distribute this information to workers, consumers, parents, teachers,
community leaders, public interest groups, companies, and others. EPA
intends to use the information and experience it has gained in other
public safety and education projects to create and distribute simple
and understandable messages to the public.
In addition, by classifying chemicals as presenting high, medium,
or low hazard concerns, the Agency may be able to explain to the public
the hazards of a chemical in simple and practical terms. In the future,
this could then be combined with exposure information (e.g., chemical
use profiles and exposure scenarios relevant to the specifics of
individual chemicals) to assess, at a screening level, the potential
risks presented by the chemical to people or the environment in various
defined circumstances--for example, to workers, to users of consumer
products, or to the environment. The hazard of a chemical is generally
seen as an ``intrinsic'' aspect of the chemical, whereas uses and
exposures can change and be ``situational'' depending on the
particulars of a given commercial application. For this reason, clear
and concise hazard information may be useful outputs of HPV screening
to the public.
EPA realigned $1.3 million of its fiscal year 1999 Enacted
Operating Plan to initiate the Chemical Right-to-Know Initiative
(CRtK). In fiscal year 2000, the Operating Plan for the CRtK Initiative
is $11.1 million, with approximately $10 million directed at HPV
chemicals and $1.1 million supporting the start-up of the program to
address chemicals of special concern to children. EPA's fiscal year
2001 President's Budget Request contains a $12.6 million request for
the CRtK-HPV program. During the initial data collection phase of the
HPV program, the bulk of these resources must be dedicated to managing
and reviewing the incoming data. Public outreach efforts will include a
dialogue with stakeholders to determine how they will use the data in
order to identify the most appropriate formats, tools, and vehicles for
effective public hazard communication.
CHLOROFORM RULE: AGENCY RATIONALE
Question. In December 1998, EPA announced its decision to
promulgate a national primary standard of zero for chloroform in
drinking water. EPA decided to set a zero standard despite scientific
evidence that the Agency's existing ``linear, no threshold'' carcinogen
policy was scientifically unjustified for chloroform. That policy, a
``conservative default assumption,'' assumes that any exposure to
carcinogens poses some cancer risk, in contrast with the national
policy for non-carcinogens which recognizes that below a specified
level there is no risk of adverse effects. The Agency's own scientists,
along with leaders of the Society of Toxicology and many others, agreed
that extensive scientific data on the ``mode of action'' by which
chloroform causes cancer supported departure from the conservative
default assumption and promulgation of a less-stringent standard of 300
parts per billion. Yet EPA chose to ignore the weight of the scientific
evidence and, for seeming political reasons, to stick with its old
default assumptions. That EPA decision raises significant concerns that
no matter how much new scientific evidence is generated the Agency will
ignore that science if it is inconsistent with its agenda. If so, why
spend millions of dollars generating new data? Can you explain EPA's
rational for this particular decision?
Answer. As part of a large-scale regulation promulgated in December
1998 under the Safe Drinking Water Act, EPA published a health-based
goal for chloroform (the maximum contaminant level goal or MCLG) of
zero. EPA provided new data and analyses concerning chloroform for
public review and comment, including a different mode of action
approach for estimating the cancer risk, but did not reach a conclusion
on how to use that new information in establishing the final MCLG,
pending further review by the Science Advisory Board (SAB). The zero
MCLG was challenged by the Chlorine Chemistry Council and others in the
Court of Appeals for the District of Columbia; the maximum contaminant
level (MCL) for trihalomethanes, which includes chloroform, was not
challenged.
After review of the SAB report, EPA concluded that it should
withdraw the MCLG for chloroform and engage in further rulemaking
proceedings on the MCLGs for the trihalomethanes and take additional
regulatory actions consistent with all information available to the
Agency, including the SAB report and other best available peer reviewed
science. The Court recently vacated the MCLG for chloroform and has
indicated it will ask the parties to address further remedies.
IRIS DATABASE: ACCURACY OF DATA
Question. Many Federal and state environmental programs rely on
EPA's IRIS (Integrated Risk Information System) database for making
decisions. Concerns have been raised as to the currency and accuracy of
the information in the database. What is the Agency doing to ensure
that the IRIS database, on which many federal and state programs rely,
contains the best available scientific information about the substances
contained in the database?
Answer. Since 1995, EPA has taken several steps to ensure that the
best available scientific information is included in IRIS assessments.
On an annual basis, EPA announces the next set of chemicals to be
considered in the IRIS program, either to update an older assessment,
or to be added to the database. This announcement includes a request
for all relevant information to be submitted to EPA for consideration
in the assessments. In addition, all IRIS assessments go through an
external peer review, which can include a public meeting permitting
more notice of relevant information. All scientific questions and
responses generated through the external reviews are available to the
general public.
In addition, in its fiscal year 2000 Appropriations Committee
Report, Congress directed EPA to ``consult with the Science Advisory
Board (SAB) on the design of a study that will (a) examine a
representative sample of IRIS health assessments completed before the
IRIS Pilot Project, as well as a representative sample of assessments
completed under the project and (b) assess the extent to which these
assessments document the range of uncertainty and variability of the
data. The results of that study will be reviewed by the SAB and a copy
of the study and the SAB's report on the study sent to the Congress
within one year of enactment of this Act.'' EPA consulted with the SAB
Nov. 29, 1999 and again on March 7, 2000 on an approach to this study.
The study is now underway. Though not specifically addressing currency
or accuracy, the study will determine whether IRIS assessments
developed using a new process adequately presented and discussed the
range of uncertainty and variability in the data used to develop the
assessments.
IRIS DATABASE: AGENCY RESOURCES
Question. How much money is the agency allocating to improving the
IRIS database?
Answer. For the fiscal year 2001 President's Budget Request, EPA
requested a total of $1.7 million to support the Integrated Risk
Information System (IRIS) database. Some key areas of effort in 2001
will include producing, updating, and maintaining health assessments on
IRIS, ensuring appropriate external peer review of IRIS summaries and
support documents, facilitating Agency consensus and resolving issues
in a timely manner, and maintaining a widely-accessible Internet
version of IRIS, available at the local level to support community-
based environmental protection.
Question. How many staff resources are allocated to this?
Answer. For the fiscal year 2001 President's Budget Request, EPA
requested a total of 7.8 work years to support the IRIS database.
project xl: progress in negotiating agreements
Question. What is the cause of the slow progress in negotiating
agreements with applicants in the XL program?
Answer. When Project XL was launched in 1995, there were no models
to draw upon. The first few XL projects posed many challenges. EPA and
others had concerns about how to test new approaches and yet still
maintain the same level of protection that the current regulatory
system provides. Predicated on experimentation, Project XL has evolved
through continuous improvement, first in policy and procedures, and
second in program structure and process.
In 1997, EPA announced new XL policy guidance. This Federal
Register notice invited stakeholders to be co-sponsors of proposals and
described changes made to streamline and improve the negotiation
process, highlighting for the first time preproposal discussions as
important to the building of good ideas, proposals, and relationships.
Most importantly, it clarified three project selection criteria:
superior environmental performance, regulatory flexibility, and
stakeholder involvement. This guidance also set the stage for EPA's
next task: reducing transaction costs.
Specific Concerns Addressed
In 1998, EPA--with industry representatives, environmental
organizations, states, and other interest groups--worked together to
streamline the proposal development and negotiation process by reducing
transaction costs and improving stakeholder involvement. Through the
reengineering process and ongoing experience, EPA continues to learn
about how to run an innovative program like Project XL (e.g., we can
now be more specific about what a quality proposal should contain, how
decisions should be made, and what a reasonable process should entail).
The Agency also developed several tools to help project sponsors,
EPA staff, and citizens create successful projects. For example, the
Best Practices Guide for Proposal Development, written specifically for
project sponsors, gives greater clarity in determining what makes a
good proposal. The Stakeholder Involvement Guide shows project sponsors
and stakeholders how to work effectively on XL projects. Technical
assistance is now available to stakeholder groups participating in
project negotiations. Finally, EPA contracts with professional
facilitators to get stakeholder discussions and internal EPA teams off
on the right track.
Results of the new process
We now expect this new process to yield agreements for most
projects in six months to a year, compared to 24 months or longer under
the old process. For example, the Atlantic Steel Redevelopment project,
in Atlanta, Georgia, produced a signed project agreement for phase one,
eight months after initial pre-proposal discussions. The Exxon
Superfund project in Fairmont, West Virginia, also produced a signed
agreement eight months after an initial pre-proposal was submitted.
EPA has signed 21 final XL agreements and is negotiating an
additional 29 projects that are expected to be signed and implemented
in fiscal year 2000.
PROJECT XL: EXAMPLES
Question. One of the key elements of the XL program is testing
ideas for innovative approaches to environmental management. Please
provide examples of where EPA has integrated into its normal operations
an innovative approach that was found to be successful in an XL
project.
Answer. In fiscal year 1999, EPA reported 30 innovations resulting
from XL projects that have the potential to improve traditional
regulatory programs. Overall, EPA and its partners have found that XL
projects produce greater reductions in environmental releases than
would have occurred under conventional regulatory approaches. At the
same time, XL project participants reduce environmental management
costs and improve their competitiveness as a result of expedited or
consolidated permitting, reduced record-keeping and reporting
requirements, and greater operational flexibility afforded by facility-
wide emission caps.
Eight innovations are fully implemented, and the remaining
innovations are in subsequent stages of testing or development prior to
being incorporated into core Agency functions. The Agency is developing
approaches to incorporate the remaining innovations into mainstream EPA
activities. However, the time frames for executing these changes are
tied to legislative requirements for rule-making and regulatory
guidance that requires comprehensive analysis, and adequate
opportunities for public review and comment. Likewise, some innovations
are tied to experiments that are in the early stages of development and
have not yet produced verifiable and replicable results.
Below are the eight XL innovations (5 regulatory and 3
institutional changes) that have been incorporated into a permanent
regulatory change or adopted into Agency operations.
Regulations:
Voluntary effluent discharge limitations
Pulp and Paper Cluster Rule.--Voluntary effluent discharge
limitations; participation in Voluntary Incentives Program allows
additional time for MACT standards compliance.
The Pulp and Paper Cluster Rule was promulgated in April 1998.
Compliance options available in the rule were part of the XL project
for Weyerhaeuser Flint River Plant in Oglethorpe, Georgia.
Specifically, the Water Effluent Limitations Guidelines and Standards
portion of the rule requires more stringent reductions for toxic
pollutants in the wastewater discharges during the bleaching process
and in the final discharge from the mill. As part of its XL commitment
and its Minimum Impact Manufacturing strategy underway at the plant,
Weyerhaeuser has conducted a feasibility study of plant-wide effluent
reductions through innovative technologies. The Effluent Guidelines
Voluntary Advanced Technology Incentives Program, a compliance option
incorporated into the Cluster Rule, encourages bleach plant operators
to install advanced technologies or make process changes that will
reduce effluent discharges beyond the rule's limits. Weyerhaeuser's
Flint River facility is participating in this program, but expects to
exceed the requirements for this option. If a pulp and paper mill
enrolls in this program and can meet the strict discharge limits
through advanced technologies, the facility receives reduced monitoring
and inspection opportunities, and additional time to comply with the
air (e.g., NESHAP) portion of the Rule.
Condensate vent stream reductions
Pulp and Paper Cluster Rule.--Testing alternative compliance
approaches for HAPs; developing a HAP emissions balance scheme for
process vent controls.
Voluntarily reducing hazardous air emissions from process water
streams is another compliance option for kraft-pulping operations that
was incorporated under the Pulp and Paper Cluster Rule. The Clean
Condensate Alternative Program focuses on reducing the hazardous air
pollutant (HAP) emissions throughout the pulp mill by reducing the HAP
mass in process water streams. The Weyerhaeuser Flint River Facility
expects to exceed the requirements to comply with this option since
they are going through a mill modernization program that will reduce
condensate vent streams throughout the facility. The Flint River
facility's willingness to redesign the mill with this option in mind
was instrumental in creating this opportunity within the Cluster Rule
requirements. By lowering the HAP mass loading in waste water streams,
fewer HAPs will be volatized to the atmosphere. Many of the pollutants
that are ultimately emitted from production vents originate in the mill
condensates that are recycled throughout the mill. If a mill can reduce
these condensates instead of controlling individual specified vents,
they achieve greater air emission reductions and reduce their
compliance costs.
Modification of the NESHAP for Magnetic Tape Manufacturing
Operations
The revised Magnetic Tape rule was effective in June 1999 and is
expected to increase compliance with this regulation, enhance
flexibility for affected entities and save companies money in
compliance costs.
The 3M (Hutchinson, Minnesota) XL proposal did not reach final
agreement. However, one of the flexibilities 3M had requested was used
in revising the 1994 Magnetic Tape Manufacturing operations maximum
achievable control technology (MACT) standard. Since the 1994 rule was
issued, 3M provided EPA with data showing that HAP emissions from
uncontrolled solvent storage tanks are very close (by volume) to HAP
emissions from uncontrolled containers of mix preparation equipment. By
balancing emissions from these uncontrolled sources against controlled
sources in the process line, 3M was able to suggest alternative control
options. EPA accepted 3M and other industrial data, and proceeded to
amend the 1994 rule providing owners/operators with 25 options for
``undercontrolling'' tanks and/or mix equipment vessels based on the
level of control they achieve on their coating lines. 3M developed this
data in conjunction with a regulatory flexibility proposal submitted to
Project XL.
Using pollution prevention technologies
The Pulp and Paper Cluster Rule also provides incentives for using
pollution prevention technologies in kraft pulping operations. The MACT
standards provide for an extension of up to eight years from
promulgation for compliance if pollution prevention approaches that
otherwise would not have been used are used.
Pulp and paper facilities will have the flexibility to demonstrate
HAP emission reductions using innovative pollution prevention
approaches in lieu of, or in addition to, end of pipe HAP controls.
This extension is designed to encourage mills to install pollution
prevention technology that will reduce HAP emissions from the pulping
process, as well as both air and water pollutant discharges from the
bleaching process. The Weyerhaeuser XL project will demonstrate
pollution prevention approaches to reducing HAP emissions such as:
reducing process condensate wash water HAP content; reducing bleach
plant HAP emissions, and reducing oxygen delignification HAP emissions;
and reducing cylinder mould decker and filtrate tank HAP emissions.
Limited Preapproval for Air Permits
The recent Pharmaceutical MACT standard regulations promulgated in
September 1998 have incorporated lessons learned from the Merck final
project agreement, allowing the limited preapproval of certain types of
production changes without requiring permit revision for each
modification.
Certain industries change their product lines and manufacturing
processes frequently. Usually, such changes require a time-consuming
preconstruction permit review and approval process prior to
implementation. By focusing on the total emissions of its facility, the
Merck XL project is testing the use flexible air emission strategies
under a facility-wide emission cap to allow modifications that would no
longer require prior approval under either Federal or state NSR
regulations. The Agency is formally considering further expanding this
use of preapproval and ``cap permits'' as part of a wider application
of these concepts in forthcoming NSR regulatory standards.
EPA Institutional Change:
Compliance Screening for XL's Voluntary Project Sponsors
EPA issued the ``Guidance for Compliance Screening for Voluntary
Programs,'' the Agency's comprehensive screening framework, applicable
to all voluntary partnership programs.
EPA actively encourages a wide variety of public and private
entities to participate in XL, but all sponsors must have a solid
history of compliance with EPA regulations. While past record of
compliance is not always an indicator of future performance, a
potential sponsor's overall compliance history is relevant to ensure
the experimental XL approach will not pose undue risks to human health
and the environment. Initially, XL project eligibility was determined
through an EPA Office of Enforcement and Compliance (OECA) enforcement
screen. As the XL process matured, compliance screening became more
frequent and time-intensive. The screening process was also not well
defined. To standardize compliance screening, OECA developed the
Guidance for Compliance Screening for Project XL. This guidance
specifies the scope, criteria and process for conducting enforcement
screens, and indicates that compliance screens will be updated prior to
high-visibility public events. XL has laid the groundwork for testing
and establishing guidance for an increasing number of EPA voluntary
programs requiring compliance screening. In addition to the XL
screening guidelines, the Guidance for Compliance Screening for
Voluntary Programs (August 1998) provides the comprehensive screening
framework for all of the Agency's voluntary partnership programs.
Senior Management Support and Involvement through the
Reinvention Action Council
EPA established the Reinvention Action Council (RAC) to further
senior management involvement in advancing innovative efforts. The
RAC's success in resolving problems in Project XL led to expanded
responsibilities for the Council.
For projects to succeed and system change to occur, there is a need
for active support from senior Agency management. For XL, this support
includes championing projects, empowering staff, giving clear direction
to teams and providing resources. In 1996, EPA established the RAC to
assist in reaching the Agency's goal of 50 XL projects. The RAC
consists of senior Agency managers (Deputy Assistant Administrators and
Deputy Regional Administrators) from each of the Headquarters and
Regional offices. Originally, the RAC served as a resource to XL teams
to resolve disagreements or difficult technical and policy issues.
Since then, RAC members have committed to working directly with XL
Coordinators within their offices to support quick decision-making and
ensure that XL teams have suitable resources. Involving senior managers
has proven to be effective in identifying and resolving problems for
XL. In 1997, the Administrator expanded the RAC's responsibilities to
support the Agency's overall commitment to reinventing environmental
protection. To date, the RAC has taken a hard look at reinvention
efforts throughout the Agency and has addressed a broad array of
reinvention issues including incentives, permitting and environmental
management systems, and continues to set new reinvention priorities.
Developing Capabilities to Conduct Experiments with State
and Tribal Governments
The ECOS-EPA Innovations agreement, developed out of the XL
experience, defines seven principles to guide innovations and a process
that clarifies how EPA and the states will put innovations to the test.
The prominent role of states in the XL process, along with the
Innovations agreement, has advanced successful Federal-state
partnerships in developing and managing innovation strategies for
environmental protection.
Federal sharing of environmental responsibilities requires that
each XL project have the support of the appropriate state or tribal
government. For most projects, state and tribal governments are
signatories. State and tribal governments are, and will continue to be,
primary partners with EPA in both regulating human health and the
environment, and designing innovative approaches. It is incumbent that
EPA, states and tribal governments rectify any differences and produce
agreements that satisfy each entity. XL serves as testing ground for
such a framework. The promise of more efficient and effective
government has led several states to develop their own XL-like
legislation to test innovative approaches to state environmental
programs. To provide an additional vehicle, EPA and the Environmental
Council of the States (ECOS) negotiated The ECOS-EPA Innovations
agreement to guide innovations in the future. Project XL continues to
influence states as they consider and develop their own programs.
Some Examples of Future Change:
In addition, below are two examples of innovations that EPA plans
to incorporate into permanent regulatory changes in 2000.
Clean Air Act Emission Caps
In the near future, The Agency will announce the New Source Review
Reform and Clean Air Act revisions. The approaches tested in the
following three XL projects have provided fundamental information about
the value and structure of flexible air permits that has been
incorporated into these rules.
Three XL projects--Intel-Chandler, Weyerhaeuser-Flint River, and
Merck-Elkton--are testing different versions of a facility-wide air
emissions cap. The benefit of these caps is that they reduce and limit
each facility's air emissions and allow them flexibility as to how to
control or prevent future emissions to maintain these reduction levels.
As long as the facilities operate within the cap limits, it also allows
the facilities to make production changes without recurring permit
modifications. Intel established its site-specific emissions cap as
part of its minor New Source Review (NSR) Permit with Arizona and EPA.
Intel is using a Plant Site Emission Limit (PSEL) for criteria
pollutants and an Arizona Ambient Air Quality Guideline limit for HAPs
to establish their facility caps. Intel has reduced its criteria
emissions and hazardous air pollutants (HAPs) by more than 20 percent
and 40 percent, respectively, below its earlier actual emissions
baseline. Weyerhaeuser has modified its existing air quality permit
(with Georgia and EPA) with a dual emissions cap for the two major
sources of criteria air emissions at their facility and Merck has
created its emissions cap as part of a new Prevention of Significant
Deterioration (PSD) permit with Virginia and EPA. These projects are
testing and confirming the potential for establishing caps that not
only provide for the opportunity to reduce air emissions below
allowable levels, but offer the flexibility to facilities to control or
prevent emissions from exceeding these levels. These project
flexibilities have been studied as part of a wider application of these
concepts in forthcoming NSR regulatory standards.
Pretreatment Mass-based Compliance Standard
The mass-based approach used in the Steele County XL project is
helping to inform the national pretreatment regulations streamlining
process.
National Pretreatment Standards establish limits on pollutants in
specific industrial categories, establishing pollutant limitations in
different ways for different categories. Current regulations do not
allow alternative mass-based limits to be developed when concentration-
based limits are required. This can serve as a hurdle for industrial
users that are attempting to minimize their water use. Water
conservation efforts can increase the concentration of pollutants in a
reduced volume of water even if the total mass of pollutants have
decreased. Complying with a mass limit that is equivalent to or less
than the total pollutant load from a concentration limit would not
change and could even reduce total pollutant loading, even though
effluent concentration might increase. In a rule proposed in July 1999,
EPA seeks to streamline the general pretreatment regulations for
existing and new sources of pollution. The proposed rule allows the
Steele County (MN) Project XL sponsor facilities in Owatonna and
Blooming Prairie the flexibility to use alternative mass-based limits.
To enable and facilitate water conservation strategies, the local
Control Authority can allow sponsor facilities in Owatonna to use
equivalent mass limits in lieu of concentration limits for discharges
to the wastewater treatment facility.
ENDOCRINE DISRUPTOR SCREENING PROGRAM: SCHEDULE FOR VALIDATION AND
STANDARDIZATION
Question. What is EPA's schedule for completing the validation and
standardization of the screens and tests in the proposed Endocrine
Disruptor Screening and Program? Will the validation work for both
screens and the corresponding tests for human health be completed at
the same time? When will the test(s) for human health be validated for
use?
Answer. The scientific screens and tests proposed for the Endocrine
Disruptor Screening Program vary considerably in terms of their
readiness for routine use in regulatory programs. Because many of the
endocrine disruptor screens and tests involve cutting-edge science, few
of them have actually undergone the standardization and validation
requirements necessary for pesticide and chemical regulation. Many of
the tests proposed for the screening program have been used in
research, but have never been formally standardized or validated
through inter-laboratory comparisons. Standardization and validation is
essential to establish the relevance, reliability, and reproducibility
of methods. Therefore, EPA will validate all test systems to ensure
that the tests are reliable and reproducible before implementing the
testing phase of the program.
EPA formed a technical committee called the Endocrine Disruptor
Standardization and Validation Task Force to provide the technical
advice needed to develop, standardize, and validate the screens and
tests proposed for the Endocrine Disruptor Screening Program. EPA is
currently reconstituting the Task Force as an advisory committee under
the Federal Advisory Committee Act. Although the Task Force's
activities have been temporarily suspended, this does not affect the
progress of the technical work, which is ongoing. EPA expects the
advisory committee to resume its technical advisory functions in late
Fall 2000.
Several years will be required to complete standardization and
validation of the entire Tier 1 Screening and Tier 2 Testing batteries.
However, EPA is moving as quickly as possible and anticipates
implementing the screening program in phases, with initial emphasis on
the legislatively mandated components of the Tier 1 Screening battery.
Several screening tests have already entered the validation process,
and we expect all the Tier 1 screens and one of the Tier 2 tests to be
validated by 2003. The four remaining ecological tests require
substantial development. One will be validated by 2003, two by 2004,
and the last by 2005.
The standardization and validation process is being conducted using
the general principles developed by the Interagency Coordinating
Committee on the Validation of Alternative Methods (ICCVAM), as
described in Validation and Regulatory Acceptance of Toxicological Test
Methods (NIEHS 1997). However, there are also Senator Bond separate
international standardization and validation efforts being conducted by
the Organization for Economic Cooperation and Development (OECD). As
these future tests are developed, EPA will examine their suitability
for use and possible replacement of tests currently proposed for use in
the screening and testing batteries.
The validation work for screens and tests relevant to human health
will be completed by 2003.
ENDOCRINE DISRUPTOR SCREENING PROGRAM: PROCEDURAL RULE
Question. Is the Agency planning to propose a procedural rule for
the EDSP?
Answer. Yes, the Agency is planning the development of a procedural
rule for the Endocrine Disruptor Screening Program. The procedural rule
will be proposed by 2002 and finalized before screening is required in
2003. The procedural rule will be detailed guidance on various aspects
of policy for implementing the screening program. Included in this rule
will be guidance on:
--the process the agency will use follow in setting priorities and
ordering or issuing rules to require testing;
--who should pay for testing and how costs should be divided;
--the justification that must be made for skipping Tier 1 screening;
--the process to be followed to obtain an exemption or waiver from
the testing requirements of screening programs; and
--the procedure for submitting data.
national air toxics assessments: public involvement
Question. My understanding is that the Agency has an ambitious
project underway to develop a national air toxics assessment tool that
will allow the Agency to characterize the potential health risks
associated with exposure to air toxics. According to EPA's most recent
schedule, next month (April 2000) you plan on a public release of a
1996 emissions inventory and modeled air quality results for every
county in the country. Then in August 2000, you plan on a public
release on the internet of exposure modeling results and estimates of
the public's cumulative risk from 33 of the most prevalent air toxics
in the country. How have you involved the public in building this tool?
Answer. Our National Air Toxics Assessments (NATA) build off of
previous modeling and analysis, the Cumulative Exposure Project (CEP),
which estimated ambient concentrations of air toxics for 1990. We
worked with various stakeholder groups on the CEP, including state and
local governments, environmental groups, and industry representatives.
In updating this effort with 1996 data and expanding our assessments to
include exposure modeling, we have continued to involve the public and
specific stakeholders. The main mechanism we have used to date for
getting public input in the development of the National Air Toxics
Screening Assessment (which includes both ambient and exposure
modeling) has been through two public meetings in October 1999 in
Washington, D.C., and continued updates through electronic mail with
the participants of those meetings. At these meetings, we described in
detail our plans for a national screening level assessment of air
toxics risks and solicited input on example presentation formats for
the results of the assessment. Participants, including people from
state, city, and county offices, environmental groups, trade press,
industry, and environmental justice representatives, provided
recommendations on presentation formats as well as the assessment in
general. We are actively involved with state and local air agencies in
conducting reviews throughout the process. We have received additional
input--written and through additional meetings with stakeholders--on
various aspects of our assessments. Also, to inform the general public
of our activities, we provide a description of our NATA activities on
the EPA website.
NATIONAL AIR TOXICS ASSESSMENTS: REVIEW AND COMMENT
Question. Has the general public been able to review and comment on
all specific elements of the NATA, including the emissions inventory,
the proposed nation-wide application of the air dispersion model and
exposure models, the IRIS values to be used, and the development of the
microenvironment?
Answer. Plans for the NATA 1996 national-scale assessment were
discussed at two public meetings held in Washington, DC in October
1999. As discussed at those meetings, the modeling approaches being
used as part of the assessment are a mixture of previously peer-
reviewed approaches and relatively new science which is undergoing peer
review during the assessment process. We incorporated comments from
these meetings on the analytical approaches being used and the methods
being proposed to communicate the results into the assessment and the
final documentation will reflect these changes.
The national-scale emissions inventory (the 1996 National Toxic
Inventory) which drives the modeling process is largely a product of
peer involvement. To develop this inventory, technical staff in the
state and local air pollution agencies work together with EPA staff to
pull together the best available information on air emissions of all
the hazardous air pollutants (HAPs) for the year 1996. The methods for
measuring, estimating, and calculating these emissions are all
individual subjects of peer review, but the full inventory itself is
not. This is consistent with the development of emissions inventories
for all the criteria pollutants.
The air dispersion model being used for the assessment, the
Assessment System for Population Exposure Nationwide (ASPEN), has been
publicly peer-reviewed by the EPA's Science Advisory Board in the
context of its use in the Cumulative Exposure Project. While the peer
review identified some shortcomings of the model, it is still
recognized as the most useful tool for this type of national-scale
assessment for air toxics.
The air pathway exposure model, the Hazardous Air Pollutant
Exposure Model (HAPEM4), has been previously subject to peer review in
the context of its use for estimating exposures from mobile source
pollutants. We have modified it from previous versions to account for
the partitioning of the 33 urban HAPs between typical outdoor
monitoring sites to indoor locations and multiple microenvironments.
These modifications are currently undergoing internal and external peer
review prior to their use in the assessment.
The cumulative risk approach (which uses IRIS values, among others)
that we are using for the assessment is consistent with previously
peer-reviewed Agency risk characterization methods. In addition, since
this is a national-scale assessment, the approach is currently
undergoing internal and external peer review, as is the overall
assessment approach of integrating these various modeling results
together for the full quantification of inhalation risks. Further, once
the national-scale assessment results are completed, the entire
assessment approach, the results, and the interpretation of those
results will be documented and subjected to a full public peer review
by the EPA's Science Advisory Board in the fall of 2000.
Throughout the process, EPA is sharing interim results with state
and local agencies in an effort to ensure the quality and consistent
interpretation of the results.
PEER REVIEW AND RELEASE OF NATA RESULTS
Question. Is it true that you plan to submit the NATA model and
results for peer review at the same time the results will be available
to the general public on the Agency's web site? What is the reason for
placing this information on the web before the NATA inputs, model and
results have been subject to peer review?
Answer. It is the practice of the Science Advisory Board (SAB) that
any technical product being peer reviewed by the SAB be made available
to the public for inspection and review. To facilitate public access
for such documents, the SAB asks that the Agency post them on the EPA
web site. All products placed on the web site are marked as a ``SAB
Review Draft,'' making clear that they are not final Agency documents.
USING NATA TO MEASURE PROGRESS
Question. According to your budget justification, one of the stated
purposes of NATA is to assist the Agency in determining the
effectiveness of the nation's air toxics programs. Will NATA be used to
measure EPA's progress toward meeting the statutory goal of a 75
percent reduction in cancer incidence, considering all emission
reductions from stationary sources?
Answer. Yes, National Air Toxics Assessment (NATA) activities will
be used to help us track progress toward meeting our overall national
air toxics program goals, which include the statutory goal of a 75
percent reduction in cancer incidence attributable to hazardous air
pollutants emitted by stationary sources. This is because NATA
activities include such efforts as expanding air toxics monitoring;
improving and periodically updating emissions inventories; periodically
conducting national- and local-scale air quality, multimedia and
exposure modeling; and characterizing risks associated with air toxics
exposures. Specifically, we plan to use the results of both the current
and future national screening assessments of air toxics, as well as
monitoring and other data generated from the NATA activities to measure
progress toward meeting the 75 percent reduction requirement.
CONTAMINATED SEDIMENTS: NAS WORKGROUP PROGRESS
Question. The National Academy of Sciences is developing a decision
framework for evaluating ways to remediate sediments contaminated with
PCBs. The NAS is looking at the efficacy and risks of remedial
alternatives to provide a scientific basis for selecting remedies at
these sites. The NAS expects to complete its report by October of this
year. At the same time, EPA's Contaminated Aquatic Sediment Remedial
Guidance Workgroup is developing guidance on essentially the same
thing, although it is looking beyond PCBs. How far has the workgroup
progressed in developing its guidance?
Answer. We plan to circulate a draft Superfund Contaminated
Sediment Remedial Guidance (SCSRG) later this year. If the NAS study is
released as expected, in October 2000, the recommendation of the NAS
would help to shape revision of the draft guidance. The development of
the SCSRG draft started before we realized that there would be another
NAS study on contaminated sediments. We believe that EPA's guidance
development effort is responsive to recommendations in the last NAS
report and constitutes an important element in clarifying our approach
to assessing contaminated sediments.
CONTAMINATED SEDIMENTS: AGENCY USE OF NAS FINDINGS
Question. Rather than developing the guidance in advance of the NAS
report, wouldn't it be better to base the guidance on the report's
findings? Once the report is issued, how will the findings be
incorporated into EPA policy?
Answer. While EPA has made several presentations before the NAS
committee and provided extensive materials for their information, EPA
does not know what recommendations will come from the Committee. The
NAS recommendations may require further work before they can be
implemented as an agency policy. However, if the current study is
released as expected in October 2000, the recommendations in this
report would help to shape revision of our draft guidance. This NAS
study will be the third NAS report on the management of contaminated
sediment since 1989. We have reviewed the recommendations of the
previously released NAS sediment reports to prepare materials for the
guidance that we are currently drafting. We look forward to the final
NAS report and intend to give it full consideration in the development
(and if necessary, revision) of our Agency's sediment remediation
guidance.
information burden: agency claims to small business committee
Question. Why did staff of the Office of Environmental Information
make these misleading claims to my staff on the Senate Small Business
Committee?
Answer. The Office of Environmental Information staff did not
intentionally make misleading claims to your staff on the Senate Small
Business Committee. EPA believes that the General Accounting Office's
(GAO) review underscores the complexity involved in communicating
burden reduction. The annual Information Collection Budget (ICB) is the
official accounting of agencies' information collection requirements.
Under OMB's Office of Information and Regulatory Affairs burden
measurement procedures, both program changes (e.g., the addition or
elimination of a question on a form) and program adjustments (e.g.,
revisions of previous burden estimates such as the number of
respondents) are used to estimate the burden associated with an
Agency's information collections and both are reflected in the year-end
estimates published in the ICB.
GAO found that EPA's estimate for hours of burden reduced, as
reported in ``Reinventing Environmental Protection'' is misleading
because it represents the sum of program change decreases and program
adjustment decreases. We believe this finding does not represent the
full range of burden reduction activities that EPA has pursued. EPA has
acted aggressively to discuss reducing burden through a variety of
activities that tend to make it easier for companies to comply with
environmental regulations. EPA is not able to quantify the level of
burden associated with these activities. They include: the
establishment of compliance assistance centers; development of
electronic reporting opportunities; creation of audit policy and
regulatory compliance options; implementation of plain language
regulations and guidance; and development of electronic tools such as
TRIME (Toxic Release Inventory Made Easy) that help make our
regulations and guidance more understandable and easier for the public
to deal with. GAO's recent report on burden states that these efforts
were outside the scope of their review of the agency's information
collection requirements.
information burden: agency claims to house appropriations committee
Question. Why, when GAO shared its findings of misleading EPA
claims of burden reduction in February, 2000, did Administrator Browner
repeat the same misleading claims to the House Appropriations
Committee, Subcommittee on VA, HUD, and Independent Agencies in March,
2000?
Answer. EPA did not intentionally make misleading claims to the
House Appropriations Committee, Subcommittee on VA, HUD, and
Independent Agencies in March, 2000. The $800 million estimate for cost
savings due to burden reductions is a straightforward estimate of the
cost of a reporter's hourly time ($30.00 per hour) and the estimated
hours of gross annual burden reduction (approximately 26.9 million
hours). As we have previously stated , GAO's review underscores the
complexities involved in communicating burden and burden reduction. We
will work with GAO and OMB to address these complexities and the
specific issues raised by GAO about EPA's application of OMB's
guidance. We also believe that GAO's review is too narrowly focused and
fails to fully acknowledge the Agency's burden reduction efforts. EPA
has acted aggressively to discuss reducing burden through a variety of
activities.
INFORMATION BURDEN: BUSINESS SAVINGS
Question. Why does EPA claim its efforts saved business over $800
million dollars when GAO found that EPA's ``math errors, erroneous
assumptions, and conversion of burden hours to dollars on a form that
the agency submits to OMB have no effect on businesses' or communities'
paperwork requirements or their expenditures.''
Answer. The $807 million dollar figure was derived by multiplying
the 26.9 million hour burden reduction estimate claimed by EPA and
reported in the Information Collection Budget by $30 per hour, an
estimate of the cost of an employee's time for a company reporting to
EPA. We intend to meet with GAO to ensure our understanding of their
criticisms and concerns.
BURDEN REDUCTION: DISCHARGE MONITORING PROGRAM
Question. EPA's largest claimed paperwork burden reduction between
fiscal years 1995 and 1998 of 4.7 million hours came from Office of
Water (OW) program changes to the discharge monitoring program. But the
4.7 million hour reduction, according to OW, was a goal and a
significantly less burden reduction was actually achieved. Why did EPA
take credit for this reduction goal and not the actual reduction
achieved?
Answer. The President's Regulatory Reinvention Initiative for the
Environmental Protection Agency (EPA) established an interim goal of
reducing reporting and monitoring burden by at least 25 percent. In
response, in April 1996, EPA issued AInterim Guidance for Performance-
Based Reductions of NPDES Permit Monitoring Frequencies. This document
provides guidance to EPA permit writers and States on how best to
implement EPA's National Pollutant Elimination Discharge System (NPDES)
regulations regarding appropriate monitoring requirements in permits.
The ICR Amendment incorporating this guidance was approved by OMB in
1996. It was based on EPA's estimate that a 26 percent reduction in
burden from previous levels for monitoring and reporting requirements
would result from the implementation of the guidance. The document is
not a regulation and cannot impose legally binding requirements on EPA,
States, or the regulated community. It may not apply to a particular
situation based upon the circumstances. Eligibility for reduced
reporting frequencies depends on meeting specific criteria regarding
facility enforcement history and parameter compliance and performance
history. Some States establish their own baseline monitoring
frequencies. The reduction reported in the ICR was EPA's best estimate
of what could be achieved; EPA plans to reevaluate this estimate by
examining actual implementation of the guidance as part of the process
to renew the ICR in 2001.
burden reduction: discharge monitoring program actual reductions
Question. How many paperwork burden hours were actually reduced
between fiscal years 1995 and 1998 by OW changes to the discharge
monitoring program?
Answer. EPA has no existing mechanism for collecting actual burden
hours from permitees. However, there is data in EPA's Permit Compliance
System (PCS) database for approximately one third of all NPDES permits
regarding monitoring frequency. For fiscal year 1995 through fiscal
year 1998, the percent of PCS reported permits reissued with reduced
monitoring frequencies was 26 percent. The percent of parameters with
reduced monitoring frequencies for those permits reported in PCS was 4
percent. The average monitoring reduction per reissued parameter with
reduced monitoring frequency was 70.5 percent. For the average facility
which reduced its monitoring frequency, this would mean that monitoring
for these parameters would be reduced from once a week to once per
month.
INFORMATION BURDEN: REINVENTION EFFORTS VS. NATURAL MATURATION OF
PROGRAMS
Question. Four of EPA's largest claimed burden hour reductions
occurred as a result of the natural maturation of the programs. EPA
took credit for 5.2 million hours of reductions associated with Air
Operating Permits, Agricultural Worker Protection Standards, OPA
Facility Response Plans and Data Generation for Registration
Activities. Why did EPA claim these reductions were due to its
reinvention efforts when they actually resulted from completion of
initial labor-intensive or start-up phases already part of each
program?
Answer. The reinvention claims included both program changes and
program adjustments. Program maturation, where a requirement is phased
out over time, is considered a ``Program Change'' because burden is no
longer imposed on the public after some period of time.
INFORMATION BURDEN: REINVENTION EFFORTS VS. REESTIMATION
Question. Another four of EPA's largest claimed burden reductions,
each claimed to produce over 500,000 hours of savings, came as a result
of EPA reestimating their initial burden hour estimates. In the case of
conformity of federal actions to state implementation plans, the
reestimation corrected an earlier collection error. Why did EPA claim
these reductions were due to its reinvention efforts when they actually
came from reestimates or corrections of errors?
Answer. Three of the four reductions were correctly calculated
using the most recent OMB guidance on reestimates and ``adjustments.''
The reduction claimed in the case of conformity of federal actions to
state implementation plans was a correction to a previous error and
should not have been included in the reduction total. We will inform
OMB of this mistake and request that the ICB be amended.
INFORMATION BURDEN: REINVENTION EFFORTS VS. ECONOMIC CHANGES/INDUSTRY
ACTIVITIES
Question. While two of EPA's largest claimed burden hour reductions
concerning the underground storage tank program reported on actual
reductions to the public, these reductions came as a result of changes
in the economy or industry's own development of new less burdensome
technologies. Why did EPA claim these reductions were due to its
reinvention efforts when they actually came from changes in the economy
or industry's own activities?
Answer. The reinvention claims included both program changes and
program adjustments. These readjustments reflect reductions in the
amount of paperwork burden borne by the affected public.
BURDEN REDUCTION: COMPLIANCE ASSISTANCE CENTERS CONTRIBUTIONS
Question. How many hours of paperwork burden did the compliance
assistance centers reduce in fiscal year 1999?
Answer. The compliance assistance centers (Centers) have not
evaluated the correlation between Center use and any net changes
associated with the paperwork burden. Rather, Centers measurement
activities have focused on: (1) Internet site activity; (2) user
satisfaction of Center services; (3) behavioral changes associated with
Center use; and (4) environmental improvements associated with Center
use.
Businesses and local governments are using the Centers as a source
of regulatory compliance assistance. In fact, the Centers' website
experienced over 260,000 visits in 1999. Furthermore, the Centers'
Website received over 890 visits on a daily basis in December 1999.
More importantly, recent survey data demonstrate that Center users find
the Centers very useful--and use improves environmental performance.
Based on eight voluntary Internet surveys, over 70 percent of the
company and local government respondents said they took one or more
actions (e.g.,changing the handling of waste, obtaining a permit,
changing a production process, contacting a regulatory agency) as a
result of Center use; where applicable, over 50 percent of these
companies and local governments felt that they had a cost savings
resulting from these actions. Furthermore, over 58 percent of company
and local government respondents stated that they realized one or more
environmental improvements as a result of using a Center (e.g. reduced
air emissions, conserved water). Lastly, the survey responses
demonstrate a high degree of satisfaction with Center services--in
fact, 85 percent of the survey respondents rated the compliance
assistance provided as either very useful or useful.
An additional study conducted by the Coordinating Committee for
Automotive Repair (CAR) further demonstrates the Centers' success. In
1997 and 1999, the CAR conducted a survey of automotive service and
repair shops throughout the United States. The results of the study
show that the automotive industry made significant strides in their
environmental compliance program between 1997 and 1999. In 1997, the
study concluded that 25.9 percent of the shops reported that they
cannot judge compliance from self-reported survey were at least 80
percent compliant with federal environmental requirements. Tin 1999,
55.8 percent of the shops reported that they were at least 80 percent
complaint. The CAR study also demonstrated a significant increase in
the regulated community's awareness of CAR and the CAR-run compliance
assistance center, CAR-Greening.
BURDEN REDUCTION: EFFECT OF COMPLIANCE ASSISTANCE CENTERS ON BURDEN
Question. If part of the goal of the compliance assistance centers
is to educate the regulated community on their environmental
obligations and help them meet those obligations, including completing
paperwork and other reporting requirements, wouldn't the centers
actually help increase paperwork burden?
Answer. The paper-work burden is established through the rule-
making process and the regulated community is obligated to comply with
those reporting and record-keeping requirements. Therefore, in no way
can the compliance assistance centers (Centers) alter reporting and
recording keeping requirements associated with environmental
requirements. However, the Centers can help the regulated community
more efficiently meet their environmental requirements. Through plain-
language guides, assistance lines, training events, compliance fact
sheets, etc., Center users can more efficiently understand and meet
their regulatory obligations. Furthermore, the Centers provide
pollution prevention tips and ideas, that may create opportunities for
Center users to decrease their regulatory obligations and associated
paperwork. For example, the Printers' National Environmental Assistance
Center's Listserv helped a client replace a solvent used for a
specialized screen printing application with a nontoxic vegetable-based
alternative cleaner. Not only did this behavioral change result in an
environmental improvement, but the activity is no longer subject to
Resource Conservation and Recovery Act hazardous waste management and
disposal regulations--and associated paperwork requirements. Lastly,
voluntary Internet survey responses indicate that the Centers are in
fact helping their users realize cost savings as a result, in whole or
in part, of Center use.
BURDEN REDUCTION: EFFECT OF AUDIT POLICY
Question. How many hours of paperwork burden did EPA's audit policy
reduce in fiscal year 1999?
Answer. EPA believes that it is generally more cost-effective for
companies to resolve violations under the audit policy when compared to
more traditional enforcement, but has no practical basis for estimating
hours of paperwork either created or reduced by the audit policy.
BURDEN REDUCTION: AUDIT POLICY REDUCTIONS
Question. If the goal of EPA's audit policy is to provide an
incentive to meet paperwork and reporting requirements, and EPA
experience has shown that the majority of those taking advantage of the
audit policy did so regarding potential violations of paperwork or
reporting violations, doesn't the audit policy actually help increase
paperwork burden?
Answer. EPA's audit policy is designed to encourage voluntary
compliance with all federal statutes, including those that provide for
the monitoring and reporting of pollution. Monitoring data is the key
to determining compliance with emission standards, and reporting
requirements provide the public with information about releases from
nearby facilities. Violating these important requirements is certainly
one way to reduce ``paperwork burden,'' but EPA believes there are more
effective and legal means to accomplish this goal that do not undermine
federal law or put law abiding businesses at a disadvantage.
INFORMATION BURDEN: EFFECT OF INTEGRATED INFORMATION INITIATIVE (I-3)
Question. EPA has indicated that its Integrated Information
Initiative (I-3) will reduce paperwork burden. Does the Agency plan to
remove current reporting requirements when it implements I-3?
Answer. The I-3 will result in an information network that will
establish a fundamentally new approach to integrating and managing
environmental information. While EPA anticipates that I-3 will reduce
burden and transaction costs for states, tribes, regulated businesses,
and the general public, it is too early to discuss plans for removing
current reporting requirements. As I-3 evolves, EPA is committed to
look for opportunities to streamline and reduce burden as appropriate
and will consider including components to I-3 that will facilitate
those opportunities.
INFORMATION BURDEN: STEPS TO ENSURE ACCURACY OF ESTIMATES
Question. What steps will EPA take to correct its future paperwork
burden hour estimates, set straight the record of misleading statements
before the Congress and ensure the Agency does not take credit
improperly for burden hour reductions?
Answer. EPA would like to meet with GAO to ensure that EPA
understands the findings in the recent GAO report on the agency's
burden reduction efforts. The purpose of this meeting will be to
clarify burden reduction tabulations and statements, make changes where
necessary and establish a process that will avoid similar findings in
the future.
REINVENTING ENVIRONMENTAL INFORMATION MILESTONES
Question. For each milestone phase which EPA failed or expects to
fail to reach by the planned date, provide a brief description for the
delay or failure, any actions, strategies or efforts to achieve missed
milestones or avert missing of milestones the Agency expects to miss.
Answer. From 1997 to 1999, EPA met all of the REI milestones and
commitments stated in its REI Action Plan. During this period, REI
project progress was tracked and reported through quarterly progress
reports and project status meetings. In 1999, integrated work plans
replaced quarterly reporting. These work plans integrated the various
REI projects to reflect ongoing activities and milestones and
deliverables across projects. The integrated work plans also showed the
interdependencies and potential shared resources of the REI projects.
In fiscal year 2000, the Agency expanded the goals of REI by
launching an effort that would leapfrog REI by working in close
partnership with the states to build and support a national network of
shared, integrated environmental information. The main components of
REI--data standards, electronic reporting and state partnerships--are
now the key components of this new effort. In organizing the
integration effort, the Agency realized the critical need to step up
our joint work with the states. We have increased our collaboration
efforts through the Information Management Work Group of the
Environmental Council of the States. We have also chartered, with the
states and Tribes, a Data Standards Council to set priorities for and
ensure implementation of data standards. This new integration effort,
and our greater partnership with the states, will require us to re-
examine our future REI milestones to ensure that we represent the
correct milestones for this broader initiative.
REINVENTING ENVIRONMENTAL INFORMATION NATIONAL SYSTEMS REQUIRING
REENGINEERING
Question. Identify the national systems the Agency has
reengineered, is currently reengineering, or will reengineer before the
Agency promulgates REI standards/protocols and estimate the cost in
time and resources necessary to retrofit those systems to address
completed REI standards/protocols.
Answer. Through EPA's Reinventing Environmental Information (REI)
data standards process, EPA committed the 13 major national program
systems (tagged the ``REI'' systems) to incorporate the six REI data
standards by fiscal year 2003. The target date was purposely set this
far out to allow programs to incorporate the six data standards during
their next system enhancement effort. Combining the incorporation of
the data standards with the revision of the data structures during
system enhancement would avoid any direct costs associated with
implementing the standards in the systems. Consequently, there were no
studies conducted on the specific cost of implementation. The six data
standards include: Facility Identification; Chemical Identification;
Biological Identification; Industrial Classification Code; Latitude/
Longitude; and Date. The 13 ``REI'' systems are:
--Permit Compliance System (PCS)
--National Compliance Data Base (NCDB)
--OECA Docket (Docket)
--RCRA Information System (RCRIS)
--Aerometric Information Retrieval System/Air Quality Subsystem (AQS)
--Aerometric Information Retrieval System/Facility Subsystem (AFS)
--Biennial Reporting System (BRS)
--CAA 112(r) Risk Management Plan Information System (RMP*INFO)
--CERCLA Information System (CERCLIS 3)
--Safe Drinking Water Information System (SDWIS)
--Toxic Release Inventory (TRI)
--Water Quality Information System (STORET)
--Envirofacts Data Warehouse (Envirofacts)
REINVENTING ENVIRONMENTAL INFORMATION: ASSESSMENT AND CURRENT EFFORTS
FOR DATA QUALITY IMPROVEMENT
Question. Provide the results of the REI assessment of current
efforts to ensure the quality of environmental data through error
correction, the options paper developed through REI for a comprehensive
data program, and the status of any efforts to implement a more
comprehensive data quality improvement program.
Answer. The options paper for a comprehensive data quality
improvement program is provided as attachment 1, and is formally titled
``Data Quality Strategic Plan'', dated December 1998. The document was
approved by the Agency in April 1999. EPA's strategy to address data
quality encompasses four components: data standards, electronic
reporting, State partnership, and error correction. These goals are
articulated in OEI's Action Plan for fiscal year 2000, and the status
of current efforts is provided below.
Data Standards
Data standards is a key piece of enhancing data quality. By
September 2000, the Office of Environmental Information expects to
complete the following data standards and associated business rules to
implement the standards:
--Date
--Standard Industrial Classification/North American Industrial
Classification
--Facility
--Chemical
--Biological/Taxonomical
--Latitude/Longitude
To facilitate the development, adoption, and implementation of
additional data standards, the State/EPA Information Management
Workgroup chartered the Environmental Data Standards Council in
November, 1999. The Council's principle mission is: ``to promote the
efficient sharing of environmental information between EPA, States,
Tribes and other parties through the development of data standards.''
The Council, made up of State, tribal and EPA representatives, is
committed to the development and adoption of data standards for
environmental information exchange. The Council has begun to identify
and prioritize the next set of data standards to be developed and
implemented. We expect to be able to finalize this list within the next
two months
The One Stop program, a partnership program with 25 states, began
in March 1995 as an effort to develop more efficient methods of
providing meaningful environmental information. Through grants to state
agencies, this program examined opportunities to reduce the reporting
burden on industry, states and local governments, and to foster
geographic and multi-media approaches to environmental problem-solving
by increased integration of environmental data at the state level.
Integrated Error Correction Process
This Spring, OEI will implement a web-based error correction
function. The goal of the error correction process is to provide an
improved mechanism for data reporters and users to report errors they
have been identified in our public data systems, and institute a
management and accounting system. We will begin with those systems that
reside in the Envirofacts data warehouse, and expect to have the error
correction process implemented for these systems by the Fall of 2000.
Central Receiving
Another tool for enhancing data quality is central receiving.
Central receiving will provide a centralized source for receipt and
processing of data submitted to the Agency. We are beginning by
establishing a limited production infrastructure to accommodate
electronic reporting, including Electronic Data Interchange and other
web-based data transmission formats. Electronic reporting supports data
quality by providing error prevention measures through validation and
edit routines that can be run at the point of data receipt. Data which
do not pass these routines can be sent back to the submitter for
correction before the data are accepted and loaded into a data system.
At full implementation, central receiving will have the capability and
capacity to receive and process data submitted in any media (paper and
multiple electronic formats). We will begin implementation in fiscal
year 2000 by receiving small sets of data for several EPA programs.
REINVENTING ENVIRONMENTAL INFORMATION
SUBCOMMITTEE RECOMMENDATIONS AND ESC IRM APPEALS
Question. Describe any early warnings by the REI Subcommittee of
projects experiencing difficulties, significant policy and technical
issues REI has identified for resolution, and any REI Subcommittee
recommendations accepted by the Chief Information Officer but appealed
by an Executive Steering Committee for Information Resources Management
(ESC for IRM) principal to the entire ESC for IRM and the outcome of
the appeal.
Answer. A strong project management program was in place to monitor
the progress of REI. Comprehensive work plans, monthly program
management meetings, regular work plan updates, and quarterly REI
Subcommittee meetings were held to insure REI projects were being
designed in support of the Agency's mission, in a timely manner, and
within budget. Key policy issues were raised and addressed by the REI
Subcommittee, which was chaired by the CIO. These included policy
discussions about the approach to the Chemical Identification data
standard, Facility Identification Registration, and Central Receiving.
No appeal of REI outcomes or decisions were ever made to the CIO by a
member of the ESC for IRM.
REINVENTING ENVIRONMENTAL INFORMATION: QUARTERLY REPORTS
Question. Provide the quarterly reports of each responsible party
to the National REI Manager on the status of the policy work, efforts
to incorporate REI standards into the national systems and to identify
any issues requiring attention.
Answer. The fiscal year 1998 quarterly reports are provided as
attachment 2, which is formally titled ``Reinventing Environmental
Information Quarterly Progress Reports for fiscal year 1998.'' In
fiscal year 1999, a decision was made to produce integrated workplans,
in lieu of quarterly reports. The integrated workplans reflected all
on-going activities and status of each activity. All components of the
REI initiative were incorporated into the core mission of the Office of
Environmental Information when it was created in October 1999.
REINVENTING ENVIRONMENTAL INFORMATION 1999-2001 FUNDING
Question. Describe, by NPM, Goal, Objective, Sub-objective, Key
Program, Office, and Activity, the level of resources including dollars
and FTE devoted to REI efforts in fiscal year 1998, proposed in the
fiscal year 1999 budget request, included in the fiscal year 1999
operating plan, spent in fiscal year 1999, proposed in the fiscal year
2000 budget request, proposed in the fiscal year 2000 Operating Plan
and proposed in the fiscal year 2001 budget request.
Answer. The attached table identifies this information from fiscal
year 1998 through the fiscal year 2000 budget request. While some of
the major milestones of the Agency's REI initiative were completed in
fiscal year 1999, the remaining REI commitments, such as data standards
and electronic reporting, have now been incorporated in the broader OEI
program plan.
REINVENTING ENVIRONMENTAL INFORMATION--EXPLANATION FOR REDUCTIONS TO
FUNDING
Question. For any REI activities which decreased from any budget
request to its operating plan, or from operating plan levels to the
following year's budget request, provide a brief explanation for the
reduction.
Answer. The REI activity entitled Reinventing Environmental
Regulations took a reduction in its fiscal year 1999 operating plan
from the fiscal year 1999 budget request level. This decrease reflected
the REI initiative's share of the Agency's overall reduction to its
fiscal year 1999 budget request. As a general rule, given the
importance of REI, we always tried to limit cuts to the program as much
as possible.
REINVENTING ENVIRONMENTAL INFORMATION PERFORMANCE MEASURES
Question. Identify and describe the GPRA or Agency performance
measures in fiscal year 1999 and fiscal year 2000 which incorporate REI
commitments?
Answer. The Agency uses three Annual Performance Goals/Performance
Measures in fiscal year 1999 and fiscal year 2000 to describe its REI
commitments. These are:
--Making a greater percentage of data reported to EPA available to
the public through Electronic Data Interchange/Electronic
Commerce;
--Streamlining and improving the information reporting processed
between state partners and EPA by increasing the number of
state participants in the One Stop Reporting Program; and
--Increasing facility identification (ID) data accuracy by
establishing a National Facility ID file.
reinventing environmental information
Question. Describe the degree to which REI has brought, to date,
reduced confusion caused by multiple methods of representing the same
information, and when and how much further reductions are anticipated
to occur.
Answer. REI is a five year plan (1998-2003) and implementation of
data standards in Agency information systems is just beginning. The
initial focus on data standards was to get a number of them
established. Four of the six are now final and the last two will be
finished this fiscal year. The focus is now moving to enabling and
accelerating implementation of the standards in Agency data systems.
Implementation will encompass a compliance element--requiring written
documentation from agency programs on their actions to implement data
standards, a communication and outreach component to make sure system
developers and system managers understand what they are being asked to
do, and a technical assistance component alleviating the initial system
retrofitting that will be required for at least two of the standards.
REINVENTING ENVIRONMENTAL INFORMATION
Question. Describe the degree, in terms of burden-hours, to which
REI has directly reduced paper reporting, errors, time delays, and
associated costs its first year and when and how much further
reductions are anticipated to occur.
Answer. Burden hour reductions have not been quantified at this
early stage since the effort thus far has been to establish an
infrastructure. REI focuses on incorporating data standards and
electronic reporting into thirteen of EPA's national information
systems. Promulgation of all necessary standards, policies, and
protocols are projected to occur by the end of fiscal year 2001. As
each new data and reporting standard becomes ready for implementation,
each national system is projected to incorporate it by the end of
fiscal year 2003 either through retrofitting existing systems or
including the standard in system reengineering efforts.
COMPLIANCE ASSISTANCE FORUM: AGENDA AND PARTICIPANTS
Question. Provide a description of the compliance assistance forum
the Agency held in Atlanta in March including: list of participants,
the agenda, and a brief description of the contents of each of the
programs, meetings or breakout sections.
Answer. The Forum 2000--Building Compliance Assistance Partnerships
was held in Atlanta, Georgia on March 1 and 2, 2000. The Forum was
intended to provide an opportunity for compliance assistance providers
to share information on compliance assistance needs and strategies, and
to offer feedback on the Compliance Assistance Clearinghouse and the
first EPA Annual Compliance Assistance Activity Plan. Discussions were
also held to address several overarching issues such as integrating
compliance assistance with enforcement, and developing a set of
criteria to use in prioritizing compliance assistance needs. The Forum
was also designed to foster a compliance assistance provider network.
The attached materials include the final Forum agenda, a list of
speakers and breakout session topics, and the meeting summary, which
includes a list of attendees. These materials are also posted on the
web at www.seattle.battelle.org/epa-icaa.
OPPTS ASSISTANCE PROVIDERS--FOLLOW-UP
Question. Provide the results of Agency efforts to prepare and
finalize recommendations and make assignments for implementing the
OPPTS assistance providers national meeting results. If EPA has not
completed this milestone, provide the status of the efforts and
estimate of completion date.
Answer. On December 6-7, 1999, the EPA, along with the National
Institute for Standards and Technology (NIST) and the U.S. Small
Business Administration (SBA), hosted a national meeting in Dallas,
Texas, of both state and federally-funded environmental and business
assistance providers, in part as a response to the Senate Small
Business Committee's April 1998 hearing on ``Environmental Compliance
Tools for Small Business.'' While the primary focus of that Senate
hearing was on EPA's small-business compliance assistance programs, the
larger goal, as articulated by Chairman Bond in his opening remarks,
was to ``address the various approaches to compliance assistance in the
context of what is working for small business.''
Several EPA programs, including its Offices of Prevention,
Pesticides and Toxic Substances; Enforcement and Compliance Assurance;
Policy, Economics and Innovation; and Air and Radiation, had begun
coordinating about this time to develop more effective and efficient
assistance delivery to the nation's small businesses and, along with
other EPA offices, to inculcate sound environmental performance as part
of standard good practices within the business culture. The Dallas
meeting, a commitment in the Agency's Aiming for Excellence report of
July 1999, has enhanced partnerships within the EPA and among the
Federal agencies. It has also promoted the federal ``wholesale''
approach for compliance and technical assistance which utilizes other
delivery agents which are closer to the customer and can sometimes
better frame environmental approaches in a broader business context.
In terms of implementing some of the key commitments made in the
Dallas meeting:
--NIST agreed to develop and maintain a dedicated list-server to
facilitate a continuation of the dialogue among the interested
parties that was begun at the meeting. This was accomplished
and is now being used to identify and discuss ideas.
--The providers agreed to work together to develop specific proposals
for consideration by the Federal sponsors: EPA, SBA and NIST.
One such draft proposal, a multi-state pilot effort with
national support capabilities led by a number of Small Business
Development Centers (SBDCs), was first mentioned at the Dallas
meeting. Work is currently underway to formalize relationships
and build support among the participating provider
organizations on this proposal, which could be complete as
early as late May 2000.
--The Federal sponsors agreed to host providers who wished to present
specific proposals that had gained support from the larger
assistance community. The sponsors could host such a meeting in
late Spring 2000, depending upon the progress of the SBDC or
other proposals--although an agreement to host a session on a
specific proposal does not imply Federal support for it.
A longer summary of the Dallas meeting is available on EPA's web
site at www.epa.gov/p2.
This national network effort is also being coordinated with a
number of EPA projects, led by the EPA Office of Enforcement and
Compliance Assurance, to improve the Agency's general compliance
assistance activities.
ASSESSMENT OF SMALL BUSINESS ASSISTANCE SERVICES: CATALOG
Question. If the Agency has not done so already, provide the
catalog of small business related services and products intended to
developed as part of the Aiming for Excellence initiative by November
1999. If EPA has not completed this milestone, provide the stats of the
effort, reason for delay, and an estimate of completion date.
Answer. Development of the catalog of small business-related
services and products is nearly complete. EPA has a number of services
and products that are targeted specifically for small businesses and
others that apply to broader audiences, yet still may be applicable to
small business. We are in the process of finalizing the catalog so that
it best reflects this mix of services and products. We anticipate
completion in June 2000.
``* * * present specific proposals that had gained support from the
larger assistance community. The sponsors could host such a meeting in
late Spring 2000, depending upon the progress of the SBDC or other
proposals--although an agreement to host a session on a specific
proposal does not imply Federal support for it.''
A longer summary of the Dallas meeting is available on EPA's web
site at www.epa.gov/p2.
This national network effort is also being coordinated with a
number of EPA projects, led by the EPA Office of Enforcement and
Compliance Assurance, to improve the Agency's general compliance
assistance activities.
ASSESSMENT OF SMALL BUSINESS ASSISTANCE SERVICES: SURVEY
Question. Provide a copy of the survey to small business consumers
of EPA environmental assistance intended to be developed as part of the
Aiming for Excellence initiative by March 2000. If EPA has not
completed this milestone, provide the status of the effort and an
estimate of completion date.
Answer. As we complete our catalogue of small business products and
services, we will refine the set of questions for the survey of small
business customers. Because we have been approved for a limited number
of hours under our information collection request, we want to be sure
that the questions we include in our survey tool will provide us with
information that will best reflect the current state of small business
satisfaction with our products and services. We anticipate commencing
the survey in July 2000.
COMPLIANCE ASSISTANCE CLEARINGHOUSE: STATUS OF EFFORT
Question. Provide the status of efforts as part of the Aiming for
Excellence initiative to design and develop a clearinghouse of
compliance assistance materials and tools and whether the effort is on
target to meet the September 2000 operational deadline.
Answer. The Compliance Assistance Clearinghouse (Clearinghouse) is
on target to be fully operational in September 2000.
The goal of the Clearinghouse is to link existing networks of
compliance assistance providers, facilitate the finding and the sharing
of information, increase quality and speed of delivery of compliance
assistance services, and increase the number of clients served. The
Clearinghouse is a nationally accessible and searchable Web site that
allows compliance assistance providers to link to existing networks to
avoid duplication, find new tools/information, download existing tools
and information, find experts, and exchange new ideas and information.
The Clearinghouse is intended to serve compliance assistance
providers, such as Small Business Assistance Programs, technical
assistance/pollution prevention providers, state and local governments,
trade/professional associations, sector-based compliance assistance
centers, EPA, other federal agencies (DOD, DOT, OSHA), and
universities. The Clearinghouse will support the tasks that providers
perform on a day-to-day basis, such as responding to frequently asked
questions and identifying experts.
There are three main components of the clearinghouse. The first is
a Providers' Directory, which will help identify providers with
expertise in a specific area. The second is a searchable database that
will have a user-friendly navigation system. The third component is a
communications forum to foster communication among providers.
Throughout the design process, EPA has worked extensively to
involve stakeholders in the development. These efforts have included
outreach efforts to states, small business assistance providers, and
industry compliance assistance providers. In addition, EPA created a
multi-stakeholder advisory group, the Compliance Assistance Advisory
Committee (CAAC) under the existing Federal Advisory Committee Act
chartered National Advisory Council for Environmental Policy and
Technology. One of the key activities of the CAAC is to provide input
on the Clearinghouse development. The CAAC has been consulted on every
aspect of the design and population of the Clearinghouse.
COMPLIANCE ASSISTANCE CLEARINGHOUSE: STAKEHOLDER
Question. Provide a summary of stakeholder input, organized by
stakeholder, which EPA obtained at its March 2000 compliance assistance
forum on the design of the clearinghouse.
Answer. The comments below, expressed at the March 2000 Forum,
reflect different stakeholders' views about the content and the format
of the Clearinghouse:
General Services Administration
1. The site needs to be well-connected to other Federal agencies.
There is a need for information exchange on Environmental Management
Systems. This should include tools for Federal workers--curriculum
development, uniform statements of work for contracts, etc. GSA has a
list of environmental services vendors that can be made available on-
line to Federal Agencies.
Bureau of Land Management
2. Presenting a solution to implementing requirements and then
having a link to a vendor who can help with the solution is very
important for the user community.
3. The EPA regulatory link is useless. The system needs to mirror
OSHA.
State
4. Contacts at the state level need to be at the working level.
STAPPA/ALAPCO provides contacts and may be a good model.
5. State regulatory sites need to be linked.
Industry
6. Links to commercial sites would need a disclaimer.
7. You need some way to indicate the quality of the data you post
from other sources. Possibly use a ranking system based on comments,
etc.
8. To increase the number of providers in the directory you could
use the log-in feature to add names to the directory.
9. Data editing of the Clearinghouse information needs to be a
faster process to encourage folks to keep the material up to date.
Compliance Assistance Providers
10. Some EPA web sites have had problems with including .com sites.
The Agriculture Center in particular has experienced this problem.
11. It is very important to keep the links ``live.'' The three
``tier'' plan the CAAC has developed would be a good start.
12. Michigan has a pollution prevention (P2) network of providers
that could be a good model for the directory.
General
13. Suggest using the ``add a link'' feature, which will pull in
the meta-data tags from the site, thus decreasing the amount of data
entry required.
14. When the comment field is used, it is important that the author
include their name.
15. Marketing is extremely important for the success of the
Clearinghouse. Presentations should be made at conferences. The
Compliance Assistance Centers should also participate in the marketing.
COMPLIANCE ASSISTANCE TOOLS DISTRIBUTION: STATUS OF EFFORTS
Question. Provide the status of efforts under Task 5 of Action 4
under the Aiming for Excellence initiative to distribute and market
compliance assistance tools to organizations that are likely to have
contact with regulated groups.
Answer. The distribution of compliance assistance tools is handled
primarily by the office and/or region that has the lead for developing
the tool. Under the ``Aiming for Excellence'' report, the Agency
committed to developing tools for economically significant rules. Of
the ten rules identified by the Agency, two have been promulgated--the
Office of Water's national pollution discharge elimination system
stormwater regulation and the Office of Environmental Information's
amendment for certain persistent and bioaccumulative toxic substances.
The compliance assistance tool for the stormwater regulation has been
completed and a plan for distribution is being developed. The tools for
the other regulations require additional stakeholder input and should
be completed this fall.
During the development of compliance assistance tools, the lead
office and/or region developing the tool works with stakeholders
interested in the regulation to ensure that the tool will be useful to
the targeted audience and the user has access to the tool. Based on
stakeholder input a plan is developed to distribute the tool to
compliance assistance providers and/or the regulated community. The
tool is also distributed to EPA regional counterparts and state
contacts.
Tools are generally posted on the web site of the EPA office/region
responsible for developing the tool. The tool is also made available
through other internet resources such as the Small Business Gateway web
site and, when appropriate, the ten industry-specific Compliance
Assistance Centers developed by EPA. In many instances, brochures
describing the tools and how to access them are developed, and
distributed to appropriate stakeholders through mailings and meetings.
The implementation of the Compliance Assistance Clearinghouse will
greatly enhance the Agency's efforts to assure that the provider
community has easy access, from one central web site, to all compliance
assistance tools developed by EPA.
COMPLIANCE ASSISTANCE TOOLS DISTRIBUTION: COORDINATION
Question. Describe how the Agency coordinates between its offices
the distribution or marketing of compliance assistance tools.
Answer. The distribution of compliance assistance tools is handled
primarily by the EPA program office or Region that has the lead for
developing the tool. EPA offices work with other internal Agency staff
and the stakeholders interested in the regulation in the development
and distribution of compliance assistance tools to ensure that the tool
is useful and that potential users have access to the tool. We believe
that the Compliance Assistance Clearinghouse will optimize the Agency's
ability to coordinate the distribution of materials to all parties that
have an interest in them.
COMPLIANCE ASSISTANCE TOOLS DISTRIBUTION: AGENCY COMPLIANCE
Question. Describe how the Agency strategically identifies areas or
sectors in need of compliance assistance tools and then distributes
tools to meet those needs.
Answer. Currently each EPA program office and region develops
individual program plans addressing their respective areas of
responsibility. Through its own analyses of environmental and
regulatory problems as well as discussions with external stakeholders ,
other governmental agencies and Congressional agencies and staff, each
office sets priorities for the coming fiscal year(s) and then develops
strategies and activities to address those priorities. These activities
include a range of compliance assistance activities, such as outreach
or technical assistance.
The distribution of compliance assistance tools is handled
primarily by the office and/or region that has the lead for developing
the tool. During the development of compliance assistance tools, the
lead office and/or region developing the tool works with stakeholders
impacted or interested in the regulation to ensure that the tool will
be useful to the targeted audience and the user has access to the tool.
Based on stakeholder input a plan is developed to distribute the tool
to compliance assistance providers and/or the regulated community. The
tool is also distributed to EPA regional counterparts and state
contacts.
COMPLIANCE ASSISTANCE TOOLS DISTRIBUTION: MARKETING
Question. Describe how the Agency identifies the need for further
marketing of its compliance assistance tools including how EPA assesses
the effectiveness of its current marketing activities.
Answer. The Agency utilizes a range of techniques to develop and
evaluate marketing approaches. Marketing approach depends on the type
of tool developed and the audience for that tool. Generally, EPA
continuously works with a wide range of stakeholders such as trade
associations, state offices and facilities to ensure that the tool is
accessible; and if not, they help us identify opportunities to enhance
the tool's distribution to those that do not have access. This provides
the Agency with insight into how well our marketing efforts are working
and what additional distribution may be needed.
Some specific examples of how the Agency furthers its marketing
approach:
--Many projects are put through a pilot process prior to large-scale
distribution. The compliance assistance tools are distributed
to a limited audience for their use. This distribution is
followed by a survey to determine the usefulness and
appropriateness of the materials for the targeted audience.
This feedback is incorporated in finalizing the materials and
the distribution of the documents.
--EPA increasingly utilizes voluntary surveys as a method to get
feedback on the tools that are developed. This process has been
done extensively with the small business community as well as
in other programs. The Agency seeks feedback on the content and
appropriateness of the materials for the audience.
--Monitoring of web site and hotline usage provides valuable
information on how well the documents are reaching the
regulated community. For example, the Compliance Assistance
Centers Website activity growth has been quite pronounced. In
fact, the Centers experienced over 260,000 visits in 1999, over
890 visits per day on average. Seventy per cent of those who
responded to an on-line survey visit said they visit the site
at least monthly while 30 percent visit on a weekly bases.
COMPLIANCE ASSISTANCE TOOLS DISTRIBUTION: SAFE DRINKING WATER MENTORING
``KITS''
Question. Describe efforts included under the Aiming for Excellence
initiative to develop by January 2000, a ``start-up'' kit to make it
easier for local and tribal governments to participate in safe drinking
water mentoring.
Answer. The Safe Drinking Water Peer Review Program (Peer Program)
began in 1996 as an effort in Georgia by EPA Region 4, along with local
and state partners, to train volunteers from small drinking water
systems so these operators could help themselves and other ``peer''
system operators achieve and remain in compliance with state and
Federal drinking water regulations.
Training for the operators volunteering to participate as review
team members is based on a modified version of the training for state
and Federal inspectors. After completing training conducted by EPA and
state regulators, these volunteers are listed in a directory along with
areas of expertise so other small system operators can call upon them
to conduct evaluations and reviews on site. Along with volunteer
training, the other components of the Peer Program include self-
assessments conducted by small system operators, and technical
assistance and evaluations provided by the trained peer volunteers.
What began as a Georgia pilot has expanded rapidly. Local chapters
of national organizations like the American Water Works Association and
the Rural Water Association have assisted EPA Region 4 and other state
and local partners to develop program implementation customized to the
particular state or tribe. The Peer Program has been replicated in
Kentucky, Iowa, Virginia, Mississippi and by the United South and
Eastern Tribes (USET, representing 23 Indian tribes from Maine to
Texas). As a result of ``word of mouth'' experiences of Peer Program
participants, increased Program exposure at regional/national water
association meetings, and numerous awards, the demand for creating
additional Peer Programs has increased. Region 4 developed a web-based
``tool kit'' as a way to provide information to interested EPA regions,
states and potential partners concerning starting a Peer Program.
The ``tool kit'' was developed to simplify as much as possible the
creation of new state and tribal Peer Programs. It includes a
description of the Peer Program, its components and sample forms which
can be easily adjusted to recognize differences in varying state
requirements. Forms include sample evaluations, a sample training
agenda and a sample volunteer directory. Also included is a start-up
flow chart which describes the various steps involved in creating the
Program, as well as a detailed check list to make it easy for
interested persons to develop a Peer Program. The ``tool kit'' includes
information on existing Programs and provides contacts and information
relating to potential partnership opportunities. The ``tool kit'' is
available from Region 4 EPA in a CD ROM format upon request and is also
accessible through an EPA website, http://www.epa.gov/region4/
peerreview/toolbox.htm.
SAFE DRINKING WATER INFORMATION SYSTEM
Question. Describe the status of efforts to convene by April 2000,
representatives from all EPA regions for training on the development
and implementation of safe drinking water information programs.
Answer. In September 1998, EPA launched a major review of the
quality of data in the Safe Drinking Water Information System/Federal
version, or SDWIS/FED. An EPA/stakeholder working group was established
for this purpose. A data quality assessment, which included a review of
three years of data verification audits covering 27 states, was
conducted. Those audits identified significant gaps in the compliance
data that states report through SDWIS. Based on this assessment, the
working group developed a Data Reliability Action Plan, which sets a
data quality goal, identifies activities to establish a quantitative
and qualitative data quality baseline, and lists interim actions to
improve data quality.
At the end of fiscal year 1999, the intensive data quality review
was completed and the EPA/stakeholder workgroup identified priority
actions to be implemented, i.e.,
--Conduct more training so states know how to interpret rules and
report violations;
--Conduct more frequent data audits so states know not only their
specific problems but also appropriate corrective measures;
--Reissue rule guidance to specify how rules may and may not be
interpreted.
To implement the first recommendation regarding training, EPA is
carrying out the following activities:
--During May 2000, five training courses in Philadelphia, Atlanta,
Denver, San Francisco, and Seattle will be offered on
implementation of the Lead and Copper Rule. The training will
provide instruction on how to report violations to SDWIS/FED.
--EPA has already established a contract mechanism for states to
obtain on-site technical assistance to resolve specific, ad hoc
data entry problems.
--EPA is developing a generic SDWIS/FED data entry course as well as
other rule specific compliance determination/reporting courses
like the Lead and Copper Rule course.
--For states that adopt SDWIS/STATE (a state version of SDWIS/FED) as
their state drinking water information management system, EPA
provides training to state personnel on entering and retrieving
data from SDWIS/STATE.
To implement the second recommendation regarding data audits, EPA
is carrying out the following activities:
--EPA is planning to increase the frequency of audits of state data
from once every three years to once every two years. Senator
Bond
--The Agency is revising and clarifying protocols for data
verification and self-audits and encouraging states to conduct
their own audits on a regular and consistent schedule. This
will strengthen overall data quality oversight.
To implement the third recommendation on reissuance of rule
guidance, EPA is carrying out the following activities:
--During the data verification audits that have already taken place,
the Agency identified issues regarding compliance and
implementation inconsistencies and confusion.
--The Agency has worked with the states to develop clear and
consistent guidance for these identified compliance and
implementation issues, and will publish this in the Water
Supply Guidance which is issued annually.
compliance assistance tools distribution: mentoring efforts
Question. Describe whether and where these mentoring efforts under
the safe drinking water program might serve as a model for other
programs around the Agency.
Answer. The concept of utilizing peer review and self assessments
to provide compliance assistance to rural communities is easily
transferrable to environmental media programs other than drinking water
programs. The initial Peer Program focusing on ground water drinking
water systems was easily expanded to include surface water drinking
water systems. Additionally, wastewater facility peer review programs
are being developed in Georgia, and the United South and Eastern Tribes
(USET, representing 23 Indian tribes from Maine to Texas) plan to adopt
this component in their program. Solid waste is another potential area
for further expansion.
compliance assistance tools for economically significant rules: aiming
for excellence--identification of economic rules
Question. The Aiming for Excellence report called for
identification of economically significant rules under development for
the purposes of developing compliance assistance tools for these rules.
The report called for identification of the rules by June 1999.
However, EPA did not release a draft of projected economically
significant rules until the November 1999 FACA meeting. What was the
reason for missing this milestone?
Answer. In May 1999, during development of the Aiming for
Excellence Report, EPA developed a draft list of projected economically
significant rules. The list was then reviewed for accuracy and
completeness by all of EPA's media program offices, followed by a
review conducted by the Agency's regulatory steering committee. The
list was then provided to the Compliance Assistance Advisory Committee.
EPA met its obligation to produce a timely and accurate list for use by
the principal set of stakeholders.
COMPLIANCE ASSISTANCE TOOLS FOR ECONOMICALLY SIGNIFICANT RULES: AIMING
FOR EXCELLENCE--FINAL
Question. The Aiming for Excellence report called for finalization
by October 1999 of the initial set of rules for which compliance
assistance materials will be developed. What was the reason for missing
this milestone?
Answer. The list of economically significant rules for which
compliance assistance material would be developed was finalized in
October, 1999. Simultaneously, EPA established a stakeholder advisory
group under the Federal Advisory Committee Act to meet the Agency's
commitment (under the Aiming for Excellence Report) to work with
stakeholders to identify potential regulations that may need compliance
assistance. The advisory group, Compliance Assistance Advisory
Committee (CAAC), held their first meeting on November 18-19, 1999. At
this meeting, the list of economically significant rules was provided
to the CAAC and any other interested stakeholder attending this
meeting.
COMPLIANCE ASSISTANCE TOOLS FOR ECONOMICALLY SIGNIFICANT RULES: DRAFT
FISCAL YEAR 2001 ANNUAL COMPLIANCE ASSISTANCE ACTIVITY PLAN
Question. The Draft Fiscal Year 2001 Annual Compliance Assistance
Activity Plan contains an appendix listing the projected economically
significant regulations. Does this represent the finalization of the
initial set of rules or was the finalization accomplished with a
different vehicle?
Answer. Appendix B of the March 1, 2000 Draft fiscal year 2001
Annual Compliance Assistance Activity Plan contains the complete list
of projected economically significant regulations as of that date. The
list of these regulations was finalized as described in the previous
questions. However, it is possible that rulemakings will be removed or
added to the list if there are changes in projected economic impact or
the date of issuance for the rules.
COMPLIANCE ASSISTANCE TOOLS FOR ECONOMICALLY SIGNIFICANT RULES
Question. Provide the dollars and FTE each applicable program
manager (NPM) has spent in the last three years to develop compliance
assistance tools for economically significant rules. In meeting this
request, organize the information by rule, NPM, fiscal year,
appropriation, goal, objective, sub-objective, office or Region and
activity.
Answer. The following provides dollars and FTE spent by the Office
of Enforcement and Compliance Assurance (OECA), the Office of Air and
Radiation and (OAR) and the Office of Water (OW) on developing
compliance assistance tools for economically significant rules in
fiscal year 1998, 1999 and 2000. The GPRA goal structure was not in
place until fiscal year 1999.
The compliance assistance tools referred to in the OECA table
address several activities and environmental requirements related to
the specific economically significant rule. The full cost of developing
the compliance assistance tool is shown because we are unable to
isolate the cost attributable to explanation of the specific rule.
Further, OECA supports other on-going sector-oriented compliance
assistance mechanisms, notably ten Internet-based Compliance Assistance
Centers, which help small and medium sized businesses, local
governments and Federal facilities better understand and comply with
Federal environmental requirements.
[Dollars in thousands]
----------------------------------------------------------------------------------------------------------------
Fiscal years
----------------------------------------------------
Economically Significant Rule 1998 1999 2000
----------------------------------------------------
FTE Amount FTE Amount FTE Amount
----------------------------------------------------------------------------------------------------------------
NPM: National Enforcement Program (OECA)
Appropriations: EPM
Goal 9, Objective 2
Pulp and Paper: NESHAP and Pulp and Paper Effluent ..... $115 ........ $20 ........ .......
Guidelines--compliance assessment guide...................
Financial Assurance for Municipal Solid Waste Landfills-- ..... ...... 1.5 $2.5 1.5 $2.5
Audit Protocol: Resource Recovery and Conservation Act
Subtitle D...............................................
Land Disposal Restrictions-Phase IV: Treatment Standards ..... ...... ........ ....... 0.75 $50
for Metal Wastes and Mineral Processing Secondary
Materials and Bevill Exclusion Issues--CA tool; training..
Lead-based paint Activities in Target Housing--Compliance 1.0 $50 1.0 ....... 1.0 .......
guidance; training, checklist.............................
NPDES Comprehensive Storm Water Phase II Regulations--Storm ..... ...... 0.25 $25 0.25 $25
Water Audit Protocol......................................
Medical Waste Incinerators--compliance guide/checklist..... 0.3 $20 0.3 ....... ........ .......
NPM: National Air Program (OAR)
Appropriations: EPM
Goal 01, Objective 02
National Emission Standards for Hazardous Air Pollutants 0.3 $50 ........ ....... ........ .......
(NESHAP) for Petroleum Refineries, OAR- OAQPS............
NESHAP for Ethylene Oxide Commercial Sterilization and 0.2 $40 ........ ....... ........ .......
Fumigation Operations, OAR-OAQPS..........................
NESHAP for Wood Furniture Manufacturing Operations, OAR- 0.4 $80 ........ ....... ........ .......
OAQPS.....................................................
(8) NESHAP for Halogenated Solvents Cleaning, OAR-OAQPS.... 0.4 $40 ........ ....... ........ .......
(12) Emission Guidelines for Large Municipal Waste 1.0 $100 ........ ....... ........ .......
Combustors, OAR-OAQPS.....................................
(14) Emission Guidelines for Hospital, Medical, and 1.0 $100 ........ ....... ........ .......
Infectious Waste Incinerators, OAR-OAQPS..................
(2) NESHAP for Off-site Waste Recovery Operations, OAR- ..... ...... 0.3 $50 ........ .......
OAQPS.....................................................
(3) NESHAP for Pulp and Paper Industry, OAR-OAQPS,......... ..... ...... 1.0 $100 ........ .......
(9) NESHAP for Flexible Polyurethane Foam Production, OAR- ..... ...... 0.3 $40 ........ .......
OAQPS.....................................................
National Volatile Organic Compound Emission Standards for ..... ...... 0.2 $40 ........ .......
Architectural Coatings, OAR-OAQPS.........................
National Volatile Organic Compound Emission Standards for ..... ...... 0.2 $40 ........ .......
Consumer Products, OAR-OAQPS..............................
Emission Guidelines for Municipal Solid Waste Landfills, ..... ...... 1.0 $100 ........ .......
OAR-OAQPS.................................................
NESHAP for Pharmaceutical Manufacturing Industry, OAR-OAQPS ..... ...... ........ ....... 2.0 $200
NPM: National Air Program (OAR)
Appropriations: S&T
Goal 01, Objective 01
Tier II Light-Duty Vehicle and Light-Duty Truck Emission ..... ...... ........ ....... 2.0 $171
Standards and Gasoline Sulfur Standards, OAR-OTAQ.........
NPM: National Water Program (OW)
Appropriations: EPM
Goal 02, Objective 01
Interim Enhanced Surface Water Treatment (Promulgated 12/ 1.1 $30 6.5 $200 5.5 $79
98) and Stage 1 Disinfectant/Disinfection Byproducts
(Promulgated 12/98).......................................
Radon...................................................... ..... ...... 1.3 ....... 2.8 $41
Ground Water............................................... 0.3 ...... 2.8 ....... 4.3 $40
Arsenic.................................................... ..... ...... ........ ....... 0.6 $15
Drinking Water Academy \1\................................. ..... ...... 3.3 $300 3.3 $350
Goal 02, Objective 03
NPDES Comprehensive Storm Water Phase II................... ..... ...... ........ ....... 0.5 $350
NPDES requirements for Sanitary Sewer Overflows (SSOs)..... ..... ...... ........ ....... 0.3 $200
----------------------------------------------------------------------------------------------------------------
\1\ In 1999, EPA established the Drinking Water Academy as a long-term training initiative with the primary goal
of assisting EPA, states and Indian tribes to build program capability to successfully carry out the
requirements of the Safe Drinking Water Act.
COMPLIANCE ASSISTANCE TOOLS FOR ECONOMICALLY SIGNIFICANT RULES--PLANNED
FUTURE SPENDING
Question. Provide the dollars and FTE each applicable national
program manager (NPM) plans to spend to develop compliance assistance
tools for economically significant rules.
Answer. In the ``Aiming for Excellence'' report, EPA commits to
develop compliance assistance information for new economically
significant rules generally within 90 days of issuing each rule. The
lead for developing this information rests with the office responsible
for the rule-making. The following charts from the Office of Air and
Radiation (OAR) and the Office of Water (OW) provides data on future
spending plans for economically significant rules. The Office of
Enforcement Compliance and Assurance will work with the media program
offices to determine how best to meet this Agency commitment by
assisting in the development of compliance assistance guides and self-
audit/inspection checklists. The FTE support necessary from OECA is not
known at this time.
[Dollars in thousands]
------------------------------------------------------------------------
Fiscal year
2001
Economically Significant Rules ------------
FTE Amount
------------------------------------------------------------------------
NPM: National Air Program (OAR)
Appropriations: EPM
Goal 01, Objective 02:
National Emission Standards for Hazardous Air 0.2 $50
Pollutants (NESHAP) for Automobile and Light-Duty
Truck Manufacturing (Surface coating), OAR-OAQPS......
NESHAP for Industrial, Commercial, and Institutional 0.2 $50
Boilers, OAR-OAQPS....................................
NESHAP for Chemical Recovery Combustion Sources at 0.2 $50
Kraft, Sulfite, and Stand Alone Semichemical Pulp
Mills, OAR-OAQPS......................................
NPM: National Air Program (OAR)
Appropriations: S&T
Goal 01, Objective 01: Compliance assistance tools to 1.0 $87
implement the Tier II Light-Duty Vehicle and Light-Duty
Truck Emission Standards and Gasoline Sulfur Standards,
OAR-OTAQ..................................................
NPM: National Water Program (OW)
Appropriations: EPM
Goal 01, Objective 01: Long term Enhanced Surface Water 6.0 $100
Treatment Rule and Stage 2 Disinfectants/Disinfection
Byproducts Rule...........................................
Goal 2, Objective 3:
NPDES Comprehensive Storm Water Phase II............... 0.5 $350
NPDES requirements for Sanitary Sewer Overflows (SSOs). 0.8 $450
------------------------------------------------------------------------
ANNUAL COMPLIANCE ASSISTANCE ACTIVITY PLAN: FISCAL YEAR 2001 PLAN
Question. Describe the ways in which the fiscal year 2001 Plan
identifies areas where compliance assistance is needed.
Answer. The draft fiscal year 2001 Plan is a comprehensive
inventory of the compliance assistance activities proposed by EPA
program offices for the upcoming fiscal year. To address various
stakeholder needs, this inventory is organized by sector, statute,
chemicals/pollutants of concern, geographic focus, target audience and
type of compliance activity.
The activities included in the draft fiscal year 2001 Plan reflect
decisions made by each program office in the Agency through their own
planning and budgeting processes that establishes their offices'
compliance assistance priorities (e.g., for new and economically
significant regulations). By offering the draft Plan for comment at the
March 1 and 2, 2000 Compliance Assistance Forum and through a Federal
Register notice, stakeholders can provide their input on where
compliance assistance tools or additional emphasis is needed. All
comments received will be reviewed by the Agency's Compliance
Assistance Advisory Committee established for providing advice on
compliance assistance.
ANNUAL COMPLIANCE ASSISTANCE ACTIVITY PLAN: COMPLIANCE ASSISTANCE NEEDS
Question. Describe the methods the fiscal year 2001 Plan
categorizes, ranks or otherwise prioritizes compliance assistance
needs.
Answer. The draft fiscal year 2001 Plan is an inventory of Agency
compliance assistance activities. To address various stakeholder needs,
this inventory is organized by sector, statute, chemicals/pollutants of
concern, geographic focus, target audience and type of compliance
activity. However, the draft plan does not categorize, rank or
otherwise prioritize compliance assistance needs. The activities
proceed from decisions made through the Agency's planning and budgeting
process for fiscal year 2001 and are included in the Agency's budget
submission/annual performance plan submitted to Congress in early
February. Stakeholder comments will be taken into consideration as the
Agency develops its fiscal year 2001 operating plan and its fiscal year
2002 President's budget.
ANNUAL COMPLIANCE ASSISTANCE ACTIVITY PLAN: STRATEGIC ACTION
Question. Describe the ways the fiscal year 2001 Plan proposes
strategic actions to meet the compliance assistance needs identified by
the fiscal year 2001 Plan.
Answer. The draft fiscal year 2001 plan is an inventory of the
Agency's compliance assistance activities. These activities reflect
decisions made by EPA program offices during the Agency's planning and
budgeting process for fiscal year 2001. Because these assistance
activities address priorities developed by EPA and its program offices,
the activities are consistent with EPA's strategic directions and meet
important compliance assistance needs.
ANNUAL COMPLIANCE ASSISTANCE ACTIVITY PLAN: EPA ORGANIZATIONS
Question. Describe the ways, and on what basis, the fiscal year
2001 Plan identifies the EPA organizations best suited to implement
individual parts of the strategy developed to ensure the Agency meets
compliance assistance needs identified in the fiscal year 2001 Plan.
Answer. The draft fiscal year 2001 Plan is an inventory of the
compliance assistance activities proposed for the upcoming year based
on individual EPA program office priorities, as developed through the
Agency's planning and budgeting process for fiscal year 2001. The Plan
lists the responsible EPA organizations for each activity, and the
organizations were selected based on their expertise about specific
regulatory requirements.
ANNUAL COMPLIANCE ASSISTANCE ACTIVITY PLAN: RESOURCES
Question. Describe the ways, and on what basis, the fiscal year
2001 Plan directs Agency resources to individual EPA organizations to
implement assigned parts of the strategy developed to ensure the Agency
meets compliance assistance needs identified in the fiscal year 2001
Plan.
Answer. The fiscal year 2001 Plan lists the organization
responsible for implementation of each activity. The responsible
organization is best suited to the activity based on program expertise
and capacity.
ANNUAL COMPLIANCE ASSISTANCE ACTIVITY PLAN: CRITERIA
Question. Describe the criteria EPA will use to prioritize
activities within the Plan among other competing Agency priorities.
Answer. Each program office in the Agency has an individual
planning and budgeting process that establishes their offices'
priorities. The items in the Plan were submitted by those offices as
real compliance assistance needs. These needs will be weighed against
other projects in need of funds and will be funded as resources permit.
ANNUAL COMPLIANCE ASSISTANCE ACTIVITY PLAN: RESOURCE NEEDS
Question. Describe how the resource needs identified in the fiscal
year 2001 Plan and future Plans will be incorporated into the Agencies
annual resource planning and budget request process.
Answer. Remaining fiscal year 2001 and future resource needs will
be identified before or at the onset of the planning and budgeting
cycle. For future Plans the Agency will adjust the schedule for seeking
stakeholder input to ensure that the feed-back is available prior to
the beginning of the planning and budget cycle.
ANNUAL COMPLIANCE ASSISTANCE ACTIVITY PLAN: LEVEL OF FUNDING FOR
ACTIVITIES
Question. Describe how, and on what basis, the Agency will decide
the level of funding for activities within the Plan during the fiscal
year 2001 Operating Plan process.
Answer. The level of funding for individual projects in the Plan
will depend on Congress's final determination of Agency appropriations
for fiscal year 2001, stakeholder feedback about compliance assistance
needs, and projected costs associated with development and delivery of
specific compliance assistance activities.
ANNUAL COMPLIANCE ASSISTANCE ACTIVITY PLAN: IDENTIFICATION OF FUTURE
COMPLIANCE ASSISTANCE NEEDS
Question. Describe the ways future compliance assistance plans will
identify areas where compliance assistance is needed.
Answer. At the completion of the fiscal year 2001 Plan the Agency
will evaluate the process used to develop the first plan, determine
what improvements might be necessary, and implement those improvements
which might help to focus compliance assistance resources where they
are most needed. The Agency will work with the Compliance Assistance
Advisory Committee and other stakeholders to accomplish this.
ANNUAL COMPLIANCE ASSISTANCE ACTIVITY PLAN: FUTURE PRIORITIZATION
METHODS
Question. Describe the methods future compliance assistance plans
will categorize, rank or otherwise prioritize compliance assistance
needs.
Answer. Currently each Office/Region individually establishes its
project priorities. As a result of stakeholder input, EPA and the
Compliance Assistance Advisory Committee are working to develop a set
of prioritizing criteria related to compliance assistance which each
office can incorporate into their planning process.
ANNUAL COMPLIANCE ASSISTANCE ACTIVITY PLAN: FUTURE STRATEGIC ACTIONS
Question. Describe the ways future compliance assistance plans will
propose strategic actions to meet the compliance assistance needs
identified by future compliance assistance plans.
Answer. At the completion of the fiscal year 2001 Plan the Agency
will evaluate the process used to meet the compliance assistance needs
and will improve upon the approach. The Agency will work with the
Compliance Assistance Advisory Committee and other stakeholders to
accomplish this.
ANNUAL COMPLIANCE ASSISTANCE ACTIVITY PLAN: FISCAL YEAR 2001 PLAN
Question. Describe the ways, and on what basis, future compliance
assistance plans will identify the EPA organizations best suited to
implement individual parts of the strategy developed to ensure the
Agency meets compliance assistance needs identified in future
compliance assistance plans.
Answer. An internal EPA workgroup will review all proposed projects
that could be included in the Plan to determine if there are
opportunities for consolidating resources between offices and to learn
from previous efforts.
ANNUAL COMPLIANCE ASSISTANCE ACTIVITY PLAN: RESOURCES TO IMPLEMENT
ASSIGNED STRATEGY
Question. Describe the ways, and on what basis, future compliance
assistance plans will direct agency resources to individual EPA
organizations to implement assigned parts of the strategy developed to
ensure the Agency meets compliance assistance needs identified in
future compliance assistance plans.
Answer. For future Plans the Agency will adjust the schedule for
seeking stakeholder input to ensure that the feed-back is available
prior to the beginning of the planning and budget cycle. This will
provide insight into where resources are most needed.
ANNUAL COMPLIANCE ASSISTANCE ACTIVITY PLAN: FISCAL YEAR 2001 ANNUAL
COMPLIANCE ASSISTANCE ACTIVITY PLAN RESOURCES
Question. Provide the dollars and FTE devoted by the Office of
Enforcement and Compliance Assurance, Office of Prevention, Pesticides
and Toxic Substances, Office of Solid Waste and Emergency Response,
Office of Air and Radiation, and Office of Water to compliance
assistance activities as defined by the fiscal year 2001 Annual
Compliance Assistance Activity Plan. In meeting this request, provide
information from the fiscal year 1999 budget request, fiscal year 1999
operating plan, fiscal year 1999 actuals, fiscal year 2000 budget
request, proposed fiscal year 2000 operating plan and fiscal year 2001
budget request. Organize the information by NPM, Appropriation, Goal,
Objective, Sub-objective, Office or Region, and activity.
Answer. The first annual Compliance Assistance Activity Plan (Plan)
is a compilation of all of the compliance assistance activities
planned, agency-wide for fiscal year 2001. The activities in the Plan
reflect projects that each program office/region is envisioning for
fiscal year 2001. These projects were identified as part of the
planning and budget development process which began in the spring of
1999 and will be finalized once the Agency receives the fiscal year
2001 appropriations. Given the process of project identification, this
first plan establishes a base-line of Agency activity.
The draft Plan is currently undergoing a public review and comment
process. Stakeholders have been asked to provide their views on EPA's
selection of priorities for the upcoming year. Once the stakeholder
comments have been summarized, they will be shared with Agency
management. Additionally, the summary will be provided to the
Compliance Assistance Advisory Committee (CAAC), the multi-stakeholder
group formed by the Agency under the existing National Advisory Council
for Environmental Policy and Technology (NACEPT). The CAAC, in
reviewing the comments will have the opportunity to develop formal
recommendations to be submitted through the NACEPT to the Agency.
These formal recommendations will be considered by the Agency as it
develops the fiscal year 2001 operating plan and the fiscal year 2002
President's Request. Thus, at this stage of the Plan development it is
difficult to accurately identify specific FTE and dollar levels for the
projects identified in the draft Plan.
The dollars and FTE for the Office of Enforcement and Compliance
Assurance's compliance assistance program, however, is provided in the
answer to question 186.
ANNUAL COMPLIANCE ASSISTANCE ACTIVITY PLAN: STEPS IN SERVICE PROVIDING
CHAIN
Question. The Agency has stated that it wished to limit its
compliance assistance activities to that of a ``wholesaler'' in the
service providing chain. For each compliance assistance need identified
by the Agency, who has the Agency identified will provide the other
steps in the chain, such as manufacturing, distributing, marketing or
retailing?
Answer. The Agency has stated that it plans to shift to primarily
fulfilling a wholesaler role with respect to compliance assistance.
There will continue to be various circumstances in which the Agency
will continue its direct provider role. Examples of the need for this
direct assistance include working with Federal facilities, providing
assistance related to Federally-run programs (e.g., CFCs), and
providing assistance to facilities in states which have not been
delegated program responsibilities.
EPA currently provides only a small part of the compliance
assistance that is targeted to the regulated community. State, local
and tribal governments, who are EPA's co-regulators, provide the bulk
of these efforts. In positioning itself as a wholesaler, EPA is working
closely with states and various provider organizations (i.e., Chemical
Manufacturers Association, American Forest and Paper Associations,
Graphic Arts Technical Foundation, and Silicon Valley Manufacturing
Group) to discuss their appropriate roles and responsibilities within a
comprehensive, yet flexible system for providing assistance.
ANNUAL COMPLIANCE ASSISTANCE ACTIVITY PLAN: SERVICE DELIVERY ROLE
Question. How has the Agency determined that each of the other
identified entities in the compliance assistance providing chain will
effectively carry-out its role in service delivery?
Answer. The Agency is currently evaluating how best to move into
the wholesaler role where appropriate. It will however be critical that
this shift include an evaluation component to assure that the delivery
chain is working effectively. The Agency will address this issue as
part of the ongoing discussions.
The Agency will rely on providers that have experience and/or
capacity to deliver compliance assistance to the appropriate audience
in the most efficient and effective way.
FIELD TESTING OF COMPLIANCE ASSISTANCE SOFTWARE TOOLS: APPROPRIATE
REGULATIONS
Question. Describe the status of efforts included in the Aiming for
Excellence report to identify regulations appropriate for compliance
assistance software development.
Answer. The Agency has solicited stakeholder input to determine
where software tools are most needed. As a result of this input, the
Agency selected the Toxic Release Inventory as a rule for which this
type of tool would be beneficial.
TRI-ME (Toxics Release Inventory Made Easy) is an interactive,
intelligent, user-friendly software that guides the user through the
reporting requirements for Section 313 of the Emergency Planning and
Community Right-to-Know Act (EPCRA) of 1986 and Section 6607 of the
Pollution Prevention Act (PPA) of 1990. This software prompts the user
for specific information, which the software then uses to determine if
the user's facility has satisfied the reporting requirements for
Section 313 and, if so, the software aids the user in completing the
appropriate reporting forms. The software includes almost all of the
existing TRI guidance so that the vast majority of users will not have
to consult any other documents to complete their TRI reporting
obligation.
FIELD TESTING OF COMPLIANCE ASSISTANCE SOFTWARE TOOLS: STAFF
Question. Describe the status of efforts to identify appropriate
staff to support software development.
Answer. The TRI Regulatory Development Branch in the Agency's
Office of Environmental Information is presently managing the
development of TRI-ME. This involves the oversight of both the
information contained in the software (the script development) as well
as the actual programming and software development. Contractors who are
well-equipped to handle both aspects of this project have been
retained.
FIELD TESTING OF COMPLIANCE ASSISTANCE SOFTWARE: SCHEDULE
Question. Describe the status of efforts to establish a schedule
for developing and field testing software.
Answer. Script development for TRI-ME began in October 1999 and was
finished in January 2000. The conversion of the script to software and
the other database management aspects of the software commenced in
January 2000 and are due to be completed by mid-May 2000. An
abbreviated beta test (including industry participation) for the
software will take place in late April 2000. In mid-May 2000 this first
version of the TRI-ME software will be distributed to facilities in
just three industry sectors subject to Section 313 reporting; chemical
distributors, petroleum bulk storage, and foundries. These three
industry sectors will be encouraged to use this software for TRI
reports due by July 1, 2000 for reporting year 1999. Subsequent
versions of TRI-ME will address and be distributed to additional
industry sectors subject to the reporting requirements of Section 313
of EPCRA.
FIELD TESTING OF DRAFT REGULATIONS: PARTICIPATION IN FIELD TESTING
Question. Describe the status of efforts included in the Aiming for
Excellence report to identify draft regulations and regulated entities
to participate in field testing of draft regulations.
Answer. In May, EPA identified draft regulations for field testing
which some regulated entities previously had recommended. Participants
in the field test may include facilities ranging from municipalities to
large electrical facilities.
FIELD TESTING OF DRAFT REGULATIONS: TRIAL APPLICATION
Question. Describe the status of efforts to conduct a simulated
trial application with selected regulations.
Answer. In addition to identifying candidate draft regulations for
field testing, the Agency is preparing guidance on how the field
testing should be conducted. The likely approach would be to ask the
regulated entities that volunteer to be part of the project to read and
comply with the draft regulations using only the proposed rule and
preamble for guidance. We anticipate that EPA and company staff would
work cooperatively to gain insights into real-world compliance issues.
FIELD TESTING OF DRAFT REGULATIONS: REGULATIONS TO BE USED FOR TESTING
Question. Which regulations has EPA chosen for field testing and
which regulated entities have agreed to participate in this testing?
Answer. The Agency will determine which entities may participate in
the field testing pilot after the draft regulations have been
identified.
Question. When will it occur?
Answer. We plan to begin implementation of the field test by late
July or early August.
FIELD TESTING OF DRAFT REGULATIONS: RESULTS OF DRAFT RULE
Question. How, and on what basis, will EPA evaluate the results of
its trial application of a draft rule?
Answer. The Agency will include an evaluation requirement in its
guidance for the simulated trial application. Once the Agency
identifies draft proposed rules for field testing, we will develop an
evaluation plan specific to each draft rule.
STRATEGIC USE OF COMPLIANCE ASSISTANCE, INCENTIVES, MONITORING AND
ENFORCEMENT ACTIONS: FISCAL YEAR 2000-2001 NATIONAL ENFORCEMENT
PRIORITY
Question. Describe the status of efforts included in the Aiming for
Excellence Report to develop for strategic use compliance assistance,
incentives, monitoring and enforcement actions for each fiscal year
2000-2001 national enforcement priority.
Answer. EPA is committed to expanding the use of integrated
strategies that combine compliance assistance, compliance incentive,
compliance monitoring, and enforcement activities. Our experiences
(e.g., Telecommunications Initiative) have shown that this approach can
be very effective in addressing enforcement and compliance assurance
program priorities. In fulfilling this commitment, we will continue to
pursue new approaches to maximizing environmental compliance (e.g.,
corporate-wide audit agreements). These efforts provide opportunities
to build on our successes in addressing serious environmental problems
and to improve compliance with environmental laws.
A draft proposal (``guidelines'') which will assist the Agency in
fulling this commitment has been developed. EPA will commence
implementing the appropriate guidelines this year. Additionally, the
appropriate strategies for each fiscal year 2000/2001 priority area
will be developed by June 30, 2000. The answer to the following
question reviews more concrete actions to integrate the use of
incentives, assistance and enforcement in specific initiatives.
STRATEGIC USE OF COMPLIANCE ASSISTANCE, INCENTIVES, MONITORING AND
ENFORCEMENT ACTIONS: ACHIEVEMENTS
Question. Describe the past or current EPA efforts to use
compliance assistance, incentives, monitoring and enforcement actions
strategically to address chosen sectors or priorities. Provide
quantitative and qualitative achievements including a differentiation
of outcomes with specific environmental improvements versus compliance
with paperwork or other reporting requirements.
Answer. Since the reorganization of OECA in 1994, we have put in
place the principal building blocks of an integrated enforcement and
compliance assurance strategy with encouraging results as described in
each of OECA's annual Accomplishments Reports. Your question, however,
appears to be more directed to the use of integrated enforcement
strategies. Current efforts to use integrated enforcement strategies
that combine compliance assistance, incentives, monitoring, and
enforcement activities are described briefly in the preceding response.
Those efforts build upon our experiences, e.g., national sector
strategies and initiatives.
Recent experiences show integrated enforcement efforts are
effective in addressing program priorities while maximizing scarce
resources:
--``Telecommunications Initiative''--EPA conducted extensive outreach
efforts to heighten awareness of potential environmental
requirements, including sending letters to 29 companies and
approximately 40 trade associations and publishing an article
in the trade press. In response to EPA's efforts,
telecommunications companies voluntarily disclosed under EPA's
Audit Policy and promptly corrected over 2,000 environmental
violations occurring at over 600 facilities. The Agency waived
over $6 million in gravity based penalties and collected
$178,727 representing economic benefit gained from delayed
compliance. At the same time, the Agency has pursued an
enforcement action against a company based on a tip that was
prompted by the publicity surrounding this initiative. The case
settled for more than $600,000, helping to assure voluntary
participants that they would not be undercut by competitors who
continue to violate the law.
--Region 5 ``Mini-Mills Initiative''--Early in fiscal year 1997 EPA
Region 5 encouraged 25 small mid-west steel mills (``mini-
mills'')--part of the iron and steel sector--to conduct self-
audits and disclose potential environmental violations. Several
``mini-mills'' voluntarily disclosed violations which will
result in significant environmental benefits. For example, EPA
settled an administrative action with Calumet Steel in 1999
that will lead to a reduction of approximately 100 tons per
year of particulate matter to the air.
--Other initiatives that reflect our integrated approach to national
priorities included a compliance partnership program with the
American Petroleum Institute to reduce emissions from petroleum
storage tanks, a national audit agreement that provides
incentives for pork producers to audit and correct violations
of the Clean Water Act and a pilot program in Region 4 that has
resulted in widespread auditing by municipalities to identify
and eliminate sewer overflows.
In addition, EPA's Office of Compliance (OC) and Office of
Regulatory Enforcement (ORE) worked with EPA regions and states to
develop and implement sector-based enforcement and compliance
activities to enhance the regional commitments for the fiscal year
1998/1999 Memorandum of Agreement (MOA). OECA selected two national
priority sectors (petroleum refining, primary nonferrous metals) and
four significant sectors (agricultural practices/CAFOs, coal-fired
power plants, chemical preparations, iron and steel) for coordinated
national sector strategies in fiscal year 1998. The attached sections
of the ``Enforcement and Compliance Assurance fiscal year 1998
Accomplishments Report'' contain detailed qualitative and quantitative
information about the activities, accomplishments and strategic
approach for each of the six sectors. OECA has achieved significant
benefits in terms of protecting the public and the environment through
these efforts. Preliminary data indicates we are continuing our
successes:
--In fiscal year 2000 EPA settled its first enforcement action with
Tampa Electric under EPA's national coal-fired power plants
priority for Clean Air Act violations. This action will result
in reductions in sulfur dioxide of 60,000 tons per year, and in
nitrogen oxide of 60,000 tons per year--the equivalent of
taking 2.8 million automobiles off our highways.
--In the petroleum refining sector, EPA concluded a multimedia action
against Marathon Ashland Petroleum, LLC in fiscal year 1999
including $12 million to correct violations and $14 million to
perform Supplemental Environmental Projects which will reduce
air emissions of sulfur dioxide and VOCs, and hydrocarbon leaks
into the Mississippi River.
--In the primary nonferrous metals sector, EPA reached a judicial
settlement with ASARCO and a subsidiary for multimedia
violations in several EPA regions. The 1998 phase of the
settlement included a $3.386 million penalty for water and
hazardous waste violations; the 1999 settlement included a $5.5
million penalty, Supplemental Environmental Projects projected
to cost $14.7 million, and enhancing the Environmental
Management System used at all ASARCO facilities.
--The fiscal year 1999 FMC Corporation, Inc. settlement--the largest
civil penalty obtained under the Resource Conservation and
Recovery Act (RCRA)--led EPA to include minerals processing as
a Memorandum of Agreement priority for fiscal year 2000/2001.
In addition, FMC Corporation Inc. committed to over a dozen
Supplemental Environmental Projects with a capital cost of $63
million, with benefits such as significantly improving air
quality by reducing air pollution by approximately 436 tons of
particulate matter per year.
EPA has used a sector-based approach--identifying key industry
sectors--to provide a broad perspective of the compliance problems
facing the sectors and to identify enforcement and compliance tools to
address the problems. The factors considered in selecting a sector
include: compliance history, Regional and state concerns, size of the
sector, and potential environmental and human health risks posed by
releases. The national enforcement and compliance goals, objectives,
and priorities--including priority sectors--are set forth in the
nationally written Memorandum of Agreement (MOA) Guidance document
which the regions, States, and OECA's other partners use in planning
their annual activities and developing individual Memoranda of
Agreement. These priorities ensure consistency of national targeting of
environmental compliance issues that pose the greatest potential threat
to human health and the environment.
STRATEGIC USE OF COMPLIANCE ASSISTANCE, INCENTIVES, MONITORING AND
ENFORCEMENT ACTIONS: VERTICAL SELECTION
Question. Has the strategic use of the entire vertical selection of
enforcement and compliance assurance tools (i.e. compliance assistance,
incentives, monitoring and enforcement actions) improved the compliance
incentives program's relative inability to encourage reporting of
environmental violations versus paperwork or other reporting
requirements.
Answer. During the past two years, EPA has received voluntary
disclosures of release--and degradation types of violations that it had
not in the past. For example, we've received disclosures related to
wetlands, air treatment technology under the New Source Review and
Prevention of Significant Deterioration programs, maintenance of
publicly owned treatment works (POTWs), and federal fuel standards. We
believe those disclosures result from, in part, the presence of a
strong enforcement program. Through such types of disclosures we expect
to see additional improvements to human health and the environment. In
a single Audit Policy settlement related to the improper use of certain
fuels by an airline, EPA expects an elimination of nearly 700 tons of
pollutants from the air annually--all the result of a voluntary
disclosure. We believe that this is a result of EPA's strong
enforcement program, and outreach and education provided through
compliance assistance activities, such as workshops and newsletters.
OFFICE OF ENVIRONMENTAL INFORMATION STAFFING FTE CEILING
Question. What is the Full Time Equivalent (FTE) ceiling in the
Office of Environmental Information (OEI)?
Answer. The FTE ceiling provided OEI in the fiscal year 2000
Enacted Operating Plan is a total of 544 FTE.
office of environmental information staffing level at 3/1/2000
Question. At what FTE level was OEI staffed as of March 1, 2000?
Answer. As of March 1, 2000, OEI was staffed at a level of 481 FTE.
ENVIRONMENTAL INFORMATION STAFFING STATUS OF FTES
Question. If OEI was below its FTE ceiling, explain the reason for
this situation?
Answer. OEI began its operations early in fiscal year 2000, but was
not fully staffed at its inception due to vacant positions which
transferred for LAN consolidation, TRI technical support, and new
program management functions which hadn't previously existed. Many
positions have already been filled, and most of the remaining jobs have
active recruitment processes underway. OEI managers are working
aggressively to fill all positions. OEI projects that it will have
filled all positions in its authorized staffing level at the end of
fiscal year 2000. Given the breadth of OEI's portfolio and scope of
operations, filling all FTE slots is crucial to OEI being able to
fulfill its base mission.
OFFICE OF ENVIRONMENTAL INFORMATION STAFFING
Question. Describe the role OEI played in the development of
specific information management activities in the fiscal year 2001
budget request.
Answer. The fiscal year 2001 budget request was submitted to OMB in
September 1999. OEI was not formally created until October 1999.
However, one of OEI's predecessor organizations, the Office of
Information Resources Management, determined the fiscal year 2001
investment review requirements and coordinated and reviewed Agency-wide
investment proposals. The results of the OIRM-led review were presented
to the Agency's Executive Steering Committee for IRM, which led to the
Chief Information Officer's advice to the Chief Financial Officer on
funding information proposals.
Question. Did OEI review fiscal year 2001 investment requests from
the program offices and recommend or not recommend funding the
investments?
Answer. OEI was not officially established until October 1999--
after the submission of the 2001 budget request to OMB. However, the
Executive Steering Committee for IRM, comprised of Agency senior
managers, and supported by the Office of Information Resources
Management, reviewed the fiscal year 2001 investment requests submitted
by the program offices. Based on the advice of the ESC, the Chief
Information Officer recommended investments for funding to the Chief
Financial Officer. The ESC advised that additional work was needed on
several proposals before investments could move forward.
With the creation of OEI in October 1999, OIRM was incorporated
into the OEI structure, and the ESC became the Quality Information
Council. Both OEI and the Quality Information Council will have a role
in reviewing and recommending investment proposals from the program
offices for the fiscal year 2002 budget process.
Question. Did OEI generate its own fiscal year 2001 investment
requests on behalf of program offices or the Agency?
Answer. Since OEI was not officially created until October 1999, it
did not generate investment requests on behalf of the program offices
as part of the fiscal year 2001 process. However, OEI's predecessor
organizations, including both OIRM and OP, submitted investment
requests that represented Agencywide information initiatives. In
January 2000, OEI also submitted an investment request for the
Information Integration Initiative as part of OMB's Exhibit 53.
Question. Did OEI review requests for disinvestments to the fiscal
year 2001 budget request?
Answer. EPA's Executive Steering Committee for IRM, comprised of
senior Agency managers, and supported by the Office of Information
Resources Management, reviewed the fiscal year 2001 investment requests
submitted by the program offices, and provided their advice to the
Chief Information Officer. Program offices would have identified
disinvestments to systems as part of the investment review process.
Question. Describe the role OEI played in developing the fiscal
year 2000 Operating Plan, including specific actions on information
management funding?
Answer. As OEI was a newly created organization at the time of the
fiscal year 2000 Operating Plan development, it concentrated its
efforts on sharing its vision of Agency information priorities with
members of the Quality Information Council, and on establishing OEI's
operating plan and priorities for fiscal year 2000. As part of its work
with the Quality Information Council and its vision for the Integrated
Information Initiative, EPA program offices are focused on information
initiatives that will support integration within EPA and between EPA
and the States.
Question. Describe the role OEI played in recommending for or
against reductions to the fiscal year 2000 budget request as
implemented through the fiscal year 2000 Operating Plan including
specific actions across the Agency on information management funding?
Answer. OEI's predecessor organization, the Office of Information
Resources Management, served as a staff office to the Executive
Steering Committee in reviewing investment proposals for the fiscal
year 2000 budget request. Based on the advice of the Executive Steering
Committee, the Chief Information Officer advised the Chief Financial
Officer of information investments that could be funded in the
Operating Plan.
OEI PARTICIPATION IN RESOURCE DECISIONS
Question. How many times did the Quality Information Council meet?
Answer. To jump-start the contributions of senior Agency officials
and their participation in the evolving information management agenda,
the Acting Deputy Administrator convened EPA's senior officials in an
executive forum four times during 1999 prior to the formal chartering
of the Quality Information Council (QIC) in the Fall, 1999. Since its
formal establishment in September, 1999, the QIC has met seven times to
engage in a variety of information management priorities.
HUMAN HEALTH
Question. At what level, in terms of FTE and dollars, did the
Agency fund the Human Health Research key program in the fiscal year
1999 budget request, fiscal year 1999 operating plan, fiscal year 1999
actuals, fiscal year 2000 budget request, fiscal year 2000 proposed
operating plan, and fiscal year 2001 budget request. Provide the
information by NPM, appropriation, goal, objective, office or region,
and activity.
Answer. The information follows:
HUMAN HEALTH RESEARCH BUDGET--FISCAL YEAR 1999-2001
[Dollars in millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year 1999 Fiscal year 2000 Fiscal year 2001
------------------------------------------------------------------------ President's
President's Enacted President's Enacted budget
budget ------------------ budget -----------------------------------
------------------ ------------------
FTE Total FTE Total FTE Total FTE Total FTE Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
S&T:
Office of Research and Development:
8.2 Human Health Research \1\......................... 231.9 57.0 225.3 49.7 257.9 55.7 186.6 49.1 176.8 53.4
3.2 Research to Support New Regulatory Requirements ....... ....... 10.4 6.4 16.9 6.6 22.1 8.1 28.0 10.5
Under FQPA...........................................
4.3 Safe Handling and Use of Commercial Chemicals and 39.3 6.1 28.2 5.1 33.9 4.9 82.1 8.4 79.7 9.1
Micro \2\............................................
Superfund:
Office of Research and Development: 8.2 Human Health 3.5 ....... ....... ....... 3.5 0.5 ....... ....... ....... .......
Research \3\.............................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Figures reflect the Human Health Objective of the Sound Science Goal [8.2].
\2\ Figures reflect the human health portion of Objective 3 of the Safe Communities Goal [4]. They include direct human health research plus a
proportion of human health/ecosystems infrastructure [e.g., operating expenses, salaries, travel].
\3\ Part of SF transfer S&T for fiscal year 1999 enacted.
HUMAN HEALTH: BUDGET REQUEST
Question. Analysis of the Agency's budget requests indicates that
EPA reduced funding to the Human Health Research key program in the
fiscal year 1999 operating plan and the fiscal year 2000 proposed
operating plan from the higher levels contained in each year's budget
request. Why did the Agency make reductions in Human Health Research
from each of these budget requests to the following operating plans and
what impact did it have on the activity levels of the program?
Answer. Fiscal year 1999 was the first year of formal
implementation of the Government Performance and Results Act (GPRA). In
implementing the Act's requirements, the Agency realigned its budget
into the current goal/objective structure. During development of the
enacted operating plan for fiscal year 1999, a review of the placement
of certain key programs suggested that human health research directly
supporting implementation of the Food Quality Protection Act (FQPA) of
1996 should be realigned from the core human health research program
captured under the Sound Science goal (8.2) to Goal 3, which directly
supports implementation of the Act.
Similarly, during development of the fiscal year 2000 proposed
enacted budget, research directly supporting implementation of the
Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and the
Toxic Substances Control Act (TSCA) was realigned from the Sound
Science goal to more directly support the Agency's efforts to improve
community safety under Goal 4.
These funding realignments were the major influences on the changes
to human health research under Goal 8 for the two years. While these
changes did result in reductions to that goal, they did not impact the
overall human health research program since they were made only to more
clearly associate certain direct research efforts with the related
regulatory programs under Goals 3 and 4.
In addition to the realignments mentioned above, there were
reductions in fiscal year 1999 as part of the general reduction
required to meet Congressionally appropriated levels. The area affected
by the general reduction to human health research under Goal 8 was the
Science to Achieve Results (STAR) grants program. As a result, the
program was able to support 2-3 fewer new grant awards than would have
been possible otherwise.
Funding for the total core human health research program under all
three goals (3, 4, and 8) was $61.1 million and 263.9 workyears in the
fiscal year 1999 operating plan, and $65.6 million and 290.8 workyears
in the fiscal year 2000 proposed operating plan.
ENFORCEMENT ACCOMPLISHMENTS: FISCAL YEAR 1998 DECREASE
Question. Describe the extent to which the level of fiscal year
1998 decrease in enforcement activities may be within the natural
variation of enforcement activity from year to year.
Answer. For fiscal year 1998, EPA issued 1,721 administrative
compliance orders, 1,400 administrative penalty orders, and referred
411 civil cases to the Department of Justice, a total of 3,532 actions
for the year. For the previous year, the total for the same categories
was 3,557, a difference which was not of concern to EPA after reviewing
the detailed data about fiscal year 1998 enforcement activities.
enforcement accomplishment: percentage change for decrease/increase
Question. At what level or percentage change does the Agency
believe a decrease or increase in enforcement activities would be due
to elements beyond the natural variation of enforcement activity from
year to year?
Answer. It is expected that variations in enforcement outputs will
occur due to the fact-specific nature of enforcement. Cases vary in
terms of the entity involved, duration of violations, type of entity,
litigations facts, and the severity of the violation, just to mention a
few. In addition, the year to year enforcement outputs vary naturally
as priorities change and the level of resources needed to handle
individual activities associated with those priorities change. There
are simply too many variables that create the total agency enforcement
activities for each year to predict the dominant cause of the variation
or a level or percentage change beyond the norm.
ENFORCEMENT ACCOMPLISHMENTS: MEASURE OF RESOURCES BY TIME, FTE AND
DOLLARS
Question. How does the Agency measure the amount of resource
intensiveness in terms of time, FTE or dollars associated with its
enforcement cases including larger, more complex or time intensive
cases or actions?
Answer. The Agency does not track the resource intensiveness of
individual cases because our goal is to target our resources through
our compliance monitoring program at the most significant environmental
problems rather than to aim for a certain resource efficiency level for
enforcement cases. If our targeting is successful and we address
significant environmental problems through enforcement it is often the
case that these cases are larger and more complex. OECA does analyze
regional civil judicial and administrative outputs as compared to FTE
resources on an annual basis so that the relative efficiency between
regions can be compared.
ENFORCEMENT ACCOMPLISHMENTS: MEASURE OF ENVIRONMENTAL IMPACT
Question. How does the Agency measure the amount of environmental
impact resulting from each of its enforcement actions?
Answer. The environmental impact from enforcement actions is
measured by the estimated pollutants reduced from each enforcement
case. This information allows the Agency to know the pounds of
pollutants reduced as a direct result of single cases or categories of
cases. In addition the Agency also measures actions taken by facilities
(e.g., change in production process, etc.) as a result of enforcement.
ENFORCEMENT ACCOMPLISHMENTS: ENFORCEMENT ACTIONS VS. ENVIRONMENTAL
IMPACT
Question. Has the Agency conducted a comparison of the amount of
environmental impact resulting from each of its enforcement actions
versus the degree of resource intensiveness of each action? If so, what
are the results?
Answer. The Agency does not routinely compile information about the
costs of each individual case. Therefore, we do not have the capacity
to compare the amount of environmental impact versus resources expended
for each enforcement case.
ENFORCEMENT ACCOMPLISHMENTS: COMPLEX CASES
Question. In general, has the agency found that larger, more
complex or time intensive cases or actions produce greater relative
levels of environmental impact?
Answer. We have found that complex cases can yield greater
environmental impacts than the cumulative effects of a group of smaller
actions for the same violations. Resolving many types of environmental
problems requires complex investigations to find the extent and
remedies for the problems. If we do not devote the time and resources
to these cases, we would not otherwise be able to achieve the
reductions in environmental releases many of our cases have achieved.
The cases can yield larger Supplemental Environmental Projects that can
achieve environmental benefits that could not be gained in smaller
cases. Also, we have been able to use the leverage of combining
multiple violations into one case to negotiate settlements with more
comprehensive injunctive relief that may result in additional
environmental impacts than would otherwise be agreed to by the
respondent.
ENFORCEMENT ACCOMPLISHMENTS: EFFORTS TO MEASURE DETERRENT EFFECT
Question. What efforts has the Agency conducted, or is the Agency
conducting, to measure the deterrent effect of their enforcement
program? Does this include any studies, document reviews, contracts or
other inquiries? What are the results?
Answer. The Agency's efforts to measure the deterrent effects of
its enforcement program include: (1) the Office of Enforcement and
Compliance Assurance's (OECA) Compliance Information Project; (2)
OECA's implementation of its National Performance Measures Strategy
(NPMS); (3) NPMS Compliance Measurement Cooperative Agreements; (4) an
ongoing deterrence measurement project sponsored by EPA's Chief
Financial Officer (CFO), (5) The Forum on Deterrence of Environmental
Violations and Environmental Crime; and (6) Request for Proposals
(RFP): Corporate Environmental Performance and the Effectiveness of
Government Interventions. Specifics under each of these actions
follows.
Compliance Information Project
The April 1999 Compliance Information Project (CIP) Literature
Summaries report developed by OECA's Office of Planning and Policy
Analysis (OPPA) contains brief reviews of seventeen pieces of
compliance literature, plus appendices referencing over two hundred
additional studies on a broad array of deterrence and motivational
topics. The function of the CIP was to assemble and distribute these
materials for followup use by federal and state compliance officials.
Information on the CIP, and the full text of the Literature Summaries
report, is posted on the OECA-OPPA website at .
National Performance Measures Strategy Implementation
The NPMS is a multi-year, high priority effort to identify, design,
and implement an enhanced set of performance measures for EPA and the
public to use to assess changes in the behavior and compliance status
of regulated entities from a full range of enforcement and compliance
activities. OECA is in the process of implementing twelve sets of NPMS
measures referred to collectively as ``the Performance Profile.'' The
Profile consists of eight measures of environmental results caused by
enforcement and compliance assurance activities (``outcomes''), plus
four measures of program activity (``outputs''). Of the twelve sets in
the Profile, three (sets 1, 6, and 7) may prove especially interesting
to deterrence researchers. Set 1 requires EPA to determine
statistically valid noncompliance rates for five regulated populations
in fiscal year 2000. OECA and others will then be positioned to analyze
impacts on those rates from government interventions and incentive
policies. Sets 6 and 7 require EPA to determine the average duration of
time significant violators take to return to compliance, and the
percentage of significant violators with recurrent significant
noncompliance within a two-year period, respectively. The sets will
rely on the information in the databases to track trends in the
duration of significant noncompliance (SNC) and recidivism by media
program.
Compliance Measurement Cooperative Agreements
In connection with the NPMS, OECA is awarding $1.8 million in
cooperative agreement grants to fund a series of Compliance Measurement
Cooperative Agreements with states to develop and implement potentially
transferable outcome-based performance measures for their own
enforcement and compliance assurance programs. Of particular interest
to deterrence researchers, among the twelve projects selected for
funding, is the Oregon-Department of Environmental Quality (DEQ) effort
to document and measure the deterrent impacts of their enforcement
activities. Oregon-DEQ intends to assess specific deterrence in its
state by comparing data elements such as penalty amounts and
recidivism, while qualitatively evaluating general deterrent effects
via surveys and interviews with the regulated community. The surveys
and interviews undertaken by Oregon will explore, among other things,
the effectiveness of government efforts to communicate information on
enforcement activities and penalties to the regulated community and the
public. EPA hopes the results of the Oregon project will enhance its
understanding of the relationship between how threats are communicated
and received, the actual (objective) probability/severity of
punishment, and subjects' perceptions of how visible or discoverable
their noncompliance may be.
Deterrence Measurement Project
EPA's Chief Financial Officer and OECA are jointly sponsoring a
project with the Eastern Research Group, Inc. (ERG) to develop a model
for determining the impact of inspection and enforcement activity on
firm behavior and environmental performance. The study is being led by
Louis Nadeau of ERG, the author of EPA Effectiveness at Reducing the
Duration of Plant-Level Noncompliance, 34 j. ENVTL. ECON. & MGMT. 54
(Sept. 1997). In that study, Nadeau, using data from 175 pulp and paper
plants covering 41 reporting quarters from 1979 through 1989, found
among other things that noncompliant plants that experienced a larger
number of tests and inspections and/or enforcement actions during their
periods of non-compliance tended to spend less time in violation.
Nadeau determined, among other things, that a 10 percent increase in
monitoring activity led to 4 percent or greater reductions in the
average length of time facilities remained in noncompliance. The new
ongoing ERG study focuses on the behavior of firms in two industrial
sectors, petroleum refining and integrated iron and steel. The behavior
under review consists of facility-level pollutant loadings regulated
under the federal Clean Water Act. For the petroleum refining sector,
the pollutants of concern are biological oxygen demand (BOD), total
suspended solids (TSS), and ammonia nitrogen. The pollutants of concern
for the integrated iron and steel sector are TSS, total zinc, and total
lead. In its simplest form, Nadeau's model will test whether
enforcement has a discernable effect on environmental quality by
impacting the behavior of the regulated community. The goal of the
model is to determine the statistical relationship between compliance
monitoring and enforcement activities, and measurable environmental
outcomes.
Forum on Deterrence of Environmental Violations and Environmental Crime
The Department of Justice's (DOJ) independent research arm, the
National Institute of Justice (NIJ), together with DOJ's Environment
and Natural Resources Division (ENRD) and OECA, held The Forum on
Deterrence of Environmental Violations and Environmental Crime on July
12 and 13, 1999. The group of academic experts and senior federal,
state, and local policy-makers and practitioners invited to the Forum
participated in a roundtable discussion of the existing deterrence
literature, and worked to generate research ideas and identify
potential partners for conducting or sponsoring such research. While
the Forum participants, consistent with Federal Advisory Committee Act
(FACA) requirements, did not prioritize potential research topics or
generate consensus recommendations, EPA considered their viewpoints in
developing the RFP discussed in the following paragraph.
Request for Proposals (RFP): Corporate Environmental Performance and
the Effectiveness of Government Interventions
On April 10, 2000, EPA published a Request for Proposals (RFP)
entitled, ``Corporate Environmental Performance and the Effectiveness
of Government Interventions.'' This research solicitation is being
sponsored by EPA's Office of Research and Development (ORD)-National
Center for Environmental Research (NCER), in cooperation with the U.S.
Department of Justice (DOJ)-National Institute of Justice (NIJ). The
solicitation opened on April 10, 2000. The closing date for submitting
grant proposals is July 24, 2000. The RFP may be accessed
electronically at . Through
the RFP, EPA anticipates making up to $1 million available to address
priority gaps in our understanding of the relationship between
government interventions and the behavior of the regulated community,
of which deterrence-related issues are a subset. The projected range
for awards is $50,000 to $200,000 per research grant per year for
durations of one to three years. Proposed research can be prospective
or retrospective, with prospective field experiments, survey research,
and multi-investigator projects more likely to justify higher funding
levels. The results will be available to assist federal, state, tribal
and local governments, industry associations, environmental groups,
corporations, and private citizens to allocate their resources in order
to achieve the greatest degree of environmental and health protection
and improvement as efficiently as possible. EPA is also sponsoring a
separate solicitation entitled, ``Market Mechanisms and Incentives for
Environmental Management (MM&I)'' . That RFP, dated November 2, 1999 with a closing date
of February 2, 2000, focuses on alternatives or complements to
traditional environmental regulation that rely specifically on market
forces, financial mechanisms, or other instruments to encourage
regulated entities to reduce emissions or improve environmental
performance. Examples include pollution fees or taxes, pollution
allowance trading, subsidies, and differing liability approaches.
ENFORCEMENT ACCOMPLISHMENTS: ADMINISTRATIVE ACTIONS
Question. According to the fiscal year 1998 Accomplishments Report,
EPA initiated 17 percent fewer administrative actions per year from the
period fiscal year 1993 to fiscal year 1998 than it did from fiscal
year 1989 to fiscal year 1992. What is the reason for this decrease in
activity?
Answer. There are two explanations for the decrease in
administrative actions. First, states made greater use of
administrative actions from fiscal year 1993 to fiscal year 1998,
increasing such actions by 58 percent compared to their use in fiscal
year 1989 to fiscal year 1992. Thus, states were taking more of the
cases that EPA had previously addressed through administrative action.
Second, during fiscal year 1993 to fiscal year 1998, EPA was expanding
the tools it used to prevent or correct noncompliance to include
voluntary self-disclosure cases handled informally and more focused
compliance assistance. In addition, EPA has placed more emphasis during
fiscal year 1993 to fiscal year 1998 on more complex judicial cases
involving significant environmental harm.
ENFORCEMENT ACCOMPLISHMENTS: CIVIL REFERRALS
Question. According to the fiscal year 1998 Accomplishments Report,
EPA made 6 percent fewer civil referrals to the Department of Justice
per year from the period fiscal year 1993 to the fiscal year 1998 than
it did from fiscal year 1989 to fiscal year 1992. What is the reason
for this decrease in activity?
Answer. A review of the data from fiscal year 1993 to fiscal year
1998 shows that in 3 of the years during that period, the number of
civil referrals was higher than any single year in the fiscal year 1989
to fiscal year 1992 period. For only two years, fiscal year 1995 and
fiscal year 1996, were the number of referrals lower than in any single
year in the period fiscal year 1989-1992. Further, the total for fiscal
year 1999 (403) was also higher than during any year in the fiscal year
1989 to fiscal year 1992 period. Finally, the number of civil referrals
in the last three years (fiscal years 1997-1999) have set a three-year
consecutive all-time record.
RISK MANAGEMENT: FISCAL YEAR 1999, FISCAL YEAR 2000 AND FISCAL YEAR
2001 FUNDING LEVELS
Question. At what level, in terms of FTE and dollars, did the
Agency fund the Risk Management Plans Assistance key program in the
fiscal year 1999 budget request, fiscal year 1999 operating plan,
fiscal year 1999 actuals, fiscal year 2000 budget request, fiscal year
2000 proposed operating plan, and fiscal year 2001 budget request.
Provide the information by NPM, appropriation, goal, objective, sub-
objective, office or region, and activity.
Answer. Response provided in the tables below.
[Dollars in thousands]
----------------------------------------------------------------------------------------------------------------
Fiscal year 1999
--------------------------------------------------------------
Budget request Op plan Estimated actuals
NPM: OSWER Appro: EPM Goal/Obj/Sub: 050202 ------------------------------------------ \1\
--------------------
FTE Amount FTE Amount FTE Amount
----------------------------------------------------------------------------------------------------------------
Risk Management Plans............................ 28.5 $11,870.9 28.5 $7,254.9 28.5 $7,254.9
HQ............................................... 10.0 $10,308.8 10.0 $5,692.8 10.0 $5,692.8
Regions.......................................... 18.5 $1,562.1 18.5 $1,562.1 18.5 $1,562.1
----------------------------------------------------------------------------------------------------------------
\1\ Since RMP activities are not specifically tracked in the Agency accounting system, an estimate was provided
for fiscal year 1999 actual obligation.
[Dollars in thousands]
----------------------------------------------------------------------------------------------------------------
Fiscal year 2000 Fiscal year 2001
--------------------------------------------------------------
NPM: OSWER Appro: EPM Goal/Obj/S ub: 050202 Budget request Op plan Budget request
--------------------------------------------------------------
FTE Amount FTE Amount FTE Amount
----------------------------------------------------------------------------------------------------------------
Risk Management Plans............................ 28.5 $11,804.6 28.6 $7,242.8 28.6 $7,913.5
HQ............................................... 10.0 $10,152.9 10.0 $5,727.7 10.0 $6,297.2
Regions.......................................... 8.5 $1,651.7 18.6 $1,515.1 18.6 $1,616.3
----------------------------------------------------------------------------------------------------------------
RISK MANAGEMENT: REDUCTIONS IN FISCAL YEAR 1999, FISCAL YEAR 2000
BUDGET REQUESTS
Question. Analysis of the Agency's budget requests indicates that
EPA reduced funding to the Risk Management Plans Assistance key program
in the fiscal year 1999 operating plan and the fiscal year 2000
proposed operating plan from the higher levels contained in each year's
budget request. Why did the Agency make reductions in Risk Management
Plans Assistance from each of these budget requests to the following
operating plans and what impact did it have on the activity levels of
the program?
Answer. The fiscal year 1999 and fiscal year 2000 budgets contained
an increase in the risk management planning (RMP) activity to support a
$5.6 million grant initiative to encourage states to develop and manage
their own RMP programs . The initiative was designed to provide states
seed money (for up to two years) to develop their audit and inspection,
technical assistance and outreach capabilities. It was also intended to
help them establish the funding mechanisms needed to sustain the
program. Reductions in the EPM appropriation in both years resulted in
EPA removing the funding requested for this effort in order to meet
higher priorities.
The impact of the reductions are not immediately visible since the
Agency currently has 10 states in the pipeline that have committed to
developing programs. To help keep these states on track, we are making
a small amount of funding--$300,000--available, as well as providing
program support. To promote recruitment, we will emphasize flexibility
in how states will be authorized to receive delegation.
Since fiscal year 1999, when implementation of the RMP program
began, base resources have been redirected to EPA regions to carry out
their responsibility as the implementing agency in lieu of states.
Regions continue to work in securing agreements through their technical
assistance and outreach activities, however, should regions fail, EPA
must be prepared to operate the program long-term for about half of the
56 states and territories.
AUDIT POLICY: FISCAL YEAR 1998 CIVIL REFERRALS TO DOJ ELIGIBLE FOR
RELIEF
Question. Many violations of emission or discharge standards are
required to be identified by prescribed monitoring and thus violations
encountered would not be eligible for relief under the Agency's audit
policy and its requirement for voluntary audits. For each statute and
section under which EPA made a civil referral to the Department of
Justice in fiscal year 1998, identify whether a violation under that
section would be eligible for relief under the audit policy and provide
a short description of the reason.
Answer. Analysis of whether a certain violation-type is eligible
for penalty relief under the Audit Policy varies depending upon several
factors, primarily how the circumstances surrounding the violation
relate to the nine conditions of the policy. Violation of a statutory
requirement may be ineligible under certain circumstances and eligible
under others. Therefore, EPA determining whether certain violation
types identified in fiscal year 1998 enforcement cases would be
eligible for the policy requires consideration of many different
hypothetical scenarios. For example:
--How would the violation have been discovered?
--Would discovery of the violation have been required under an
existing permit or prior settlement or court order?
--Had a state or local investigation begun?
--Would the discovery have occurred prior to the commencement of
EPA's investigation?
--Had notice of a citizen suit been issued?
--Did the company have prior violations that would make the violation
at issue a repeat violation?
Without reasonable access to this type of information about the
cases, EPA's analysis would be difficult to conduct and would likely
provide inaccurate responses.
Attached is a break-down of the various statutes represented in our
fiscal year 1998 enforcement cases.
The Audit Policy provides that matters that are the subject of a
federal investigation or inspection are not considered independent
discoveries and are ineligible for penalty relief. It follows that all
cases referred to the Department of Justice would be ineligible.
Violations discovered solely through monitoring that is required by
law or through a permit are ineligible--although there could be case-
specific circumstances that would warrant treatment of such violations
under the policy. The key issue is whether an entity had a pre-existing
obligation under statute or permit to look for a violation--i.e., was
the discovery of the violation voluntary--not whether an entity had a
pre-existing obligation to report to EPA any violations it discovers.
Therefore, in the instance of an entity that did not conduct legally
required monitoring, a disclosure that involves failure to monitor
would be eligible under the policy.
The most prominent federal monitoring requirements are the Clean
Water Act's NPDES daily monitoring requirements, as promulgated at 40
CFR 122.41; the Safe Drinking Water Act's Public Water Sewer Systems
monitoring requirements, as promulgated at 40 CFR 141; the Resource
Conservation and Recovery Act's hazardous waste leak detection
monitoring requirements, as promulgated at 40 CFR 265.1063; and the
Clean Air Act's Title V operating permit requirements, as promulgated
at 40 CFR 70.5.
On September 30, 1999, EPA issued a memorandum to clarify that
certain Clean Air Act violations discovered, disclosed and corrected by
a company prior to issuance of a Title V permit are potentially
eligible for the Audit Policy. That memorandum allows New Source Review
(NSR) and Prevention of Significant Deterioration (PSD) violations
discovered through extraordinary review of permitting history and
meeting conditions 3 through 9 of the Audit Policy to receive penalty
relief under the policy.
AUDIT POLICY: FISCAL YEAR 1998 ADMINISTRATIVE PENALTY ORDER AND
ADMINISTRATIVE COMPLIANCE ORDER ELIGIBLE FOR RELIEF
Question. For each statute and section under which EPA issued an
administrative penalty order or an administrative compliance order in
fiscal year 1998, identify whether under that section would be eligible
for relief under the audit policy and provide a short description of
the reason.
Answer. See BOND 129 answer. Audit policy cases are resolved
through three mechanisms: penalty orders; compliance orders; and
unilateral determinations (often referred to as notices of
determination). Therefore, fiscal year 1998 administrative orders
include many of the cases resolved under the Audit Policy, as well as
unrelated enforcement cases. We will provide an approximate break-out
of the fiscal year 1998 administrative orders in two weeks.
The Audit Policy cases settled in fiscal year 1998 were resolved
with the following distribution:
--10 were resolved through an administrative penalty order (these are
cases for which only partial (75 percent) credit under the
policy was granted or for which an economic benefit was
collected).
--4 were resolved through a notice of noncompliance (NON) or notice
of violation (NOV) under which no penalty was collected.
--28 were resolved through a unilateral order (Notice of
Determination) or Agency letter under which no penalty was
collected.
--31 were resolved through the use of administrative orders under
which no penalties were collected.
Because of the several ways in which these cases can be resolved,
we report audit policy cases collectively without breaking down the
cases by settlement types. However, some audit policy cases may have
had an ongoing correction or remedy (these would be a subset of the
fourth category above) that warranted reporting as a compliance order.
The same applies for audit policy cases for which some aspect of
penalties were collected (first category above).
AUDIT POLICY: FISCAL YEAR 1998 ADMINISTRATIVE COMPLIANCE ORDER ELIGIBLE
FOR RELIEF
Question. For each statute and section under which EPA issued an
administrative compliance order in fiscal year 1998, identify whether
under that section would be eligible for relief under the audit policy
and provide a short description of the reason.
Answer. See BOND 129 answer. Audit policy cases are resolved
through three mechanisms: penalty orders; compliance orders; and
unilateral determinations (often referred to as notices of
determination). Therefore, fiscal year 1998 administrative orders
include many of the cases resolved under the Audit Policy, as well as
unrelated enforcement cases. We will provide an approximate break-out
of the fiscal year 1998 administrative orders in two weeks.
AUDIT POLICY: HUMAN HEALTH OR ENVIRONMENTAL IMPROVEMENTS
Question. EPA is committed to obtaining human health or
environmental improvements from concluded environment actions but does
not consider violations disclosed under the audit policy to be
enforcement actions. So to the audit policy's emphasis on paperwork and
record keeping violations, 84 percent of disclosures in the last
evaluation, is in contrasts to the enforcement program's goal of 75
percent of concluded actions requiring environmental or human health
improvements. Is the goal of the audit policy not to require
environmental or human health improvements? If so, why has the Agency
structured the policy this way?
Answer. The Audit Policy has proven to be efficient for companies
and EPA in resolving record-keeping and reporting violations. Record-
keeping and reporting requirements provide the framework for public
access to information, the structure for safe handling, and the use and
discharge of hazardous substances, and are derived from federal laws
enacted by Congress. The failure to submit emergency and chemical
inventory forms, e.g., can have tragic consequences, such as the death
of firefighters unaware of the presence of hazardous chemicals. As the
greatest number of violations tend to involve monitoring and reporting
requirements, it is not surprising that the majority of disclosures
include violations of this type. EPA has undertaken several efforts
over the past year to encourage the disclosure and correction of
violations of emission and discharge limits. These include an agreement
with a large manufacturer to audit and disclose violations of Clean Air
Act permit and emission standards; a compliance partnership agreement
to encourage controlling VOC emissions from petroleum storage tanks, an
audit agreement with the National Pork Producers Council to reduce or
eliminate penalties for disclosure and correction of Clean Water Act
violations; 67 municipal audits conducted in response to an initiative
from Region 4, which are expected to reduce sanitary sewer overflows by
improving maintenance and expanding capacity; and voluntary audits by
airlines of compliance with fuel standards.
AUDIT POLICY: VOLUNTARY NATURE VS GOAL OF ENFORCEMENT PROGRAM
Question. The voluntary nature of the audit is cited as a reason
the audit policy does not induce more violations of environmental or
health standards. If the goal of the enforcement program is to address
environmental and human health problems with 75 percent of concluded
enforcement actions requiring environmental or human health
improvements, why does the Agency conclude the voluntary nature
provision which runs counter to the goal of the enforcement program?
Answer. As explained in an answer to a similar question last year,
the 75 percent goal applies to traditional enforcement actions, not
voluntary disclosure and correction under the audit policy. The
Agency's policy was designed to provide an incentive for voluntary
actions to identify and correct violations. Violations identified
through prescribed monitoring (e.g. daily monitoring reports) are
already generally available to federal and state agencies. In addition,
EPA believes that guaranteeing amnesty for all violations, regardless
of how they are identified would provide an obvious disincentive to
conduct good audits.
AUDIT POLICY: QUALITATIVE MEASURE OF SUCCESS
Question. EPA has cited quantitative measures of success for its
audit policy such as the number of violations disclosures and
corrections generated for facilities. Why does the Agency not measure
the success of the Audit Policy in qualitative terms such as meeting
the goals of requiring environmental or health improvements?
Answer. EPA reports successes of Audit Policy use in a quantitative
measure, consistent with reporting requirements under the Government
Performance and Results Act. For some cases, however, EPA is aware of
the environmental and health improvements that result from the case.
For example, EPA's settlement with American Airlines is expected to
eliminate nearly 700 tons of pollutants from the air annually.
Because of the recent significant growth in the Audit Policy
program and the Agency's interest in environmental and health
improvements, EPA has begun to further develop capabilities for begin
tracking such improvements made under the policy.
AUDIT POLICY: PENALTY RELATED CHANGES
Question. EPA considered and approved non-penalty related changes
to the Audit policy to encourage additional quantities of disclosures.
Why did the Agency not consider penalty related changes to increase the
quality of disclosures in terms of meeting the goal of requiring
environmental or human health improvements?
Answer. Recovering a violator's economic benefit from noncompliance
is a cornerstone of EPA's civil penalty program. In addition, many
federal statutes explicitly require EPA and the Federal courts to
consider a violator's economic benefit in imposing a civil penalty.
Although the Audit Policy is a voluntary program, EPA does not believe
participants should gain an economic advantage over those regulated
entities that have maintained compliance with federal environmental
statutes. To encourage increases in the quantity and breadth of
disclosures, EPA continues its attempts to raise the regulated
community's awareness of the Audit Policy. During the past two years,
EPA has received certain chemical release- and degradation-related
disclosures that we had not before received. Through the use of sector-
related Audit Policy initiatives and targeted marketing, EPA has
recently received disclosures related to wetlands, air technology,
publicly owned treatment works (POTWs) and federal fuel standards.
AUDIT POLICY: NUMBER OF VIOLATIONS DISCLOSED
Question. In fiscal year 1998, how many violations were disclosed
under the state audit policies or statutes in each of the states with
audit policies or statutes?
Answer. EPA does not have access to this information. To obtain
such information, EPA would need to issue to states resource-intensive
inquiries that would require clearance through OMB.
AUDIT POLICY: CASES SETTLED BY CORRECTING VIOLATIONS
Question. Question. Why did only 32 percent of companies disclosing
potential violations in fiscal year 1998 under the Agency's audit
policy settle those cases by correcting violations and taking steps to
prevent their recurrence?
Answer. Many of these disclosures have yet to be resolved. EPA has
tracked audit policy cases cumulatively by fiscal year so that the
collective data does not distinguish when a resolved case was initially
disclosed. The number of resolved cases in a given year may include a
case that was disclosed that year or in another year. For example, a
case may have been disclosed in the last month of a fiscal year and
resolved in the subsequent year. That dynamic creates a rolling cycle
of cases, for which the resolution time for each depending on the
circumstances surrounding the disclosure.
AUDIT POLICY: FISCAL YEAR 1998 DISCLOSURE OF VIOLATIONS
Question. As of fiscal year 1998, why has the Agency granted relief
to only 38 percent of the companies disclosing violations under the
Agency's audit policy since inception of the policy?
Answer. As of fiscal year 1999, EPA had granted penalty relief to
approximately half of the facilities disclosing violations under the
Audit Policy since the policy's inception. Facilities that have not
been granted penalty relief fall into one of several situations: the
disclosure has not yet been resolved; the disclosure did not meet the
conditions of the Audit Policy; upon further analysis, EPA determined
that a violation did not occur; or the entity disclosed the identity of
multiple facilities at the onset of a corporate-wide audit, but
ultimately determined that violations occurred at fewer facilities.
Several factors influence the first category. One, a company may
not disclose all information necessary to determine the nature of the
violation it suspects occurred, or may disclose the information in
subsequent communications. Two, EPA has received an increasing number
of multi-facility disclosures that may involve many violations and more
than one violation type. These multi-facility disclosures usually
involve extended schedules for audits, which may not be completed for
one year or longer. Three, EPA is receiving disclosures of violation
types that require greater analysis than traditional record-keeping
violations. Four, in fiscal year 1999 EPA provided Regions with
additional tools and information resources in an effort to expedite
case resolution time. The results of such efforts should be more
apparent in fiscal year 2000.
Through fiscal year 1998, EPA granted penalty relief to an
estimated 4 out of 5 facilities whose disclosure cases had been
resolved. Of the remaining 20 percent, some included cases where the
audit policy was inapplicable because no violation had occurred. The
improvements we are making to the case tracking system for audit policy
cases will allow us to provide more accurate and detailed information
in the future. The Agency has recently lengthened the time for
disclosure from 10 to 21 days, and more disclosures are being made
under structured auditing agreements with terms identified in advance
of factual disclosures, both of which should result in fewer policy
denials in the future.
AUDIT POLICY: MEASURE OF UNFAIR BUSINESS ADVANTAGE
Question. The Agency has stated that penalty related changes to the
audit policy would allow regulated entities to gain an unfair business
advantage. However, the Agency structured the audit policy so that the
overwhelming (84 percent) number of violations disclosed under the
policy do not address environmental or human health improvements. How
has the Agency measured and determined the gain to society in
preventing a degree of unfair business advantage outweighs the
environmental and human health improvements which would be achieved
from allowing those advantage gains?
Answer. Congress, the General Accounting Office, and federal courts
have all recognized that it is critical to recover economic benefit a
company gains from violating federal laws. This principle is not at
odds with EPA's goal of protecting human health and the environment,
rather, it is fundamental to achieving that goal. Our commitment to
recover economic benefit eliminates the incentive to violate the law by
avoiding or postponing compliance. This deterrent effect assures more
widespread compliance with the law, which offers obvious benefits to
public health and the environment through reduced emissions. Finally,
EPA does not agree that record-keeping and reporting requirements in
statutes like the Emergency Planning and Community Right to Know Act,
which was enacted by Congress in the wake of the Bhopal tragedy,
provide no benefit to public health or the environment.
AUDIT POLICY: DETERRENT EFFECT
Question. The Agency fears that elimination of penalties in the
audit policy would provide a disincentive for entities to be proactive
in their environmental compliance attempts to address the future
conduct of an entity. Does the Agency believe that the audit policy is
also providing a deterrent effect on the behavior of regulated entities
above and beyond the deterrent effect of a strong and vigorous
enforcement program? What is the basis for this opinion?
Answer. A study by the National Council of State Legislatures found
that more expansive amnesty laws in effect in some states had no effect
on the overall level of auditing. EPA believes that the Audit Policy is
one component of a multi-faceted approach to obtaining environmental
compliance. As noted in the 1992 Price-Waterhouse study, concern for an
enforcement action is a strong motivator for corporate environmental
auditing. Although EPA wishes to create an incentive for companies to
voluntarily correct historical noncompliance, we do not believe it
should be done at the cost of those companies that have historically
complied with regulations, including those who've made significant
capital expenditures to comply with federal law at the time it was
required. To treat disclosers under the Audit Policy as if they were
historical compliers would create a financial penalty for making prompt
capital expenditures required by law.
AUDIT POLICY: PENALTY CHANGES AND ITS EFFECT ON DETERRENT
Question. To what degree would penalty changes to audit policy
would materially diminish the deterrent effect of the Agency's strong
and vigorous enforcement program? What is the basis for this option?
Answer. EPA has a limited number of resources. Together, a strong
enforcement program and the Audit Policy provide a deterrent for
noncompliance and an incentive for compliance. Elimination of all
penalties under the Audit Policy would eliminate the incentive for
compliance by providing a competitive advantage to those companies that
do not comply with federal environmental requirements and then later
elect to come into compliance without any penalty for the delay in
compliance time.
EXISTING CHEMICALS: FISCAL YEAR 1999--FISCAL YEAR 2000 RESOURCES
Question. At what level, in terms of FTEs and dollars, did the
agency fund the Existing Chemical Data, Screening, Testing and
Management key program in the fiscal year 1999 budget request, fiscal
year 1999 operating plan, fiscal year 1999 actuals, fiscal year 2000
budget request, fiscal year 2000 proposed operating plan, and fiscal
year 2001 budget request. Provide the information by NPM,
appropriation, goal, objective sub-objective, office or region, and
activity.
Answer. The information requested is presented in the accompanying
spreadsheet.
EXISTING CHEMICALS KEY PROGRAM
[Dollars in thousands]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year 1999 Fiscal year 2000 Fiscal year 2000
------------------------------------------------------------------------------------ Pres. budget
Existing Chemicals key program Activities Pres. budget \1\ Operation plan \2\ Pres. budget Operating plan --------------------
------------------------------------------------------------------------------------
FTE Dollars FTE Dollars FTE Dollars FTE Dollars FTE Dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
OPPTS total (EPM).............................. 125.1 $12,491.2 122.1 $14,225.3 120.4 $23,045.6 118.5 $20,394.5 117.4 $24,412.4
HQ Total....................................... 125.1 $12,491.2 122.1 $14,225.3 117.4 $22,779.0 118.5 $20,394.0 114.4 $24,133.2
========================================================================================================
Chemical Right to Know......................... ....... .......... ....... $1,250.0 37.0 $14,114.1 37.0 $11,490.0 34.0 $14,487.8
Other Existing Chemicals activities............ 125.1 $12,491.2 122.1 $12,975.3 80.4 $8,664.9 81.5 $8,904.0 80.4 $9,645.4
Regions: Chemical Right to Know ....... .......... ....... .......... 3.0 $266.6 ....... $0.5 3.0 $279.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Fiscal year 1999 President's Budget key program totals as displayed in fiscal year 2000 President's Budget submission.
\2\ Agency data not available at objective level for fiscal year 1999 actual.
Note: Key Program--Existing Chemicals.
EXISTING CHEMICALS FUNDING REDUCTIONS
Question. Analysis of the Agency's budget requests indicates that
EPA reduced funding to the Existing Chemical Data, Screening, Testing
and Management key program in the fiscal year 1999 operating plan and
the fiscal year 2000 proposed operating plan from the higher levels
contained in each year's budget request. Why did the Agency make
reductions in Existing Chemical Data, Screening, Testing and Management
from each of these budget requests to the following operating plans and
what impact did it have on the activity levels of the program?
Answer. EPA found it necessary to make significant budget cuts in
fiscal year 1999 as a result of across-the-board reductions made by
Congress. The Congressional reductions led to cuts in a variety of
programs, including the Existing Chemical Data, Screening, Testing and
Management key program. The fiscal year 2000 requested and enacted
amounts for Existing Chemicals was higher than in the previous year,
primarily because the Agency requested $14 million for the Chemical
Right-to-Know initiative. Nevertheless, in fiscal year 2000, the Agency
was constrained to reduce other parts of the the Existing Chemical
program, as well as the Chemical Right-to-Know Initiative, as a result
of the general reductions in the appropriations.
The Agency attempted to reduce the impact of these cuts to the
extent possible by analyzing its Existing Chemicals program using the
principles of government reinvention to determine the most efficient,
publicly responsive, and cost-effective way to proceed. The Agency
concluded that the Chemical Right-to-Know (ChemRTK) Initiative offered
both the best return on investment and the greatest promise of
achieving the Existing Chemicals program's goals of protecting human
health and the environment, and adjusted its program activities
accordingly. The cooperative, voluntary nature of the program,
especially the HPV Challenge Program segment, appeared to offer an
excellent opportunity for government and industry to contribute as
partners, working in concert with other stakeholders, in a program
geared to providing near-term public access to a significant quantity
of essential health and safety information, and for the Agency to gain
data vital to its core risk assessment and risk management missions.
The program offered tangible benefits in terms of both time and cost
savings over attempting to use the traditional regulatory, adversarial
process to achieve the same ends. The net result is that the core
activities and mission of the Existing Chemicals program have
benefitted from the investment of resources in ChemRTK.
Within ChemRTK and the HPV Challenge, the Agency adjusted the
funding for specific activities according to their relative priority in
time. Thus, risk assessment and risk management activities, which
require the presence of data, were de-emphasized at the beginning of
the project in order to focus more attention on data development and
collection activities, which will provide the necessary information in
order to conduct the risk assessment work.
ENFORCEMENT PERFORMANCE GOALS/MEASURES: POLLUTANT REDUCTIONS
Question. An Agency performance goal for fiscal year 2001 is that
75 percent of concluded enforcement actions require environmental or
human health improvements such as pollutant reduction. Why does the
Agency's performance measure call for only 35 percent of concluded
enforcement actions to identify pollutant reductions?
Answer. The Agency Performance Goal for 2001 says: 75 percent of
concluded enforcement actions will require environmental or human
health improvements, such as pollutant reductions and/or changes in
practices at facilities. It is difficult to project in advance the
percentage of cases which will produce pollutant reductions. The 35
percent measure is a reasonable projection based on performance in
previous years.
ENFORCEMENT PERFORMANCE GOALS AND MEASURES: RISKS FACTORS TO DIFFERENT
POLLUTANTS
Question. Does the Agency apply any relative risk factors to the
different pollutants reduced by enforcement actions to determine the
degree of environmental improvement achieved by weight of pollutant
reduced? If so, how?
Answer. The Agency does not apply quantitative and/or relative risk
factors to the pollutants reduced by enforcement actions. Over the past
several years, EPA has recorded information on a range of environmental
improvements, such as the expected pollutant reduction and
modifications to industrial processes, resulting from Federal
enforcement actions. Because EPA has included actions requiring
pollutant reductions as an annual performance measure in fiscal year
2000 and fiscal year 2001, we have focused on improving the accuracy
and completeness of pollutant information related to concluded
enforcement actions. EPA plans to begin a project to address the manner
in which quantitative pollutant reduction/controlled amounts are
measured and reported for each media program, using standard pollutant
names, calculation methods and units of measure.
ENFORCEMENT PERFORMANCE GOALS/MEASURES: REGULATED POPULATIONS MEASURING
COMPLIANCE
Question. For which selected regulated populations is EPA measuring
compliance rates or other indicators of compliance?
Answer. EPA is currently completing its analyses of potential
regulated populations, violations within those populations, and the
number of random inspections needed to produce statistically valid
compliance rates. This analysis will be completed by July 1, 2000.
ENFORCEMENT PERFORMANCE GOALS/MEASURES: FISCAL YEAR 2000 BASELINE RATE
OF COMPLIANCE
Question. What is the fiscal year 2000 baseline rate of compliance
or other indicator of compliance for each of the selected regulated
populations?
Answer. The Agency will use the first year of statistically valid
compliance rates for each regulated population as a baseline against
which subsequent years will be compared.
enforcement performance goals/measures: fiscal year 1998, fiscal year
2000 and fiscal year 2001 improvements in use/handling of pollutants
Question. What was the number of concluded enforcement actions that
resulted in improvements in the use or handling of pollutants in fiscal
year 1998, fiscal year 2000 and expected in fiscal year 2001?
Answer. For fiscal year 1998 and fiscal year 1999, the percentage
of settled enforcement cases requiring various improvements by
facilities was 89 percent and 88 percent, respectively. Further, in
fiscal year 1998 and fiscal year 1999 respectively, 27 percent and 22
percent of these complying actions required the defendants to perform
either use reduction, industrial process changes, emission or disposal
changes, remediations or removals. Our target for these types of
improvements in fiscal year 2000 and fiscal year 2001 is 35 percent.
ENFORCEMENT PERFORMANCE GOALS/MEASURES: POLLUTANT REDUCTIONS
Question. What was the number of concluded enforcement actions that
resulted in improvements in facility management and information
practices in fiscal year 1998, fiscal year 2000 and expected in fiscal
year 2001.
Answer. For fiscal year 1998 and fiscal year 1999, the percentage
of settled enforcement cases requiring improvements in facility
management and information practices was 52 percent and 49 percent,
respectively. (It should be noted that settled enforcement cases
typically require multiple complying actions, so it would not be
accurate to claim that about half the settled cases required only
changes in facility management and information practices.) We have not
set specific targets for this type of improvement in fiscal year 2000
and fiscal year 2001.
ENFORCEMENT PERFORMANCE GOALS/MEASURES: LEVEL OF NON-COMPLIANCE
Question. What was the level of significant non-compliance
recidivism in each of the CAA, CWA, and RCRA programs in fiscal year
1998, fiscal year 2000 and expected in fiscal year 2001?
Answer. The tracking of significant non-compliance (SNC) recidivism
only began in fiscal year 1999; therefore the only data available for
this measure is for fiscal year 1999. In the Clean Air Act program, of
those SNCs that returned to compliance in fiscal year 1997, 30 percent
were again SNCs within the next two years. In the Clean Water Act
program, of those SNCs that returned to compliance in fiscal year 1997,
56 percent were again SNCs at some point within the next two years. In
the RCRA program, of those SNCs that returned to compliance in fiscal
year 1997, 17 percent were again SNCs at some point within the next two
years. (For CAA and the RCRA program, this measure only looks at the
inspected universe for the pool of potential repeat SNCs).
In fiscal year 2000, we will establish a firm baseline for this
measure, and in fiscal year 2001 our target is reducing SNC recidivism
in each program by 2 percentage points.
ENFORCEMENT PERFORMANCE GOALS/MEASURES: FISCAL YEAR 1998, FISCAL YEAR
2000 AND EXPECTED FISCAL YEAR 2001 IN PHYSICAL COMPLIANCE
Question. What was the number of facilities that returned to full
physical compliance in less than two years for each of the CAA, CWA,
and RCRA programs in fiscal year 1998, fiscal year 2000 and expected in
fiscal year 2001?
Answer. The tracking of significant non-complier (SNC) duration
began in fiscal year 1999. In the Clean Air Act (CAA) program, of those
SNCs (High Priority Violators) that returned to compliance in fiscal
year 1999, 258 did so in more than two years; 278 did so in 1 to 2
years; 226 did so in 6 months to one year; and 417 did so in less than
6 months (In the CAA program, a facility loses its SNC status only when
a formal order is issued and all penalties have been paid).
In the Clean Water Act (CWA) program, of those SNCs that returned
to compliance in fiscal year 1999, 116 did so in more than two years;
129 did so in 1 to 2 years; 134 did so in 6 months to one year; and 570
did so in less than 6 months (In the CWA program in order to be
considered a non-SNC a facility does not have to come into full
physical compliance. A formal order can take a facility out of SNC).
In the RCRA program, of those SNCs that returned to compliance in
fiscal year 1999 53 did so in more than 2 years; 53 did so in 1 to 2
years; 76 did so in 6 months to a year; 184 did so in less than 6
months (In RCRA, a facility is no longer considered a SNC if it has
returned to full physical compliance or it is on a compliance
schedule.).
In fiscal year 2000, we will establish a firm baseline for this
measure, and in fiscal year 2001 our target is increasing the number of
facilities in each program returning to full compliance by 2 percentage
points.
ENFORCEMENT PERFORMANCE GOALS/MEASURES: INSPECTIONS AND OUTPUT MEASURES
Question. All performance measures in the fiscal year 2001
congressional justification for inspections and investigations are
output measures. Why is this still the case? What efforts are underway
to develop outcome performance measures for inspections and
investigation activities?
Answer. In developing an improved set of enforcement and compliance
assurance performance measures, the Office of Enforcement and
Compliance Assurance needed to limit the amount of new information
reported by Regional offices to headquarters. Our first priority was to
collect outcome information about compliance assistance, enforcement
actions, and disclosures under the EPA audit policy. Outcome measures
for inspections were viewed as a subsequent task. Through a number of
pilots underway in Regional and headquarters-operated compliance
inspection programs, the Agency is testing ways to collect information
on the outcomes of inspection and investigation activities. EPA
inspectors participating in these pilots are recording inspection-
specific information related to compliance assistance, deficiencies
observed, specific actions taken to respond to deficiencies, and other
beneficial actions taken in response to the inspection. For example,
based on one pilot involving 24 inspections:
--Compliance assistance was provided in 21 of the 24 inspections;
--Twenty-one inspections identified deficiencies;
--In seventeen inspections, corrective actions were taken by
facility; and
--In eight inspections, other beneficial actions were taken by
facility.
During fiscal year 2000 the Agency will continue to run the pilot
projects to determine the value of collecting this type of information.
In fiscal year 2001, the Agency will review the data and determine
whether the data collection for inspection outcomes should be
implemented on a national basis.
ENFORCEMENT PERFORMANCE GOALS/MEASURES: INSPECTIONS CONTRIBUTES TO
IMPROVED RATES OF COMPLIANCE
Question. On what basis does the Agency believe its inspection
presence contributes to improved rates of compliance and how did the
Agency determine this belief including measure the degree of
improvement?
Answer. The Agency believes that compliance monitoring inspections
are an essential element of a compliance assurance program, along with
compliance assistance, incentives for self-policing, and enforcement
targeted toward important environmental risks and patterns of non-
compliance.
It is not possible to isolate the effects of inspections (or any of
the other elements) on rates of compliance. Instead, the Agency will
rely on rates of compliance to measure the overall results of using all
these elements. In addition, results from individual elements (e.g.,
pollutant reductions from enforcement cases) will also be used to
measure program outcomes.
ENFORCEMENT PERFORMANCE GOALS/MEASURES: INSPECTIONS IMPROVEMENTS AT
FACILITIES
Question. On what basis does the Agency believe individual
inspections result in changes and improvements at specific facilities
and how did the Agency determine this belief including measure the
degree of improvement?
Answer. The Agency believes that compliance inspections produce a
broad range of changes and improvements at the specific facilities
inspected and in the regulated community in general. Compliance
inspections:
--identify potential risks to human health and the environment;
--lead to on-the-spot or subsequent correction of violations;
--provide a specific deterrent effect on inspected facilities;
--provide a general deterrent effect on other facilities in the same
industry sector or geographic area; and
--complement citizen efforts to monitor compliance.
As mentioned in response to a previous question, the Agency has
been conducting pilots to begin documenting outcomes and results from
inspections, and may begin collecting this information on a national
basis if resources permit.
ENFORCEMENT PERFORMANCE GOALS/MEASURES: INSPECTION/INVESTIGATIONS--
CHANGES IN ENVIRONMENTAL AND HUMAN HEALTH
Question. In what ways might the Agency measure how the number and
manner of Agency inspections and investigations bring about environment
and human health improvements?
Answer. Measuring how inspections and investigations ``bring about
environmental and human health improvements'' can be done in two ways.
First, by collecting information from inspectors about outcomes of
inspections and investigations we may learn that pollutant reductions
and other improvements are occurring. There are several pilot projects
underway or planned to collect and analyze this kind of information.
Second, by collecting information about improvements that result from
enforcement actions, we are measuring how inspections and
investigations bring about such improvements since cases are based on
inspections and investigations.
For example, the compliance investigations that the Agency has
conducted in the electric utility and petroleum refinery sectors have
uncovered serious non-compliance. A number of major enforcement actions
have resulted from these investigations and on-going investigations may
uncover further non-compliance. Most of the non-compliance identified
through the investigations should result in measurable environmental
improvements, e.g., reduction of air pollutants such as nitrogen
oxides, particulate matter, and sulphur dioxides.
ENFORCEMENT PERFORMANCE GOALS/MEASURES: INSPECTIONS/INVESTIGATIONS--
CHANGES IN BEHAVIOR
Question. In what ways might the Agency measure how the number and
manner of Agency inspections and investigations bring about changes in
behavior in the regulated community?
Answer. Measuring how inspections and investigations ``bring about
changes in behavior in the regulated community'' can be done in two
ways. First, by collecting information from inspectors about the
outcomes of inspections and investigations, we may learn that behavior
changes are occurring. There are several pilot projects underway or
planned to collect and analyze this kind of information. Second, by
collecting information about behavior changes resulting from
enforcement actions, we are measuring how inspections and
investigations bring about such changes since cases are based on
inspections and investigations.
ENFORCEMENT PERFORMANCE GOALS/MEASURES: STATUS OF REGION II PILOT
PROJECT
Question. What is the status of the Region II pilot project to
document results achieved through inspections? Will the Agency
implement the pilot for the entire national program?
Answer. In fiscal year 2000, EPA Region II is piloting a tool to
better manage inspection resources. The Region is currently collecting
information on how inspections are targeted and the results of those
inspections. The results of the pilot will be used by the Region to
determine if there are more effective targeting strategies for
compliance inspections and whether there is a more efficient way to
manage the overall compliance inspection program.
In fiscal year 2001, EPA plans to review the results of the Region
II pilot as well as the results of other pilot projects to collect
inspection outcome data currently underway in select Regional and
Headquarters programs. A decision will then be made about whether to
expand the used of the Region II targeting pilot and/or the other
pilots designed to learn more about inspection outcomes.
ENFORCEMENT PERFORMANCE GOALS/MEASURES: NUMBER OF QUALITY MANAGEMENT
PLANS (QMS)
Question. How many Quality Management Plans (QMS) will the
enforcement program develop and implement for major systems in fiscal
year 2000, which major systems will have plans, and which major systems
will still require plans?
Answer. In fiscal year 2000, no additional work will be undertaken
on the Office of Enforcement and Compliance Assurance (OECA)'s Quality
Management Plan (QMP) for its data systems. In fiscal year 1998, OECA
initiated evaluations of its information systems under its Quality
Management Plan. To date, OECA has completed a baseline data quality
audit, data quality objectives, quality assurance project plans, and
standard operating procedures for the National Compliance Data Base and
the Resource Conservation and Recovery Information System, and data
quality objectives for the Permit Compliance System. No work has been
completed to date on the AIRS Facility System, the Enforcement Docket,
and the Safe Drinking Water Information System.
ENFORCEMENT PERFORMANCE GOALS/MEASURES: QMS DATA SYSTEMS COMPLETED IN
FISCAL YEAR 2001
Question. For which systems will the enforcement program complete
QMS in fiscal year 2001?
Answer. The Office of Enforcement and Compliance Assurance (OECA)
will use its data modernization efforts to address and resolve the
challenging problem of improving data quality. Work on additional
portions of the OECA Quality Management Plan (QMP) in the fiscal year
2001 time frame will be considered in coordination with the effort to
modernize OECA data systems and integrate enforcement and compliance
data. Modernization and integration is being undertaken as a part of
the Agency's Integrated Information Initiative. Additional work on the
QMPs may well be delayed as resources are diverted to modernization in
fiscal year 2001.
ENFORCEMENT PERFORMANCE GOALS/MEASURES: ASSISTANCE AND TRAINING
ACTIVITIES
Question. What outcome performance measures could the enforcement
program develop for its capacity building activities to measure
environmental improvements resulting from the assistance and training
activities?
Answer. The capacity building measure was intentionally designed to
only count outputs (i.e., training courses delivered, etc.). Measuring
the outcomes or environmental results of capacity building efforts
would require extensive new reporting by state, local, and tribal
governments who use EPA training and other capacity building efforts to
produce outcomes.
ENFORCEMENT PERFORMANCE GOALS/MEASURES: ENVIRONMENTAL IMPROVEMENTS FROM
COMPLIANCE INCENTIVES
Question. While the performance measure for the compliance
incentives program measures the behavior of the regulated community,
there is no measurement for environmental or human health improvements.
What performance measures could the enforcement program develop to
determine the environmental improvements coming from the compliance
incentives program.
Answer. OECA has recently started tracking environmental or human
health improvements resulting from self disclosures in the same manner
that such improvements are tracked for enforcement cases. We are still
in the implementation stages of developing a reporting system and
providing guidance to EPA Regional Offices. However, once the
implementation process is complete, we will be able to provide full
results from the self-disclosures similar to those currently reported
for enforcement cases, such as pollutants reduced and changes in
facility practices.
ENFORCEMENT PERFORMANCE GOALS/MEASURE: NUMBER OF ENTITIES VOLUNTARILY
DISCLOSING VIOLATIONS
Question. Why does the Agency not include the number of entities
voluntarily disclosing violations of environmental violations (other
than paperwork or record keeping requirements)?
Answer. The Agency does currently report (e.g., in EPA's fiscal
year 1999 Annual Performance Report) the number of entities which
voluntarily elect to use EPA's audit policy to disclose and correct any
or all violations disclosed under the policy.
ENFORCEMENT PERFORMANCE GOALS/MEASURE: 10 COMPLIANCE ASSISTANCE OUTCOME
MEASURES PROJECTS
Question. Describe the 10 compliance assistance outcome measurement
projects for which information is being collected to assess the impacts
of compliance assistance. What is the status of each of those efforts?
Answer. Below is a table that describes each project and provides
the status. Each of these projects will collect data on OECA's
compliance assistance outcome measures which fall into three
categories: (1) improved awareness/understanding of regulatory
requirements; (2) regulatory and non-regulatory behavioral changes
(e.g. getting a permit, conducting an audit); (3) environmental and
human health improvements. The various projects will collect the data
for these measures through surveys, on-site revisits and database
reviews.
----------------------------------------------------------------------------------------------------------------
Region Project Summary Measurement Methodology Status
----------------------------------------------------------------------------------------------------------------
I................................... Evaluation of the New Mailed follow-up Survey Survey sent out 1st
England Environmental to 14,000 recipients Quarter fiscal year
Assistance Team's Auto of auto service 2000 results currently
Service Compliance compliance assistance. being summarized.
Assistance Program,
which consists of
written assistance
material, workshops and
on-site assistance.
II.................................. Evaluation of the 1. Develop a baseline 1. Baseline underway.
effectiveness of the of the compliance rate 2. Follow-up by 3Q
Dry Cleaning Compliance and perc alternative 2000.
Assistance Program. use among dry cleaners
in NYC using data from
inspections and
compliance assistance
visits that were
conducted in to date.
2. Follow-up surveys
sent to those
participating in
compliance assistance
program..
III................................. Evaluation of Clean Air Phone Survey to 100 1. 40 percent response
Act Risk Management attendees of the rate. 2. 68 percent of
Plan Compliance workshop. facilities made
Assistance Workshops. changes as a result of
the workshop.
IV.................................. NPMS Pilot Project: A. Compliance Baseline A. Done. B. Done. C. 3Q
Charleston CBEP for 10 facilities (out 2000.
Project: Developing of 150 total). B.
workshops/seminars/ Follow-Up to Baseline
training and compliance through on-site
guides and on-site inspections after
visits. Bulk of assistance provided.
assistance conducted by C. Interim Report on
SC DHEC. Primary form Results.
of assistance is on
site. Assistance is
provided to primarily
Auto Repair and Paint
Body Shop businesses.
V................................... SDWA Project with the A. Letters sent to 3 A. Done. B. Done. C.
Department of Interior: National Parks to End of 2nd Q. D. Mid-
Source Water outline process for 3rd Q
Assessments for info gathering. B.
groundwater sources on Follow-up site visits
National Park Service that included
Lands. Assist States of providing assistance.
Minnesota, Indiana, and C. Summary report on
Wisconsin making assessments that may
susceptibility be used to develop
determinations for management education
water supplies. and outreach materials
for other Federal
Facility compliance
assistance visits. D.
Surveys to Park
Service Lands visited.
VI.................................. NPMS Pilot: Educate A. Compliance Manifest Completed. 150 surveys
Maquiladora industries Baseline using RCRIS mailed out, 26
through outreach and HAZTRAKS. B. response. 16 percent
seminars on their Survey seminar response rate. a. 96
hazardous waste participants in mid- percent felt more
environmental May of 1999. C. aware and 60 percent
management obligations. Section 3007 Request had a better
Seminars were conducted to determine changes understanding. b. 58
in July and August of in manifest baseline. percent made changes
1998. (on hold due to in env. practices and
contract problems) D. 50 percent made a
Final Report on physical change. c. 42
Results. percent reduced waste.
VI.................................. Offer compliance A. Compliance Baseline. B. Completed. 123
assistance to the Region has an existing surveys mailed out; 33
Maritime industry at a baseline. B. Follow-up percent response rate.
conference in August survey to industry a. 93 percent felt
1998.. that attended the more aware and 85
conference C. Post- percent had a better
Compliance Assistance understanding. b. 63
Baseline through percent made changes
follow-up inspections in env. practices, 29
to an industry sample. percent installed
(7 or 8 already pollution control
underway, facilities equipment, and 71
that attended the percent made a
workshop). D. Final physical change. c. 24
Report on Results. percent reduced waste.
C. Based on follow up
inspections,
noncompliance dropped
from 33 percent to 12
percent.
VII................................. EPCRA/TRI Release A. Follow-up survey to A. 50 percent response
Inventory Project. industries that rate. 58 percent of
Conducted four attended workshops. B. those responding felt
workshops/seminars/ Follow-up survey to that the workshops
training and provide industries in specific helped them to
compliance assistance SIC codes that did not determine if their
materials. These one- attend workshops. C. facility was subject
day workshops were Analysis of Post- to EPCRA reporting
conducted in April, Compliance Assistance requirements. 52
1999 and were sponsored Baseline through percent felt the
by EPA, Region 7 and review of Form Rs information they
cosponsored by Local filed. D. Final Report received helped
Emergency Planning on Results. improve the way they
Committees. Primary manage records and
assistance involves determine emissions
instruction on estimates and off-site
completing Form R as transfers of toxic
required under Section substances when
313 of EPCRA. completing Form R. B.
Assistance is provided 1Q 2000 C. 3Q 2000 D.
to industries listed by 3Q 2000.
certain Standard
Industrial Code (SIC)
code that meet
reporting requirements
of EPCRA, Section 313.
Also includes seven new
industry sectors.
VIII................................ The overall goal of this The Region 8 project 1. Determination of
project is to identify, calls for taking Case media/sector/
measure and compare the Conclusion information geographic area (2nd
most effective and and reporting it as quarter 2000). 2.
efficient approaches to environmental outputs Ensure consistency/tie-
motivating facilities and outcomes (in in to NPMS measures
to achieve or exceed addition to the (2nd quarter 2000). 3.
compliance, and the ``traditional'' Focus groups with
result to the enforcement inspectors to test
environment. This is to activities). Region 8 ability to measure
be accomplished by is working with the activities (2nd
developing measures for State of Colorado to quarter 2000). 4.
the various activities identify the specific Incorporation into
of enforcement media, measurements Region VIII CATS
(pollution prevention, and reports that will database.
compliance assistance most effectively
activities, and other present and reflect
``non-traditional compliance assistance
activities) and activities. The
incorporating these selected measures and
measures into the facilities will need
regional inspection to take into
case conclusion data consideration already
sheets (CCDS). scheduled inspections
in Region 8 states.
IX.................................. Compliance Assistance A. Compliance A. 1Q 2000. B. 1Q 2000.
Outreach Materials for assistance baseline C. 3Q 2000.
MACT degreaser standard. from site visits by
Bay Area Resources
Board and compliance
reports and permits
submitted to BARD and
EPA. B. On-site Pre-
workshop ``test of
workshop participants
current knowledge. C.
On-site Post-workshop
``test of knowledge
gained during the
workshop.
X................................... 1. Evaluation of EPA 1. Survey of workshop 1. Results in house
112(r) workshops. participants at 112(r) workshops found
completion of 98 percent more aware
workshops. as result of workshop;
16 percent will reduce
chemical inventories;
38 percent will
increase p2; 62
percent will increase
emergency response
measures; 19 percent
increase in # of risk
management plans
submitted.
----------------------------------------------------------------------------------------------------------------
ENFORCEMENT PERFORMANCE GOALS/MEASURE: STATUS OF NATIONAL PERFORMANCE
MEASURES STRATEGY
Question. Describe the status of the National Performance Measures
Strategy and implementation of any remaining measures.
Answer. Fiscal year 2000 will be the first year that OECA will be
reporting results for all of the measures from the NPMS Profile. These
results will be available in the second quarter of fiscal year 2001.
WETLANDS/CWAP: LEVEL OF FUNDING
Question. At what level, in terms of FTE and dollars, did the
Agency fund the Wetlands (CWAP) key program in the fiscal year 1999
budget request, fiscal year 1999 operating plan, fiscal year 1999
actuals, fiscal year 2000 budget request, fiscal year 2000 proposed
operating plan, and fiscal year 2001 budget request. Provide the
information by NPM, appropriation, goal, objective, sub-objective,
office or region, and activity.
Answer. Agency funding of the Wetlands key program is detailed
below.
OFFICE OF WATER \1\
------------------------------------------------------------------------
Fiscal year Dollars FTE
------------------------------------------------------------------------
1999 Budget Request............................ $17,489,400 158.6
1999 Operating Plan............................ $15,694,900 150.5
2000 Budget Request............................ $18,124,500 164.6
2000 Proposed Operating Plan................... $15,730,000 150.3
2001 Budget Request............................ $17,315,200 149.1
------------------------------------------------------------------------
\1\ Appropriation: EPM; Goal 2: Clean and Safe Water; Objective 2:
Conserve and Enhance Nation's Waters.
WETLANDS/CWAP: REDUCTIONS IN FISCAL YEAR 1999 OP AND FISCAL YEAR 2000
PROPOSED OP
Question. Analysis of the Agency's budget requests indicates that
EPA reduced funding to the Wetlands (CWAP) key program in the fiscal
year 1999 operating plan and the fiscal year 2000 proposed operating
plan from the higher levels contained in each year's budget request.
Why did the Agency make reductions in Wetlands (CWAP) from each of
these budget requests to the following operating plans and what impact
did it have on the activity levels of the program?
Answer. Reductions to wetlands activities resulted from the
requirement to absorb the general reductions and congressional earmarks
included in the fiscal year 1999 and fiscal year 2000 Environmental
Programs and Management appropriation. Impacts of the wetlands cuts
included diminished support for monitoring and assessment of the extent
and health of the nation's wetlands; reduced funding for outreach and
education on wetlands protection issues; and elimination of funding for
the Five-Star Wetlands and Stream Corridor Assistance Grants.
GRANTS MANAGEMENT: NON-PROFIT RECIPIENTS
Question. How many different non-profit recipients received new
non-construction grant awards in fiscal year 1999?
Answer. EPA issued new non-construction grant awards to 881
different non-profit recipients in fiscal year 1999.
GRANTS MANAGEMENT: DOLLAR AMOUNT OF NON-PROFIT AWARDS
Question. How many dollars did the Agency award to non-profit
recipients in non-construction grants in fiscal year 1999?
Answer. The Agency awarded $252,937,107 to nonprofit recipients in
fiscal year 1999.
grants management: top 20 non-profit grant recipients number of awards
Question. List the top twenty non-profit EPA grant recipients by
number of awards in fiscal year 1999. Provide also the number of awards
and total dollar amount awarded.
Answer. The following table contains the top twenty non-profit EPA
grant recipients in fiscal year 1999 by the number of awards including
the number of wards and total dollar amount awarded.
FISCAL YEAR 1999 TOP NON-PROFIT GRANT RECIPIENTS
[By Number of Awards]
------------------------------------------------------------------------
No. of
Rank Recipient City/State Dollars \1\ Awards \1\
------------------------------------------------------------------------
1 NATIONAL OLDER WASHINGTON, DC... $21,293,303 122
WORKER CAREER
CENTER
2 NATIONAL CAUCUS/ WASHINGTON, DC... $7,541,181 71
CTR ON BLACK
AGED, INC
3 NATIONAL SENIOR SILVERSPRING, MD. $9,829,653 55
CITIZEN EDUC. &
RES. CTR
4 NATIONAL ASIAN SEATTLE, WA...... $5,916,381 50
PACIFIC CENTER ON
AGING
5 NATIONAL PASADENA, CA..... $5,322,630 32
ASSOCIATION FOR
HISPANIC ELDERLY
6 ENVIRONMENTAL BOSTON, MA....... $6,892,839 31
CAREERS
ORGANIZATION
7 NATIONAL ACADEMY WASHINGTON, DC... $3,550,282 23
OF SCIENCE NRC
8 NATIONAL COUNCIL WASHINGTON, DC... $3,423,156 23
ON AGING, INC
9 RESEARCH TRIANGLE RESEARCH TRIANGLE $3,265,787 14
INSTITUTE PARK, NC.
10 INTERNATIONAL CITY/ WASHINGTON, DC... $2,232,286 12
COUNTY MGMT ASSOC
11 ENVIRONMENTAL LAW WASHINGTON, DC... $1,235,876 12
INSTITUTE
12 NATIONAL SAFETY ITASCA, IL....... $952,079 12
COUNCIL
13 NATIONAL WASHINGTON, DC... $967,176 10
ASSOCIATION OF
COUNTIES
14 NATIONAL DENVER, CO....... $726,272 10
CONFERENCE OF
STATE
LEGISLATURES
15 COUNCIL OF STATE LEXINGTON, KY.... $389,569 10
GOVERNMENTS
16 INTER TRIBAL PHOENIX, AZ...... $624,029 9
COUNCIL OF
AR1ZONA, INC
17 NEBRASKA LINCOLN, NE...... $346,388 9
GROUNDWATER
FOUNDATION
18 SOCIETY FOR OKLAHOMA CITY, OK $227,075 9
APPLIED
ANTHROPOLOGY
19 NORTHEAST STATES BOSTON, MA....... $2,438,494 8
FOR COORDINATED
AIR
20 GLOBAL ENVIRONMENT ANNANDALE, VA.... $1,337,853 8
& TECHNOLOGY FDN
------------------------------------------------------------------------
\1\ Dollars and Awards include increase amendments to existing
grants as well as new grants made in fiscal year 1999.
Question. List the top twenty nonprofit EPA grant recipients in
fiscal year 1999 in terms of amount of funds awarded. Provide also the
number of awards and total dollar amount awarded.
Answer. The following table contains the top twenty non-profit EPA
grant recipients in fiscal year 1999 by amount of funds awarded
including the number of awards and total dollar amount awarded.
FISCAL YEAR 1999 TOP NON-PROFIT GRANT RECIPIENTS
[By Number of Awards]
------------------------------------------------------------------------
No. of
Rank Recipient City/State Dollars \1\ Awards \1\
------------------------------------------------------------------------
1 NATIONAL OLDER WASHINGTON, DC... $21,293,303 122
WORKER CAREER
CENTER
2 BORDER EL PASO, TX...... $10,000,000 1
ENVIRONMENTAL
COOPERATION COMM
3 NATIONAL SENIOR SILVER SPRING, MD $9,829,653 55
CITIZEN EDUC. &
RES. CTR
4 NATIONAL RURAL DUNCAN, OK....... $8,000,006 3
WATER ASSOCIATION
5 NATIONAL CAUCUS/ WASHINGTON, DC... $7,541,181 71
CTR ON BLACK
AGED, INC
6 ENVIRONMENTAL BOSTON, MA....... $6,892,839 31
CAREERS
ORGANIZATION
7 BATTELLE MEMORIAL COLUMBUS, OH..... $6,572,500 3
INSTITUTE
8 ONONDAGA LAKE SYRACUSE, NY..... $6,243,500 1
CLEANUP CORP
9 NATIONAL ASIAN SEATTLE, WA...... $5,916,381 50
PACIFIC CENTER ON
AGING
10 WEST VIRGINIA MORGANTOWN, WV... $5,798,270 7
UNIVERSITY
RESEARCH CORP
11 UPPER SAVANNAH GREENWOOD, SC.... $5,325,000 1
COUNCIL OF
GOVERNMENTS
12 NATIONAL PASADENA, CA..... $5,322,630 32
ASSOCIATION FOR
HISPANIC ELDERLY
13 AMERICAS CLEAN WASHINGTON, DC... $5,185,000 2
WATER FOUNDATION
14 AMERICAN WATER DENVER, CO....... $4,989,000 4
WORKS ASSOC.
RES.FOUND
15 NATIONAL ACADEMY WASHINGTON, DC... $3,550,282 23
OF SCIENCE NRC
16 NATIONAL COUNCIL WASHINGTON, DC... $3,423,156 23
ON AGING, INC
17 NATIONAL JEWISH DENVER, CO....... $3,412,500 1
MEDICAL &
RESEARCH CTR
18 RESEARCH TRIANGLE RESEARCH TRIANGLE $3,265,787 14
INSTITUTE PARK, NC.
19 NATIONAL FISH & SAN FRANCISCO, CA $3,003,279 2
WILDLIFE
FOUNDATION
20 WATER ENVIRONMENT ALEXANDRIA, VA... $2,925,000 1
RESEARCH
FOUNDATION
------------------------------------------------------------------------
\1\ Dollars and Awards include increase amendments to existing
grants as well as new grants made in fiscal year 1999.
GRANTS MANAGEMENT: BENCH AND ON-SITE REVIEWS MEASUREMENT
Question. Why does the Agency not measure the number of bench
reviews or on-site reviews conducted in order to gauge the activities
of the grants management program?
Answer. As part of the Grantee Compliance Assistance Initiative,
all Grants Management Offices are required to report quarterly the
number of on-site reviews and bench reviews. (We assume the definition
of ``bench reviews'' is the same as ``desk reviews'' which are an
evaluation performed in-house at the Federal Grants Office largely, if
not, entirely, from the desk. The Grants Management Office will perform
an evaluation of the recipient's procurement system, property,
financial and general administrative system; communicate with the
project officer and the recipient; and obtain documentation, as
needed.) The Agency is currently expanding the Initiative to establish
an Agency-wide overview of post-award management and outreach
activities. In addition to the Grants Offices, Headquarters and
Regional Program Offices will be required to identify and report on
post-award activities. The Initiative will establish national goals;
and identify and document post-award activities, namely on-site
reviews. The Agency also will develop a database to track planned and
actual grantee on-site visits performed by the Grants Management
Offices to help avoid duplication and to help ensure adequate
coordination across the Agency.
GRANTS MANAGEMENT: FISCAL YEAR 1999 BENCH REVIEWS BY REGION
Question. How many bench reviews did grants management offices
conduct in fiscal year 1999? List by Region.
Answer. The Grants Administration Division is defining ``bench
reviews'' as ``desk reviews''. (We assume the definition of ``bench
reviews'' is the same as ``desk reviews'' which are an evaluation
performed in-house at the Federal Grants Office largely, if not,
entirely, from the desk. The Grants Management Office will perform an
evaluation of the recipient's procurement system, property, financial
and general administrative system; communicate with the project officer
and the recipient; and obtain documentation, as needed.) The Grants
Management Offices conducted a total of 21 desk reviews in fiscal year
1999. Please see the following chart for a list of fiscal year 1999
desk reviews by Region.
Grants Management Office Desk Reviews
Region 1................................................................
Region 2.......................................................... 2
Region 3.......................................................... 5
Region 4................................................................
Region 5................................................................
Region 6.......................................................... 9
Region 7................................................................
Region 8.......................................................... 5
Region 9................................................................
Region 10.........................................................
Headquarters............................................................
______
TOTAL....................................................... 21
Active grants management involves many types of activities, desk or
``bench review'' being just one of these activities (some Grants
Management Offices, Regions 1 and 4, for example, allocate significant
amounts of time providing pre and post award workshops and training for
grantees. In fiscal year 1999 for example, the Grants Management
Offices nation-wide, conducted workshops and training sessions for 671
grantees).
GRANTS MANAGEMENT: FISCAL YEAR 1999 ON-SITE REVIEWS BY REGION
Question. How many on-site reviews did grants management offices
conduct in fiscal year 1999? List by Region.
Answer. The following is a listing of on-site reviews conducted by
grants management offices in fiscal year 1999.
Grants Management Office On-Site Reviews
Region 1.......................................................... 26
Region 2.......................................................... 19
Region 3.......................................................... 6
Region 4.......................................................... 1
Region 5.......................................................... 5
Region 6.......................................................... 1
Region 7.......................................................... 5
Region 8.......................................................... 7
Region 9.......................................................... 50
Region 10......................................................... 4
Headquarters...................................................... 20
______
TOTAL....................................................... 144
GRANTS MANAGEMENT: SINGLE AUDIT REPORTS
Question. How many Agency grants required single audit reports in
fiscal year 1999 based on the level of funds received by EPA? On what
does the Agency base this conclusion.
Answer. Approximately 608 grantees received over $300,000 in grants
from EPA in fiscal year 1999. This number is based on funds awarded in
fiscal year 1999 and not the expenditures. Please note, the Single
Audit Act requirement is based on total expenditures from all Federal
Agencies and not award data from a single Agency.
GRANTS MANAGEMENT: SINGLE AUDIT REPORTS CONDUCTED BY GRANTEES
Question. How many single audit reports were conducted by EPA
grantees in fiscal year 1999? On what does the Agency base this
conclusion?
Answer. Based on the Federal Audit Clearinghouse Data Query, to
date, 325 reports were received on EPA grantees in fiscal year 1999.
Under the Single Audit Act, the Bureau of Census is responsible for the
collection of Single Audit Reports from recipients receiving Federal
Assistance and for determining whether the reports are acceptable or
unacceptable. Grantees are allowed six months after the close of the
fiscal year to submit their Single Audit.
grants management: assistance agreement audit fiscal year 2001 finding
Question. Why is the Agency proposing reduced funding for the
Assistance Agreement Audits key program in fiscal year 2001 when the
number of assistance agreements awarded by the EPA has exploded over
the last five years?
Answer. The decrease is attributed to: (1) the closeout of the
OIG's construction grant strategy; (2) the completion of the first
cycle of OIG's Clean Water State Revolving Fund (CWSRF) Strategy; and
(3) the implementation of the OIG's Assistance Agreement Issue Area
Plan. In fiscal year 1999, the OIG successfully completed its
Construction Grant Audit Strategy. In March 1994, the OIG developed a
strategy, using a risk-based approach, where we determined that 414
grants in the amount of $6.5 billion would be subject to audit. As of
January 2000, only 18 projects are still under consideration for audit.
The OIG CWSRF Audit Strategy included resources to review state
financial statement audits conducted by other parties or to perform
these audits ourselves. Several states plan to conduct these audits in
the future rather than have the OIG conduct them, thus reducing the OIG
resources requirement.
Finally, the OIG has initiated a major new audit effort of EPA's
management and oversight of assistance agreements with its Assistance
Agreement Issue Area Plan. This plan focuses on EPA's systems to manage
and administer its assistance agreements and expands OIG audit coverage
of $2.4 billion awarded to state, local governments, tribes,
universities, and non-profit organizations. Prior OIG audits focused on
individual regions, programs and recipients. The implementation of our
Assistance Agreement Issue Area Plan will result in evaluating issues
nationally which also allows us to consolidate the OIG resource
requirement.
GRANTS MANAGEMENT
Question. At last examination, fewer than two percent of non-profit
grantees were subject to bench or on-site reviews conducting
transaction testing. Do the Agency's auditors believe this rate of
review is sufficient to ensure Agency funds are protected from
mismanagement or misuse of funds? What rate of audit is sufficient to
safeguard Agency funds?
Answer. Single Audits conducted in accordance with OMB Circular A-
133 provide the primary assurance that Federal funds are protected from
mismanagement or misuse. Non-Federal entities that expend $300,000 or
more in a year in Federal awards must have a single or program-specific
audit conducted for that year in accordance with the provisions of OMB
Circular No. A-133, Revised June 24, 1997, ``Audits of States, Local
Governments, and Non-Profit Organizations.'' An audit made in
accordance with A-133 must be in lieu of any financial audit required
under individual Federal awards. The scope of a Single Audit covers
three areas: (1) financial statements; (2) internal controls; and (3)
compliance with laws, regulations, and the provisions of contracts or
grant agreements that may have a direct and material effect on each of
its major programs. Any additional audits must be planned and performed
in such a way as to build upon work performed by other auditors.
The OIG recently expanded this audit coverage of assistance
agreements with a new audit effort. On March 31, 2000, we issued our
Assistance Agreement Issue Area Plan. This plan outlines a series of
audits designed to evaluate EPA's processes and systems to manage and
administer its assistance agreements. This will allow us to identify
systemic problems in both the financial and performance aspects of
assistance agreements and develop solutions that affect the entire
population of assistance agreements. Part of this issue area will
assess non-profits and we have recently begun that survey. With a non-
profit universe of more than 1700 agreements totaling more than $600
million, we believe this approach offers more potential to identify and
correct mismanagement and/or misuse than individually targeted
assistance agreement audits.
The expansion of audit coverage for assistance agreements consists
of single audits as well as Performance audits of EPA's Grants
Management. There are three ongoing surveys which are Non-competitive
grants, Oversight of non-profit grants, and Headquarters 40 Product
Accomplishments. Each of these surveys have a different amount of non-
profit grants that are being reviewed. They are as follow:
--Non-competitive Grants = 105 non-profit grant being reviewed
Oversight of non-profit grants = 50 non-profit grants being
reviewed
--HQ 40 Product Accomplishments = 48 non-profit grants being reviewed
Additionally, during fiscal 2000, the Agency plans to increase its
on-sight reviews of assistance recipients. The headquarters Grants
Administration Office (GAD) plans to perform 26 reviews of assistance
recipients (about 75 per cent of the reviews are of non-profit
organizations) of which seven have already been completed. The GAD
selects the recipients for review based on four criteria: (1) total
dollar value of EPA awards to the entity; (2) number of grants awarded
to the entity; (3) known problems; and (4) discussions with the grant
specialist. EPA's regional offices also perform on-site reviews of
grant recipients. These reviews provide additional assurance that
recipients are performing and federal funds are used appropriately.
LEAD RISK REDUCTION: FISCAL YEAR 1999--FISCAL YEAR 2000 RESOURCES
Question. At what level, in terms of FTEs and dollars, did the
agency fund the Lead Risk Reduction key program in the fiscal year 1999
budget request, fiscal year 1999 operating plan, fiscal year 1999
actuals, fiscal year 2000 budget request, fiscal year 2000 proposed
operating plan, and fiscal year 2001 budget request. Provide the
information by NPM, appropriation, goal, objective sub-objective,
office or region, and activity.
Answer. The information requested is presented in the accompanying
spreadsheet.
FISCAL YEAR 2001 PRESIDENT'S BUDGET BY ACTIVITY--LEAD RISK REDUCTION KEY PROGRAM AND STATE GRANTS FOR LEAD RISK REDUCTION KEY PROGRAM
[Dollars in thousands]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year 1999 Fiscal year 2000 Fiscal year 2001
----------------------------------------------------------------------------------------------------------------
Goal, Objective, Sub-objective, Pres Bud \1\ Op Plan \2\ Pres Bud Op Plan Pres Bud
Activity ----------------------------------------------------------------------------------------------------------------
FTE Dollars FTE Dollars FTE Dollars FTE Dollars FTE Dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
OPPTS TOTAL (EPM + STAG)......... 121.4 $30,640.9 117.4 $30,623.5 115.8 $2,8698.5 95.2 $2,6519.3 92.6 $27,285.4
================================================================================================================
EPM Total (HQ + Regions)......... 121.4 $16,928.7 117.4 $16,911.3 115.8 $14,986.3 95.2 $12,807.1 92.6 $13,573.2
Lead Risk Reduction Program:
Obj. 2--Reduce Lead Poisoning (HQ). 45.1 $11,046.6 43.0 $11,029.2 41.4 $8,915.3 44.6 $8,425.2 43.1 $9,076.2
Obj. 2--Reduce Lead Poisoning 74.4 $5,882.1 74.4 $5,882.1 74.4 $6,071.0 50.6 $4,381.9 49.5 $4,497.0
(REGIONS).........................
Grants to States for Lead Risk ....... $13,712.2 ....... $13,712.2 ....... $13,712.2 ....... $13,712.2 ....... $13,712.2
Reduction: Obj. 2--Reduce Lead
Poisoning (STAG)......................
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Fiscal year 1999 President's Budget key program totals as displayed in fiscal year 2000 President's Budget submission.
\2\ Agency data not available at objective level for fiscal year 1999 actual.
Note: Key Program--Lead Risk Reduction. Key Program--Grants to States for Lead Risk reduction.
LEAD RISK REDUCTION: FUNDING REDUCTIONS
Question. Analysis of the Agency's budget requests indicates that
EPA reduced funding to the Lead Risk Reduction key program in the
fiscal year 1999 operating plan and the fiscal year 2000 proposed
operating plan from the higher levels contained in each year's budget
request. Why did the Agency make reductions in Lead Risk Reduction from
each of these budget requests to the following operating plans and what
impact did it have on the activity levels of the program?
Answer. EPA's lead program reductions were the result of the
following actions:
1. EPA found it necessary to make significant budget cuts in fiscal
year 1999 as a result of across-the-board reductions made by Congress.
The Congressional reductions led to cuts in a variety of programs,
including lead risk reduction. The impacts of the lead program
reductions were felt most keenly in the areas of regulatory development
and program implementation.
2. EPA's policy is to not carry over Congressional Add-ons.
Therefore, OPPTS funding for lead program outreach activities in fiscal
year 2000 was reduced. The Agency was unable to continue funding a
cooperative agreement with the National Safety Council for public
education and outreach activities relating to lead risk reduction.
Other activities that had to be curtailed included translation of
existing outreach materials (English to Spanish), development of new
outreach materials, printing activities and technical assessments.
3. As part of a review of FTE charging under EPA's new GPRA
structure, we made adjustments to more accurately reflect where
regional work is being performed. FTE included under the lead activity
line were in fact performing work in areas such as asbestos and PCBs.
This correction is noted in the fiscal year 2001 President's Budget.
There are no performance implications resulting from this technical
correction.
4. The remaining reductions in fiscal year 2000 result from an on-
going effort to improve grants management. We reduced overall costs in
2000 with no impact to the program.
IMPROVED PERFORMANCE MEASURES
Question. How many annual planning goals did the Agency include in
its fiscal year 2000 annual performance plan? How many of the annual
planning goals were output goals? How many were outcomes? How many set
goals to improve the environment or human health?
Answer. EPA has 74 Annual Performance Goals (APGs) in the Agency's
fiscal year 2000 Annual Plan.
GAO in a report entitled ``Managing for Results--EPA Faces
Challenges in Developing Results Oriented Performance Goals and
Measures,'' evaluated the 73 APGs contained in an earlier version of
EPA's Annual Performance Plan that was released with the fiscal year
Congressional Justification document in February, 1999.
GAO classified 44 of the 73 APGs as `Outputs' and 29 as either `End
Outcomes' or `Intermediate Outcomes'. End Outcomes are defined as the
results of programs and activities compared to their intended purposes.
Intermediate Outcomes show progress toward achieving end outcomes. The
End Outcomes explicitly show measured improvements in the environment
or human health. GAO classified 20 of the APGs as `End Outcomes.'
Question. How many annual planning goals did the Agency include in
its fiscal year 2001 annual performance plan? How many of the annual
planning goals were output goals? How many were outcomes? How many set
goals to improve the environment or human health?
Answer. EPA's fiscal year 2001 Annual Performance Plan contains 75
Annual Performance Goals (APGs). The Agency has just started the
process of classifying its fiscal year 2001 Annual Performance Goals
(APGs) according to end outcomes, intermediate outcomes, outputs. The
process will include an internal peer review by the various Agency Goal
Teams.
Question. How many performance measures did the Agency include in
its fiscal year 2000 annual performance plan? How many of the
performance measures measured outputs? How many measured outcomes? How
many measured improvements in the environment or human health?
Answer. EPA has 166 Annual Performance Measures (APMs) in the
Agency's fiscal year 2000 Annual Plan.
GAO in a report entitled ``Managing for Results--EPA Faces
Challenges in Developing Results Oriented Performance Goals and
Measures,'' evaluated the 157 APMs contained in an earlier version of
EPA's fiscal year 2000 Annual Performance Plan that was released with
the fiscal year 2000 Congressional Justification document in February,
1999.
GAO classified 118 of the 157 APMs as `Outputs' and 39 as either
`End Outcomes' or `Intermediate Outcomes'. End Outcomes are defined as
the results of programs and activities compared to their intended
purposes. Intermediate Outcomes show progress toward achieving end
outcomes. The End Outcomes explicitly show measured improvements in the
environment or human health. GAO classified 30 of the APMs as `End
Outcomes.'
Question. How many performance measures did the Agency include in
its fiscal year 2001 annual performance plan? How many of the
performance measures measured outputs? How many measured outcomes? How
many measured improvements in the environment or human health?
Answer. EPA's fiscal year 2001 Annual Performance Plan contains 163
Annual Performance Measures (APMs). The Agency has just started the
process of classifying its fiscal year 2001 Annual Performance Measures
according to end outcomes, intermediate outcomes, outputs. The process
will include an internal peer review by the various Agency Goal Teams.
Question. What process is the Agency using to increase the number
of outcome goals and measures? How are program offices held accountable
for producing outcome goals and measures to be incorporated into the
annual performance plan?
Answer. EPA is committed to increasing the outcome orientation of
our performance measures and goals. While ``activity'' or ``output''
measures and goals are important for program management purposes, it is
the programmatic, environmental, and human health results from EPA's
activities, not the activities themselves, that matter most to public
welfare.
In recognition of the Agency's need to increase the number of
outcome or results-based goals and measures, EPA's Office of the Chief
Financial Officer (OCFO) has established a Performance Measurement
Improvement (PMI) Team. The primary objective of this team is to
support EPA's program offices in their efforts to increase the general
quality and outcome orientation of the Agency's performance goals and
measures. OCFO's PMI Team is involved in efforts such as general
workshop and training sessions, on-going analyses of annual goals and
measures, and various other Goal-specific performance measurement
improvement projects.
The lead within EPA for developing results-based performance
measures and goals, however, rests with the program offices. Working
with the States, Tribes, OCFO's PMI Team, and other partners, program
offices have initiated various improvement projects such as improvement
work teams, workshops, and special analyses to support development of
more outcome-oriented measures and goals. Specific examples of program
office performance measurement improvement initiatives include: the
Office of Enforcement and Compliance Assurance's development of their
National Performance Measurement Strategy, which includes a plan to
develop more outcome-based performance measures and goals; the Office
of International Activities formation of a ``best practices'' working
group which has developed more outcome-oriented measures and goals; the
Office of Research and Development's on-going analysis to identify and
learn from results-based, research-related measures and goals employed
by other federal agencies; and the Office of Prevention, Pesticides,
and Toxics Substances working group and cooperative agreement with
Florida State University to develop more outcome-focused measures and
goals.
EPA's Program offices are held accountable for improving the
general quality and outcome orientation of their goals and measures. In
accordance with Agency guidance for developing annual performance goals
and measures, program offices must submit their annual goals and
measures to OCFO for review each Summer in time for the OMB budget
submission and each winter in time for the Congressional budget
justification and Annual Plan submission. Also, EPA's ``Goal Teams''
meet each Spring with the Deputy Administrator to report on EPA's goals
and measures, efforts to improve these goals and measures, and progress
toward achieving EPA's goals. Specific topics to be addressed by EPA's
Goal Teams this spring will likely include: development of better
performance goals and measures using existing data, improvement of
baseline descriptions and information, data needs for development of
more outcome-oriented goals and measures, and plans to address data
needs.
Performance measurement improvement is an ongoing and incremental
pursuit at EPA. The rate of improvement progress is currently limited
by data availability and quality. The state of our knowledge of
environmental conditions, their dynamics, and the contribution of
program interventions is a critical constraint in establishing
realistic outcome-based performance measures and goals. The creation of
EPA's new Office of Environmental Information will facilitate
improvement of our national information base on environmental quality.
As data gaps are filled, EPA will accelerate progress toward
development of more outcome-based measures and goals.
IMPROVED PERFORMANCE MEASURES: NATIONAL PERFORMANCE MEASURES STRATEGY
Question. How is the Agency implementing the success of the
National Performance Measures Strategy on an agency-wide basis?
Answer. The National Performance Measures Strategy was initiated in
January of 1997 to develop and implement an enhanced set of performance
measures for EPA's enforcement and compliance assurance program. The
goals of the Measures Strategy included the adoption of the most
effective combination of output, outcome and environmental indicator
measures, within resource constraints. Furthermore, the Measures
Strategy sought to develop performance measures that would improve
EPA's ability to evaluate the effectiveness of its enforcement and
compliance assurance program, manage that program more strategically,
and achieve relevant Agency GPRA objectives.
As part of the development of the Measures Strategy, extensive
consultation with stakeholders, regulatory partners, and internal
managers and staff were held during the February-October 1997 timeframe
to discuss issues and solicit ideas about development, use and
implementation of enhanced performance measures. Through this effort, a
framework of transparent, credible, feasible, functional and
comprehensive output and outcome-based measures were identified and are
referred to as the Performance Profile. Agency Workgroups facilitated
the design phase which included developing definitions, identifying
collection processes, and piloting certain measures.
To date, EPA's Office of Enforcement and Compliance Assurance has
made great strides in implementing the Measures Strategy. Significant
improvements have resulted in the form of numerous revised and new
performance measures. However, it is important to note that the
implementation of the Measures Strategy is not yet complete.
Although the measures developed through the Strategy were intended
to apply only to EPA's enforcement and compliance assurance program,
reports detailing the process undertaken have been widely disseminated
throughout the Agency. Unfortunately, given the status of this effort
as well as its limited applicability to other Agency programs, it is
premature to attempt to assess the Agency's efforts in transferring the
success of the Measures Strategy to other Agency programs.
COMPLIANCE ASSISTANCE FUNDING: FUNDING LEVEL DOLLARS AND FTES
Question. Provide the dollars and FTE under the Compliance
Assistance and Centers key program in the Office of Enforcement and
Compliance Assurance (OECA). In meeting this request, provide resource
levels from the fiscal year 1999 budget request, fiscal year 1999
operating plan, fiscal year 1999 actuals, fiscal year 2000 budget
request, proposed fiscal year 2000 operating plan, and fiscal year 2001
budget request. Organize the information by Appropriation, Goal,
Objective, Sub-objective, Office or Region, and activity.
Answer. The attached spreadsheet provides resource information for
OECA's compliance assistance key program. The information comes from
the Agency's Budget Automation System (BAS). The resources requested
for the fiscal year 1999 actuals and activity level information are not
maintained in the Agency's key program data base.
PESTICIDES REREGISTRATION: FUNDING LEVEL DOLLARS AND FTES
Question. At what level, in terms of FTE and dollars, did the
Agency Fund the Pesticide Reregistration key program in the fiscal year
1999 budget request, fiscal year 1999 operating plan, fiscal year 1999
actuals, fiscal year 2000 budget request, fiscal year 2000 proposed
operating plan and fiscal year 2001 budget request? Provide the
information by NPM, appropriation, goal, objective, sub-objective,
office or region, and activity.
Answer. This information is provided in the following table:
[Dollars in millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year 1999 Fiscal year 2000 Fiscal year
-------------------------------------------------------------------- 2001 Request
Approp/Goal/Obj Request Op. Plan Request Op. Plan ----------------
--------------------------------------------------------------------
FTE Dollars FTE Dollars FTE Dollars FTE Dollars FTE Dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
EPM:
3.1............................................................ 38.6 $3.2 38.6 $3.7 36.0 $3.6 36.2 $3.9 32.9 $4.3
3.2............................................................ 125.1 $23.9 125.1 $20.7 134.7 $23.8 119.3 $19.4 120.4 $22.7
4.1............................................................ 32.9 $4.5 32.9 $4.9 33.4 $4.6 31.1 $4.2 21.9 $2.7
7.2............................................................ 37.9 $5.1 37.9 $5.9 40.3 $4.1 35.8 $4.0 36.9 $4.4
S&T:
3.1............................................................ 3.8 $1.0 3.8 $1.0 3.3 $0.7 4.0 $0.8 4.3 $0.8
3.2............................................................ 10.9 $1.4 10.9 $1.5 9.9 $1.0 10.1 $1.2 8.2 $1.1
4.1............................................................ 4.0 $0.3 4.0 $0.4 4.0 $0.3 3.5 $0.4 4.0 $0.4
FIFRA: 3.2......................................................... 104.2 ....... 104.2 ....... 104.2 ....... 104.2 ....... 102.7 .......
------------------------------------------------------------------------------------
Total All Approps............................................ 357.4 $39.4 357.4 $38.1 365.8 $38.1 344.2 $33.9 331.3 $36.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
PESTICIDES REREGISTRATION: IMPACT OF FUNDING REDUCTION
Question. Analysis for the Agency's budget requests indicates that
EPA reduced funding to the Pesticides Reregistration key program in the
fiscal year 2000 proposed operating plan from the higher levels
contained in the fiscal year 2000 budget request. Why did the Agency
make this reduction and what impact did it have on the activity levels
of the program?
Answer. EPA's fiscal year 2000 Operating Plan maintains the same
level of program activity for reregistration as contained in the
President's budget submission. The budget Congress enacted for EPA in
fiscal year 2000 included a substantial General Reduction to the EPM
account, including FTE reductions. At the same time, the implementation
of the Food Qualify Protection Act is one of EPA's top priorities and
we tried to increase and protect resources and activities programmed to
carry out the Act. The slightly reduced `key program' resources are the
result of ongoing consolidation of the reregistration and FQPA's
tolerance reassessment process, as well as a change in the schedule for
setting up the registration review program. Moreover, we protected the
primary components of FQPA, tolerance reassessments and the
registration of safer substitutes and in fact these programs received
more resources over fiscal year 1999 levels.
The Office of Prevention, Pesticides and Toxic Substances' (OPPTS)
share of the general reduction was $18.3 Million. Also, OPPTS had to
project some staff reduction in the reregistration program to comply
with Congressional directions to cut Agency staff levels to 18,000 FTE.
OPPTS has been under a hiring freeze since the beginning of the fiscal
year and has been unable to protect the staff support for the
registration and reregistration programs. As vacancies occur, we have
not backfilled, resulting in declining FTE levels. The nature of work
in both these programs is very FTE intensive and the skills are very
specialized; in some cases it is impossible to shift from within to
replace lost personnel. However, OPPTS' proposed operating plan for
fiscal year 2000 minimizes the program impact of the general reduction
as much as possible and we project no change in outputs.
Beyond cuts in staff, OPPTS reduced the funds budgeted to set up
the Registration Review Program, the new FQPA requirement to review
pesticide registrations every 15 years. The regulations establishing
this program are proceeding and the cuts will not affect the
establishment of the Registration Review program. In addition, the
incorporation of some special review work into the tolerance
reassessment process has streamlined the Special Review process,
resulting in cost savings. We do not expect any reduced outputs from
the reduction to the Special Review Programs.
Altogether, Congress directed EPA to fund the registration and
reregistration programs at $68.9 Million. EPA's operating plan
submitted to Congress funded these programs at $65.8 Million, a small
reduction of $3.1 Million. This reduction resulted from the
streamlinings and schedule changes described above. These revised
levels also allowed us to lessen the impact of the general reductions
on other critical EPA programs like the High Production Volume Chemical
Challenge Program, which is collecting basic hazard information on
chemicals the public routinely encounters.
EPA is confident that it fully carried out the intent of the
Congressional directive to maintain a robust program to register,
reregister and set food use tolerances using strict FQPA requirements.
The fiscal year 2000 budget fully supports an aggressive effort to
carry out these key programs.
QUALITY OF LAB DATA: CHICAGO CENTRAL REGIONAL LAB
Question. Why did EPA's initial responses to inquiries on the
criminal investigation underway at the Chicago Central Regional Lab
reveal that only 40 pollution cases were frozen because they may have
been based, in part, on flawed lab test results when separate EPA court
filings indicated that approximately 1,000 other cases . . . including
judicial and administrative matters are being assessed for potential
impact?
Answer. In the initial stage of our investigation, we estimated
that we would have to review up to 1,000 cases to determine whether
they involved analytical data generated or reviewed at the Central
Regional Laboratory (CRL) by either Agency or contract personnel. That
number represented the approximate number of open enforcement cases on
the Region 5 docket. The Agency and the Department of Justice
identified 43 cases on the DOJ ``hot list'' of active cases in which
CRL involvement was verified or suspected and for which notice of such
involvement has been provided to the court and the parties involved in
the cases. At the same time, many of the other case files that had been
examined did not reveal involvement on the part of the CRL Agency or
contract staff under investigation. This review of open case files is
an on-going process.
QUALITY OF LAB DATA: TESTS OF CONTAMINATED MATERIALS
Question. Why did the Agency downplay the role of the lab in public
characterizations by saying that double-checks of materials analyzed by
outside labs retained by polluters comprising 75 percent of the tests
of contaminated materials from Midwest states were handled by Superfund
staff and not the suspect lab? In reality court filings revealed the
lab actually did validate analytical data from samples analyzed by
outside laboratories.
Answer. More than 75 percent of Superfund cleanup activities are
handled by Potentially Responsible Parties (PRPs), which includes any
necessary laboratory analyses, which are carried out by the PRP's own
contract laboratories. The data resulting from those analyses are
neither reviewed nor validated by the CRL, except on a limited basis
when requested by the Superfund program for oversight purposes. It is
estimated that less than 1 percent of PRP data was reviewed or
validated by CRL staff. In most matters not being carried out by PRPs,
the Superfund program uses private laboratories that participate in the
Contract Laboratory Program (CLP) to generate analytical data. These
data are reviewed and validated by the Environmental Support and
Analysis Team (ESAT) contractor with oversight by the Region 5
Superfund program office. This oversight consists of double checking
the reviews conducted by the ESAT contractor to ensure that proper data
validation procedures have been followed.
Data validation is a review of other laboratories' data to provide
an opinion as to the usability of the data. The data validation process
does not involve laboratory analytical work. It involves the review of
a hard copy data package against an established set of Quality
Assurance Criteria and Programmatic Data Objectives that are documented
in a Quality Assurance Project Plan. Because the allegations which have
been raised involve analytical work and not the expression of an
opinion on another laboratory's work, the Agency does not believe that
the reliability of such data has been impacted.
There is alleged misconduct in generating organic analytical data
for certain types of chemical analyses within CRL. Typically, a hard
copy results package for organic data does not contain electronic files
for review. Electronic files of processed data are usually necessary to
detect improper manipulation of data. Therefore, laboratory misconduct
of this nature would have been detected through the data review or
validation process for these packages. However, the Region will notify
parties when one of the suspect analysts is identified as the data
validator.
QUALITY OF LAB DATA--PROCESS TO IDENTIFY NON-ANALYSIS WORK PERFORMED
Question. Describe the process EPA is currently developing to
identify those sites at which the lab or its contractor performed non-
analytical work, and any results of the process to date.
Answer. EPA is relying on time charges submitted by the suspect
analysts to determine the work they performed, including whether they
were involved in non-analytical work which includes the review of
outside laboratories' data (data validation work). The EPA employees
were required to bill time to individual sites on which they worked. In
addition, the CRL's receiving logs were used to track information
regarding documents from outside laboratories. The information tracked
included the site name, time received and the data set number assigned
to the data from the outside lab. This process continued from about
1981 through 1990. By 1990, the Environmental Support and Analysis Team
(ESAT) contractor had taken over the data validation work and EPA
employees were not involved. Also information has been extracted from
another tracking data base covering data review when it was performed
by EPA employees. It identifies the review of data according to EPA
employee initials. These different data bases will be used to determine
which data sets were reviewed by the suspect analysts.
The ESAT time charges by employee have been summarized in data
bases. The summaries provide information by site as to when the work
took place, the name of the suspect analysts, hours charged, and the
type of work involved. This information is being used to determine the
involvement of the suspect contractor personnel.
Where the suspect analysts have worked on data validation,
information on the site and work performed is to be provided to courts,
parties, and identified potentially responsible parties. Notice is
being provided to parties to ensure that there is no question as to the
government's forthrightness in disclosures regarding this matter.
QUALITY OF LAB DATA: AGENCY REACTION TO NEWS REPORT ON LAB
Question. Why did EPA wait until newspaper stories publicized the
criminal investigation underway at the Chicago lab before transferring
the troubled lab's director?
Answer. The transfer of the Central Regional Laboratory (CRL)
Director was independent of the timing of any publication of CRL-
related stories in the press. Regional management decided to reassign
the CRL Director to other duties once the corrective actions
recommended by the Office of Inspector General and the Technical Audit
Team were substantially completed. The reassignment became effective
March 6 and the completion of the recommendations led to the CRL
reopening March 16.
QUALITY OF LAB DATA
Question. EPA states that it is establishing new quality policies
and providing training for staff to correct the lab's problems. But
these steps don't seem to address the reason for the fraud, that being
a desire to even-out busy spikes of workload. What is the Agency doing
to deal with the actual cause of the problems?
Answer. The Regional laboratories have developed training on
acceptable conduct in laboratories, including an emphasis on activities
that are considered inappropriate behavior. The laboratories are also
conducting detailed audits of their management processes and technical
operations to ensure that proper systems are in place and are effective
in ensuring that the analytical results are of known and documented
quality. Management at all the laboratories are monitoring the
analytical work at their laboratories and are taking steps to more
closely control the workload and even-out workflow.
NPDES: FUNDING LEVEL DOLLARS AND FTES
Question. At what level, in terms of FTE and dollars, did the
Agency fund the NPDES Program key program in the fiscal year 1999
budget request, fiscal year 1999 operating plan, fiscal year 1999
actuals, fiscal year 2000 budget request, fiscal year 2000 proposed
operating plan, and fiscal year 2001 budget request. Provide the
information by NPM, appropriation, goal, objective, sub-objective,
office or region, and activity.
Answer. Agency funding of the NPDES key program is detailed below.
OFFICE OF WATER \1\
------------------------------------------------------------------------
Fiscal year Dollars FTE
------------------------------------------------------------------------
1999:
Budget Request........................... $43,408,500 338.0
Operating Plan........................... $30,862,600 \2\ 294.1
2000:
Budget Request........................... $46,338,800 350.5
Proposed Operating Plan.................. $36,274,900 \2\ 329.7
2001: Budget Request......................... $41,592,000 \2\ 327.5
------------------------------------------------------------------------
\1\ Appropriation: EPM; Goal 2: Clean and Safe Water; Objective 3:
Reduce Loadings and Air Deposition.
\2\ Reflects a realignment of Regional workyear distributions to reflect
a more accurate depiction of the national water program workforce.
NPDES: EXPIRED PERMIT BACKLOG
Question. The Agency declared to the President that backlogs in the
NPDES permitting program were a material management weakness and
developed a plan to reduce the backlog down to 10 percent in December
2001. EPA recently disclosed that the backlog is instead increasing.
Why is the backlog in expired permits in states and territories whose
water programs are run by EPA increasing and forecast to reach to 44
percent in December 2001?
Answer. The Agency has identified the backlog of expired National
Pollutant Discharge Elimination System (NPDES) permits as a material
weakness under the Federal Managers Financial Integrity Act (FMFIA) and
has established a goal of reducing the backlog of individual permits
issued to major facilities to 10 percent, or less, by December 31,
2001.
Based on NPDES permit backlog data collected between November 1998
and March 2000, the national backlog of expired NPDES permits for major
facilities (including both State- and EPA-issued permits) has increased
from approximately 26 percent to 28 percent. The increase in the
national backlog rate is due to an increase from 24 to 26 percent in
the backlog of State-issued NPDES permits, which comprise approximately
90 percent of the permitted facilities. Over this same period, the
backlog of permits for major facilities where EPA administers the NPDES
program has decreased from 46 percent to 41 percent. These data, noting
the increasing backlog trend at the national level, have been provided
to House and Senate committees on a quarterly basis since March 1999.
The Agency does not project a 44 percent backlog of EPA-issued permits
in December 2001. Intensive efforts are currently underway at EPA
Regional offices in support of achievement of our national target of 10
percent for December 2001.
NPDES: ACTIONS TO REDUCE BACKLOG
Question. Why have EPA's actions to reduce the backlog in programs
run by EPA failed to produce reductions in the backlog?
Answer. Between November 1998 and March 2000, the backlog of
National Pollutant Discharge Elimination System (NPDES) permits for
major facilities where EPA is responsible for permit issuance has been
reduced from 46 percent to 41 percent. While the backlog rate is
falling, the Agency believes that it remains unacceptably high and has
taken steps to reduce it to meet the 10 percent target over the next 20
months. The Agency's analysis of the causes of the permit backlog and
our strategy for addressing the problem is presented in the Interim
Framework to Ensure Issuance of Timely and High Quality NPDES Permits
(Approaches for Reducing the NPDES Permit Backlog)--July 28, 1999. This
document provides the Agency's vision for both short and long term
strategic objectives for backlog reduction, and is available for
downloading on our web site [www.epa.gov/owm/permits/backlog/
backlog.htm].
NPDES: STATE COMPLIANCE TO REDUCE BACKLOG
Question. Why are only 15 states on track to meet the Agency's goal
of reducing the NPDES permit backlog to 10 percent? Why have EPA's
actions to reduce the backlog in delegated programs failed to produce
reductions in the backlog?
Answer. While the Agency is directly responsible for National
Pollutant Discharge Elimination System (NPDES) permit issuance in seven
states and all U.S. Territories (except the U.S. Virgin Islands), this
represents only about 10 percent of all NPDES permits issued. For the
remaining ANPDES authorized states, EPA acts only as an oversight
authority. While some authorized states have been able to maintain
successful permit issuance rates (i.e., below 10 percent backlog), the
majority have encountered resource, technical, and administrative
obstacles similar to EPA Regions.
The Agency has identified a variety of potential causes for the
current backlog of expired NPDES permits, and for the increase in the
backlog of State-issued permits for major facilities. Based on
discussions with EPA Regional and State permitting managers, the
following causes of the backlog were provided in our Interim Framework
to Ensure Issuance of Timely and High Quality NPDES Permits (Approaches
for Reducing the NPDES Permit Backlog)--July 28, 1999:
--The universe of facilities requiring NPDES permit coverage (e.g.,
storm water SSOs/CSOs, CAFOs) is expanding at the same time
that previously issued permits are expiring.
--State environmental agencies are challenged by implementing other
competing regulations (e.g., air, solid waste, drinking water).
--NPDES permits have become increasingly complex due to State
adoption of numeric water quality standards and TMDL
requirements. Effluent guidelines have been promulgated for
industrial operations that are increasingly complex.
--In many cases, permit writers today need training in complex
technical and regulatory matters to issue high quality permits.
Due to decreasing permit resources and movement of staff to
other program areas, it has been difficult for States and
Regions to maintain technical experts on their permits staff.
--States have begun shifting to a watershed approach for permit
issuance, which may increase backlogs for the first few years
to allow alignment of five-year permit cycles within watershed
boundaries.
To address these issues, the Agency's Acting Deputy Administrator,
W. Michael McCabe, issued a memorandum on March 31, 2000, to each of
the EPA Regional Administrators requesting State-specific backlog
reduction plans for both authorized and non-authorized States and
Territories. The intent of these plans, which are due by May 15, 2000,
is to identify the actions that the Region or State must take to reduce
the permit backlogs and meet the 2001 and 2004 backlog reduction
targets. To adequately develop these plans, the Region must fully
assess the backlog of both State and EPA-issued permits (for major and
minor facilities) and actively engage authorized States in establishing
permit issuance commitments.
NPDES: IMPACT OF FUNDING REDUCTION
Question. Analysis of the agency's budget requests indicates that
EPA reduced funding to the NPDES program in the fiscal year 1999
operating plan and the fiscal year 2000 proposed operating plan from
the higher levels contained in each years budget request. Why did the
Agency make reductions in NPDES program from each of these budget
requests to the following operating plans and what impact did it have
on the activity levels of the program?
Answer. Reductions to NPDES activities resulted from the
requirement to absorb the general reductions included in the fiscal
year 1999 and fiscal year 2000 Environmental Programs and Management
appropriation. Resources devoted to reducing the NPDES permit backlog
were not reduced during the development of either operating plan.
Impacts of the NPDES cuts included eliminating funding for additional
Clean Water Action Plan workyears; limiting guidance and support to
states and communities implementing storm water controls; curtailing
EPA efforts to work with other Federal and state agencies, tribes, and
private entities to cleanup watersheds affected by mines; hampering
implementation of the Animal Feeding Operation (AFO) Strategy and
curtailing support for the development of guidance with USDA on how
450,000 AFOs should manage over 1.37 billion tons of animal waste; and
hampering efforts to study the effectiveness of approaches to
implementing best management practices (BMPs) for silviculture.
FINANCIAL STATEMENTS
Question. The Agency recently received a qualified opinion for its
most recent financial statements. This follows the previous year where
six months of assistance from the Office of Inspector General was
required to get EPA's statements in a state to earn an unqualified
opinion. What steps is the Agency taking to train its financial
management staff to better perform the task of annually preparing
financial statements?
Answer. For our prior year financial statements, the OIG did
cooperate in giving the Agency additional time in completing its
financial statements. The number of resources available to compile the
statements was more of the contributing factor then skill competency.
The issues that caused the delay for our 1998 statements were addressed
and were not the same contributing factors for 1999.
As indicated in our answer to an earlier question titled
``FINANCIAL AUDIT: IG OPINION'', the Inspector General qualified its
opinion on the Agency's 1999 financial statements based on two
technical accounting issues that were highlighted late in the audit
process and consequently could not be resolved by the statutory due
date of March 1. We have in place a plan to further improve our quality
control process for producing our financial statements. This will
include system and process changes. We also plan to use contractor
support to supplement EPA staff in performing technical analyses as
needed. In addition, we have had discussion with the OIG regarding the
number and level of technical expertise that they have assigned to the
audit to prevent delays in receiving audit feedback to allow for
statement adjustments.
Our plan also includes staff training. We are committed to
providing our staff with the tools and on-going training necessary to
produce reliable and timely financial statements. We have sent key
staff to financial statement and general ledger training, engaged an
accounting expert from the Treasury Department to review our books and
train our staff on analytical techniques, and plan to send key staff to
project management training to help better plan and coordinate with the
auditors.
FINANCIAL STATEMENTS: ACCOUNTING AND RECORDKEEPING PROCESS
Question. What steps is the Agency taking to change accounting,
recordkeeping or other charging processes to enable the Agency to more
accurately and quickly prepare sound financial statements?
Answer. We are implementing systemic solutions to streamline the
preparation and audit of annual financial statements. We are changing
how we record certain detailed transactions to a way that facilitates
year-end reporting; we are also taking steps to increase the amount of
effort devoted to ongoing review and analysis of our accounting
records. We believe this additional focus on quality assurance can
facilitate the preparation and audit of the year-end financial
statements by resolving potential issues during the year, rather than
late in the audit. Finally, we have implemented a new financial data
warehouse reporting tool that makes a great deal of current and
historical financial information available to EPA management on a near
real-time interactive basis.
FINANCIAL STATEMENTS
Question. Why is the Agency reducing funding for the Financial
Statement Audits key program in fiscal year 2001 if the Agency's
financial statements have worsened over the last year?
Answer. The Office of the Inspector General (OIG) has audited EPA's
financial statements since 1992. During that time, the OIG has spent
considerable resources identifying areas for improvement in EPA's
systems and controls and working with the Agency to improve the
accuracy and timeliness of its financial information. Internal control
and compliance issues identified by the OIG have existed for a number
of years, and the OIG has worked extensively with the Agency to resolve
these.
At this point, the OIG believes its role in identifying and
recommending needed systems improvements is complete. It is incumbent
upon the Agency to implement the OIG's recommended corrective actions,
so that accurate data is available to prepare the annual financial
statements and to manage the Agency's environmental program on an
ongoing basis. Therefore, the funding request was slightly reduced and
the OIG believes that this will maintain the resources necessary to
perform the audit.
ROOT CAUSE ANALYSIS PILOT PROJECT: INDUSTRY-SPONSORED TRAINING ON ``HOW
CHEMICAL PLANTS WORK''
Question. Provide the status of any efforts to develop industry-
sponsored training on ``how chemical plants work'' for staff of
regulatory agencies as recommended in the EPA/CMA Root Cause Analysis
Pilot Project.
Answer. Developing industry-sponsored training on ``how chemical
plants work'' was not a formal recommendation of the Root Cause
project. It was an idea offered by an industry representative on the
project team. Although the Agency recognizes merit in such training,
there are currently not resources available for such a project.
ROOT CAUSE ANALYSIS PILOT PROJECT: INDUSTRY-EPA PERSONNEL EXCHANGE
PROGRAM
Question. Provide the status of any efforts to develop an industry-
EPA personnel exchange program as recommended by the Root Cause
project.
Answer. Developing an industry-EPA personnel exchange was not a
formal recommendation of the Root Cause project. It was an idea offered
by an industry representative on the project team. Although the Agency
recognizes merit in such exchange programs, there are currently no
resources available for such a program.
ROOT CAUSE ANALYSIS PILOT PROJECT: DEVELOPMENT OF INSPECTION PROGRAM
Question. Provide the status of any efforts to develop an
inspection program under which technical assistance inspections are
conducted routinely in advance of traditional enforcement inspections,
particularly in the case of new rules as recommended by the Root Cause
project.
Answer. Developing such an inspection program was not a formal
recommendation of the Root Cause project. It was an idea offered by an
industry representative on the project team.
Although EPA has no plans to develop the level of inspection
program described in this question, EPA has often implemented
compliance assistance activities in advance of enforcement initiatives.
One recent example is the minimill initiative in Region V. Region V
used an integrated sector-based approach to improve compliance among
the minimills in its six states, focusing on Electric Arc Furnaces
(EAFs). First, the Region identified relevant minimills, contacted
industry groups and sent out a notification letter to the minimills
concerning the initiative. Each mill had the opportunity to carry out a
self-audit within a six-month period after being contacted. Any
identified violations were to be handled using EPA's Audit Policy.
During the six month period, the Region conducted compliance assistance
activities including: a kick-off meeting, a web page on the Internet
dedicated to the initiative, telephone and E-mail access to EPA staff,
EPA presentations at two conferences, coordination with State agencies
to assure consistency and correspondence and meetings with individual
companies. Out of 22 minimills, ten minimills self-disclosed findings
based on self-audits. One facility self-disclosed without submitting an
audit. Most reported violations were minor and did not result in
penalties. At the end of the 6 month period, Region V began
investigations of the remaining minimills to pursue enforcement, if
appropriate.
In addition, on-site compliance assistance is routinely provided to
facilities through on-site compliance assistance visits and EPA
inspectors. For example, inspectors routinely share standardized
information and references with facilities during traditional
inspections including: copies of requirements; guidance documents;
manuals and technology transfer documents; information on other
assistance providers; information on control practices and equipment
used within a specific sector to comply with environmental regulations;
pollution prevention literature; and suggestions on simple techniques
and concepts to reduce or eliminate pollution. In some cases,
inspectors may provide information on compliance status; information
and insight into a facilities particular problem and what might be
evaluated to remedy the problem; and technical assistance on recognized
industry or sector-based practices and concepts to reduce or eliminate
pollution. For more specific or technical information, inspectors are
encouraged to refer facilities to appropriate technical assistance
programs, including the Compliance Assistance Centers, Small Business
Assistance Programs, and Manufacturing Extension Partnerships.
ROOT CAUSE ANALYSIS PILOT PROJECT: COMPLIANCE ``GRACE PERIOD''
Question. What is the Agency's reaction to the Root Cause report
recommendation to allow facilities a ``grace period'' for compliance
with new regulations and does the Agency have any efforts underway to
test, pilot or implement this recommendation?
Answer. Allowing facilities a ``grace period'' for compliance with
new regulations was not a formal recommendation of the Root Cause
project. It was an idea offered by an industry representative on the
project team. While EPA does not generally offer a ``grace period'' for
compliance with new regulations, for certain rules, the Agency has
formally established a dedicated compliance assistance period before it
undertakes enforcement, such as in the lead-based paint Sections 1018
and 406 programs.
In addition, EPA routinely provides ample opportunity for
facilities to become familiar with and implement new regulatory
requirements. In developing and implementing rules promulgated under
the 1990 Clean Air Act Amendments (CAA), the agency has consistently
been sensitive to providing the regulated community ample time to
become familiar with the new regulatory requirements and make whatever
operational adjustments are necessary to be in compliance. Sources
which existed prior to the proposal of new CAA rules are given up to 3
years after the effective date to comply. Sources may also be granted
an additional year to comply if additional time is necessary to install
pollution control equipment.
The Agency has also focused considerable effort on the development
of compliance assistance material to facilitate compliance with new
rules. In particular, the Agency is committed to early development of
compliance assistance tools to provide the regulated community the
information it needs to comply with regulatory requirements. In fact,
the Agency's Action Plan for Innovation commits EPA to issuing
compliance assistance materials for new economically significant
regulations typically within 90 days of final rule promulgation.
The Agency has also focused compliance assistance resources on
rules that apply to small businesses. Even after the compliance date of
a new regulation, the Agency continues to work proactively with the
regulated community to ensure that small businesses understand their
new regulatory requirements. EPA has also offered the regulated
community opportunities through self disclosure and small business
policies to disclose violations with, in most cases, no penalties and
also provides small businesses with access to compliance assistance
resources.
ROOT CAUSE ANALYSIS PILOT PROJECT: COORDINATION BETWEEN EPA AND
FACILITY
Question. What is the Agency's reaction to the Root Cause report
recommendation to designate a single EPA contact to work with each
facility to coordinate EPA regulatory activities and provide assistance
and does the Agency have any efforts underway to test, pilot or
implement this recommendation?
Answer. Designating a single EPA contact to work with each facility
to coordinate EPA regulatory activities and provide assistance was not
a formal recommendation of the Root Cause project. It was an idea
offered by an industry representative on the project team. Although
resource levels limit the Agency's ability to designate individual
staff to work with each regulated facility, EPA has undertaken many
efforts in the last several years to provide more compliance assistance
to regulated facilities and industries. For example, EPA has partnered
with industry, academia, and nonprofit groups to launch the ten sector-
specific compliance assistance centers to serve as the ``first-stop-
shop'' for compliance assistance. In addition, the creation of the
National Compliance Assistance Clearing House will enable regulated
entities to easily identify and access available compliance assistance
material.
ROOT CAUSE ANALYSIS PILOT PROJECT: TECHNICAL ASSISTANCE OR MITIGATION
Question. What is the Agency's reaction to the Root Cause report
recommendation to allow and encourage EPA inspectors to (1) provide
technical assistance and (2) mitigate or omit penalties for
noncompliance events that are addressed in a timely manner and does the
Agency have any efforts underway to test, pilot or implement this
recommendation?
Answer. Encouraging inspectors to provide assistance and to
mitigate or omit noncompliance was not a formal recommendation of the
Root Cause project. It was an idea offered by an industry
representative on the project team. Inspectors routinely share
standardized information and references with facilities during
traditional inspections. These materials include: copies of regulatory
requirements; guidance documents; manuals and technology transfer
documents; information on other assistance providers; information on
control practices and equipment used within a specific sector to comply
with environmental regulations; pollution prevention literature; and
suggestions on simple techniques and concepts to reduce or eliminate
pollution. In some cases, inspectors may also provide more facility- or
industry-specific information such as: information on compliance
status; information providing analysis of a facility's particular
problem and what remedies might be appropriate; and technical
assistance on recognized industry or sector-based practices and
concepts to reduce or eliminate pollution. For more specific or
technical information, inspectors are encouraged to refer facilities to
appropriate technical assistance programs, including the Compliance
Assistance Centers, Small Business Assistance Programs, and
Manufacturing Extension Partnerships.
EPA's penalty policies do allow penalties to be mitigated based on
a variety of factors, including:
--the degree of cooperation in remedying the noncompliance--in cases
where violations are addressed immediately upon discovery,
EPA's penalty policy allows for a substantial portion of the
unadjusted gravity component to be reduced;
--the level of sophistication within the industry in dealing with the
compliance issue; and
--ability to pay.
In addition, EPA's ``Incentives for Self-Policing: Discovery,
Disclosure, Correction and Prevention of Violations'' and ``Small
Business Compliance Policy'' offer facilities the opportunity to
discover, disclose, and correct regulatory noncompliance. Both policies
encourage companies and other regulated entities to voluntarily
discover, disclose, correct and prevent violations of Federal
environmental requirements. Entities that meet policy conditions are
eligible for penalty reductions (including penalty waivers) and other
benefits. To date, over 750 entities have disclosed violations at over
2,750 facilities under the two self-disclosure policies.
ROOT CAUSE ANALYSIS PILOT PROJECT: COMPREHENSIVE VS. INDIVIDUAL
EVALUATION
Question. What is the Agency's reaction to the Root Cause report
recommendation to redirect inspectors from a focus on individual
noncompliance events to a more comprehensive evaluation of the
effectiveness of a facility's systems for protecting the environment
and does the Agency have any efforts underway to test, pilot or
implement this recommendation?
Answer. Shifting the focus of compliance inspectors was not a
formal recommendation of the Root Cause project. It was an idea offered
by an industry representative on the project team.
However, as resources and expertise allow, EPA has conducted
Environmental Management Systems inspections and Environmental
Management Reviews (EMR). For example, EPA's Federal Facility
Enforcement Office (FFEO) conducted a 2-year pilot program of
conducting environmental management Reviews (EMRs) at Federal
facilities. An EMR is an on-site review of selected aspects of a
facility's environmental management program and policies in accordance
with the Code of Environmental management principles for Federal
Agencies (CEMP), an EMS-based set of principles similar to ISO 14001.
These EMRs are conducted by following the EMR Policy and Guidance which
contains an Incidental Violations Response Policy which is a hybrid of
the EPA Small Business and Audit Policies. During the 2-year pilot
program, EPA Regions conducted 29 EMRs at facilities of 20 different
federal agencies. Federal facilities have been very receptive to the
EMRs and have made numerous management and good practice changes based
on EMR report recommendations. FFEO has issued a national report on the
pilot program and is currently conducting a follow-up study and
facility survey to document improvements made as a result of these
EMSs.
In July, 1999 EPA, after extensive consultations with a variety of
outside stakeholders, released a major report from our Innovations Task
Force, ``Aiming for Excellence: Actions to Encourage Stewardship and
Accelerate Environmental Progress.'' In this report EPA commits to
promoting the use of environmental management systems. Specifically,
the report states that EPA will:
--encourage organizations to adopt EMSs that improve compliance,
prevent pollution, and use other measures of environmental
performance;
--continue our efforts to learn more about how EMSs can complement
existing environmental programs and policies; and
--evaluate how EMSs, in the long-term, might help bring about changes
in public policy.
As a result, EPA has developed an EMS action plan (currently in
draft) that sets out the steps EPA will take to fulfill this
commitment. EPA has held meetings with various stakeholder groups to
facilitate discussion of the plan and expects to have it finalized in
the near future. The entire draft action plan can be located
electronically at www.epa.gov/ems.
ROOT CAUSE ANALYSIS PILOT PROJECT: COORDINATION BETWEEN EPA AND STATES
ON REGULATORY REQUIREMENTS
Question. What is the Agency's reaction to the Root Cause report
recommendation to improve coordination between EPA and states regarding
the interpretation of regulatory requirements and does the Agency have
any efforts underway to test, pilot or implement this recommendation?
Answer. EPA routinely works with states to develop and distribute
uniform guidance on individual rules and on categories of regulations.
Through interaction between EPA program offices, state environmental
agencies, and media-specific associations, interpretations issues are
identified and addressed.
Several tools are also available to support consistent
interpretation of regulatory requirements. Through Agency funded
hotlines, federal regulatory determinations are easily accessed. In
addition, EPA has created the Applicability Determination Index (ADI)--
a searchable database of hundreds of Clean Air Act regulatory
determinations. Lastly, the Agency is creating a national compliance
assistance clearinghouse that will further facilitate coordination
between EPA and the states.
Finally, state regulations and state contacts are easily accessible
through the Compliance Assistance Centers. As part of the Centers
program, the Environmental Council of States (ECOS) has actively
partnered with the Local Government Environmental Association Network
(Center for local government officials) promoting interaction between
the state, local and federal governments.
ROOT CAUSE ANALYSIS PILOT PROJECT: STAKEHOLDERS FOCUS GROUPS
Question. What is the Agency's reaction to the Root Cause report
recommendation to create focus groups representing all stakeholders
during early stages of revision of rules and does the Agency have any
efforts underway to test, pilot or implement this recommendation?
Answer. Convening focus groups during early stages of rule revision
was not a formal recommendation adopted in the Root Cause project. It
was an idea offered by an industry representative on the project team.
Early and interactive stakeholder involvement is a cornerstone of the
Agency's sector program's approach and is also a cornerstone of the
Agency's approach to regulatory development. For example, consultation
with small business advisory panels and federal advisory committees are
integral to the Agency's regulatory development process.
The Agency's sustainable industry program in particular is designed
to build knowledge of stakeholder perspectives as a means of
identifying worthwhile policy and programmatic changes in regulatory
standards and other areas, to achieve better compliance, promote
beyond-compliance stewardship, and to do so with minimum possible
burden on the regulated community and regulators. For example, sector
participation in the sustainable industry program has prompted
regulatory changes for the metal finishing industry in RCRA, for chrome
in the Clean Air Act (CAA), and for Metal Products & Machinery effluent
guidelines. In addition, EPA is seeking public feedback on new
regulatory projects such as the Persistent Bioaccumulative Toxics (PBT)
initiative.
ROOT CAUSE ANALYSIS PILOT PROJECT: PILOT TEST PROGRAM
Question. What is the Agency's reaction to the recommendation
recorded by the Root Cause report to pilot-test a program similar to
OSHA's ``Nationwide Quick-Fix Program'', which offers reductions of
penalties to employers that immediately abate hazardous identified
during an OSHA inspection and does the Agency have any efforts underway
to test, pilot or implement this recommendation?
Answer. Pilot-testing a ``Quick Fix'' program was not a formal
recommendation adopted in the Root Cause project. It was an idea
offered by an industry representative on the project team. In the
response to a previous question, we noted that EPA's penalty policies
allow penalties to be mitigated in certain situations, and we noted the
factors that determine whether mitigation is appropriate in a
particular situation. We also referenced the Agency's self-audit and
small business policies. The Agency believes these initiatives offer
appropriate types of flexibility. There are no plans to adopt the OSHA
approach.
ROOT CAUSE ANALYSIS PILOT PROJECT: FEASIBILITY PILOT-TEST PROGRAM
Question. What is the Agency's reaction to the Root Cause report
recommendation to work with industry to pilot-test the feasibility of
new rule before the are promulgated and does the Agency have any
efforts underway to test, pilot or implement this recommendation?
Answer. Pilot-testing of new rules was not a formal recommendation
adopted in the Root Cause project. It was an idea offered by an
industry representative on the project team. The Agency has committed
to field testing certain draft regulations prior to promulgation in its
``Aiming for Excellence'' report. The field testing will be conducted
through a simulated trial application of a draft rule with one or more
regulated entities, with opportunity for public involvement.
Furthermore, on-going Agency activities do allow industry pilot-
testing to affect regulatory requirements. For example, the Agency's
metal finishing sector program tested low cost pollution prevention
technologies to reduce chrome emissions in a project that was defined
and validated by an early focus group. The results of a successful
research and development test may lead to changes in the Chrome Clean
Air Act MACT standards and allow the use of the tested technology. In
essence, this initiative road tested an approach that identified what,
if any, regulatory change was appropriate.
Similarly, the sustainable industry sectors approach discussed
above: (1) develops a base of knowledge and stakeholder understanding;
(2) determines which ideas should be tested; and then (3) defines, if
any, appropriate programmatic and/or regulatory changes. This approach
has worked well in the metal finishing sector, and it is being
implemented in other sectors.
ENFORCEMENT TARGETING
Question. How are EPA's efforts to strategically target its
enforcement and compliance activities allowing the Agency to address
the most significant risks to human health and the environment and to
address disproportionate burden on certain populations?
Answer. The Office of Enforcement and Compliance Assurance (OECA)
has developed several tools for strategic targeting of enforcement and
compliance resources by headquarters and regional programs to address
human health and environmental risks and areas which may have
disproportionately exposed populations. The use of these tools is
leading to identification of important environmental risks and
noncompliance patterns. For example, the selection of two industry
sectors (Petroleum Refining and Metal Services) as OECA priorities for
inclusion in the fiscal year 2000/2001 Memoranda of Agreement (MOA) was
based on an analysis of industrial sectors that took into account
inspection coverage, violation rates, emissions data, and the views of
state regulatory partners. Another OECA-developed targeting tool
incorporates interactive mapping techniques to allow users to look at
facilities in stressed areas (e.g., a priority watershed), near
schools, in minority communities, or other relevant factors. By
combining various types of information and using appropriate
technologies, the Agency is able to improve its ability to target
compliance and enforcement resources at the most important problems.
ENFORCEMENT TARGETING: PURPOSE AND SUPPORT TARGET ACTIVITIES
Question. Describe the different targeting activities in which the
enforcement targeting program is engaged including their purpose and
support of the Agency's goals and performance measures.
Answer. The Office of Enforcement and Compliance Assurance (OECA)
engages in a broad range of both strategic and tactical enforcement
targeting activities in support of Agency goals. OECA uses data
strategically from across the Agency's programs and from external
sources where possible to identify environmental risks or noncompliance
patterns which may warrant intervention. Identifying these problems
leads to further analysis and can result in a variety of responses,
from declaring an industry sector a multi-year priority to be addressed
by a variety of tools, to dispatching compliance assistance staff or an
inspector to one or more facilities. By targeting our compliance and
enforcement resources at important problems we align those resources
with EPA goals and we can use performance measures to track progress
and adjust strategies for maximum impact.
ENFORCEMENT TARGETING: DATA/INFORMATION SYSTEMS PROGRAM FUNDING LEVELS
Question. Provide funding levels in terms of dollars and FTE, for
all activities under the Data/Information Systems program component of
the Office of Enforcement and Compliance Assurance (OECA) in the fiscal
year 1999 budget request, fiscal year 1999 operating plan, fiscal year
1999 actuals, fiscal year 2000 budget request, fiscal year 2000
proposed operating plan, and fiscal year 2001 budget request. Provide
the information by appropriation, goal, objective, sub-objective,
office or region, and activity. Ensure that targeting activities are
labeled and differentiated from other data/information systems
activities.
Answer. The attached spreadsheet provides resource information for
OECA's data and information efforts. The information comes from the
Agency's Budget Automation System (BAS). The budget activities on the
table are used primarily in budget formulation. The resources requested
for the fiscal year 1999 actuals are not maintained in the Agency's
database.
OECA does not specifically identify targeting activities under this
program. Targeting work supports the compliance assistance and
compliance monitoring programs. However, the Integrated Data
Enforcement Analysis (IDEA) system can be used for several
purposes...targeting, public access to name two. These resources are
located under the Office of Compliance's budget in Goal 7.
ENFORCEMENT TARGETING: COMPLIANCE MONITORING PROGRAM FUNDING LEVEL
Question. Provide funding levels, in terms of dollars and FTE, for
all activities under the Compliance Monitoring program component of the
Office of Enforcement and Compliance Assurance (OECA) in the fiscal
year 1999 budget request, fiscal year 1999 operating plan, fiscal year
1999 actuals, fiscal year 2000 budget request, fiscal year 2000
proposed operating plan, and fiscal year 2001 budget request. Provide
the information by appropriation, goal, objective, sub-objective,
office or region, and activity. Ensure that targeting activities are
labeled and differentiated from compliance monitoring activities.
Answer. The attached spreadsheet provides resource information for
OECA's compliance monitoring key program. The information comes from
the Agency's Budget Automation System (BAS). The resources requested
for the fiscal year 1999 actuals and activity level information are not
maintained in the Agency's key program database.
______
Questions Submitted by Senator Richard C. Shelby
ACCESS TO DATA: FEDERALLY FUNDED RESEARCH DATA
Question. It is my understanding that EPA has proposed to adopt
OMB's interpretation of my amendment by applying it only to awards made
to institutions after November 1999. Does this mean the American public
will not see the underlying federally funded research data that has
been or will be cited in your agency's TIER II rule, Environmental
Justice Guidance, 2002 PM/Ozone review, and low sulphur diesel
regulation--among others?
Answer. You are correct in your understanding that EPA has proposed
to adopt OMB's interpretation that your amendment applies only to
awards made to institutions after November 1999. As to the question of
whether EPA will provide research data both produced as a part of
federal assistance agreements initiated prior to November 1999 and not
in the Agency's possession, this determination will continue to be made
on a case-by-case basis. Of course, research data that are in the
Agency's possession will continue to be provided upon FOIA request
(subject to applicable FOIA exemptions). This policy applies to all
research data related to Agency rulemakings and other preceedings,
including those cited in your question.
ACCESS TO DATA: PUBLIC INTEREST IN CREDIBILITY AND VALIDITY
Question. Do you believe that the public has an interest in the
credibility and validity of the underlying data that would support
these agency actions?
Answer. It is crucial that the public know that the science that
serves as the foundation for governmental actions is sound--from
ensuring the safety of medications to protecting the environment. One
way to make sure this happens is sustaining the integrity of scientific
peer review, a process that has served the scientific community in the
United States well over the years. EPA recognizes the need for thorough
peer review of the science behind its policy decisions and has taken
several steps to bolster the degree to which peer review is integrated
into all major policy actions. For example, when the Agency reevaluates
the adequacy of National Ambient Air Quality Standards, we only
consider information in the peer-reviewed scientific literature. EPA
summarizes these studies in a criteria document, which is then peer
reviewed by the Clean Air Scientific Advisory Committee. The broadening
of our reliance on peer review is best exemplified by the issuance of
our Peer Review Handbook in 1998.
ACCESS TO DATA: LEVEL OF PUBLIC ACCESS
Question. Shouldn't they be able to see the data you claim supports
your rules if they so choose? Or should they just take your word for
it?
Answer. EPA is strongly committed to the public availability of
data used to support regulations and policies. We encourage researchers
to make their data available for other researchers and the public
whenever possible.
Nonetheless, we recognize that there are circumstances that must be
considered when determining whether it is appropriate to publicly
release such information. For example, the Agency routinely considers
confidential business information in its public access decisions whose
release may place corporations at a competitive disadvantage were they
to be made public. Additionally, the Agency sometimes bases decisions
on health studies that rely on an individuals medical records, whose
participation in the study was predicated on the agreement that these
records not be made public.
In two recent situations involving health effects studies on
particulate matter, researchers refused to release the underlying
health data after requested to do so by EPA, citing confidentiality
agreements not to release personal medical records. To address public
concerns about the integrity of these studies, EPA enlisted the help of
the original researchers and independent research organization, the
Health Effects Institute (HEI). HEI recruited independent researchers
to audit the data in the original reports and to undertake their own
re-analyses of these data. These audits and re-analyses were recently
completed and corroborated the results of the original peer-reviewed
studies.
ACCESS TO DATA: PEER REVIEW AND PUBLIC ACCESS
Question. Do you believe peer review is a substitute for public
access?
Answer. EPA evaluates peer review and public access issues
separately; one is not considered to be a substitute for the other. EPA
policy is to require peer review for all major scientific and technical
work products, and in special cases for non-major products.
Independent, expert review is key to the scientific credibility of
EPA's decisions. The Agency has taken major steps in recent years to
enhance its peer review efforts, including its 1998 publication of the
EPA Peer Review Handbook and the 1999 implementation of a new peer
review database to track at the project level program and regional
office implementation of the Agency's peer review guidance.
EPA also supports public access to data, as long as privileged
information such as medical records and confidential business
information (for example, proprietary data on patented chemical
formulations) remains protected. Over the past several years, the
Agency has taken many steps to increase public access to data; new
information technology has helped us considerably in this area.
In sum, peer review and public access to data are both important,
and neither is a substitute for the other. EPA has made great strides
in recent years to enhance both of these key aspects of scientific
credibility, and will continue to do so in the future.
ACCESS TO DATA: PUBLIC ACCESS AND FEDERAL DECISIONMAKING
Question. Do you not agree that public disclosure generally
promotes greater scrutiny, accountability and transparency in the
federal decisionmaking process?
Answer. We agree that public disclosure of information that serves
as the foundation for Federal decisionmaking promotes scrutiny,
accountability and transparency in the process. EPA remains committed
to such disclosure, consistent with applicable statutes and other
requirements.
ACCESS TO DATA: FEDERALLY FUNDED RESEARCH AGENCY ACCESS TO DATA
Question. Aside from last year's law and OMB's new rule expanding
the public's access to federally funded research data--it is my
understanding that EPA and every federal agency has the rights to
obtain federally funded research data. It is in all of your contracts.
Has EPA ever waived its rights to the research study data it funds?
Answer. EPA's Office of Research and Development (ORD) has never
waived its rights to the research study data it has funded. EPA-ORD has
the right to obtain research study data that it has funded.
Question. If you have, why and in what circumstances have you done
that?
Answer. Not applicable
Question. If you have not, when has EPA ever exercised its right to
obtain the underlying data, if ever? Please outline those cases, if
any, in writing to the Subcommittee.
Answer. Please see attached Shelby Attachment 1 for instances when
EPA-ORD has exercised its right to obtain underlying data from
Federally funded research since 1995.
FEDERALLY FUNDED RESEARCH: AGENCY ACCESS AND PUBLIC ACCESS
Question. Why doesn't EPA use its existing powers to obtain that
data to release the information as a matter of good government?
Answer. As noted in the answer to the previous question, EPA has
exercised its right to obtain data for public release. Such information
exchanges also occur routinely on the part of Federally-funded
researchers on an informal basis, as a part of the scientific process.
To the maximum extent possible, EPA uses scientific and technical
data for regulatory decision making that have appeared in peer-reviewed
publication. Therefore, the data are already publicly available. For
studies or data that do not fall into this category and were funded
prior to the recent amendments to OMB Circular A-110, a decision to
exercise our right to obtain data must be weighed against legal or
other factors, e.g., the need for confidentiality of human subjects.
There have been very few occasions where such issues have arisen. Thus,
the Agency will continue its practice of evaluating such requests on a
case-by-case basis.
ACCESS TO DATA: CRITICAL STUDIES DATA
Question. Why won't EPA make a commitment to do everything it can
to obtain the data for the critical studies cited in rules in a timely
manner, so the public can review the data?
Answer. EPA has been and remains strongly committed to the public
availability of data used to support regulations and policies. We
encourage researchers to make their data available for other
researchers and the public whenever possible.
For regulatory decision making, it is our policy to rely to the
maximum extent possible on studies and data that have already been
published. We believe this is the best way to assure transparency of
the decision process. However, we recognize that there are sometimes
countervailing considerations that must be weighed when determining
whether it is appropriate to publicly release information. For example,
the Agency routinely considers confidential business information in its
decisions, the release of which may place submitters of such
information at a competitive disadvantage were it to be made public.
Additionally, we sometimes base decisions upon health studies that rely
on the medical records of individuals, whose participation in the study
was predicated on the agreement that those records not be made public.
NAAQS RESEARCH FUNDING
Question. Ms. Browner, over the last few years, I have repeatedly
requested the federally funded research data used to justify EPA's 1997
PM/Ozone rule--specifically, the American Cancer Society and Harvard
(of Pope) studies. For various reasons, I have been told that your
agency can not obtain these studies. Now, it is my understanding that
EPA did not fund these studies. As Administrator of the EPA who
promulgated this rule, I'd appreciated it if you find out if any
federal agency funded these studies that you relied on.
Answer. With regard to obtaining the two studies mentioned above
[Dockery et al., 1993, An association between air pollution and
mortality in six U.S. cities. N Engl J Med 329:1753-1759; Pope et al.,
1995, Particulate air pollution as a predictor of mortality in a
prospective study of U.S. adults. Am J Respir Crit Care Med 151:669-
674], EPA has always been able to obtain the studies themselves and has
placed copies of the published studies in the docket for the PM NAAQS
review. However, although EPA requested the raw health data, EPA has
not been able to obtain the data used in these studies (see response to
question #3).
With regard to federal funding for these studies, EPA has provided
funding, in part, for both studies. In the published reports for the
two studies, the authors acknowledge funding from numerous sources. The
Dockery et al. (1993) study was supported by several grants from the
National Institute of Environmental Health Sciences (NIEHS) and EPA as
well as a contract with the Electric Power Research Institute. The Pope
et al. (1995) study, which used health data collected by the American
Cancer Society, was also supported by grants from NIEHS and EPA. For
both studies, EPA grant funds were provided to specifically support the
analysis of the data, not the collection of the health data.
GUIDANCE AND POLICY DOCUMENTS
Question. I am very concerned about the growing use of agency
guidelines and policy documents that in many cases impose significant
and substantive requirements on business and individuals. These
documents are not given the public consideration and due process
protections of a rulemaking procedure. What legal effect do EPA
interpretive rules, policies, and guidance documents have?
Answer. Interpretive rules are generally non-binding advisory
statements that interpret the language of a statute or a legislative
rule. They may state what we think a particular statute means and
remind parties of existing duties. A policy statement (which includes
guidance documents, guidelines, manuals, and opinion letters) announces
EPA's intended future course or areas for exploration with respect to
how EPA will interpret or enforce a statutory or regulatory provision,
and leaves EPA free to exercise administrative discretion in carrying
out the policy.
Generally, interpretive rules and policy statements are similar in
that neither have the force of law that is, they do not impose binding
legal requirements. Interpretive rules are distinguishable from general
statements of policy and guidance documents because while interpretive
rules clarify or explain existing statutes or regulations, general
statements of policy announce to the public the policy which the agency
intends to apply in the future when making decisions, whether through
rulemakings, adjudications, or other agency actions. See National
Whistleblower Ctr. V. Nuclear Regulatory Comm'n, F.3d (D.C. Cir. Apr.
11, 2000) (``the advance-notice function of policy statements yields
significant informational benefits, because policy statements give the
public a chance to contemplate an agency's views before those views are
applied to particular factual circumstances''). See also EPA's response
to the question below on legal analysis of binding effect of these
types of documents.
Question. If they are not legally binding, should the taxpayers you
regulate be told clearly these documents which interpret rules and
policies have no binding legal effect and that people, in reality, are
free to disregard them?
Answer. EPA believes such a provision is unnecessary. As you are
aware, EPA issues many kinds of general guidance documents and other
statements to help the public and regulated community understand and
comply with the Agency's regulatory programs and requirements. EPA has
found that the more tools we use to communicate with regulated
entities, our regulatory partners (state, local and tribal
governments), and the public at large, the more effective we can be in
explaining our programs and anticipating and answering their questions.
We believe the regulated community, our regulatory partners, and the
public find EPA's extensive communication efforts--including guidance
documents, policy statements, fact sheets, question and answer
documents, reports, advisories, letters responding to individual
questions, and other means of providing information about our
activities--to be very helpful to, and an important part of our
programs.
We appreciate the need of the regulated community to be able to
differentiate between a legally binding document and one that is not.
To promote clarity, the Agency currently includes language in many of
our non-binding policy statements and guidance documents notifying the
readers that such documents are not legally binding. Requiring the
inclusion of a statement in all non-binding Agency documents, such as
fact sheets, analytical reports, and guidance documents may cause
unnecessary confusion, particularly when the aim of some of the
materials is to inform and explain to regulated entities underlying
regulatory requirements that are legally binding.
For example, section 212 of the Small Business Regulatory
Enforcement Fairness Act requires agencies to publish one or more small
entity compliance guides for any rule for which a final regulatory
flexibility analysis was prepared under 5 U.S.C. Sec. 604. The purpose
of these guides is to assist small entities in complying with the rule,
by ``explain[ing] the actions a small entity is required to take to
comply with a rule or group or rules.'' Pub. L. 104-121, sec. 211
(emphasis added). These are non-binding guidance documents that explain
binding regulatory requirements to small entities in ``sufficiently
plain language likely to be understood by affected small entities.''
Id. Including a statement that the guide is non-binding and regulated
small entities are free to disregard it may lead to unnecessary
confusion.
Question. Are interpretive rules, guidance or policy documents
subject to the administrative requirements of Section 553 of the
Administrative Procedure Act?
Answer. No. Section 553(b) of the Administrative Procedure Act
states:
``General notice of proposed rule making shall be published in the
Federal Register, unless persons subject thereto are named and either
personally served or otherwise have actual notice thereof in accordance
with law.''
However, section 553(b)(A) expressly exempts from the requirements
of advance publication and opportunity for public participation
interpretive rules, general statements of policy, or rules of agency
organization, procedure or practice. That section provides:
``Except when notice or hearing is required by statute, this
subsection does not apply--
``(A) to interpretive rules, general statements of policy, or
rules of agency organization, procedure, or practice . . . .''
5 U.S.C. Sec. 553(b)(A) (emphasis added).
A general statement of policy is merely an announcement to the
public of the policy which EPA plans to implement in future rulemakings
or adjudications. As a consequence, the APA does not require notice and
comment rulemaking to issue a policy statement.
Question. What about judicial review? Are guidance documents
subject to judicial review?
Answer. Policy statements, guidance documents, and interpretive
rules generally are not subject to judicial review. However, someone
may bring suit to challenge any of these documents if he or she
believes it actually is a substantive rule that was not promulgated in
accordance with the Administrative Procedure Act's requirement of
notice and opportunity for comment.
Question. I would appreciate you providing the Subcommittee with a
legal analysis including citations of authorities that support the view
that interpretive rules, guidance or policy documents have binding
legal effect if you believe them to have some legal weight.
Answer. EPA is not aware of legal cases that support the view that
interpretive rules, guidance or policy documents generally have binding
legal effect. In fact, courts have consistently held that the fact that
such documents do not create substantive law is one reason Congress
exempted them from notice-and-comment rulemaking when it enacted the
Administrative Procedure Act.
For example, in American Hospital Association v. Bowen, 834 F.2d
1037, 1045-46 (D.C. Cir. 1987), the court noted:
``The reading of the Sec. 553 exemptions that seems most consonant
with Congress' purposes in adopting the APA is to construe them as an
attempt to preserve agency flexibility in dealing with limited
situations where substantive rights are not at stake. The exceptions
have a common theme in that they accommodate situations where the
policies promoted by public participation in rulemaking are outweighed
by the countervailing considerations of effectiveness, efficiency,
expedition and reduction in expense. Agency actions or statements
falling within the three exemptions are not determinative of issues or
rights addressed. They express the agency's intended course of action,
its tentative view of the meaning of a particular statutory term, or
internal house-keeping measures organizing agency activities. They do
not, however, foreclose alternate courses of action or conclusively
affect rights of private parties . . . . Unlike legislative rules, non-
binding policy statements carry no more weight on judicial review than
their inherent persuasiveness commands.
``Substantive rules are ones which grant rights, impose
obligations, or produce other significant effects on private interests,
or which effect a change in existing law or policy. Interpretive rules,
by contrast, are those which merely clarify or explain existing law or
regulations, are essentially hortatory and instructional, and do not
have the full force and effect of a substantive rule but [are] in the
form of an explanation of particular terms.
``The function of the second Sec. 553 exemption, for general policy
statements, is to allow agencies to announce their tentative intentions
for the future, without binding themselves. We have previously
contrasted a properly adopted substantive rule with a general statement
of policy, observing that while a substantive rule establishes a
standard of conduct which has the force of law in subsequent
proceedings, a general statement of policy, on the other hand, does not
establish a binding norm. It is not finally determinative of the issues
or rights to which it is addressed. The agency cannot apply or rely
upon a general statement of policy as law because a general statement
of policy only announces what the agency seeks to establish as policy.
[Emphasis added.]''
There are cases in which a court has found an agency's purported
interpretive rule, guidance document, or policy statement to be a
substantive rule, either because the rule established binding norms on
its face, or the agency applied the document with the inflexibility of
a rule. These cases, however, are instances where the agency did not
properly issue a substantive rule; they do not stand for the
proposition that generally, interpretive rules, guidance documents and
policy statements have binding legal effect.
BEVILL WASTES DETERMINATION: NEW INFORMATION TO JUSTIFY REGULATORY
DECISION
Question. What significant new information have you received that
would justify overriding the technical positions of EPA's professional
staff at the end of a 19 year process as well as your own
recommendations last March in the Report to Congress? Please provide
any such new evidence to the Committee.
Answer. On April 25, 2000, the EPA announced our decision to
continue to exempt fossil fuel combustion wastes from regulation as
hazardous waste. This decision was based on all available information,
including new information submitted as public comments to us in
response to our March 1999 Report to Congress.
At the same time, we announced that we will establish non-hazardous
waste national regulations applicable to fossil fuel combustion wastes
when managed in surface impoundments and landfills and when the wastes
are used as minefill. This decision was based in part on significant
new environmental information that was submitted to the Agency in
response to our March 1999 Report to Congress. In preparing the Report
to Congress, EPA concentrated its efforts on damage case analyses in 5
of the major coal consuming states, but our survey was not exhaustive
in those states. Based on a review of facility data for these 5 states
involving coal combustion wastes managed in surface impoundments or
landfills, EPA identified 7 proven damage cases and 11 potential damage
cases (a potential damage case is one in which there is a known release
from a waste management unit, but the release has not traveled
sufficiently far from the unit to pose an actual threat to human health
or the environment, but has the ``potential'' to do so in the future).
Commenters provided documentation for 59 candidate damage cases in
another 13 states. After carefully reviewing this information, we
concluded that 4 of these represented proven damage cases and an
additional 25 represented potential damage cases. Thus, EPA believes
that it is highly likely that other cases of proven or potential damage
would be identified if we reviewed data in the remaining 32 states.
This new information contributed to our April 25 decision to
continue to exempt the wastes from regulation as hazardous wastes but
to establish national non-hazardous waste regulations for these wastes,
under Subtitle D of RCRA.
BEVILL WASTES DETERMINATION: REASON FOR CHANGE OF POSITION
Question. If there is no new evidence to contradict previous
findings, then why the change of position on the determination on these
wastes?
Answer. As explained in the previous question,on April 25, 2000,
EPA decided that it was appropriate to continue to exempt fossil fuel
combustion wastes from being regulated as hazardous. Senator Shelby
BEVILL WASTES DETERMINATION: EFFECT ON RECYCLING EFFORTS
Question. Many states, including mine, have developed successful
programs to increase the beneficial use of these materials, e.g., use
in the production of concrete. This beneficial use is environmentally
sound, conserves virgin natural resources and conserves energy. There
is a growing market for coal combustion by-products and unless this
waste is recycled it will have to be landfilled.
Has the EPA considered the chilling effect and significant decrease
in these recycling efforts that will occur if you reverse EPA's own
studies and your Report to Congress and regulate these materials as
hazardous?
Answer. EPA did not identify any significant risk posed by
beneficial uses of fossil fuel combustion wastes in construction
applications, such as in concrete or concrete products, in production
of wall board, and as road bed material. We have, however, identified
the potential for significant risk resulting from certain applications
of coal combustion wastes when used to fill underground or surface
mines (an activity that increasingly uses these wastes). While this
practice can provide significant benefits, when not properly done
minefilling has the potential to contaminate ground water to levels
that could damage human health and the environment.
EPA wants to ensure that any actions taken by the Agency not place
any unnecessary barriers on the beneficial use of coal combustion
wastes. Our analyses indicate that beneficial uses of coal combustion
wastes, with the exception of minefilling when not done properly, are
not likely to pose significant risks to human health and the
environment. For this reason and because most beneficial uses of coal
combustion wastes conserve natural resources and reduce disposal costs,
EPA decided that we would continue the exemption of fossil fuel
combustion wastes from being regulated as hazardous wastes. Because of
a concern that certain minefilling practices may pose significant risk
to human health and the environment, we also decided that we would
develop national regulations under non-hazardous waste authorities
(Subtitle D of RCRA) applicable to coal combustion wastes when used as
minefill. We would base these standards on the approaches taken by
states that currently have comprehensive programs addressing
minefilling of coal combustion wastes.
______
Questions Submitted by Senator Larry Craig
KYOTO PROTOCOL
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]
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.
Under what authority will EPA develop a ``credit for early action''
program?
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. The above questions are identical to questions asked by the
House Committee on Science and the Senate Appropriations Committee last
year. We have attached the responses that EPA submitted for those
questions. Please let us know if you would like any additional
information.
FUNDING FOR STUDIES OF DOMESTIC OR INTERNATIONAL CARBON EMISSIONS
TRADING
Question. Has EPA provided any funding for studies of either
domestic or international carbon emissions trading?
If so, please provide by April 1, 2000: (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. Please see attached information on EPA funding (since
October 21, 1998) for studies of the design of carbon emissions trading
systems. These documents could not be provided by April 1, 2000,
because the questions were not received by the Agency until after the
deadline.
EPA is authorized to pursue these studies under the following
statutory provisions:
--Clean Air Act, 42 U.S.C. 7401 et seq.--sections 103(a), (b), (g)
--National Environmental Policy Act, 42 U.S.C. 4321 et seq.--section
102(2)(F)
--Global Climate Protection Act of 1987, 15 U.S.C. 13101 et seq.--
section 1103
CLIMATE CHANGE: USE OF MODELS
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 global 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
global 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 (e.g.,
the Canadian Centre for Climate Modeling and Analysis; the Hadley
Centre for Climate Prediction and Research). In some cases, the outputs
of these climate models are used as inputs to Regional Climate Models
in order to develop scenarios for future climatic conditions at a
regional level. Also, EPA--and the regional coordinators it is
sponsoring in the research community--are using the Vegetation/
Ecosystem Modeling and Analysis Project (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. The Report can be found on the Internet
at: http://www.epa.gov/oppeoee1/globalwarming/publicatons/impacts/
sealevel/probability.html.
CLIMATE CHANGE: JUSTIFICATIONS OF MODELS
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.
All of the regional and sectoral teams for the National Assessment
worked with two climate models, the United Kingdom's Hadley Center
Model and the Canadian Coupled Climate Model. These two models were
chosen for several reasons. First, it was important that all the
assessments be based on the same models to ensure comparability.
Second, when the National Assessment began, the Canadian and Hadley
Models were the only two global climate models that incorporated the
role of aerosols as off-sets to the warming effects of greenhouse
gases. These two vary in their interpretation of other factors, and
therefore differ in their scenarios of future climate.
It must be emphasized that the climate model output is viewed as
scenarios, not predictions of future climate. EPA's regional
assessments do not use models to ``predict'' any particular climate
future, but rather to develop a range of possible scenarios of future
climate. The scenarios serve as the basis for assessing the possible
consequences of climate change--positive and negative consequences. It
is the possible consequences that will be of use to decision makers,
and of interest to stakeholders. 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,
ecosystems, and social well-being.
CLIMATE CHANGE: HEALTH SECTOR ASSESSMENT
Question. Because of these substantial modeling problems, what is
the basis for EPA conducting a ``Health Sector Assessment'' in fiscal
year 2000?
Answer. The Health Assessment Work Group used a set of assumptions
and/or projections of future climates developed for all participants in
the National Assessment of ``The Potential Consequences of Climate
Variability and Change.'' The output from the climate models was used
to define scenarios of potential climate futures. It must be emphasized
that the climate model output was viewed as scenarios, not predictions
of future climate. The scenarios were used to understand the
sensitivity and vulnerability of human health to potential future
climate change, but not to make actual predictions of future
conditions.
The Health Sector Assessment focused on understanding the
relationships between several categories of health outcomes and weather
and/or climate variables (e.g., temperature-related morbidity and
mortality; health effects of extreme weather events; air-pollution-
related health effects). The assessment examined both benefits and
detriments arising from possible changes in future climate. Their
analysis was, for the most part, not quantitative because of many
layers of uncertainties in the data. In fact, the Health Assessment
Work Group concluded that the levels of uncertainty preclude any
definitive statement on the direction of change for each of these
health outcomes, although they developed some hypotheses.
Projections of the extent and direction of the potential health
impacts of climate variability and change are extremely difficult to
make because of the many confounding and poorly understood factors
associated with potential health outcomes, population vulnerability,
and adaptation. For example, the relationship between weather and
specific health outcomes is understood for a relatively small number of
diseases, with few quantitative models available for analysis. Research
aimed at filling the priority knowledge gaps identified in this
assessment would allow for more quantitative assessments in the future.
The Health Sector Assessment went through an extensive peer review
process that has been fully documented. Based on the peer review, the
Assessment meets the highest standards of scientific excellence and is
scientifically credible, balanced, and unbiased.
Question. Is the EPA using ``worst case scenarios?''
Answer. No, EPA is not using ``worst case scenarios.''As noted
above, to the extent that scenarios of future climate were used, the
Health Assessment Work Group used a set of assumption and/or
projections of future climates developed for all participants in the
National Assessment of ``The Potential Consequences of Climate
Variability and Change.'' These projections were based on the outputs
of the Canadian Coupled-Climate Model and the United Kingdom's Hadley
Centre Climate Model. These two models were chosen for several reasons.
First, it was important that all the assessments be based on the same
models to ensure comparability. Second, when the National Assessment
began, the Canadian and Hadley Models were the only two global climate
models that incorporated the role of aerosols as off-sets to the
warming effects of greenhouse gases. These two vary in their
interpretation of other factors, and therefore differ in their
scenarios of future climate. Their outputs fall in the middle of a
range of outputs by a number of climate models.
CLIMATE CHANGE: U.S. NATIONAL ASSESSMENT PARTICIPATION
Question. Who from EPA is participating in the U.S. National
Assessment ``The Potential Consequences of Climate Variability and
Change'' and what are the specific topical and work group assignments?
Answer. As part of the U.S. National Assessment effort, EPA is
sponsoring the Mid-Atlantic Regional Assessment, the Great Lakes
Regional Assessment, the Gulf Coast Regional Assessment, and the Health
Sector Assessment. An ``arms-length'' relationship has been maintained
between EPA and the Work Groups producing the three Regional
Assessments and the Health Sector Assessment. EPA researchers are
contributing to the assessments, but the assessments are being managed
by independent universities throughout the country. These assessments
are being conducted through a public-private partnership that actively
engages researchers from the academic community, decision makers,
resource managers, and other affected stakeholders in the assessment
process.
Several EPA researchers have contributed to the EPA-sponsored
assessments. EPA researchers involved in the Mid-Atlantic Regional
Assessment include Dr. Catriona Rogers (Office of Research and
Development), Dr. John McCarty (AAAS Fellow, Office of Research and
Development), and Dr. Henry Walker (Office of Research and
Development).
The Mid-Atlantic Regional Assessment is also a stakeholder-oriented
process that is actively engaging an Advisory Committee of over 90
members from the private and public sectors. EPA researchers and
personnel who serve on the large Advisory Committee include Mr. Thomas
DeMoss (EPA Mid-Atlantic Integrated Assessment Team), Dr. Ray Lassiter
(Office of Research and Development), Mr. Ed Linky (EPA Region 2), Dr.
Joel Scheraga (Office of Research and Development), Dr. Betsy Smith
(Office of Research and Development), Mr. Eric Walbeck (EPA Mid-
Atlantic Integrated Assessment Team), and Dr. Janet Gamble (Project
Officer, Office of Research and Development).
Ms. Anne Grambsch is one of the 12 Lead Authors for the Health
Sector Assessment. The other Lead Authors come from Johns Hopkins
University, Harvard Medical School, the University of Florida, EPRI,
NOAA, CDC-Division of Vector-borne Diseases, and CDC-Division of
Environmental Hazards and Health Effects.
Mr. Jim Titus is an author of the Coastal and Marine Resources
Sector Team under the U.S. National Assessment.
climate chance: u.s. national assessment support for participation
Question. Who is being provided EPA support for participation in
the U.S. National Assessment and what are the specific topical and Work
Group assignments?
Answer. As part of the U.S. National Assessment effort, EPA is
sponsoring the Mid-Atlantic Regional Assessment, the Great Lakes
Regional Assessment, the Gulf Coast Regional Assessment, and the Health
Sector Assessment. The Mid-Atlantic Regional Assessment is being
conducted by The Pennsylvania State University. The Great Lakes
Regional Assessment is being conducted by the University of Michigan.
The Gulf Coast Regional Assessment is being conducted the Southern
University. The Health Sector Assessment is being conducted by Johns
Hopkins University.
The Mid-Atlantic Regional Assessment is analyzing the potential
effects of climate change and variability on forests, agriculture,
water, coasts, and human health, as well as additional selected issues
that cut across these five impacts areas (e.g., ecosystems). The Great
Lakes Regional Assessment is considering water quality and quantity
(including lake level and temperature changes), storms and extreme
events, ecological and natural resources (such as plant life, forests,
wetlands, aquatic life and agriculture), air quality, health and
education. The Gulf Coast Regional Assessment is, to varying degrees,
analyzing the potential effects of climate change and variability on
ecosystems, farming and forestry, industry, human health, air quality,
water quality, fisheries, and recreation/tourism.
The Health Sector Assessment is examining five categories of health
outcomes that are most likely to be affected by climate change because
they are associated with weather and/or climate variables: temperature-
related morbidity and mortality; health effects of extreme weather
events (storms, tornadoes, hurricanes, and precipitation extremes);
air-pollution-related health effects; water- and food-borne diseases;
and vector- and rodent-borne diseases.
An ``arms-length'' relationship has been maintained between EPA and
the Work Groups producing the three Regional Assessments and the Health
Sector Assessment.
Question. Were any of these individuals involved in the IPCC Second
Assessment Report?
Answer. To the best of our knowledge, only three individuals
involved in the Regional and Sectoral Assessments being sponsored by
EPA as part of the U.S. National Assessment were involved as Lead or
Contributing Authors in the 1995 IPCC Second Assessment Report. These
individuals are Dr. Jonathan Patz (Johns Hopkins University), Dr. Paul
Epstein (Harvard Medical School), and Dr. Joel Scheraga (EPA Office of
Research and Development). Dr. Patz is the Co-Chair of the Health
Sector Assessment. Dr. Epstein is one of the 12 Lead Authors of the
Health Sector Assessment. Dr. Scheraga is on the Advisory Committee for
the Mid-Atlantic Regional Assessment.
Question. If so, please identify the specific roles and
responsibilities in the Second Assessment Report?
Answer. Dr. Patz and Dr. Epstein were Principal Lead Authors of
Chapter 8 of the Working Group II Report of the 1995 IPCC Second
Assessment. Chapter 8 was entitled, ``Human Population Health.'' Dr.
Scheraga was a Contributing Author to Chapter 26 (a Technical Appendix)
of the Workgroup II Report of the 1995 IPCC Second Assessment. Chapter
26 was entitled, ``Technical Guidelines for Assessing Climate Change
Impacts and Adaptations.''
REQUEST: Please provide this list including affiliations and
locations
Dr. Jonathan Patz, Department of Environmental Health Sciences,
Johns Hopkins University School of Hygiene and Public Health,
Baltimore, MD.
Dr. Paul Epstein, Center for Health and the Global Environment,
Harvard Medical School, Boston, MA.
Dr. Joel Scheraga, National Program Director, Global Change
Research Program, Office of Research and Development, U.S.
Environmental Protection Agency, Washington, DC.
climate change: u.s. national assessment peer review
Question. What peer review process is used for the science
contributions prior to submittal to the US National Assessment?
Answer. All of the EPA-sponsored Regional and Sectoral Assessments
are being held to the highest standards of scientific excellence. All
of the Regional and Sectoral Assessment Reports are being subjected to
an extensive peer review process that has been fully documented to
ensure that they are scientifically credible, balanced, and unbiased.
EPA's Global Change Research Program committed to the Congress that it
would insist upon and maintain scientific excellence, openness, and
broad-based participation in all of the regional and sectoral
assessment reports that it sponsors. EPA has fulfilled this commitment
and aggressively implemented a rigorous peer review process.
The following guidelines have been established and followed for the
external peer review of the EPA-sponsored regional and sectoral
reports:
Technical Review.--A technical review must be conducted to evaluate
the accuracy and validity of statements of fact and interpretations of
data. Each section of the report should be reviewed by independent
experts with technical expertise in the appropriate subject area. These
expert reviewers should include persons who are active in relevant
disciplines or fields of endeavor but who have not participated in the
assessment process.
Comprehensive Review.--Experts with broad scientific and technical
expertise relevant to the particular region or sector should review the
entire document in a comprehensive manner. These reviewers should not
have participated in the assessment process.
Public/Stakeholder Comment.--The report should be circulated for
comment to a range of interested parties, including the stakeholders
engaged in the assessment and be available to the public upon request
during the review period.
Documentation of Reviews and Responses.--A document should be
prepared that compiles and summarizes all broad categories of comments,
and explains the assessment team's responses.
We also note that the entire assessment process was open and
predicated on the involvement of stakeholders. The assessments were
launched with workshops to formulate questions and concerns to be
addressed by the assessments themselves. A wide range of stakeholders--
including for example, representatives from industry, state and local
governments, and environmental groups--were invited to take part in the
workshops. Those who chose to take part had the opportunity to shape
the assessment, to participate in it, and to review the assessment
report.
CLIMATE CHANGE: U.S. NATIONAL ASSESSMENT PUBLIC REVIEW
Question. How can the public review this material prior to
submittal to the U.S. National Assessment?
Answer. In order to ensure that all of the EPA-sponsored Regional
and Sectoral Assessment Reports are scientifically credible, balanced,
and unbiased, EPA established guidelines for a rigorous external peer
review process that must be followed by the assessment teams. One
component of this external peer review process includes:
Public/Stakeholder Comment.--The report should be circulated for
comment to a range of interested parties, including the stakeholders
engaged in the assessment and be available to the public upon request
during the review period.
Copies of the assessment reports are available to the public upon
request from the assessment teams during the review period. Also, EPA
is requiring that each assessment team prepare a document that compiles
and summarizes all broad categories of comments, and explains the
assessment team's responses. This document will be made available to
the public.
We also note that the entire assessment process was open and
predicated on the involvement of stakeholders. The assessments were
launched with workshops to formulate questions and concerns to be
addressed by the assessments themselves. A wide range of stakeholders--
including for example, representatives from industry, state and local
governments, environmental groups--were invited to take part in the
workshops. Those who chose to take part had the opportunity to shape
the assessment, to participate in it, and to review the assessment
report.
Question. Does EPA maintain a public Internet site that can be used
to post this material?
Answer. EPA's Global Change Research Program does not yet have a
public Internet site that can be used to post this material. However,
each of the universities responsible for conducting the EPA-sponsored
Regional and Sectoral Assessments maintain websites. These websites can
be used to post this material. For example, The Pennsylvania State
University maintains an excellent website on which is posted their
Overview document entitled, Preparing for a Changing Climate: The
Potential Consequences of Climate Variability and Change. The website
address is: http://www.essc.psu.edu/mara/index.html
This website also posts documentation of responses to reviewers'
comments on a draft version of the Overview report.
Question. Does EPA plan to use this site for public disclosure?
Answer. EPA's Global Change Research Program is in the process of
developing a new public website. This website is being developed to
further fulfill the Global Program's commitment to the Congress that it
will insist upon and maintain scientific excellence, openness, and
broad-based participation throughout its program (including in all of
the regional and sectoral assessments that it sponsors). An important
purpose of this website will be to disseminate data and information. It
will provide a portal through which scientists, policy analysts, and
the public can access research data, documents, project descriptions
and updates, workshop announcements and proceedings, presentations, and
analytic tools. It will also provide information produced by the Global
Change Research Program's intramural and extramural researchers,
including output from the U.S. National Assessment. EPA expects to be
able to use this new website for public disclosure.
CLIMATE CHANGE: TRANSFER OF INFORMATION
Question. Has EPA or anyone funded by EPA transferred any of its
work under the U.S. National Assessment to anyone involved in the IPCC
Third Assessment Report? If so, provide the following: (a) What
material was transferred? (b) Who transferred the material? (c) Who
authorized the transfer? (d) To whom was the material transferred?
Answer. No. In fact, EPA's Global Change Research Program has
insisted that all work that it has sponsored as part of the U.S.
National Assessment go through a rigorous peer review process before it
is released--including release to anyone involved in the IPCC Third
Assessment Report.
The following guidelines have been established and followed for the
external peer review of the EPA-sponsored regional and sectoral
reports:
Technical Review.--A technical review must be conducted to evaluate
the accuracy and validity of statements of fact and interpretations of
data. Each section of the report should be reviewed by independent
experts with technical expertise in the appropriate subject area. These
expert reviewers should include persons who are active in relevant
disciplines or fields of endeavor but who have not participated in the
assessment process.
Comprehensive Review.--Experts with broad scientific and technical
expertise relevant to the particular region or sector should review the
entire document in a comprehensive manner. These reviewers should not
have participated in the assessment process.
Public/Stakeholder Comment.--The report should be circulated for
comment to a range of interested parties, including the stakeholders
engaged in the assessment and be available to the public upon request
during the review period.
Documentation of Reviews and Responses.--A document should be
prepared that compiles and summarizes all broad categories of comments,
and explains the assessment team's responses.
CLIMATE CHANGE: IPCC EPA PARTICIPATION
Question. Who from EPA is participating in the U.N.
Intergovernmental Panel on Climate Change (IPCC) Third Assessment
Report and what are the specific topical and Work Group assignments?
Answer. The following EPA personnel are participating in the IPCC
Third Assessment Report:
Mr. Bill Rhodes is a Contributing Author on ancillary benefits for
Chapter 8 of Working Group III of the IPCC Third Assessment Report.
Dr. Stephen Andersen is the lead author of the Chapter 3 Appendix,
Options to Reduce Global Warming Contributions from Substitutes for
Ozone Depleting Substances, under Working Group III of the Third
Assessment Report.
Neil Leary is on detail from EPA as the head of the Technical
Support Unit in Washington, DC for Working Group II of the Third
Assessment Report.
John ``Skip'' Laitner is a contributing author to Chapter 5,
Barriers, Opportunities, and Market Potential of Technologies and
Practices, under Working Group III of the Third Assessment Report.
Question. Were any of these individuals involved in the IPCC Second
Assessment Report?
Answer. Yes. Neil Leary (EPA, Washington, DC) served as an expert
reviewer of the Working Group II and III reports of the Second
Assessment Report.
Question. If so, please identify the specific roles and
responsibilities in the Second Assessment Report?
Answer. Neil Leary (EPA, Washington, DC) served as an expert
reviewer of the Working Group II and III reports of the Second
Assessment Report.
Request: please provide this list including affiliations and
locations.
Answer. Neil Leary, Environmental Protection Agency, Washington
D.C.
CLIMATE CHANGE: IPCC SUPPORT FOR PARTICIPATION
Question. Who is being provided EPA support for participation in
the IPCC Third Assessment Report and what are the specific topical and
Work Group assignments?
Answer. The following people are being provided EPA support for
participation in the IPCC Third Assessment Report:
Dr. Terry Root is a Lead Author for the Ecosystems and Wildlife
chapter of Working Group II. Dr. Root is affiliated with the University
of Michigan, Ann Arbor, MI.
Joel Smith is Convening Lead Author for the Synthesis of Climate
Change Impacts and Adaptation chapter of Working Group II. Mr. Smith is
with Stratus Consulting Inc., Boulder, CO.
Dr. Charles Howe is a Lead Author for the Water Resources chapter
of Working Group II. Dr. Howe is affiliated with the University of
Colorado at Boulder, Boulder, CO.
Mr. Bill Easterling is involved in the IPCC Third Assessment
Report. He is affiliated with Pennsylvania State University in State
College, PA.
Jeff Price is a lead author for the IPCC Third Assessment Report.He
is affiliated with Pennsylvania State University in State College, PA.
Dr. Sandra Brown is a Convening Lead Author for the IPCC Working
Group II Chapter 5 on ecosystems and their uses. Dr. Brown is also
serving as a convening lead author for Chapter 6 of the Land Use, and
Land Use Change, and Forestry Special Report. Dr. Brown participated in
the IPCC Second Assessment report. Dr. Brown works for Winrock
International in Arlington, VA.
Dr. Jayant Sathaye is a Lead Author for the IPCC Working Group III
Chapter 5 on barriers and opportunities and market potential of
technologies and practices. Dr. Sathaye is also serving as a convening
lead author for Chapter 6 of the Land Use, and Land Use Change, and
Forestry Special Report. Dr. Sathaye is also a convening lead author
for Chapter 7 of the Technology Transfer Special Report. Dr. Sathaye
participated in the IPCC Second Assessment report. Dr. Sathaye works
for Lawrence Berkeley Laboratories in Berkeley, CA.
Dr. Brian Murray is serving as a lead author for a chapter of the
Land Use, Land Use Change, and Forestry Special Report. He did not
participate in the IPCC Second Assessment Report. Dr. Murray works for
the Research Triangle Institute, in Research Triangle Park, NC.
Mr. William Pepper and Mr. Alexi Sankovsky are serving as
contributing authors to the IPCC Special Report on Emission Scenarios.
Neither Mr. Pepper nor Mr. Sankovsky participated in the IPCC Second
Assessment Report. Mr. Pepper works for ICF Incorporated in Fairfax,
Virginia. Mr. Sankovsky works for ICF Incorporated in Washington, DC.
Dr. Lynn Price is a lead author for Chapter 3, Technical and
Economic Potential of Greenhouse Gas Emissions Reduction, under Working
Group III of the TAR.
Dr. Mark Levine is a lead author of Chapter 3, Technical and
Economic Potential of Greenhouse Gas Emissions Reduction, under Working
Group III of the TAR.
Dr. Willy Makundi is a lead author of Chapter 4, Technical and
Economic Potential of Options to Enhance, Maintain, and Manage
Biological Carbon Reservoirs and Geo-Engineering, under Working Group
III of the TAR.
Mr. E. Thomas Morehouse (Institute for Defense Analysis in
Arlington VA) is a contributing author of the Chapter 3 Appendix,
Options to Reduce Global Warming Contributions from Substitutes for
Ozone Depleting Substances, under Working Group III of the Third
Assessment Report.
Dr. Devra Davis is a lead author of Chapter 8 under Working Group
III of the TAR.
Dr. Hugh Pitcher was provided funds to attend a meeting associated
with Working Group III of the Third Assessment Report.
Dr. R.N. Stavins is a lead author for the economics chapter of
Working Group III of the Third Assessment Report.
Question. Were any of these individuals involved in the IPCC Second
Assessment Report?
Answer. Yes.
Question. If so, please identify the specific roles and
responsibilities in the Second Assessment Report?
Answer. Dr. Lynn Price was a lead author for Chapter 22, Mitigation
Options for Human Settlements, under Working Group II of the Second
Assessment Report. Dr. Price is affiliated with the Lawrence Berkeley
National Laboratory in Berkeley, CA.
Dr. Mark Levine was the lead author for Chapter 22, Mitigation
Options for Human Settlements, under Working Group II of the Second
Assessment Report. Dr. Levine is affiliated with the Lawrence Berkeley
National Laboratory in Berkeley, CA.
Dr. Jayant Sathaye was a principal lead author for Chapter 24,
Management of Forests for Mitigation of Greenhouse Gas Emissions, and a
lead author for Chapter 27, Methods for Assessment of Mitigation
Options, under Working Group II of the Second Assessment Report. Dr.
Sathaye is affiliated with the Lawrence Berkeley National Laboratory,
in Berkeley, CA.
Dr. R.N. Stavins was a lead author for Chapter 11, Economic
Assessment of Policy Instruments for Combatting Climate Change, under
Working Group III of the Second Assessment Report. Dr. Stavins is
affiliated with Harvard University.
REQUEST: Please provide this list including affiliations and
locations.
Affiliations and locations provided in the answers above.
CLIMATE CHANGE: IPCC PEER REVIEW
Question. What peer review process is used for the science
contributions prior to submittal to the IPCC?
Answer. The IPCC is an independent entity that has its own process
for producing and peer-reviewing its assessment documents. Lead Authors
and Contributing Authors for every chapter of the IPCC Third Assessment
Report were nominated by their respective governments and chosen by the
IPCC. These authors work together in an independent IPCC process to
write their respective chapters. All EPA researchers who are Lead or
Contributing Authors, as well as EPA-sponsored authors, work with other
researchers from around the world within this independent IPCC process.
(In other words, chapters are not first written by individual countries
outside of the IPCC process, peer reviewed, and then submitted to the
IPCC.)
Once the chapters of the IPCC Third Assessment Report are drafted,
they go through a rigorous international scientific review, which
includes official government reviews. (IPCC Technical Reports go
through an identical peer review process.) The U.S. Global Change
Research Program is responsible for coordinating the U.S. government
review of IPCC assessment documents. The draft chapters are then
revised and submitted for approval by all governments involved in the
IPCC process.
It is important to distinguish between U.S. scientific research
done for the U.S. National Assessment and research that is done
specifically for the IPCC process. These are two independent activities
with their own peer-review processes. EPA's Global Change Research
Program has insisted that all work that it has sponsored as part of the
U.S. National Assessment go through a rigorous peer review process
before it is released--including release to anyone involved in the IPCC
Third Assessment Report.
As described in our response to Question #34, all of the EPA-
sponsored Regional and Sectoral Assessments are being held to the
highest standards of scientific excellence. All of the Regional and
Sectoral Assessment Reports are being subjected to an extensive peer
review process that has been fully documented to ensure that they are
scientifically credible, balanced, and unbiased. EPA's Global Change
Research Program committed to the Congress that it would insist upon
and maintain scientific excellence, openness, and broad-based
participation in all of the regional and sectoral assessment reports
that it sponsors. EPA has fulfilled this commitment and aggressively
implemented a rigorous peer review process.
The following guidelines have been established and followed for the
external peer review of the EPA-sponsored regional and sectoral
reports:
Technical Review.--A technical review must be conducted to evaluate
the accuracy and validity of statements of fact and interpretations of
data. Each section of the report should be reviewed by independent
experts with technical expertise in the appropriate subject area. These
expert reviewers should include persons who are active in relevant
disciplines or fields of endeavor but who have not participated in the
assessment process.
Comprehensive Review.--Experts with broad scientific and technical
expertise relevant to the particular region or sector should review the
entire document in a comprehensive manner. These reviewers should not
have participated in the assessment process.
Public/Stakeholder Comment.--The report should be circulated for
comment to a range of interested parties, including the stakeholders
engaged in the assessment and be available to the public upon request
during the review period.
Documentation of Reviews and Responses.--A document should be
prepared that compiles and summarizes all broad categories of comments,
and explains the assessment team's responses.
We also note that the entire assessment process was open and
predicated on the involvement of stakeholders. The assessments were
launched with workshops to formulate questions and concerns to be
addressed by the assessments themselves. A wide range of stakeholders--
including for example, representatives from industry, state and local
governments, environmental groups--were invited to take part in the
workshops. Those who chose to take part had the opportunity to shape
the assessment, to participate in it, and to review the assessment
report.
CLIMATE CHANGE: PUBLIC ACCESS TO PEER REVIEW INFORMATION ON U.S.
NATIONAL ASSESSMENT
Question. How can the public review this material prior to
submittal to the IPCC?
Answer. As noted in our response to Question #40, it is important
to distinguish between U.S. scientific research done for the U.S.
National Assessment and research that is done specifically for the IPCC
process. These are two independent activities with their own peer-
review processes.
IPCC Review Process.--Once the chapters of the IPCC Third
Assessment Report are drafted, they go through a rigorous international
scientific review, which includes official government reviews. The U.S.
Global Change Research Program is responsible for coordinating the U.S.
government review of IPCC assessment documents. The U.S. government
review of the IPCC assessment reports is an open and inclusive process.
Anyone from the public has an opportunity to participate, review IPCC
chapters, and submit comments. These comments are then incorporated
into the official U.S. government response to the IPCC.
Following the international scientific review, the draft chapters
are then revised and submitted for approval by all governments involved
in the IPCC process.
National Assessment Peer-review Process.--EPA's Global Change
Research Program has insisted that all work that it has sponsored as
part of the U.S. National Assessment go through a rigorous peer review
process before it is released--including release to anyone involved in
the IPCC Third Assessment Report.
In order to ensure that all of the EPA-sponsored Regional and
Sectoral Assessment Reports are scientifically credible, balanced, and
unbiased, EPA established guidelines for a rigorous external peer
review process that must be followed by the assessment teams. This
review process includes a public/stakeholder comment period. EPA's
guidelines specifically requires that ``The report should be circulated
for comment to a range of interested parties, including the
stakeholders engaged in the assessment and be available to the public
upon request during the review period.''
Copies of the assessment reports are available to the public upon
request from the assessment teams during the review period. Also, EPA
is requiring that each assessment team prepare a document that compiles
and summarizes all broad categories of comments, and explains the
assessment team's responses. This document will be made available to
the public.
We also note that the entire assessment process was open and
predicated on the involvement of stakeholders. The assessments were
launched with workshops to formulate questions and concerns to be
addressed by the assessments themselves. A wide range of stakeholders--
including for example, representatives from industry, state and local
governments, environmental groups--were invited to take part in the
workshops. Those who chose to take part had the opportunity to shape
the assessment, to participate in it, and to review the assessment
report.
Question. Does EPA maintain a public Internet site that can be used
to post this material?
Answer. EPA's Global Change Research Program does not yet have a
public Internet site that can be used to post this material. However,
each of the universities responsible for conducting the EPA-sponsored
Regional and Sectoral Assessments maintain websites. These websites can
be used to post this material. For example, The Pennsylvania State
University maintains an excellent website on which is posted their
Overview document entitled, Preparing for a Changing Climate: The
Potential Consequences of Climate Variability and Change. The website
address is: http://www.essc.psu.edu/mara/index.html
This website also posts documentation of responses to reviewers'
comments on a draft version of the Overview report.
Question. Does EPA plan to use this web site for full disclosure of
any material transferred for use by the IPCC?
Answer. EPA's Global Change Research Program is in the process of
developing a new public website. This website is being developed to
further fulfill the Global Program's commitment to the Congress that it
will insist upon and maintain scientific excellence, openness, and
broad-based participation throughout its program (including in all of
the regional and sectoral assessments that it sponsors). An important
purpose of this website will be to disseminate data and information. It
will provide a portal through which scientists, policy analysts, and
the public can access research data, documents, project descriptions
and updates, workshop announcements and proceedings, presentations, and
analytic tools. It will also provide information produced by the Global
Change Research Program's intramural and extramural researchers,
including output from the U.S. National Assessment. EPA expects to be
able to use this new website for public disclosure.
Related answer from previous Question [NOTE: This has not been
cleared with Department of State or others.]
IPCC Third Assessment Report.--Public Review.
Question. How can the public review this material prior to
submittal to the IPCC? Will this material be posed on EPA's website
prior to submittal to the IPCC?
Answer. EPA will not be leading the review of the Third Assessment
Report and currently has no plans for posting this material on the EPA
website prior to submittal to the IPCC.
For the Second Assessment Report, the United States Government
invited public comment. A Federal Register Notice was published which
provided information on how to obtain the report from the United States
Global Change Research Program and a mailing address for comments. A
team of people then went through all of the comments (from agencies,
experts and the public) and put together a set of United States
Government comments, taking into account some of the comments received
from the public. The United States Government comments were then
forwarded to the IPCC. In addition, the United States Government
separately forwarded the public comments received during the review
process. Individuals can also send comments directly to the IPCC.
CO2: ANALYSIS OF EMISSIONS REDUCTIONS
Question. On August 8, 1998 Administrator Browner wrote to Chairman
Sensenbrenner that ``EPA is not attempting in any way to implement the
Kyoto Protocol by conducting the multi-pollutant analysis called for in
the proposed modification [to the settlement]. EPA does not have any
plan to regulate CO2 from electric power plants.''
With this statement in mind, please describe the basis for
including CO2 in the Office of Air and Radiation March 1999
study ``Analysis of Emissions Reductions Options for the Electric Power
Industry'' Please provide a full copy of this study and any
presentation material developed.
Answer. EPA has the responsibility under the Clean Air Act to
decide whether to regulate mercury emissions from coal-fired electric
power plants. Mercury exposure is associated with serious neurological
and developmental effects in humans. The March 1999 analysis was an
update to a series of multi-pollutant analyses of utility emissions
that were first undertaken four years ago. The updated analysis was
specifically intended to assist EPA in making decisions on mercury. The
information it generated will be considered in making decisions
regarding the possible regulation of mercury emissions from electric
utility steam generating units under section 112 of the Act.
Multiple pollutant analysis of utility emissions makes sense
because any effort to reduce any one pollutant affects the others. In
the March 1999 analysis EPA evaluated how much reduction in mercury
would result (and at what cost) from various possible scenarios to
control mercury. Those model runs also estimate the reductions in other
pollutants (NOX, SO2 and CO2) that
would result from these possible mercury control scenarios. The
analysis also provides estimates of mercury reductions that would
result from possible scenarios that reduce emissions of NOX,
SO2 and CO2.
EPA routinely uses a widely-accepted computer model, called the
Integrated Planning Model (IPM), to undertake these multiple pollutant
analyses. EPA has conducted analyses like this for electric power
plants for more than three years with broad stakeholder involvement and
support. In 1996, EPA conducted the Clean Air Power Initiative (CAPI),
a stakeholder process involving utilities, fuel suppliers, labor, and
environmental organizations using the IPM model to look at the
interaction of control strategies for various pollutants from electric
power plants. In that process and in subsequent advisory committee
meetings the inclusion of carbon dioxide in these analyses was
supported by a broad range of stakeholders including a number of
utilities, the United Mine Workers, and environmental organizations.
Multiple pollutant analyses are called for in the Clean Air Act.
For example, Sec. 103(g)(1) calls for analyses of ``[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.''
CO2: LEGAL AUTHORITY FOR CAP AND TRADE SYSTEM
Question. What legal authority does EPA claim for assuming a ``cap
and trade'' basis in this study for each of the following emissions:
mercury, NOX, SO2.
Answer. As the introduction to the study report emphasizes, the
options that were analyzed were ``hypothetical approaches to emissions
controls on the electric power industry for each pollutant.'' They do
not represent an EPA or Administration position on how any of the
pollutants should or could be reduced. EPA's authority for conducting
this analysis can be found in sections 103 and 112 of the Clean Air
Act.
MERCURY RULE NRDC SETTLEMENT
Question. Is the study related in any way with the NRDC settlement
in April 1998 related to the Mercury rule?
Answer. An EPA commitment to perform the study was included as part
of the proposed April 1998 stipulation modifying an existing settlement
agreement with the NRDC. As discussed in more detail in the response to
your question, ``CO2 Consent Decree,'' EPA had already
planned to perform this analysis irrespective of the settlement
agreement. Including it in the proposed settlement modification helped
EPA gain NRDC's agreement to give EPA additional time beyond the then-
applicable deadline of April 15, 1998 to determine whether to regulate
mercury emissions from electric utility steam generating units.
CLEAN AIR PARTNERSHIP FUND--AUTHORIZATION OF FUNDS
Question. For the fiscal year 2000 appropriations, the
Administration included language in the EPA appropriation for ``State
and Tribal Grants'' for a ``new'' $200 million program called the
``Clean Air Partnership Fund,'' which was not enacted by the Congress
(see Budget App. p. 930-931). The request said the ``new'' program
would be carried out under section 103 of the Clean Air Act. The word
``new'' is in the Budget explanation. This year the fiscal year 2001
appropriation language repeats the request at a lower funding level of
$85 million. In light of the provisions of section 327 of the Clean Air
Act, why is EPA apparently trying to circumvent the legislative
committees of Congress in requesting through the Appropriations
Committees funds for a ``new'' program that appears to be for more than
one fiscal year 2001? Is this only a 1-year program?
Answer. Section 103 of the Clean Air Act provides the statutory
authority necessary for the award of financial assistance to support
activities that would be undertaken as part of the Clean Air
Partnership Fund program. Section 103 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)(3) authorizes
the Administrator to make grants to support the activities listed in
Section 103(a)(1). The Section 103(b)(3) grant authority thus includes
the authority to fund demonstration projects, as well as related
studies and investigations, such as those that would be supported
through the Clean Air Partnership Fund program.
Section 327 of the Clean Air Act (the Act) authorized
appropriations ``to carry out this chapter'' for the seven fiscal years
commencing after the date of enactment of the Clean Air Act amendments
or November 15, 1990. This means that there were authorized to be
appropriated funds to carry out the Act for fiscal years 1991 through
1997; the section 327 authorization of appropriations expired on
September 30, 1998. Nonetheless, EPA can continue to implement a
program whose authorization has expired provided Congress continues to
appropriate funds for the program. This has been the situation for the
Clean Air Act. The Comptroller General has recognized that, as a
general proposition, the appropriation of funds for a program whose
funding authorization has expired provides a sufficient legal basis to
continue the program. 65 Comp. Gen. 524 (1986); 65 Comp. Gen. 318, 320-
21 (1986). The enacted appropriation effectively carries its own
authorization. See 67 Comp. Gen. 401 (1988); B-219727, July 30, 1985.
Appropriations are presumed to be available for one fiscal year,
unless specified otherwise in an appropriation act. The funds
appropriated in EPA's State and Tribal Assistance Grants account are
specifically ``to remain available until expended''. With section 103
of the Clean Air Act serving as the grant authority, the Agency's
Appropriation Act and the STAG appropriation, enacted after section 327
of the Clean Air Act, would provide the Agency with the authority to
carry out a new program with funds made available for the fiscal year
of the Appropriation Act and with funds that are carried over and
remain available for obligation until expended in a succeeding year.
CLEAN AIR PARTNERSHIP FUND--AUTHORITY FOR MULTI-YEAR PROGRAMS
Question. Section 327 of the Clean Air Act authorizes
appropriations for the Act for 7 fiscal years after enactment in 1990
or through September 30, 1998. That authorization has expired. However,
a February 16, 2000 White House letter to ``Dear Interested Party''
from Mr. Roger Ballentine, explains that EPA is re-proposing the
``creation of a new'' Clean Air Partnership Fund at an $85 million
level rather than $200 million ``to achieve reductions in both
greenhouse gas emissions and ground-level air pollutants.'' The letter
also states that EPA ``will expand its industry partnership programs''
to ``encourage'' businesses to adopt reduction opportunities for the
``most potent greenhouse gases'' listed in the Kyoto Protocol. The
letter clearly implies that both of these programs are for multi-years,
not just for fiscal year 2001. If that is right, what is the authority
for multi-year programs in light of section 327 of the Act? Is EPA
expecting the appropriation process to provide this authorization
beyond fiscal year 2001?
Answer. Section 103 of the Clean Air Act provides the statutory
authority necessary for the award of financial assistance to support
activities that would be undertaken as part of the Clean Air
Partnership Fund program. Section 103 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)(3) authorizes
the Administrator to make grants to support the activities listed in
Section 103(a)(1). The Section 103(b)(3) grant authority thus includes
the authority to fund demonstration projects, as well as related
studies and investigations, such as those that would be supported
through the Clean Air Partnership Fund program.
Section 327 of the Clean Air Act (the Act) authorized
appropriations ``to carry out this chapter'' for the seven fiscal years
commencing after the date of enactment of the Clean Air Act amendments
or November 15, 1990. This means that there were authorized to be
appropriated funds to carry out the Act for fiscal years 1991 through
1997; the section 327 authorization of appropriations expired on
September 30, 1998. Nonetheless, EPA can continue to implement a
program whose authorization has expired provided Congress continues to
appropriate funds for the program. This has been the situation for the
Clean Air Act. The Comptroller General has recognized that, as a
general proposition, the appropriation of funds for a program whose
funding authorization has expired provides a sufficient legal basis to
continue the program. 65 Comp. Gen. 524 (1986); 65 Comp. Gen. 318, 320-
21 (1986). The enacted appropriation effectively carries its own
authorization. See 67 Comp. Gen. 401 (1988); B-219727, July 30, 1985.
Appropriations are presumed to be available for one fiscal year,
unless specified otherwise in an appropriation act. The funds
appropriated in EPA's State and Tribal Assistance Grants account are
specifically ``to remain available until expended''. With section 103
of the Clean Air Act serving as the grant authority, the Agency's
Appropriation Act and the STAG appropriation, enacted after section 327
of the Clean Air Act, would provide the Agency with the authority to
carry out a new program with funds made available for the fiscal year
of the Appropriation Act and with funds that are carried over and
remain available for obligation until expended in a succeeding year.
KYOTO PROTOCOL: CLARIFICATION OF PROCEDURES AND MECHANISMS INVOLVING
``BINDING CONSEQUENCES'' UNDER ARTICLE 18
Question. The Clean Air Report for February 17, 2000 reports that
the U.S. delegation, which includes EPA officials, negotiating rules,
guidelines, procedures and modalities for the Kyoto Protocol submitted
to the Convention Secretariat on January 31 new ideas for enforcement
of a country's commitment under Article 3 of the Protocol and of the
Kyoto mechanisms. This includes binding consequences for violations.
Is it correct that the Kyoto Protocol does not include any
compliance provisions and that Article 18 provides that any procedures
and mechanisms involving ``binding consequences'' must be adopted by
amendment to the Protocol after it enters into force?
Answer. As this is a matter of treaty interpretation, we requested
the views of the Department of State, which replied as follows: It is
not correct to say that the Protocol does not include any compliance
provisions. The Protocol contains many compliance-related provisions
such as those for monitoring and reporting emissions data (Articles 5
and 7), expert review of implementation (Article 8), and dispute
resolution (Article 19). It is also too broad to assert that the only
way to adopt binding consequences is through an amendment to Article 18
after the Protocol enters into force. First, the requirement in Article
18 for an amendment applies only to procedures and mechanisms ``under
this Article.'' Second, it applies only to noncompliance with the
Protocol (as opposed, for example, to not meeting eligibility
requirements under other Articles). Finally, it would also be possible
for the Conference of the Parties to modify the Protocol before it
enters into force. The Parties would then ratify the modified
instrument, not the original Protocol.
KYOTO PROTOCOL: U.S. DELEGATION PROPOSAL OF JAN. 31ST RECOGNIZE
ADOPTION BY PARTIES TO PROTOCOL
Question. Does the U.S. delegation proposal of January 31 calling
for bans on use of the Kyoto mechanisms and other binding consequences
also recognize that such consequences must await adoption by Parties to
the Protocol after entry into force of an amendment as provided in
Article 18 or does the U.S. contemplate some other process for adopting
such consequences?
Answer. The Department of State notes that the U.S. submission of
January 31 did not call for ``bans'' on the use of the Kyoto
mechanisms. Rather, the U.S., like other Parties, has proposed certain
linkages between annual emissions inventory and reporting requirements
and eligibility to use the Protocol's flexibility mechanisms in order
to assure the environmental integrity of those mechanisms. The U.S. has
proposed that a Party could lose access to the mechanisms only in the
case of a failure to meet inventory and reporting requirements so
egregious as to undermine the environmental integrity of the
mechanisms. In such a case, access to the mechanisms would be restored
when the inventory or reporting problem was rectified. Smaller-scale
inventory problems would be remedied in other ways and not result in
loss of mechanism eligibility. Eligibility requirements would be part
of the mechanisms provisions under Articles 6, 12, and 17, not binding
consequences under Article 18. Eligibility requirements would thus be
adopted by the Conference of the Parties (in the case of emissions
trading) or the Conference of the Parties serving as the meeting of the
Parties to the Protocol (in the case of joint implementation and the
clean development mechanism).
KYOTO PROTOCOL: EFFECT OF PROPOSAL ON PREDICTIONS OF COSTS FOR U.S.
TRADING WITH RUSSIA AND UKRAINE
Question. In 1998, the Administration's economic analysis of the
Kyoto Protocol stressed that it would not be costly because of the
budget period of 5 years, the mechanisms, and sinks. However, the
recent submissions by the U.S. delegation appear to undercut the
benefits of the budget period and the mechanisms by, in essence,
calling for annual reviews for enforcement purposes of a country's
inventories, which are merely estimates, and for bans on the use of the
mechanisms during the five year period if the reviews find deficiencies
in the inventories or if the monitoring and reporting systems are
deficient. What will be the effect of that proposal on the predictions
about the Protocol's costs for the U.S. and on the ability of the U.S.
to meet its commitment over the budget period through the mechanisms,
such as trading with Russia and the Ukraine?
Answer. We do not expect there to be any impact on the
Administration's cost projections or our country's ability to meet its
commitment under the Kyoto Protocol, if it is ratified, as a result of
the proposals to which you refer.
The Protocol provides for countries to undertake and report annual
emissions inventories, which are to be reviewed each year. As you may
know, emissions inventories are already performed and reviewed on an
annual basis under the United Nations Framework Convention on Climate
Change (UNFCCC), which was ratified in 1992, and Articles 5, 7, and 8
of the Protocol build on these existing requirements. Under Article 3
of the Protocol, a country will be required to show that its cumulative
emissions over a five-year commitment period (2008-12) do not exceed
its assigned amount, as increased or decreased due to the Protocol's
flexibility mechanisms (such as international emissions trading) or its
sink provisions. Compliance with Article 3 will be evaluated using
countries' annual inventory reports on the basis of cumulative totals
at the end of the five-year period.
As explained in answer to the preceding question, the U.S.
submissions to which you refer include proposals for certain linkages
between annual emissions inventory and reporting requirements and
access to the Protocol's flexibility mechanisms in order to assure the
environmental integrity of those mechanisms. A Party could lose access
to the mechanisms only in the case of a failure to meet inventory and
reporting requirements so egregious as to undermine the environmental
integrity of the mechanisms. In such a case, access to the mechanisms
would be restored when the inventory or reporting problem was
rectified. Smaller-scale inventory problems would be remedied in other
ways and not result in loss of mechanism eligibility.
Under these proposals, we expect that countries will be able to
retain their eligibility to use the mechanisms. As already noted,
countries are already performing annual emissions inventories under the
UNFCCC, and while improvements in inventories may be needed if the
Protocol is ratified and enters into force, there is ample time to make
such improvements before the first commitment period begins. Thus,
these proposed linkages would serve as a useful incentive for prompt
compliance with inventory and reporting requirements without
diminishing the flexibility offered by the five-year budget period, the
mechanisms, or sink credits. As a result, we would not expect there to
be any impact on the Administration's cost projections or the ability
of the U.S. to meet its commitment.
KYOTO PROTOCOL: SOURCE AND REASON OF U.S. PAYMENT OF FINES FOR
VIOLATIONS
Question. Some apparently want the countries to pay fines for
violations and the Report says the ``U.S. would entertain, but does not
endorse,'' payment of fines into a fund to assist developing countries.
Why would the U.S. even entertain such an idea and where would the
money come from if the U.S. was a violator?
Answer. The Administration does not support mandatory payment of
fines for non-compliance.
CO2 EMISSIONS: STATUS OF PETITION TO REGULATE CO2
EMISSIONS
Question. What is the status of EPA's consideration of the Oct. 20,
1999 environmental groups' petition for EPA to regulate CO2
emissions from new cars and trucks? When does EPA plan to respond to
the petition?
Answer. On October 22, 1999, a coalition of 19 groups, headed by
the International Center for Technology Assessment, submitted a
petition asking EPA to regulate emissions of carbon dioxide and other
greenhouse gases from new motor vehicles and engines. EPA has made no
decision concerning whether to grant or deny the petition. In
compliance with the Agency's common practice and requests by members of
Congress, EPA plans soon to publish a notice asking for public comment
on the petition. The notice will probably provide a 90 day comment
period. Several comments have already been received and placed in a
public docket that EPA has established for the petition. See docket
number A-2000-04. EPA will consider all comments in making a decision
on the petition.
KYOTO PROTOCOL: KNOLLENBERG FUNDING RESTRICTION
Question. Under EPA's reading of the Knollenberg funding
restriction, the Agency may issue regulations ``for a number of
purposes, including reduction of greenhouse gas emissions,'' as long as
the regulation is ``not for the purpose of implementing, or in
preparation for implementing, the Kyoto Protocol.'' Reducing greenhouse
gas emissions is the purpose of the Kyoto Protocol. As a practical
matter, what real difference is there between issuing regulations to
accomplish the purpose of the Kyoto Protocol and issuing regulations
for the purpose of implementing the Protocol? Isn't EPA's reading of
Knollenberg permissive rather than prohibitive or restrictive?
Answer. The Clean Air Act authorizes (and, in places, requires) EPA
to take a variety of actions to address air pollution problems entirely
unrelated to climate change. As elaborated below, some of these actions
can also have the indirect effect of reducing greenhouse gas emissions,
depending on the sources that are controlled and the types of pollution
reduction measures sources elect to use. In addition, certain
provisions of the Clean Air Act authorize regulatory actions that
directly address emissions of greenhouse gases. These provisions pre-
date the Kyoto Protocol and action taken under them carries out
purposes articulated in the Clean Air Act itself and does not implement
or prepare to implement the Protocol. EPA does not believe that the
Knollenberg language bars, or was intended to bar, either of these
types of regulatory action under the Clean Air Act.
The Knollenberg language covers EPA's proposal or issuance of a
rule, regulation, decree, or order for the purpose of implementation,
or in preparation for implementation of the Kyoto Protocol. EPA's
regulatory activities implementing the requirements of the Clean Air
Act are for the purpose of implementation of those particular
requirements of the Clean Air Act, not the Kyoto Protocol.
As noted above, many EPA activities authorized under the Clean Air
Act are entirely unrelated to climate change, but have various indirect
effects, including reduction of greenhouse gas emissions. For example,
control of sulfur dioxide for the purpose of reducing acid rain, or
control of nitrogen oxides for the purpose of reducing tropospheric
ozone, may have the indirect effect of reducing greenhouse gas
emissions, depending upon the sources controlled and the types of
abatement measures they elect to use. Protecting human health and the
environment from ozone pollution and from acid rain are major goals of
the Clean Air Act. The Knollenberg language does not on its face bar
expenditures on such activities and it would be unreasonable to assume
that Congress intended such an interpretation.
Other provisions of the Clean Air Act authorize regulatory actions
that directly address emissions of greenhouse gases, but do not
implement or prepare to implement the Kyoto Protocol. For example,
Title VI of the Clean Air Act, enacted in 1990, provides for EPA to
take certain actions regarding the health and environmental risks of
substances that serve as replacements for ozone-depleting chemicals.
Section 612 directs EPA to place limits on the use of particular
replacement chemicals if the agency determines that other existing
alternatives ``reduce overall risk to human health and the
environment.'' EPA believes that a reasonable and common-sense/
interpretation of the quoted language includes the consideration of
contribution to climate change. Thus, in comparing the ``overall risk''
of various substitutes for ozone-depleting substances, EPA considers
ozone depletion potential, human toxicity, flammability, contribution
to global warming, occupational health and safety, and effects on water
and air quality. Actions taken under section 612 of the Clean Air Act
carry out the purposes of that provision (i.e., ensuring that
replacements for ozone-depleting substances do not in turn create new
and unnecessary risks). These actions are not for the purpose of
implementing or preparing to implement the Kyoto Protocol.
CCTI TAX CREDITS: COST TO TREASURY IN LOST TAX REVENUE
Question. As you know, the Administration is requesting $4 billion
in Climate Change Technology Initiative (CCTI) tax credits over five
years. What is the cost to the Treasury in lost tax revenue of each of
those tax credits? In each case, is the cost in lost revenue greater or
less than $14 to $23 per ton of emissions reduced?
Answer. As provided in the President's budget, the tax incentives
are estimated to cost $4.03 billion over five years (fiscal year 20001
through fiscal year 2005). The 5-year revenue impact of each tax credit
are as follows: energy-efficient building equipment ($201 million),
energy-efficient homes ($633 million), solar energy systems ($132
million), electric, fuel cell, and hybrid vehicles ($2,078 million),
clean energy ($976 million), and distributed power ($10 million).
CCTI TAX CREDITS: VOLUNTARY PROGRAM COSTS LESS THAN MANDATORY PROGRAMS
Question. Last year, the Energy Information Administration (EIA)
estimated, for very similar proposals, that the average revenue loss
per ton of carbon reduced or avoided is $133/tonne to $206/tonne. Only
the utility co-firing tax credit fell within the $14 to $23 range
estimated by Dr. Yellen as the cost of implementing the Protocol via
emissions trading and other flexibility mechanisms. In short, all but
one of the tax credits failed what might be called the ``Janet Yellen
Test.'' The Kyoto Protocol would create mandatory--legally binding--
emission reduction obligations. The CCTI tax credit proposals are
voluntary. Shouldn't voluntary programs cost less than mandatory
programs, not the other way around?
Answer. Please see prior response to ``CCTI Tax Credits: Cost to
Treasury in Lost Tax Revenue.''
NSR REFORM AND RELATIONSHIP TO UTILITY ENFORCEMENT INITIATIVE
Question. While there is considerable debate about how to reform
the New Source Review program (NSR) under the Clean Air Act, it appears
that almost everyone agrees that this program is overly complex and has
imposed a high level of uncertainty and unnecessary burdens on States
and industrial sources. In its 1998 notice of availability of further
changes to the NSR rules, EPA indicated that its proposed changes would
be likely to result in NSR applicability to projects at existing
facilities that ``increase reliability, lower operating costs, or
improve operational characteristics'' of production equipment.
Can you explain how reinterpreting your rules to make routine
efficiency and reliability projects subject to the NSR permitting
process will help to improve this program and reduce disincentives for
technology development and deployment?
Answer. In answering this question, it is important to distinguish
between two efforts. One is the effort to enforce the existing NSR
rules. The other is an effort to reform the NSR rules to promote more
flexibility and certainty, as well as reduce the burdens on states and
sources, while maintaining at least the same level of environmental
protection.
In the context of this first effort, the enforcement action, some
industry stakeholders have alleged that EPA has reinterpreted its NSR
rules governing the longstanding NSR exemption for ``routine
maintenance, repair, and replacement.'' However, the interpretation of
``routine'' has remained unchanged. Nothing in the recent EPA
complaints, notices of violation, or administrative orders indicates
that EPA has changed its interpretation of this exclusion nor has
anyone identified the prior interpretation that EPA is alleged to be
changing. In fact, in a widely publicized 1990 court decision
(Wisconsin Electric Power Co. vs. Reilly) EPA's historical
interpretation of ``routine'' was the subject of litigation, and the
interpretation was upheld by the courts.
The EPA is hopeful that its effort to reform the NSR rules will
promote flexibility and certainty in NSR permitting to reduce the
burden on states and sources and assure an equivalent level of
environmental protection as the current program. However, the subject
of what is ``routine'' and the issues raised by the enforcement action
are not at issue in NSR reform. Thus, not only have the policies on
``routine'' not changed in the past, but there is also no proposal to
do so in NSR reform.
This question suggests that NSR reform (and specifically the notice
of availability) will somehow expand NSR applicability to include
projects that ``increase reliability, lower operating costs, or improve
operational characteristics.'' As stated earlier, EPA has indicated for
years that NSR already applies to these types of changes where they
increase emissions. The sentence you reference illustrates this point
by stating:
``The EPA's experience leads to the conclusion that sources
generally make non-routine physical or operational changes which are
substantial enough that they might trigger NSR in order to increase
reliability, lower operating costs, or improve operational
characteristics of the unit and do so in order that they may improve
their market position.''
Thus, NSR reform will not subject these types of projects to NSR;
they are already subject if they increase emissions. Many changes which
a source labels ``efficiency'' changes can increase emissions by large
amounts, and the Clean Air Act requires review of the environmental
impacts of these changes. However, if an ``efficiency'' change does not
increase emissions, NSR does not apply, and there is nothing proposed
that would cause NSR to apply to a change that does not increase
emissions.
EFFECTS OF NSR ``REINTERPRETATION''
Question. Don't you think that reinterpreting the law to subject to
NSR routine projects that neither increase capacity nor emission rates,
but only improve operations will magnify the burdens of the NSR
program, increase procedural delays, and further discourage innovation?
Answer. First, it is important to note that before a modification
is subject to NSR it must first result in a potential emissions
increase. Thus, unless a project to improve operations also results in
an increase in emissions, it would not be subject to major NSR.
Moreover, as noted above, the EPA is acting consistent with
longstanding policy as upheld by the courts and is not ``reinterpreting
the law.'' Indeed, the preamble to the 1992 rule revising the NSR
regulations applicable to electric utilities specifically states that
``changes that improve operational characteristics will be treated in
the same manner as any other changes'' and thus, when an improvement
``is not routine and an emissions increase results from the
improvement, that portion of the emissions increase resulting from the
improvement will be considered in determining whether the proposed
change subjects the unit to NSR requirements'' 57 Fed. Reg. 32314,
32327 (1992). Because there has been no change in EPA's interpretation
of this exclusion, no increase in procedural delays or discouragement
of innovation could have resulted from a reinterpretation.
ENFORCEMENT ACTION AND POTENTIAL BROWNOUTS
Question:. Since EPA's actions could affect potentially thousands
of projects and even require prior Agency NSR review of projects
designed simply to prevent a deterioration in efficiency, is EPA
prepared to accept responsibility for interruptions in service (brown-
outs)?
Answer. Again, as stated earlier, a non-routine project designed to
prevent a deterioration in efficiency would trigger major NSR only if
it also resulted in a significant increase in emissions. EPA's
responsibility is to assure that sources comply with the Act by
obtaining the necessary permits when they increase emissions. Sources
should plan for obtaining the necessary air permits whenever they
undertake construction that will increase emissions by a large enough
amount. Sources also have other options to legally avoid NSR
permitting. These options include ``netting out'' of NSR or limiting
the size of the emissions increase to stay below NSR levels. Therefore,
to avoid interruptions in service and possible brownouts, a source
should take into consideration its options for compliance with all
regulatory requirements (including air regulations) as part of its
normal capital and operational planning activities prior to undertaking
a construction project that increases emissions. With appropriate
planning, sources can readily avoid brownouts and other similar
situations.
Moreover, as is the usual practice, the EPA intends to resolve the
violations in the ongoing enforcement action in a manner that will not
result in brownouts. Indeed, in the settlement with Tampa Electric
Company, the company has ample time to install the necessary emissions
control technology and can thus plan the installation so that it
minimizes any impact on the ability to meet electricity demand.
NAAQS: AIR ENFORCEMENT DIVISION: APPLICATION OF NEW RULES
Question. What kind of procedures will be put in place to ensure
that the Agency's Air Enforcement Division will not become over zealous
in the application of the new rules?
Answer. The EPA Air Enforcement Division's priorities are developed
after discussion with the Air Program Office. In addition, the Regions,
and representatives of state and local air pollution control agencies
are consulted before enforcement priorities are set. By using objective
targeting methodologies including analyses of compliance data and
investigation reports, the Division pursues enforcement cases that
result in the greatest environmental benefit while optimizing the use
of available agency resources. The Office of Enforcement and Compliance
Assurance, which includes the Air Enforcement Division, annually re-
evaluates its list of ``National Significant Issues'' for enforcement,
soliciting comment from other offices within EPA. We have also
publicized existing requirements through widely distributed Enforcement
Alerts.
GREENHOUSE GASES
Question. What other ``greenhouse gases'' are EPA trying to
regulate: methane from agriculture, methane from wetlands, water vapor?
Answer. EPA has no current plans to regulate methane from
agriculture, methane from wetlands, or water vapor.
TMDL: NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM (NPDES) PERMITS:
FORESTRY ACTIVITIES
Question. What specific forestry activities has the Environmental
Protection Agency (EPA) now designated to be point source discharges
subject to federal National Pollutant Discharge Elimination System
(NPDES) permits?
Answer. Currently, 40 CFR 122.27 designates a silvicultural point
source as any discernible, confined and discrete conveyance related to
rock crushing, gravel washing, log sorting, or log storage facilities
which are operated in connection with silvicultural activities and from
which pollutants are discharged into waters of the United States. EPA's
August 23, 1999 proposal would, if promulgated, add an authority for
States and EPA to designate for NPDES regulation, on a case-by-case
basis, discharges of storm water from additional silviculture
activities such as road building and harvesting. Under the proposal, a
State may designate a source only where there is a discharge from a
discrete, confined conveyance, a ``point source,'' and where the State
determines that the discharge contributes to a violation of water
quality standards or is a significant contributor of pollutants. EPA
could designate a source under these circumstances as well; however,
its authority would be limited further. EPA could designate a source
only where there is a point source discharge to a waterbody that is
impaired, the silvicultural operation is contributing to that
impairment, the Agency is establishing a TMDL for that waterbody, and
the Agency believes it is necessary, to designate that source to
provide reasonable assurance that the source will meet its allocated
load reductions under the TMDL.
TMDL: SILVICULTURAL OPERATIONS REGULATION
Question. Is this the first time EPA will regulate silviculture
operations?
Answer. This is not the first time the Agency would be regulating
discharges associated with silvicultural operations. The Environmental
Protection Agency's (EPA) regulations currently require NPDES permits
for discharges associated with log sorting, log storage, gravel washing
and rock crushing. (See silviculture regulations at 40 CFR
Sec. 122.27).
TMDL: SILVICULTURAL OPERATIONS PERMIT REQUIREMENTS
Question. Does this proposal automatically and categorically
subject all silvicultural operations to NPDES permit requirements?
Answer. This rule would not automatically or categorically subject
silviculture sources to the NPDES program. If the rule were promulgated
as proposed, no additional silviculture sources would be required to
obtain an NPDES permit. The proposed designation authority is
discretionary, not mandatory, and, under the proposal could be invoked
only on a case-by-case basis and under the following circumstances.
A State may designate a source only where there is a discharge from
a discrete, confined conveyance, a ``point source,'' and where the
State determines that the discharge contributes to a violation of water
quality standards or is a significant contributor of pollutants. EPA
could designate a source under these circumstances as well; however,
its authority would be limited further. EPA could designate a source
only where there is a point source discharge to a waterbody that is
impaired, the silvicultural operation is contributing to that
impairment, the Agency is establishing a TMDL for that waterbody, and
the Agency believes it is necessary, to designate that source to
provide reasonable assurance that the source will meet its allocated
load reductions under the TMDL.
Sources located in States with effective and appropriately
protective forestry programs and which are implementing those programs
would likely not be affected by this proposal. The intent of this
proposal was to provide a mechanism to address those that are not
implementing measures to protect water quality.
TMDL: FORESTRY ACTIVITIES DEFINED AS NON-POINT SOURCE
Question. Is it statutory or through regulation that forestry
activities are defined as a nonpoint source category and thereby not
subject to point source discharge NPDES permit requirements?
Answer. The current exemption from NPDES permit requirements for
certain storm water discharges associated with a silvicultural
operation is regulatory, not statutory. In other words, there is
nothing in the CWA that explicitly excludes storm water discharges
associated with silvicultural operations from NPDES requirements. The
Agency's regulations currently define certain discharges associated
with silvicultural activities as ``nonpoint'' source discharges
therefore, not requiring NPDES permits. These regulations, drafted
prior to the 1987 storm water amendments, properly prevent the general
application of the permit requirements to countless discharges of storm
water from silvicultural operations, the vast majority of which are not
``significant contributors'' of pollutants to waters of the United
States.
Agency regulations established prior to the 1987 Amendments subject
some discharges associated with silvicultural activities to NPDES
permit requirements; namely, those associated with log sorting and
storage facilities and gravel washing and rock crushing activities. (40
CFR Sec. 122.27). Facilities conducting these activities are currently
required to obtain NPDES permits.
TMDL: SILVICULTURAL OPERATIONS STORMWATER REGULATIONS
Question. Do the existing storm water regulations enacted after the
1987 Amendments to the Clean Water Act give EPA the authority to
designate silviculture as a point source discharge subject to these
provisions?
Answer. The 1987 Amendments to the Act created a new storm water
program and exempted from the Clean Water Act (CWA) permit
requirements, all ``discharges'' (i.e. a discernable, confined discrete
conveyance) of storm water except specified discharges (e.g. some
municipal industrial storm water). These amendments also provided
discretionary authority to designate specific storm water discharges as
needing a permit if they contribute to a violation of a water quality
standard or are ``significant contributors'' of pollution to waters of
the United States. (See CWA Section 402(p)(2)(E) and implementing
regulations at 40 CFR Sec. 122.26(a)(v)). Under the proposal, it is
this discretionary designation authority which would be invoked if and
when EPA or a State chose to designate a discharge from a silvicultural
operation as requiring an NPDES permit.
TMDL: SILVICULTURAL OPERATIONS IMPAIRMENT OF WATER QUALITY
Question. Does impairment of water quality that might result from
silvicultural operations provide the Agency with the justification to
designate forestry operations a point source discharge subject to NPDES
permits?
Answer. The August 23, 1999, Federal Register notice of the
proposed rule explains that for the sources that were categorically
excluded previously (nursery operations, site preparation,
reforestation and subsequent cultural treatment, thinning, prescribed
burning, pest and fire control, harvesting operations, surface
drainage, or road construction and maintenance), the categorical
exclusion from the definition of ``point source'' would be removed.
Instead, on a case-by-case basis, selected sources could be designated
for regulation under the NPDES program for storm water discharges under
40 CFR 122.26(a)(v). EPA believes the impacts and potential impacts on
water quality of silviculture activities, as reported by States, do
justify this use of case-by-case authority to designate discharges of
polluted storm water for regulation under NPDES.
TMDL: SILVICULTURAL OPERATIONS POINT SOURCE DISCHARGE
Question. How does EPA now claim after almost 30 years of Clean
Water Act legislation, regulation, and case law that silvicultural
operations are to be designated as a point source discharge subject to
NPDES permits?
Answer. As explained in the August 23, 1999, Federal Register
notice of the proposed rule, in 1987, Congress directed EPA to focus on
water quality concerns associated with storm water. One of the types of
storm water discharges that the Agency identified as appropriate for
regulatory control under the NPDES program was storm water discharges
associated with construction activity, including clearing, grading, and
excavation activities. Storm water discharges resulting from land
disturbance have significant potential for water quality impairment due
to excessive sediment loads and other factors. Sediment adversely
affects aquatic ecosystems by reducing light penetration, impeding
sight-feeding, smothering benthic organisms, abrading gills and other
sensitive structures, reducing habitat by clogging interstitial spaces
within a streambed, and reducing the intergravel dissolved oxygen by
reducing the permeability of the bed material.
To date, NPDES regulation of storm water discharges associated with
construction activity has protected water quality from the runoff
associated with, for example, the construction of roads. A gap in
regulatory coverage exists, however, in that the existing NPDES
regulations categorically exclude silvicultural road construction and
maintenance as well as run-off from several other categories of
silviculture activities from the definition of ``point source.''
Therefore, the current silviculture regulation excludes discharges
related to all but four categories of silviculture activities (rock
crushing, gravel washing, log sorting, and log storage facilities) from
the universe of sources that can be regulated under the NPDES
permitting program. EPA's August 23, 1999 proposal moved to address
this gap by enabling EPA and States to designate, case-by-case, point
sources of storm water for regulation under NPDES.
In 1998 the National Water Quality Inventory, 32 States identified
forestry as a source of water quality problems that affect more than
20,000 miles of rivers and streams; 220,000 acres of lakes; and 15
square miles of coastal waters.
Several types of silvicultural activities that are currently exempt
from NPDES regulation may cause significant adverse impacts on water
quality. These include, but are not limited to, road construction and
maintenance, site preparation, prescribed burning, clearcutting, and
harvesting operations. As mentioned above, the construction and
maintenance of roads, other than those constructed for silvicultural
operations, are currently subject to NPDES requirements. The
construction and maintenance of roads related to silvicultural
activities, however, are exempt. Studies demonstrate that such road
construction may create significant water quality problems. Results
Senator Craig of a study on forest management activities in a small
watershed indicated that suspended sediment yields increased almost 8
fold in the first year following road construction, and two-fold
following logging in the second year.
Mechanical site preparation by large tractors that shear, disk,
drum-chop, or root-rake a site may result in considerable soil
disturbance over large areas and has a high potential to deteriorate
water quality. Site preparation techniques that result in the removal
of vegetation and litter cover, soil compaction, exposure or
disturbance of the mineral soil, and increased stormflows due to
decreased infiltration and percolation, all can contribute to increases
in stream sediment loads. Prescribed burning is another method used to
prepare sites that may also have effects on water quality as a result
of increased erosion and the altering of soil properties.
The actual harvesting of timber can also contribute to water
quality problems. Results from studies have indicated that
clearcutting, which is often a method used for timber harvesting, can
have significant effects on the nutrient levels and temperatures of
nearby waters. The resulting impacts of a logging operation in the Bull
Rull Watershed of Oregon include increased nitrate-nitrogen levels for
up to 7 years after the harvest and an increase in annual stream
temperatures by 2-3 degrees Celsius for the following 3 years after the
harvest.
TMDL: FORESTRY COMMUNITY IMPROVEMENT IN WATER QUALITY
Question. What progress has the forestry community made to improve
water quality over the last decade?
Answer. The forestry community has worked hard during the last
decade to address water quality impacts from silviculture operations.
Within the last decade, nearly every state has developed and published
Best Management Practices (BMPs). Most states with significant
commercial forestry operations routinely conduct assessments of how
well their nonpoint source control programs are working. For those
states which have repeatedly measured implementation of BMPs, there is
an encouraging trend of improving implementation rates. EPA recognizes
that implementing properly designed forest management plans which
include appropriate BMPs can result in logging activities that are both
economically viable and protective of water quality.
TMDL: FORESTRY PROVISION IN THE CLEAN WATER ACT
Question. Has Congress specifically regulated forestry in any
provision of the Clean Water Act?
Answer. Yes, the Clean Water Act (CWA) addresses forestry
activities.
EPA regulates point sources discharges from certain forestry under
CWA Section 402, the NPDES permitting program. Since 1976, when EPA
promulgated its regulations, discharges from certain silviculture
activities (rock crushing, gravel washing, log sorting and log storage
facilities)have been subject to NPDES permitting based on the
interpretation of point source in Section 502 of the CWA. Section 502
does not specifically mention silviculture.
Section 319 provides for the establishment of State nonpoint source
management programs to address various categories of nonpoint source
pollution, including silviculture. Section 319 does not provide any
Federal regulatory authority; nor does it mandate that States employ
regulatory approaches. State 319 programs employ a broad range of
voluntary and/or regulatory programs to address water quality issues
associated with forestry, including publication of technical guidance,
provision of technical assistance and financial assistance, conducting
audits, and implementing State-established regulatory programs. Section
319 does not specifically mention silviculture, however, states may
identify silviculture under their State assessment reports.
Section 404(f) describes exemptions from Section 404 permitting
requirements for certain agricultural, silvicultural, and mining
activities that result in discharges of dredged or fill material into
waters of the United States. Discharges of dredged or fill material
into waters of the United States typically require a permit form the
Army Corps of Engineers. However, discharges of dredged or fill
material associated with normal forestry activities such as harvesting
and seeding, as well as for forest road construction and maintenance,
are exempt unless they are recaptured under Section 404(f)(2). With
respect to forest road construction or maintenance, Section 404(f)
requires the use of best management practices to minimize adverse
impacts to the aquatic environment.
tmdl: forestry community view of forestry activities as nonpoint source
Question. EPA states they will only designate forestry activities
as a point source discharge in ``very narrow circumstances,'' as a
``last resort,'' and ``extremely rare circumstances.'' How does the
forest community view these assurances from the federal Environmental
Protection Agency?
Answer. The forest community has indicated their belief that the
rule as proposed would lead to a significant number of forestry
operations being subject to NPDES permitting requirements. The Agency
respectfully disagrees with this assertion. Indeed, EPA believes the
case-base-provisions would only need to be used in the specific
circumstances described in the proposal as a means to correct water
quality impairments resulting from silviculture, where no effective
program to address such impacts is in place.
TMDL: FORESTRY EXAMPLES OF EPA IMPOSING LAND USE
Question. Are there current examples of EPA imposing land use
forestry requirements on states and forest land owners?
Answer. No, EPA regulations currently require NPDES permits for
point source discharges associated with log sorting, log storage,
gravel washing and rock crushing. (See silviculture regulations at 40
CFR Section 122.27.) These permits regulate discharges from these
activities, not land use.
tmdl: authority to require states to develop reasonable assurance
Question. Does EPA have the authority to require states to develop
a ``reasonable assurance'' policy to achieve a nonpoint source load
reduction and submit that policy with a TMDL implementation plan to EPA
for approval?
Answer. Yes. The preamble to the proposed rule provides an
extensive discussion of EPA's authority to require that an
implementation plan be submitted as part of a TMDL and that reasonable
assurance be part of that implementation plan. [see pages 46032 through
46034, Federal Register Vol. 64, No. 162, August 23, 1999].
TMDL: FORESTRY ECONOMIC IMPLICATIONS
Question. What are the economic implications of EPA's proposal to
designate forestry as a point source discharge subject to NPDES
permits?
Answer. The proposed silvicultural designation authority is both
limited and discretionary and, if invoked, it would be on a case-by-
case basis. By amending the definition of silviculture point source the
proposed rule would remove an exemption from the NPDES program for
discharges from certain activities associated with silviculture. The
removal of this exemption would not automatically and categorically
subject any silvicultural operations to NPDES permit requirements. EPA
estimates that the costs related to this proposed authority would total
$3.7-$13.2 million annually. The estimates include costs to potentially
designated silviculture operators for compliance with NPDES permit
requirements, and States and EPA for administration and oversight. The
costs reflect that these sources would not be subject to NPDES permit
requirements unless and until they are designated on a case-by-case
basis.
TMDL: BENEFIT-COST ECONOMIC ANALYSIS OF ITS PROPOSAL
Question. Should EPA be required to conduct a thorough benefit-cost
economic analysis of its proposal?
Answer. EPA recognizes that the TMDL program is of interest to a
wide range of stakeholders, and expects that stakeholders will have an
interest in understanding the costs and benefits from implementation of
the TMDL program as well as the direct costs of developing TMDLs. While
the issues and estimating methods are complex and difficult, EPA is
working to develop such information. As this work evolves and its
quality is sufficient to meaningfully inform the public, EPA will make
it available for public review.
TMDL: NEAR A CULVERT--NONPOINT SOURCE
Question. Is it the position of EPA that any activity that takes
place near a culvert will be classified as point source pollution? If
not, how does the EPA determine which ones are? Does EPA intend to
regulate forestry practices in the headwaters basins when natural
runoff flows through a drainage culvert in conjunctions with a forest
road?
Answer. EPA's August 23, 1999 notice proposed to allow states and
EPA, in limited cases to designate for NPDES permitting, point source
discharges of polluted storm water from forestry operations, where
necessary to address a clear water quality problem. It is EPA's
position, consistent with its regulations at 40 CFR Section 122.2, that
a discharge of a pollutant means any addition of any pollutant or
combination of pollutants to waters of the United States from any point
source. The definition includes additions of pollutants into waters of
the United States from surface runoff which is collected or channeled
by man. A point source means any discernible, confined, discrete
conveyance, including but not limited to, any pipe, ditch, channel,
tunnel, conduit, well, or discrete fissure (40 CFR 122.2). EPA's
proposal envisioned that, where a specific forestry activity such as
forest road construction and maintenance results in the point source
discharge of polluted storm water in a manner that causes or
contributes to excursion of water standards, or is a significant
contributor of pollutants to waters of the U.S., that point source
could be required by the state to seek an NPDES permit. EPA could also
require such sources to seek permits on a case-by-case basis, but only
where necessary to ensure implementation of an EPA-established TMDL.
COMPLETENESS OF THE CALPUFF MODEL
Question. For FLAG, EPA is requiring long range visibility modeling
to use a model not completely available to the scientific community--
the CALPUFF model. Also, the company which has the missing piece of the
model is not releasing it. Since the model is not completely available,
EPA cannot hold a workshop to approve the model
Why is EPA requiring use of a model which is not completely
available? Why is EPA requiring use of a model not accepted by EPA? Why
is EPA requiring use of a model of which only one company has complete
control, creating a monopoly in the modeling community?
Answer. EPA is not requiring use of any particular model as part of
FLAG. FLAG is a joint program of the U.S. Forest Service, the National
Park Service, and the U.S. Fish and Wildlife Service. EPA has been
included in many of FLAG's discussions in an advisory and informational
capacity, but is not an active member of the FLAG, nor does it
participate in the management or direction of the group.
CALPUFF is, however, part of the Guideline on Air Quality Models
which EPA has prepared. EPA has prepared changes to Appendix W of 40
CFR Part 51 that make minor changes to recommendations on visibility
calculations. The complete set of proposed changes is about to be
published in the Federal Register for a 90-day public comment period.
These changes will also will be the subject of the Seventh Conference
on Air Quality Modeling in Washington, D.C. planned for June 28-29,
2000. Regarding regional haze, the proposed changes state:
``CALPUFF may be applied on a case-by-case basis when assessment is
needed of reasonably attributable haze impairment due to one or a small
group of sources. The procedures and analyses should be determined in
consultation with the appropriate Regional Office, the appropriate
regulatory permitting authority, and the appropriate Federal Land
Manager (FLM).''
Thus, it should be clear that EPA has not required the use of
CALPUFF for long range visibility modeling or regional haze. The model
is, and has been, in the public domain and has been subjected to
scientific peer review. It is available free of charge through an
independent Internet website which is linked to EPA's website on all
air quality models that are used for regulatory applications.
The model (CALPUFF) is, and has been, publicly available through an
Internet website free of charge. By mutual agreement with EPA, and for
efficiency purposes, the website from which CALPUFF is obtained is
managed by the model developer. If this arrangement becomes impractical
or untenable and the developer can no longer provide access, EPA will
make the model available on its own website. The version of the CALPUFF
modeling system currently provided at the independent Internet website
is dated March, 1999. The firm that produced the CALPUFF modeling
system (which has had many sponsors, of which the EPA is just one)
provides beta-test versions of software under development to
individuals of its choosing. The EPA has requested the company to
provide timely updates to the modeling system as new advances in
software are finalized. It is EPA's understanding that the company
plans a major update prior to EPA's planned Seventh Conference on Air
Quality Models (an open workshop and hearing), in Washington, D.C. June
28-29, 2000.
FLAG: INDUSTRIAL AND SCIENTIFIC COMMUNITY REQUIREMENTS
Question. Scientists trying to meet FLAG requirements in Colorado
asked your FLAG member, the National Park Service, in August for
boundaries of the Rocky Mountain National Park and the Great Sand Dunes
National Monument. The request was made August 5 and again in late
December, but to date the scientists have yet to receive the necessary
boundary information from your FLAG group. How can the industrial and
scientific community meet your FLAG requirements if you do not provide
the most basic of information?
Answer. The Federal Land Managers' Air Quality Related Values
Workgroup (FLAG) process referred to in this question is managed by the
three agencies responsible for managing federal lands. They are the:
National Park Service; U.S. Forest Service; and U.S. Fish and Wildlife
Service. EPA is not involved in the FLAG process except as a commenter
on its development and activities and a provider of technical support.
Information about the FLAG process and underlying technical data,
such as Park boundaries for Rocky Mountain National Park and Great
Dunes National Monument is currently available on the National Park
Service web site: ftp:/ftp.nps.gov/pub/. When you go to this site,
choose ``park boundaries'' from the list of sub-directories.
COEUR D'ALENE: RIFS REPORT AND ROD
Question. On March 22, EPA announced in Coeur d'Alene that the RIFS
report and ROD for the Coeur d'Alene Basin would be bifurcated and
delayed for up to a year. The State did not have any knowledge of this
action they thought we were all working together. This is a major
change in direction and could have major impacts on the ability to find
a solution in the Basin. Could you explain to me EPA's attitude on
working with states on Superfund and specifically what is going on in
Coeur d'Alene?
Answer. EPA is and will continue to be committed to working closely
with the State of Idaho, the State of Washington, the Coeur d'Alene
Tribe and all the stakeholders in the Basin to come up with workable
cleanup solutions. As you know, EPA originally proposed to issue a
final Record of Decision for the Coeur d'Alene Basin by the end of this
year, partly in response to concerns for moving the study process
quickly toward cleanup decisions and cleanup actions. Meeting this
schedule would require extremely tight deadlines for stakeholder review
of interim technical documents.
Early this year, we began hearing concern that this schedule would
not allow enough time for adequate review of data and documents. When
Regional Administrator Chuck Clarke traveled to the Basin with Idaho
Environmental Director Steve Allred during the first week of March,
stakeholders raised concerns that the RI/FS schedule was moving too
quickly. During two days of meetings with community members in Coeur
d'Alene and Wallace, the possibility of either phasing or delaying the
schedule was discussed. Although several people had questions about a
schedule change, there seemed to be no opposition to it. By modifying
the Remedial Investigation/Feasibility Study and Record of Decision
schedule, and phasing the release of cleanup decision documents, EPA
believed it was being responsive to stakeholder concerns. EPA also
believed that doing so was acceptable to Idaho and Washington states,
the Coeur d'Alene Tribe, and other stakeholders. As soon as EPA decided
to propose a phasing of the Records of Decision, we immediately
notified the Idaho Department of Environmental Quality (IDEQ) staff and
other government agencies. We thought we were doing our best to
communicate and coordinate with those involved in this decision. We
sincerely regret if anyone involved did not receive timely information.
EPA Regional Administrator Chuck Clarke spoke with Idaho Environmental
Director Steve Allred on March 29, 2000, to discuss important issues
related to the site. EPA and IDEQ staff are working together to produce
a schedule that will be workable for both agencies.
SRF FUNDING LEVELS FACILITIES
Question. In many Idaho communities, the systems for ensuring safe
drinking water and efficient wastewater disposal facilities lag behind
modern demands. In some cases, the costs associated with meeting
national standards have outstripped a community's ability to pay for
necessary upgrades and/or replacement of worn-out or outdated
facilities. Do you feel the capitalization grant programs for
wastewater and drinking water are adequately funded to meet these
concerns?
Answer. Financing for wastewater infrastructure has been, and will
continue to be, a partnership between EPA, other Federal agencies,
state governments, and local communities. By capitalizing the SRF such
that it will be able to provide at least $2 billion in financial
assistance to local communities over the long run, the Agency is
providing a substantial source of financing consistent with historic
levels of Agency contribution. Over $17 billion has already been
provided to capitalize the CWSRF, more than twice the original Clean
Water Act authorized level of $8.4 billion. Total SRF funds available
for loans since 1987 reflecting loan repayments, state match dollars,
and other sources of funding are approximately $30 billion, of which
$26 billion has been loaned to communities ($4.2 billion was available
for loans as of June 1999).
The Drinking Water SRF continues to provide an affordable source of
funding for communities to build and upgrade their drinking water
facilities to ensure that all public water systems provide drinking
water that is safe to drink. Since its inception in fiscal year 1997,
$3.6 billion has been provided to capitalize the DWSRF. EPA expects
that states will soon make their 1,000th loan under this program
representing nearly $2 billion in loan assistance to local communities.
EPA's annual performance goal and measure estimates that 1,800 loans
will be made and some 450 SRF-funded projects will be initiating
operations by the end of fiscal year 2001. The DWSRF program is also
fulfilling the goals of the Safe Drinking Water Act (SDWA) with respect
to assistance for small systems. Fully three quarters of the loans made
to date have gone to small water systems that serve fewer than 10,000
persons. Forty percent of total loan dollars have gone to these small
systems, well above the SDWA mandate of fifteen percent.
The Agency acknowledges that needs estimates may be higher than
previously estimated. Given that, and the fact that we now have a
better understanding of the water quality challenges that states and
local governments face, the Administration believes it would be useful
to have a dialogue with the Congress and the broad range of
stakeholders on the future funding levels and project eligibilities for
the Clean Water and Drinking Water SRF programs.
BOISE NAAQS/DESIGNATION ISSUE
Question. Idaho is involved in a comprehensive airshed management
effort in the Treasure Valley/Boise Area. EPA is currently considering
reimposing a non-attainment designation over a portion of the area
which has not had an air quality violation since 1991. The State of
Idaho feels such a designation would needlessly divert attention and
resources away from the real issue. The real issue being an airshed-
wide management program assuring that the health of Idaho's citizens is
protected. Is EPA intending and will they support the State of Idaho's
efforts to resolve this issue? If so, by what action?
Answer. The EPA fully supports the State's efforts to resolve this
issue, and has been working diligently with all parties in this matter
to find a solution that benefits the environment and the people of
Idaho. It is our goal to provide the State of Idaho with as much
flexibility to implement an airshed plan for the Treasure Valley/Boise
area as the law allows when we take action to reinstate the PM10
national ambient air quality standards (NAAQS) in the northern Ada
County/Boise area. If the State is successful in developing a
comprehensive air quality management plan that addresses the long-term
protection of public health and the continued maintenance of the PM10
NAAQS in the area, including assessment of the impact of transportation
activities, we will give every consideration to alternative approaches
available to EPA in lieu of reinstating the nonattainment designation.
REGIONAL HAZE: IMPLEMENTATION OF RULE
Question. How can EPA be implementing the Regional Haze Rule
despite being directed by Congress to implement it only in conjunction
with PM/ozone standards?
Answer. EPA is proceeding with work now that will enable the states
to coordinate future regional haze implementation plans with any future
implementation plans for PM2.5 standards. This work is
consistent with the TEA-21 legislation and fiscal year 2000
appropriations for regional haze planning activities. EPA has work
under way to complete a review of the PM2.5 standards by
2002, to complete deployment of the PM2.5 monitoring network
to characterize ambient air quality, and to provide funding to the
states to establish regional planning partnerships for coordinating the
development of policy and technical analyses for regional haze. If
PM2.5 standards are in effect upon completion of the
Agency's review of the standards in 2002, EPA and the states will have
the necessary monitoring data for designating PM2.5
attainment and nonattainment areas in the 2002-2005 time frame.
Consistent with the TEA-21, the regional haze rule links the date
for submittal of regional haze control strategy State Implementation
Plans (SIPs) in certain states to the dates for designation of
PM2.5 attainment and nonattainment areas. Thus, control
strategy SIPs for regional haze are due in the 2004-2008 time period
which encompasses the period that control strategy SIPs would be due
for PM2.5 nonattainment areas.
Under a specific section of the regional haze rule, certain western
states have the option to submit regional haze SIPs in 2003. The timing
for these SIPs would not be linked to the dates for designation of
PM2.5 areas. This approach is consistent with TEA-21 and was
included in the haze rule to allow these states to move forward with
implementing the set of recommended strategies from the Grand Canyon
Visibility Transport Commission within the framework of the regional
haze rule.
In addition, EPA has provided funding to states and regional air
quality planning organizations to enable them to initiate regional
planning activities to address the regional haze program. Many of the
activities and analyses done in support of regional planning for
regional haze will overlap with implementation of the PM2.5
standards, thereby, allowing coordination of these efforts. EPA
believes that by taking the steps outlined above, the Agency will be
able to ensure coordination of PM2.5 and regional haze SIPs
as discussed in the preamble to the regional haze rule.
TIMETABLE FOR IMPLEMENTATION OF OZONE/PM/REGIONAL HAZE
Question. What specific timetable will EPA use for implementing PM/
ozone standards which allows the Regional Haze Rule to follow?
Answer. The timetable for submittal of state implementation plans
(SIPs) in the regional haze rule is consistent with the TEA-21
legislation. As noted in the response to the preceding question, the
TEA-21 links due dates for SIPs for regional haze with the dates for
designation of PM2.5 attainment and nonattainment areas.
Regional haze implementation plans for areas designated attainment or
unclassifiable for PM2.5 are due within 1 year of the
designation. Regional haze implementation plans for areas designated
nonattainment for PM2.5 are due within 3 years of
designation, which is consistent with the time period for submittal of
plans for PM2.5 nonattainment areas. The regional haze rule
also allows states the option of participating in regional planning
groups and submitting regional haze implementation plans for all parts
of the state at the same time, consistent with the timing for
PM2.5 nonattainment plans. In addition, as noted above,
certain western states have the option to submit regional haze SIPs in
2003 allowing them to implement the set of recommended strategies from
the Grand Canyon Visibility Transport Commission within the framework
of the regional haze rule.
REGIONAL HAZE RULE: COST/BENEFIT ANALYSIS
Question. Did EPA conduct a cost/benefit analysis of the Regional
Haze Rule?
Answer. Yes. The Regulatory Impact Analysis is available on the OAR
Policy and Guidance web page at: www.epa.gov/ttn/oarpg/t1ria.html.
REGIONAL HAZE RULE: SCIENTIFICALLY PROJECTED REDUCTIONS
Question. What are the scientifically projected reductions in haze?
Answer. In the Regulatory Impact Analysis (RIA) for the Regional
Haze Rule, mentioned in the previous question, the Agency estimated
reductions in regional haze as a result of the rule out to the year
2015. These estimates in reductions in haze are based on meeting four
illustrative progress goals applied nationally over a period of time
(10 to 15 years) and based on whether fugitive dust emissions are
controlled or not. In summary, 43 to 90 percent of Class I area
counties (e.g. counties with national parks) achieve the illustrative
progress goals when fugitive dust emissions are controlled, while 31 to
84 percent of Class I area counties achieve the four illustrative
progress goals when fugitive dust emissions are not controlled.
REGIONAL HAZE RULE: COST IN CASH OUTLAY
Question. What will the Rule cost in cash outlay by affected
emissions sources?
Answer. In the Regulatory Impact Analysis (RIA) for the Regional
Haze Rule, the total estimated capital cost (e.g., the costs of
installing pollution control equipment) to facilities having to meet
requirements associated with these four illustrative progress goals in
the projection year of 2015 ranges from $2.8 billion to $15.9 billion
when fugitive dust emissions are controlled and from $3.2 billion to
$16.3 billion when fugitive dust emissions are not controlled. The
total estimated annual cost (e.g. the costs of operating pollution
control equipment) nationally to facilities having to meet requirements
associated with these four illustrative progress goals range from $1.0
billion to $4.4 billion (1990 dollars) when fugitive dust emissions are
controlled and from $0.8 billion to $3.6 billion (1990 dollars) when
fugitive dust emissions are not controlled.
REGIONAL HAZE RULE: SOCIO-ECONOMIC COSTS
Question. What are the socio-economic costs?
Answer. In the Regulatory Impact Analysis (RIA) for the Regional
Haze Rule, the economic impacts associated with the four illustrative
progress goals examined for the regional haze rule in the projection
year of 2015 showed that only 0.02 to 0.04 percent of establishments
(i.e. facilities or plants) nationwide are expected to have control
costs of greater than 1 percent of their sales or revenues regardless
of whether fugitive dust emission controls are considered or not. These
results suggest that changes in prices of most affected products and
changes in prices of fuels and electricity from implementation of the
regional haze rule should be relatively small.
DOE PARTICIPATION IN REGIONAL HAZE RULE
Question. Emissions Limits being set are well below those
recommended by the Grand Canyon Commission. Also, the Regional Haze
Rule has a ``regional BART'' rather than the statutory site-specific
BART. Consequently, the Rule will impose tremendous costs on stationary
sources, including power plants, which were not identified as a major
source of haze by the Grand Canyon Commission.
Since this rule obviously will affect power plants' operations and
permitting, why was DOE not an active part of developing the Regional
Haze Rule?
Answer. Like all EPA rules, the Regional Haze Rule went through the
interagency review process. The Department of Energy was included in
this review process for both the proposed regional haze rule and the
final regional haze rule.
REGIONAL HAZE RULE: LEGAL AUTHORITY FOR THE FLAG AQRV ``POLICY''
Question. What is the legal authority for the FLAG AQRV ``policy''?
Answer. Under the Clean Air Act, the federal land managers have an
``affirmative responsibility'' to protect the air quality related
values (e.g. visibility, ozone impact to terrestrial resources, acidic
deposition impacts to aquatic and terrestrial resources) in Federal
Class I areas, and they have specific authority to take part in the
review of new source permits. The Federal Land Managers' Air Quality
Related Values (FLAG AQRV) document is guidance, not standards or
regulations, developed to bring more predictability and uniformity to
Federal Land Managers (FLM) participation in the permit review process.
For more information on their authority to convene a work group to
issue this guidance, we recommend that you contact the federal land
managers directly (U.S. Department of Interior--National Park Service,
Air Quality Division, and U.S. Department of Agriculture--U.S. Forest
Service). We have forwarded a copy of your questions to our contacts in
the National Park Service and the U.S. Forest Service.
FLAG: FLAG AQRV CRITERIA
Question. Page 27 of the FLAG's draft Phase I Report issued
October, 1999 states, ``The FLAG recommendation is designed to prevent
new sources from causing visibility impairment.'' Do FLAG AQRV
standards affect legal rights and responsibilities of permit
applicants?
Answer. No, the Air Quality Related Values (AQRV) criteria
themselves do not affect the legal rights and responsibilities of
permit applicants. Applicants are bound by the Clean Air Act and the
New Source Review (NSR) regulations implemented by EPA, states and
tribes. These regulations have always required consultation with
Federal Land Managers during NSR permitting and the Federal Land
Managers have always had the responsibility to identify AQRVs and
protect them against adverse impacts. The FLAG AQRV work will simply
better define what resources in Class I areas are considered AQRVs and
how they can be damaged by pollution. This should promote more
predictability in NSR permitting but does not alter any of the rights
and responsibilities of permit applicants.
FLAG: FLM'S, EPA, AND NOAA FOLLOWING RULEMAKING PROCEDURES
Question. If FLAG standards affect legal rights and
responsibilities, the standards are a rule. Why are FLMs, EPA, and NOAA
not following rulemaking procedures of the Administrative Procedures
Act with their FLAG standards? No public hearing has been held--only a
public ``meeting'' during the holiday season in late 1999 when FLAG
members gave no answers to questions.
Answer. Because the FLAG Air Quality Related Values (AQRV) document
is guidance that has been drafted by the National Park Service and the
U.S. Forest Service, we recommend that you contact them for a full
explanation of the procedures followed in developing it. We have
forwarded a copy of your questions to the National Park Service and the
U.S. Forest Service.
FLAG: DENIED PARTICIPATION SINCE 1995
Question. I understand the public consistently been denied
participation in FLAG efforts since at least 1995. Why is this?
Answer. As noted, the Federal Land Managers drafting the FLAG Air
Quality Related Values (AQRV) guidance held a public hearing on the
guidance in December 1999 and provided a public comment period as well.
We recommend that you contact the National Park Service or U.S. Forest
Service for more information on these issues. We have forwarded a copy
of your questions to the National Park Service and the Forest Service.
FLAG: FLAG AQRV HEALTH-BASED OR NON-HEALTH BASED STANDARDS
Question. Are FLAG AQRV standards health-based or non-health based?
Answer. The EPA has been involved in FLAG only from an advisory and
informational capacity. EPA has not been an active member of the FLAG,
nor did it participate in the management or direction of the group. We
have forwarded your questions to the National Park Service and the U.S.
Forest Service and recommend you contact them directly for more
information on these issues.
FLAG: STATUTORY COST/BENEFIT ANALYSIS
Question. Did you conduct a statutory cost/benefit analysis on FLAG
standards?
Answer. It is our understanding that a cost-benefit study was not
performed on this guidance. Because the FLAG Air Quality Related Values
(AQRV) guidance has been drafted by the National Park Service and the
U.S. Forest Service, we recommend that you contact them with questions
about this issue. We have forwarded a copy of your questions to the
National Park Service and the U.S. Forest Service.
FLAG: ENVIRONMENTAL BENEFITS
Question. What are the environmental benefits--the haze reductions
or other AQRV benefits--you have determined will result from FLAG
standards?
Answer. Because the FLAG air quality related values (AQRV) document
is guidance that has been drafted by the National Park Service and the
U.S. Forest Service, we recommend that you contact them for an
explanation of these issues. We have forwarded a copy of your questions
to the National Park Service and the U.S. Forest Service.
FLAG: ``ADVERSE'' IMPACT THRESHOLD FOR OZONE
Question. Why has FLAG defined an ``adverse impact'' threshold for
ozone at a level below that which occurs naturally? Doesn't this
automatically create a tool to block any permit for a new or modified
source?
Answer. Because the FLAG Air Quality Related Values (AQRV) document
is guidance that has been drafted by the National Park Service and the
U.S. Forest Service, we recommend that you contact them for an
explanation of these issues. We have forwarded a copy of your questions
to the National Park Service and the U.S. Forest Service.
FLAG: MEMBERS DELEGATING OR REQUIRING NON-FEDERAL ENTITIES
Question. Why are FLAG members (EPA, FLMs, NOAA) delegating or
requiring non-federal entities, such as permit applicants, to study
AQRV issues on federal land? Isn't the study of AQRVs of federal lands
something for which you should be budgeting and coming to Congress for
appropriations?
Answer. EPA is not a member of FLAG but participates only in an
advisory and informational capacity. For additional information on
these issues, we recommend that you contact the National Park Service
and the U.S. Forest Service. We have forwarded a copy of your question
to the National Park Service and the U.S. Forest Service.
FLAG: SCIENTISTS NOTED FOR STUDIES OF AQRVS
Question. Why are scientists noted for their studies of AQRVs
(ozone, visibility, deposition) and whose work you use to support the
FLAG standards disputing the use of their work and your alleged
scientific bases?
Answer. Because the FLAG Air Quality Related Values (AQRV) document
is guidance that has been drafted by the National Park Service and the
U.S. Forest Service, we recommend that you contact them for an
explanation of these issues. We have forwarded a copy of your question
to the National Park Service and the U.S. Forest Service.
FLAG: FIRES ON FEDERAL LANDS
Question. Federal lands' fires were identified as a major source of
western haze by a 1993 National Academy of Sciences study and by the
eight-state Grand Canyon Commission in which EPA and FLMs extensively
participated. How does FLAG address federal lands' fires as a major
source of haze?
Answer. Since the FLAG air quality related values (AQRV) document
is guidance that has been drafted by the National Park Service and the
U.S. Forest Service, we have forwarded a copy of your question to the
National Park Service and Forest Service and recommend that you contact
them for an explanation of these issues. As indicated in the response
to your later question on forest fires, EPA has worked closely with the
Federal land managers to develop the ``Interim Wildland Fire Policy.''
This policy outlines EPA's approach to dealing with the impact of
wildland fire on the PM National Ambient Air Quality Standards. EPA
expects to work with the same stakeholders in expansion of this policy
to deal with the impact of fire on regional haze.
FLAG: COMPLIANCE WITH STATUTES AND THE CONSTITUTION
Question. Have the FLAG standards complied with:
--the Unfunded Mandates Reform Act?
--the Regulatory Flexibility Act of 1980?
--the Small Business Regulatory Enforcement Fairness Act of 1996?
--the statutory requirement that no buffer zones are allowed for
wilderness areas or national parks?
--the Property Clause of the constitution--federal agencies can have
oversight of private land use only to the extent federal lands
are harmed by private land activities?
Answer. Because the FLAG Air Quality Related Values (AQRV) document
is guidance that has been drafted by the National Park Service and the
U.S. Forest Service, we recommend that you contact them for an
explanation of these issues. We have forwarded a copy of your question
to our contacts in the National Park Service and the U.S. Forest
Service.
FLAG STANDARDS VERSUS EPA MODELING PROTOCOLS
Question. Does the visibility component of FLAG standards conflict
with EPA modeling protocols and requirements?
Answer. The FLAG guidance was developed by those agencies concerned
with federal land management so input on this question should be sought
from them. EPA has acted in a review capacity on the visibility
component of the FLAG guidance and believes that it is based on models
and modeling approaches referenced in EPA's Guideline on Air Quality
Models. To meet FLAG needs, the applications are sometimes extended
beyond what is specified in that guideline. However, EPA staff have
reviewed these extended applications and find them consistent with the
more general EPA guidance.
CLEAN AIR ACT: FLAG STANDARDS
Question. The Clean Air Act requires federal agencies to comply
with stricter-than-federal state clean air laws. Colorado state statute
requires a federal agency to factually establish an AQRV impairment
exists before declaring an impairment. Colorado state statute also
tracks with cost/benefit analysis required by the federal Clean Air
Act. The Clean Air Act gives states the authority to define AQRVs. Why
do the FLAG standards not accommodate state statutory AQRV protection
programs which comply with federal law?
Answer. The Clean Air Act (CAA) requires federal facilities to
comply with state requirements respecting the control and abatement of
air pollution in the same manner and to the same extent as any
nongovernmental entity. This provision of the CAA does not apply to
federal agencies in their regulatory capacity. With respect to
protecting AQRVs on federal lands, the CAA imposes an affirmative
responsibility on the FLMs to protect these values. Because the FLAG
Air Quality Related Values document is guidance that has been drafted
by the National Park Service and the U.S. Forest Service, we recommend
that you contact them for further explanation of these issues. We have
forwarded a copy of your question to the National Park Service and U.S.
Forest Service.
CLEAN AIR ACT: STATIONARY SOURCES
Question. Why are federal agencies pursuing stationary sources
(such as forest prescribed burning) not found to be a major source of
western haze?
Answer. Section 169A of the Clean Air Act requires states to
develop implementation plans that provide for reasonable progress in
remedying existing impairment and preventing future impairment in
mandatory Class I Federal areas (such as national parks and wilderness
areas). These plans must include two basic elements: (1) measures
addressing the best available retrofit technology for a specific set of
major stationary sources that emit any pollutant that causes or
contributes to impairment in any Class I area, and (2) a long-term
strategy for making reasonable progress. The regional haze rule
acknowledges that many different types of sources contribute to
visibility impairment and it requires states to address all types of
sources in the long-term strategy: mobile sources; fire emissions;
other area sources; and other stationary sources.
While there are some actions under way by federal and state
agencies to address stationary sources contributing to regional haze,
there are many other efforts in place to characterize and develop
strategies for many types of sources contributing to haze, not just
stationary sources. For example, these agencies are also working to
develop smoke management programs that incorporate best available
control measures to minimize emissions and smoke impacts from wildland
fires they manage to achieve resource benefits (e.g., prescribed
fires).
CLEAN AIR ACT: REGIONAL HAZE REQUIREMENTS
Question. What is the difference between what federal land managers
are willing to do to address haze and what is required of industry?
Answer. As noted in the response to the above question, state
regional haze State Implementation Plans (SIPs) need to address a range
of source categories that contribute to visibility impairment. For
example, certain major stationary sources may be required to implement
best available retrofit technology under the rule. The states have the
flexibility to implement best available control measures to address
other source categories as well, such as fire emissions from federal,
state, and private lands.
The EPA understands that the policy of returning fire to the
wildlands to address excessive fuel build-up in certain areas is
expected to provide the benefit of reduced incidence of catastrophic
wildfires and improved forest health over the long term. It is
recognized, however, that this policy will result in smoke emissions
that can impact visibility and the National Ambient Air Quality
Standards for particulate matter on an episodic basis. EPA understands,
based on working with high level managers in the U.S. Forest Service
and the Bureaus of the Department of the Interior, that those agencies
have agreed to use the best available control measures to minimize
emissions and smoke impacts from wildland fires they manage to achieve
resource benefits (e.g., prescribed fires). Federal agencies are
familiar with several techniques that can be used to minimize emissions
from prescribed fires including mechanically thinning fuel levels,
burning when fuel moisture is high, mopping up smoldering embers after
the fire, and burning on days with proper meteorological conditions.
Federal agencies will use smoke management techniques to minimize the
potential impact of the smoke emitted from prescribed fires on
visibility, regional haze and the national ambient air quality
standards. Smoke management techniques consider how prescribed fire
emissions will affect air quality and impact smoke sensitive areas
under the atmospheric conditions that will exist at the time of the
fire.
CLEAN AIR ACT: FEDERAL LAND MANAGERS REDUCTION OF HAZE
Question. Fires of tremendous heat and excessive emissions result
from the heavy fuel loading allowed to occur on forest floors (no
logging, no clearing blowdown, 100 year policy of preventing natural
burns). What are federal land managers willing to do to reduce haze?
Answer. It is EPA's understanding that the U.S. Forest Service and
the Bureaus of the Department of the Interior are committed to
complying with the National Ambient Air Quality Standards and with
national visibility goals for mandatory Class I federal areas while
conducting their wildland fire programs. We believe all the federal
agencies are committed to using smoke management techniques to minimize
emissions and mitigate air quality impacts from prescribed fires.
CLEAN AIR ACT: FEDERAL AND STATE REQUIREMENTS
Question. The Clean Air Act requires federal agencies to comply
with states' stricter-than-federal clean air laws. However, in
Colorado, FLMs actively worked against legislation requiring them to
submit emissions inventories, seek permits, and mitigate fire
emissions. FLMs now are threatening to sue Colorado to ensure their
emissions are not regulated by Colorado law as allowed by the Clean Air
Act. Why are the USFS and NPS resisting federal and state clean air
requirements regarding a major source of western haze and the single
largest episodic source of haze ``federal lands'' fires?
Answer. EPA understands that these agencies are prepared to employ
the best available control measures applicable to prescribed fires
(i.e., smoke management techniques). However, EPA has not had
communication with Federal Land Managers regarding their support for
Colorado's legislation regarding smoke emissions. Therefore, we cannot
comment on their position.
______
Question Submitted by Senator Jon Kyl
REVIEW OF PHOENIX'S REVISED SERIOUS AREA PM10 NONATTAINMENT PLAN
Question. As you are aware, the Phoenix, Arizona, area has been
struggling with particulate matter air pollution for some time. The EPA
Region 9 office has been working with Maricopa County, Arizona, to
address Maricopa Country's failure to attain the PM-10 National Ambient
Air Quality Standards established in the Clean Air Act. Maricopa County
is extremely positive about its experience in this effort.
On December 23, 1999, the Maricopa Association of Governments
submitted its Clean Air Act Revised Serious Area Nonattainment Plan to
EPA for review. Again, EPA's Region 9 staff have been cooperative and
agreed to expedite its review of the revised plan, indicating to county
officials that the matter should be resolved by April 3, 2000. In the
interim, sanctions were imposed beginning on March 2, that require 2-
to-1 offsets for new or substantially modified major particulate
sources in Maricopa County. Delay in final resolution of this may
result in additional sanctions.
What is the status of EPA's review?
Answer. EPA signed the proposed approval of the revised Phoenix
serious area PM-10 plan on April 3, 2000. We committed to Governor Hull
to do everything possible to expedite EPA's review of this plan, which
was received in draft on January 3, 2000 and officially on February 23,
2000.
On April 3, 2000, EPA's Administrator for Region 9 also signed an
interim final determination which, when published in the Federal
Register on April 13, stayed the Clean Air Act 2-to-1 offset sanction
that was imposed on the Phoenix area on March 2, 2000. It also defers
the imposition of the highway sanctions until EPA takes final action on
the plan.
EPA's review of the plan was aided by the efforts of Maricopa
County Environmental Services Department, the Maricopa Association of
Governments, Maricopa County Department of Transportation, and the
Arizona Department of Environmental Quality in revising the plan
quickly to address the disapproval issues that EPA raised in a November
9, 1999 letter to Governor Hull.
______
Questions Submitted by Senator Ted Stevens
RED DOG MINE PERMIT: AGENCY INVOLVEMENT
Question. What has the EPA done to address the concerns regarding
the mine's ability to operate in the future under a state Clean Air
Permit?
Answer. EPA is always willing to work with companies to ensure that
the operation of their facilities is in accordance with the Clean Air
Act. Unfortunately, despite months of discussions during which most
issues were resolved, EPA continues to disagree with the State
regarding whether the Clean Air Act permit for a current expansion
project at the mine complies with the Act. Thus, EPA took steps to
ensure both the State and the facility acted in compliance with the
Act. EPA remains committed to resolving issues with the permit in a
manner that minimally impacts the operation of the mine's expansion
project. Recently, we have amended our order so that the Red Dog Mine
can begin ``water-related'' construction while we attempt to resolve
our concerns about the need for emission controls. The Red Dog Mine
will be able to continue to operate in the future so long as they
remain in compliance with the requirements of the Clean Air Act.
CO NAAQS REVIEW
Question. Will EPA factor in the conditions faced in Northern Tier
communities in reviewing the CO NAAQS?
Answer. The EPA has conducted an air quality analysis of northern
tier cities, including the largest cities of Alaska. The EPA analysis
has been incorporated into the Air Quality Criteria Document for Carbon
Monoxide, which forms the scientific basis for the CO NAAQS review and
is about to be released as a final document. The analysis has also been
referenced in the air quality section of the CO Staff Paper currently
being prepared for public and Clean Air Scientific Advisory Committee
(CASAC) review.
CO NONATTAINMENT AREAS: WORKING WITH ALASKA
Question. Is EPA willing to work with the delegation, the local
communities, and the State in effort to identify possible solutions to
the difficulties Alaska has had in reaching CO attainment?
Answer. EPA will continue to work with the State of Alaska and
local communities to find ways to reduce carbon monoxide air pollution
in Anchorage and Fairbanks and welcomes the input of the Alaska
Delegation. EPA has provided technical and financial support for a
number of special projects aimed at gathering scientific information
about the sources of air pollution, their relative contributions, and
the impacts of various control strategies to abate air pollution
levels. These EPA efforts have included:
--vehicle testing in Fairbanks and Anchorage during several winters
and under different operating conditions, including the use of
engine block heaters (``plug-ins'');
--making changes sought by the Alaska Department of Environmental
Conservation (ADEC) for the national computer model used to
predict vehicle air pollution levels;
--studying driver behavior in Anchorage to document typical idling
times for commuters;
--approving a substitution to the contingency measures requested by
ADEC (air pollution control measures that are automatically
triggered by the failure to attain the national health-based CO
standard); and
--conducting CO saturation studies in both Anchorage and Fairbanks to
better identify where the highest levels of CO air pollution
are being generated within the boundaries of the official
nonattainment areas for the communities.
______
Questions Submitted by Senator Barbara A. Mikulski
B. CEPACIA: CONTAINED IN BIO-PESTICIDE PRODUCTS
Question. Can you please outline for the Subcommittee what steps
the Agency will be taking with regard to the use of B. cepacia in
bioremediation and what the timetable will be to address this aspect?
Answer. B. cepacia may be subject to regulation as a bioremediation
application under the Toxic Substances Control Act (TSCA) and is
subject to regulation as a pesticide under the Federal Insecticide,
Fungicide and Rodenticide Act. EPA is currently examining uses of this
microorganism that fall under the purview of either statute,
identifying data needs, assessing risks where possible, and considering
possible voluntary and regulatory options for addressing risks where
appropriate. We met with the Cystic Fibrosis Foundation (CFF) on March
1, 2000 on this issue, and provided a detailed update on our progress
as part of a professional meeting sponsored in part by CFS on April 8,
2000. This April 8 update included an examination of the commercial
products which could contain B. cepacia such as those used for
bioremediation, specialty chemical production, and drain cleaners.
While we do not have a definite timetable for any potential
regulatory action, we are expediently addressing potential risks posed
by B. cepacia by taking immediate steps within our statutory authority
when possible (under FIFRA, for example). EPA has a continuing dialogue
with CFF and, at this time, is attempting to define the issues (with
CFF's help). Once we have better information on the scope of the issues
(i.e., exposure and potential risk), OPPT will be able to establish a
course of action and a timetable for any needed regulatory action.
BURKOLDERIA CEPACIA: USE
Question. Administrator Browner, can you highlight for the
Subcommittee what the Agency's plans are to improve, label or re-
classify, or remove existing biopesticide products containing B.
cepacia?
Answer. B. cepacia (Burkholderia cepacia) is under review as a
result of human health concerns. There may be some impact on uses or
registrations of products containing B. cepacia, but it is too early in
the process to predict. The FIFRA Scientific Advisory Panel (SAP)
prepared a report to explain the basis for the risk assessment for
microbial pesticide products containing B. cepacia and to discuss the
scientific issues that have informed this risk assessment. The Agency
is currently working to complete its analysis of the SAP report by July
2000. Based upon conclusions drawn from that assessment, the Agency
will take whatever actions are necessary regarding the B. cepacia
products. EPA is not currently registering any B.cepacia products until
data gaps can be addressed. In addition, Stine Co. has voluntarily
withdrawn its registrations, and Agrium, U.S., Inc. recently withdrew
its application for a product containing B. cepacia.
STATUS OF NSR REFORM RULEMAKING
Question. What is the status of discussions with the complex
manufacturer stakeholder group on New Source Review (NSR) reform?
Answer. Some of the members of the group we now refer to as the
complex manufacturing group have been actively participating in the NSR
Reform effort since it began. Among other activities, various members
of this group took part in eight public meetings of the NSR Reform
Subcommittee of the Clean Air Act Advisory Committee (CAAAC) in the
1993-94 time frame; commented on a 1994 preliminary draft of the NSR
Reform proposal; participated actively in several additional meetings
prior to the 1996 summer proposed rule; commented on the proposed NSR
Reform Rule that appeared in the Federal Register; testified at a
public hearing on the proposed rule; provided input at several
subsequent meetings of the CAAAC Subcommittees; and actively
participated in another round of meetings that stakeholders requested
when EPA released a 1998 Notice of Availability updating several issues
within the NSR Reform rule.
Then, in late 1998 during discussions over litigation of the rules
governing NSR applicability for utilities, EPA suggested to industry
stakeholders to try again to develop a better system for determining
what is or is not covered by NSR--one that could receive broad
stakeholder support. At this time EPA indicated a desire to complete
this last effort in just a few months, given that the NSR Reform
stakeholder discussions had been ongoing since 1992. We have made a
special effort since then to seek further input from all stakeholders
on new approaches that will help achieve this goal. A large stakeholder
meeting was convened on February 2-3, 1999, and multiple rounds of
follow-up meetings have been held with stakeholders since then
including the complex manufacturing group with whom we last met in
March 2000. The meetings we have held this year with the complex
manufacturing group have been productive. We are now discussing some of
the ideas they raised with other stakeholders, such as environmental
groups and state and local agencies, to get their input as well. Once
we complete this round of meetings we plan to have an additional
meeting with the complex manufacturing group.
SHARING CONTENTS OF FINAL RULE BEFORE PROMULGATION
Question. What do you plan to include in this final NSR reform
package?
Answer. As described in the above question, the EPA has engaged in
an extraordinarily thorough and inclusive stakeholder process in
developing the NSR Reform package. We have held hundreds of hours of
meetings with stakeholders representing a very broad cross-section of
industry, Federal, state and local governments, and the public. The EPA
continues to work with all our stakeholders to be sure that we have a
full understanding of their views on the issues raised. However,
because the EPA is still involved in stakeholder discussions and
internal deliberation, it would be premature to discuss the extent to
which we plan to incorporate any specific provisions in the final rule.
NEW SOURCE REVIEW REFORM: ENFORCEMENT ACTION
Question. I understand that the Agency's enforcement office is also
involved in the NSR debate. The Agency is pursuing enforcement Actions
in several sectors: utilities, pulp and paper, refining, the chemical
industry, etc. Why is EPA targeting these industries?
Answer. EPA has conducted very extensive targeting analyses of
various industry sectors to ascertain those industries that should be
the subject of enforcement initiatives. As a result of those analyses,
EPA determined that coal-fired utilities, petroleum refineries, pulp
and paper facilities and the chemical industry are large emitters of
criteria pollutants, as well as the industries that have high rates of
noncompliance with the NSR requirements. EPA will continue to evaluate
its priorities and may select other sectors for future enforcement
initiatives.
______
Questions Submitted by Senator Patrick J. Leahy
MERCURY MONITORING: FUNDING FOR UNDERHILL, VERMONT SITE
Question. The uninterrupted monitoring of mercury deposition at the
Proctor Maple Research Center in Underhill, Vermont is critical to
national and Northeastern mercury monitoring initiatives. In place
since 1992, this monitoring station is the longest continuously-running
monitor of its kind in the Northeast and is invaluable as a long-term
data collection site for mercury monitoring networks, including EPA's
Regional Ecological Monitoring and Assessment Program (REMAP), the
Northeast States for Coordinated Air Use Management (NESCAUM), and the
National Park Service Air Monitoring Program. Despite its national
importance, we recently heard that federal funding for the Underhill,
Vermont site has vanished this year. I would like to know how EPA can
help this monitoring station in the short-term as well as the long-
term.
Answer. EPA's efforts to help the Proctor Maple Research Center
mercury monitoring site have been many. Since 1992, the Proctor Maple
Research Center mercury monitoring site has been funded by the Air
Resources Laboratory of the National Oceanic and Atmospheric
Administration (NOAA). However, cuts in NOAA's budget over the past
several years eventually resulted in NOAA ending their funding of the
site in fiscal year 2000. Aware of the decreasing funding, EPA New
England began partially funded the Proctor Maple Research Center
mercury monitoring site with Regional Ecological Monitoring and
Assessment Program (REMAP) funds during fiscal year 1998 and fiscal
year 1999. As a part of the EPA Region's mercury monitoring network
initiative, the Region also leveraged funds from other EPA programs,
such as the National Estuary Program (NEP), Regional Applied Research
Effort (RARE), and EPA New England discretionary funds. These funds
were provided as a ``stop-gap'' and not expected to support routine
long-term monitoring. In 1999, EPA New England approached the Vermont
Department of Environmental Conservation (VTDEC) to consider partial
funding of the Proctor Maple Research Center mercury monitoring site.
The VTDEC declined to support the site because of insufficient funds.
Over the next several years, the EPA Office of Air will provide
additional grant funds to promote state air toxics monitoring programs.
Federal funds for these programs may be used to support mercury
monitoring sites such as the Proctor Maple Research Center site. In
addition, the EPA Office of Research and Development is developing a
Mercury Research Strategy, expected to be finalized this year, which
will address research questions in various areas, including human
health, exposure, ecological effects, transport and fate, and risk
management. It also will address various research questions for mercury
deposition.
In addition, the newly formed New England Governors and Eastern
Canadian Premiers Mercury Research Workgroup is considering the
completeness of ambient mercury monitoring New England and maritime
Canada. EPA New England is a member of this Workgroup and will promote
the continuation of the Proctor Maple Research Center mercury
monitoring site.
MONITORING MERCURY: EPA'S LONG-TERM PLANS
Question. In addition, I would like to know EPA's long-term mercury
monitoring plan for U.S. air, land, and water--especially in the
Northeastern states.
Answer. Several important monitoring efforts are underway. In
particular, EPA recently developed a draft concept paper outlining the
development of a nationwide air toxics monitoring network (which would
include air concentrations and deposition). The initial focus of the
network will be the operation of selected pilot studies in major U.S.
cities to assist the design of a long-term network that will be used to
support application of air toxics models and characterize trends in air
toxics concentrations. The draft concept paper and initial program have
been guided by a steering committee consisting of EPA and state and
local agency representatives. The paper has undergone peer review by
EPA's Science Advisory Board. Mercury is discussed in the draft concept
paper and mercury monitoring eventually will be brought into the
national network.
EPA is also undertaking or supporting various mercury monitoring
activities, including:
--the Mercury Deposition Network which maintains sites throughout the
U.S. to measure mercury deposition as part of the National
Atmospheric Deposition Network;
--a National Sediment Inventory established by EPA to provide
information on sediment quality;
--EPA's Environmental Monitoring and Assessment Program (EMAP) which
provides estimates of changes in the nation's ecological
resources on a regional basis;
--a National Survey of Chemical Residues in Fish to determine
methylmercury and other chemical contaminants concentration in
freshwater fish during the time period from 1999 though 2002
--the National Health and Nutrition Examination Survey (NHANES) human
monitoring program which has been expanded to measure mercury
in blood and hair along with dietary records. This study will
allow better characterization of exposure of the U.S.
population to mercury.
In addition, as part of developing EPA's Mercury Action Plan, we
are considering additional ways to assist in the coordination of the
monitoring efforts of various Federal, state and local agencies.
We will keep you and others in Congress apprised of our mercury
monitoring plans as we proceed.
TMDL REGULATION: ASSISTANCE TO FARMERS AND LANDOWNERS
Question. Through the work of the Lake Champlain Basin Program and
the Northern Forest Lands Council, we have learned that the conversion
of forest and farm land to urban/suburban use represents the greatest
threat to our environment, especially our water quality. Contaminants
from non-agricultural and non-silvicultural non-point run-off are many
times greater than farm and forest land run-off on a per acre basis.
Therefore, we are very concerned with any approach to water quality
improvement which, however well-intentioned, inadvertently forces
farmers out of business or encourages the sale and conversion of
working forests to developed land.
For this reason, I have authored legislation such as the
Environmental Quality Incentive Program (EQIP) which provides cost-
share funding to help farmers and landowners implement water quality
improvement practices. These include animal waste storage, riparian
protection and erosion control. These programs have long waiting lists
of farmers and landowners yet also have woefully insufficient public
funding. In past years I have specifically included EPA appropriations
to fund such cost share pilot programs in specific watersheds such as
Vermont's Lake Memphremagog.
Can you outline for me how your agency would reconcile its proposal
regarding TMDL regulation with my concerns? I would like to know
specifically how EPA would work with states such as Vermont to sustain
working farms and forests through popular and effective voluntary
conservation programs--and not unintentionally drive them to sell lands
for further development.
Answer. EPA shares your concerns about sustaining working farms and
forests and supports using popular and effective voluntary conservation
programs, such as EQIP, to help farmers and landowners implement
management practices needed to improve water quality.
As Assistant Administrator J. Charles Fox stated in his April 5,
2000, letter to the Honorable Bud Shuster, EPA regrets the confusion
about treatment of diffuse runoff in our August TMDL proposal and wants
to specifically clarify that EPA remains committed to relying on
voluntary approaches to reduce runoff from diffuse water pollution
sources. The proposed rule would not require Clean Water Act permits
for polluted runoff. In fact, voluntary and incentive-based approaches,
which are often as you note supported by financial assistance from the
Federal government, are the preferred way to address these problems.
EPA has proposed that state grant funds for polluted runoff programs be
increased from $200 to $250 million in fiscal year 2001 and the
President has also requested a $1.3 billion increase in authorized
levels for conservation assistance programs at the US Department of
Agriculture.
MTBE STUDIES: PUBLIC ACCESS TO INFORMATION
Question. I strongly support the recent announcement by the
Environmental Protection Agency (EPA) and the United States Department
of Agriculture (USDA) to significantly reduce or eliminate the use of
the fuel additive MTBE (methyl tertiary butyl ether) and to increase
the use of safe, renewable alternatives such as ethanol. I understand
that studies have been done to measure the quantity and spread of
Volatile Organic Compounds (VOCs), including MTBE, in the nation's
ground water and drinking water wells. Has EPA made this information
available to the public? If so, please let me know how this information
can be accessed.
Answer. EPA has entered into a cooperative study with the U.S.
Geological Survey (USGS), titled the ``12-State MTBE/VOC Drinking Water
Retrospective.'' This study assesses MTBE occurrence and distribution
in 12 Northeastern and Mid-Atlantic States. While the release of the
final report is expected by early Fall 2000, preliminary data from the
study were presented to a Blue Ribbon Panel in April 1999. This
information is available at the Blue Ribbon Panel's Internet website
address of: http://www.epa.gov/oms/consumer/fuels/oxypanel/blueribb.htm
ACID RAIN: CAP AND TRADE APPROACH
Question. As published in the recent ``Progress Report on the EPA
Acid Rain Program,'' sulfur dioxide emissions and total acid deposition
have declined in the Northeast since the passage of the Clean Air Act
Amendments of 1990. However, the decreases in acid precipitation have
not been enough. High-elevation soils, lakes, and other critical
habitats throughout Vermont and the northeast continue to receive high
levels of acid precipitation, from both sulfuric and nitric acid
components. Environmental scientists agree that ecosystem recovery from
the damaging effects of acid precipitation may take twenty to fifty
years at least.
EPA has often proposed that a cap-and-trade approach to nitrogen
oxides will help alleviate the northeastern acid rain problem. Please
outline how this program would work and, based on what is known about
sulfur dioxide emissions trading patterns and the differences between
major SO2 and NOX sources (power plants vs.
vehicles), what decreases you expect in total acid deposition in the
northeast over the next 10 years of such a program. Also, please
explain how you will monitor the effect of the acidity trends over time
in the regional ecosystems that are most affected by acid deposition.
Answer. With regard to recovery of sensitive ecological systems in
the Northeast, EPA agrees with observations in the recent GAO study,
entitled Acid Rain--Emissions Trends and Effects in the Eastern United
States. Despite significant reductions in sulfur dioxide
(SO2) emissions, decreases in total sulfur deposition and
declining surface water concentrations of acid anions, many of the most
sensitive ecosystems in the Northeast have not demonstrated significant
recovery. Recent studies attribute lack of recovery to two important
factors. First, base cations in watershed soils have been severely
depleted due to many years of leaching caused by acid deposition
reducing the acid buffering capacity of soils. Second, despite
reductions in SO2 emissions and sulfur deposition,
significant reductions in nitrate deposition have not been observed due
to relatively constant emissions of nitrogen oxides (NOX)
over the past 20 years. Scientists contend that both further reductions
in SO2 and significant reductions in NOX
emissions may be necessary to ensure recovery of the most sensitive
ecosystems. EPA has been aggressively pursuing NOX
reductions through the 22 state NOX SIP Call, Tier II/low-
sulfur vehicle standards, and the Section 126 NOX petitions.
These rules will reduce 2.3 million tons of NOX annually in
2010.
EPA believes that if a national, annual NOX reduction
effort is developed, a NOX cap and trade program would
provide the most cost-effective means to achieve reductions. Such a
program would likely be set up much like the current sulfur dioxide cap
and trade program, which has been highly successful in providing
significant, low cost, early reductions resulting in benefits to health
and the environment. For the first time under the Clean Air Act (CAA),
in 1994, EPA began collecting actual hourly emissions data
(SO2, NOX, CO2) from large power
generating sources through Continuous Emissions Monitoring systems
(CEMs). There has been 100 percent compliance with the SO2
emissions reduction requirements for this section of the Clean Air Act.
Utility SO2 emissions have dropped by over 5 million tons
annually relative to the 1980 baseline. The first five years of the
program have produced SO2 reductions in every state and
beyond the legal requirement in almost every affected state. The
greatest reductions occurred in the highest emitting areas (Midwest).
Full implementation will achieve a 10 million ton SO2
reduction, approximately 40 percent below 1980 levels. Full compliance
cost is now expected to be about $1 billion per year, based on a
combination of scrubber installations, coal substitution, fuel
switching and other approaches, as opposed to the $4 to $7 billion per
year cost projected in 1990 at the time of enactment.
Such impressive results achieved under this program have resulted
in expressed interest in cap and trade as a successful model for
implementing other pollutant reduction programs. A similar, ongoing
program modeled on the SO2 program already provides a
template for a program targeted at nitrogen oxides. The Ozone Transport
Commission (OTC), composed of 12 Northeastern states and the District
of Columbia, is implementing a cap and trade program to reduce
summertime NOX emissions during the ozone season.
Preliminary results from 1999 (the first summer of operation) indicate
that the OTC NOX Program is achieving its goal of reducing
ozone season NOX emissions. There has been a 55 percent
reduction since 1990 by the eight states currently participating in the
program. Emissions were reduced 20 percent below required levels and
NOX allowance costs are well below early estimates. When the
program is fully implemented in 2003, summertime NOX
emissions in the Northeast will be reduced by 70 percent (from 1990
levels), resulting in lower ozone levels and improved health for
Northeast residents. The OTC NOX Program demonstrates that
emission cap and trading mechanisms can achieve significant
NOX emission reductions and improve air quality in the
United States at a lower cost than traditional command and control
approaches.
One important distinction must be made, however, between the
current OTC NOX budget trading program designed to address
summertime ozone levels and any program designed to better lead to
recovery of sensitive ecosystems. In order to address the most
biologically sensitive time period (spring), it is vital that a program
achieve annual reductions, rather than seasonal reductions, to ensure
benefit to ecosystems.
One crucial means of determining ecological response and recovery
involves monitoring pollutant concentrations in precipitation,
deposition of pollutants to land and water, and the response of
sensitive ecosystems. Efforts to assess the impact of the CAA should
focus on national and regional long-term monitoring programs such as
the NADP (National Acid Deposition Program), which monitors wet
deposition, and EPA's CASTNet (Clean Air Status and Trends Network),
which monitors dry deposition, rural ozone and other forms of
atmospheric pollution. In addition, it is important to monitor status
and trends in sensitive ecosystems in receptor areas through networks
such EPA's LTM/TIME (Long-Term Monitoring Program/Temporally Integrated
Monitoring of Ecosystems), which monitors surface water chemistry at
135 sites in the Northeast (currently 14 in Vermont, reduced from 36 in
1980 and 24 in the early 1990s). Such regional and national long term
monitoring programs are essential to understanding the overall impacts
of the Clean Air Act to the environment, including recovery of
ecosystems. Although current patterns of SO2 trading have
produced no negative consequences for sensitive ecosystems, such
monitoring systems are the best means for measuring performance in the
future.
Total acid deposition reduction in the Northeast over the next 10
years depends on assumptions of additional levels of reduction. Under
the current Clean Air Act, EPA is expecting an additional 10 percent
reduction in sulfate and nitrate deposition to Northeast ecosystems.
Several proposals before Congress call for additional SO2
and NOX reductions from power generation of 50-60 percent
and 60-75 percent, respectively. Our experience with cap and trade
programs and understanding of atmospheric chemistry suggest that
sulfate and nitrate deposition reductions due to power generation
emissions would be approximately proportional to these emissions
reductions. However, it should be noted that power generation currently
comprises about 65 percent of total sulfur dioxide emissions and about
30 percent of nitrogen oxide emissions. Therefore, deposition
reductions would also be affected by the relative proportion of other
emissions sources. Ascertaining the ecological effects of such
deposition levels over time depends entirely upon continuing essential
long-term monitoring programs such as NADP, CASTNet, and LTM/TIME.
VERMONT SCHOOL ENVIRONMENTAL HEALTH INITIATIVE: AGENCY ASSISTANCE
Question. The Vermont Legislature is currently considering indoor
environmental health legislation known as the School Environmental
Health Initiative. An EPA indoor air quality specialist had been
detailed to the Vermont Health Department and gathered a great amount
of data that informed Vermonters about air quality issues in the
state's schools. Unfortunately, the appointment of this specialist
recently ended and has not been renewed. Would your agency support an
extension of this specialist or a similar assignment of an appropriate
EPA staffer to assist Vermont in its School Environmental Health
Initiative?
Answer. The Agency does not support an extension of this specialist
to assist Vermont in its School Environmental Health Initiative because
the assignment has reached a successful conclusion. The staffer was
detailed to the State of Vermont two years ago to pilot test both the
EPA's Indoor Air Quality (IAQ) Tools for Schools implementation
strategy and the Agency's approach to training school personnel and
other stakeholders on improving the indoor environment in schools. This
appointment worked to the benefit of EPA by: (1) providing the Agency
with first-hand experience at the local and state level that proved
invaluable in revising the Indoor Air Quality Tools for Schools kit and
(2) refining the schools' training and outreach materials.
EPA's Region I office in Boston, MA, is responsible for providing
support and technical assistance to the New England states, and is
particularly active in promoting the voluntary implementation of IAQ
Tools for Schools. Please do not hesitate to contact our Regional
Administrator, Mindy Lubber, and advise her of your desire for
assistance.
______
Questions Submitted by Senator Robert C. Byrd
NITROGEN OXIDE (NOX) REGULATORY ACTIONS TO ADDRESS AIR
QUALITY
Question. In November 1997, the Environmental Protection Agency
(EPA), issued a draft ruling on its regional NOX SIP Call
which primarily focused on the transport of nitrogen oxide emissions
discharged from electric power and other manufacturing sources. In
September 1998, the EPA issued the final NOX SIP Call rule
requiring stringent reductions of NOX primarily emitted from
electric utilities and other industrial facilities in the Midwest and
Southeast. In October 1998, Midwestern and Southeastern states and the
electric utilities from those states challenged the EPA NOX
SIP Call rule in the U.S. Circuit Court of Appeals for the D.C. Circuit
because of its stringency and limited compliance schedule (Michigan vs.
EPA). On May 25, 1999, the same court issued an indefinite stay on the
submission of SIP Calls for states until the court ruled on the merits
of the NOX SIP Call suit. Oral arguments on the SIP Call
rule were heard by the court on November 9, 1999, and on March 3, 2000,
the court issued a decision relating to the EPA's September 1998 rule
on regional NOX SIP Call rule. The court upheld most aspects
of the SIP Call rule. Given the continued existence of a court stay of
the states' deadlines to submit their SIP Calls and the year and a half
delay since first issuing the SIP Call rule, it seems reasonable to
assume that the schedule for compliance with the rule and installation
of emission controls on affected utilities and industrial sources
should also be delayed.
The EPA has also recently issued a final rule under Section 126 of
the Clean Air Act directing almost 400 utility and industrial sources
of NOX to meet a stringent NOX standard by May
2003, not much more than three years from now. Thus, state
environmental agencies and the regulated sources may now be faced with
separate regulatory programs with different compliance schedules
affecting the same electric and industrial sources.
The electric utility industry and several states have raised
concerns about the ability to comply with the stringent NOX
SIP Call reduction requirements in a very short time frame (by May
2003) without threatening the reliability of the electrical supply in
many regions in the affected states. The North American Electric
Reliability Council and the East Central Area Reliability Council have
issued two separate reports indicating that a compliance May 2003
deadline poses a potential threat to reliability. Additionally, the
Section 126 Petition deadlines do not comport with the NOX
SIP Call rule if and when the stay is lifted by the D.C. Circuit Court
of Appeals.
Administrator Browner, are you considering administratively
revising the compliance deadlines for the Clean Air Act's Section 126
Petition sources so that those deadlines will be consistent with the
compliance schedule established by the NOX SIP Call rule
once the U.S. Circuit Court of Appeals for the D.C. Circuit rules on
lifting its stay on the NOX SIP Call? If this is not the
case, why not?
Answer. EPA does not see any reason to change the compliance
deadlines for the sources subject to the action EPA took in December
1999 when it granted states' petitions requesting relief from pollution
caused by sources in upwind states. The petitioning states have the
right under the Clean Air Act to relief and the temporary stay of an
independent action (the NOX SIP Call) does not deprive these
states of the relief to which they are entitled. The United States
Court of Appeals for the District of Columbia Circuit denied
petitioners request last year to stay the Section 126 action. EPA did a
careful and thorough analysis that demonstrated that it is feasible for
the covered sources to comply with the Section 126 action without
adversely impacting reliability of the power supply.
Sources regulated under Section 126 and the NOX SIP Call
need not be subject to separate regulatory programs with different
compliance dates. If a state submits and EPA approves a SIP revision
meeting all the requirements of the NOX SIP Call (including
providing for control measures to be in place by 2003), then EPA will
withdraw the Federal requirements for sources in that state subject to
the Section 126 action. Furthermore, as discussed in more detail in
response to the following question, EPA believes that May 1, 2003, is
the appropriate compliance deadline for the primary portion of the
NOX SIP Call.
NOX SIP CALL: COMPLIANCE DEADLINE REVISION
Question. The North American Electric Reliability Council and the
East Central Area Reliability Council have issued two separate reports
indicating that a compliance May 2003 deadline poses a potential threat
to reliability. Is the EPA willing to take the necessary steps to avoid
the possible threat to the reliable supply of electricity as indicated
by these reliability studies?
Answer. EPA has taken steps to protect the reliable supply of
power. Before issuing the NOX SIP Call and taking final
action on the section 126 petitions, EPA carefully analyzed whether a
May 2003 deadline posed a potential threat to reliability. (See
Feasibility of Installing NOX Control Technologies by May
2003, EPA Office of Air and Radiation, September 1998). EPA projected
that compliance with the SIP Call will require the installation of
selective catalytic reduction (SCR) on 72.9 GW worth of coal fired
capacity. Furthermore EPA believes that past experience in both the
U.S. and Germany shows that SCR can be installed in outage periods of
five weeks or less. EPA examined a worse case study where 62.3 GW worth
of SCR were installed in a one year period and where SCR installations
required 9 week outages. Even under these extreme conditions, EPA's
analysis found no threat to reliability. As an added precaution to
protect the reliable supply of power, EPA included a compliance
supplement pool in both the SIP Call and the section 126 action. This
special provision is designed in part to protect the reliability of the
power supply and assist facilities that cannot install controls by May
1, 2003, despite their good faith efforts to do so. Under the
Compliance Supplement Pool as established in the SIP Call, at states'
options, a total of 200,000 tons of credits would be available that
facilities could either buy from a facility that reduced its emissions
early or be given by the state. If states decide to use this pool, it
could allow some units to delay installation of controls beyond May 1,
2003.
EPA believes that the North American Electric Reliability Council
(NERC) Study supports EPA's analysis. First NERC's study explicitly
acknowledges that there are fewer concerns about the impact that the
Section 126 rule will have on reliability. Second, most of the
scenarios that NERC examined did not indicate reliability problems. For
example NERC did not find any reliability problems when there were 30
months available for installation of controls. Additionally, NERC did
not find reliability problems when 72.3 GW worth of SCR was installed
in 18 months with 9 weeks required for installation of controls. It is
only when NERC combined a number of extremely conservative assumptions
that they found a significant impact on reliability.
East Central Area Reliability Council's (ECAR's) study predicts
reliability problems, but it is based on extreme assumptions about the
availability of electricity and the installation of control equipment.
ECAR, which is a subregion of NERC, began with the premise that the
system is on the verge of having reliability problems even without the
SIP Call. This is not consistent with the assumption NERC used.
Furthermore, ECAR makes some very conservative assumptions about the
amount of new electricity generation that may come on line over the
next several years and the availability of existing power plants. The
more new electricity generation that comes on line, the less likely it
is that reliability problems will occur. ECAR assumes that
approximately 9900 MWs of generation will come on line by 2008. In
contrast, the Electric Power Supply Association reports that more than
10,000 MWs of capacity already have been announced to come on line
before 2003.
BEVILL WASTES: REPORT TO CONGRESS
Question. Administrator Browner, I understand that in March 1999,
the EPA issued a report to Congress on the wastes from the combustion
of fossil fuels. In that report, the EPA concluded from its nineteen-
year technical study that the regulation of these wastes should
generally remain the responsibility of the states and should remain
exempt from federal hazardous waste regulations. Is this the case and
is the EPA preparing a Federal Register notice that is contrary to
previous findings in its report to Congress?
Answer. In the Report to Congress, EPA indicated a preliminary
decision that disposal of coal combustion wastes should remain exempt
from regulation under RCRA Subtitle C, although we noted that these
wastes contained levels of arsenic that caused the Agency some concern.
We also identified specific situations where we had particular concerns
with the disposition or uses of coal combustion wastes.
In comments on the Report to Congress, EPA received significant new
information related to damage to human health or the environment. This
coupled with the fact that a large fraction of facilities do not have
basic environmental controls in place (e.g., 62 percent of all utility
surface impoundments do not employ groundwater monitoring), we became
further concerned that damage to ground water may be going undetected.
Ultimately, on April 25, 2000, EPA issued a regulatory determination in
which we explained that we would continue to exempt coal combustion
wastes from being regulated as hazardous wastes but we also explained
that we would develop national regulations under non-hazardous waste
authority (RCRA Subtitle D) for coal combustion wastes when managed in
landfills and surface impoundments or when used to fill underground or
surface mines.
Question. Can you explain to the Congress and the industry why your
agency is not prepared to follow the recommendations made by your own
technical staff, based on nineteen years of study?
Answer. Ultimately, relying on all of the information that was
available to us, we determined that the best way to ensure that
appropriate controls were applied at all coal combustion facilities
would be to continue to exempt coal combustion wastes from being
regulated as hazardous wastes and to develop national regulations under
non-hazardous waste authority (RCRA Subtitle D) for these wastes when
they are managed in landfills and surface impoundments or when used to
fill underground or surface mines.
ENERGY POLICY IMPLICATIONS AND THE EPA'S REGULATORY ACTIONS
Question. In the past three years, the EPA has promulgated four
major new regulatory requirements and announced an intention to focus
on the electric utility industry to achieve improvements in air quality
goals. These rules include the following:
--New national ambient air quality standards for ozone;
--New national ambient air quality standards for fine particulates
(PM2.5);
--Regional NOX SIP Call;
--Section 126 petitions from Northeast states to require stringent
NOX reductions from specified electric utility and
industrial sources in the Midwest.
In addition the EPA is in the process of finalizing a new rule to
reform the existing New Source Review regulatory program affecting
existing electric generation sources. The EPA has also, in this regard,
filed suit against eight electric utilities alleging that these
companies have illegally modified their older power plants in violation
of the existing New Source Review regulations.
Finally, the EPA has reportedly reconsidering nineteen years of
evidence and a March 1999 report to Congress on how to regulate coal
combustion waste products by recommending that some yet unspecified
regulatory action may be warranted.
Answer. The cumulative effect of these actions is likely to
significantly drive up the cost of coal-fired electric generation,
force the retirement of some existing coal-fired power plants, as well
as encourage the replacement of coal-fired generators with natural gas
at other facilities. Currently, coal provides fifty-six percent of the
nation's electricity. It is also the source of an affordable and
reliable domestic supply of energy. All of these actions are occurring
at a time that the share of electric generation from nuclear power is
declining and generation from hydro power is not increasing.
Additionally, it remains uncertain whether gas and renewable energy
sources are in a position to completely fill this potential energy gap.
Finally, the Energy Information Agency reports that the overall demand
for electricity will continue to rise in the future. At this time, many
states and the federal government have already taken action or are
considering restructuring the electric power industry with the
expressed goal of reducing the cost of electricity to consumers.
Question. Does the EPA believe its policies and regulations
regarding ozone, fine particulates, the Regional NOX SIP
Call, Section 126 petitions, New Source Review, coal combustion wastes,
and electricity deregulation may be conflicting and dangerous to other
important energy policy implications?
Answer. The rules EPA has already issued that regulate the utility
industry are to address well-recognized and long-standing public health
and air quality problems. The NOX reductions that will be
required by either section 126 or the NOX SIP Call are
necessary to bring areas into attainment with the pre-1997 1-hour ozone
standard. Before issuing these rules, EPA carefully considered their
impact on the cost and reliability of the electric power supply. EPA
found that these NOX reduction requirements will not have an
adverse effect on electricity system reliability or on electric power
costs for households or industrial users. EPA also found that these
NOX reduction requirements will not have a significant
impact on the use of coal for electrical generation. As the electricity
generating industry has recognized, over the next ten to fifteen years
public health and environmental concerns are likely to require
additional reductions of multiple pollutants from the electric
generating industry.
EPA has considered the restructuring of the electric power industry
in the context of our rulemakings and other Agency actions. EPA
believes that this transitional period for the power industry is an
appropriate time to address the environmental responsibility of
electric generating facilities; in this way, the industry can be
afforded the most coherent planning framework and the greatest
flexibility and stability. The Administration believes that
restructuring will have substantial benefits for consumers, including a
significant reduction in the cost of electricity which is likely to
exceed the costs of the environmental safeguards necessary to ensure
that public health and the environmental are protected.
REGULATORY ACTIONS: IMPACT ON USE OF COAL
Question. Has the EPA done any analyses or commissioned any studies
to determine the cumulative effect of all of these regulatory and
agency actions on the use of coal and any unintended electric power
cost increases from such actions? Does the EPA believe that the
combination of these regulatory actions, unintended or not, will reduce
the use of coal for electric generation in the foreseeable future?
Answer. EPA has not conducted an analysis of the cumulative effect
of the specific list of policies and regulations listed in your
previous question. EPA's analysis of changes that will occur in the
electric power industry due to the NOX SIP call and Section
126 shows very little reduction of coal-fired capacity. Instead,
compliance with both regulations will be achieved primarily through the
installation of emission control technologies such as selective
catalytic reductions (SCR) and selective non-catalytic reduction
(SNCR). The Agency estimates early closure by 2007 of, at most, 0.06
percent of the coal-fired capacity in the SIP call region. We also
estimated an increase in combined-cycle capacity of between 1,798 and
4,156 MW. (See the Regulatory Impact Analysis for the NOX
SIP call, FIP, and Section 126 Petitions, Volume 1: Costs and Economic
Impacts. EPA Office of Air Quality Planning and Standards, and EPA
Office of Atmospheric Programs, September 1998). Further, the Agency's
analysis indicates that there will be less than a one percent reduction
in total coal demand in the U.S. in 2007 that will result from the
NOX SIP call. This translates to an anticipated annual
reduction of approximately 4.6 million tons of coal production in the
eastern U.S. (See Responses to Significant Comments on the Proposed
Finding of Significant Contribution and Rulemaking for Certain States
in the Ozone Transport Assessment Group (OTAG) Region for Purposes of
Reducing Regional Transport of Ozone, Docket No. A-96-56, U.S. EPA,
September 1998).
EPA examined the potential increases that may occur in electricity
prices under the NOX SIP call and section 126. The Agency
concluded that these increases will likely result in a 1.6 percent
increase in the average electricity bill. (See the Regulatory Impact
Analysis for the Final Section 126 Petitions Rule. EPA Office of
Atmospheric Programs, December 1999).
Looking at potential future regulations, EPA released a report in
March 1999 concerning its investigation of some options for emission
controls and their impact to the electric power industry and the fuels
it uses. The report, titled ``Analysis of Emissions Reduction Options
for the Electric Power Industry,'' presents the results of multiple
pollutant analyses conducted by EPA regarding the four most significant
air pollutants from electric power generation: nitrogen oxides, sulfur
dioxide, mercury, and carbon dioxide. The options presented in this
report 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. The analysis shows that having advance knowledge
of potential requirements for all four pollutants could lead the
industry to follow significantly different compliance strategies at
individual plants, compared with compliance choices made when the
pollutants are addressed one-by-one. Further, the analysis shows that
an integrated strategy would have more modest impacts on fuel patterns
than many other analyses have predicted. In all options investigated,
coal remains a major fuel in the production of electricity in this
country. EPA continues to refine these multi-pollutant analyses.
SUBCOMMITTEE RECESS
Senator Bond. Thank you so much.
[Whereupon, at 11:14 a.m., Thursday, March 23, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENT OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2001
----------
THURSDAY, MARCH 30, 2000
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:34 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Kyl, Stevens, Mikulski, and Leahy.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
STATEMENT OF ANDREW CUOMO, SECRETARY
ACCOMPANIED BY:
SAUL RAMIREZ, DEPUTY SECRETARY
GAIL LASTER, GENERAL COUNSEL
JACQUIE LAWING, DEPUTY CHIEF OF STAFF FOR POLICY AND PROGRAMS
RHODA GLICKMAN, DEPUTY CHIEF OF STAFF
HALL 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 COMMISSIONER
IRA PEPPERCORN, DIRECTOR, OFFICE OF MULTIFAMILY HOUSING
ASSISTANCE RESTRUCTURING
GEORGE ANDERSON, EXECUTIVE VICE PRESIDENT, GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION
EVA PLAZA, ASSISTANT SECRETARY FOR FAIR HOUSING AND EQUAL
OPPORTUNITY
DAVID GIBBONS, ACTING CHIEF FINANCIAL OFFICER
EDWARD KRAUS, DIRECTOR, ENFORCEMENT CENTER
DONALD J. LaVOY, 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 SENATOR CHRISTOPHER S. BOND
Senator Bond. Good morning. The Senate VA-HUD and
Independent Agencies Subcommittee hearing will come to order.
We welcome Secretary Cuomo and our other guests from the
Department of Housing and Urban Development who have joined us
here this morning to testify on the President's fiscal year
2001 budget request for the Department of Housing and Urban
Development.
The President's budget request for HUD proposes $32.1
billion for fiscal year 2001, which is an increase of some $5.8
billion over the fiscal year 2000 appropriation of $26.2
billion. This includes a request for $120,000 new incremental
vouchers at a cost of some $690 million as well as nine new
housing initiatives costing another $200 million. While I have
significant reservations regarding the creation of these new
boutique programs, I am pleased the Administration has included
additional funds for a number of HUD's core programs such as
public housing, the CDBG program, the HOME program, and Section
202 elderly housing. In most cases these programs represent our
most important Federal investment in affordable low-income
housing and community development initiatives.
Mr. Secretary, I expect this will be the last time that we
sit in a hearing to discuss the annual budget for the
Department of Housing and Urban Development together. I know
that you have worked hard to make the Department a better
agency. However, I am disappointed the early promise of your
energy and commitment has failed to make the necessary reforms
to ensure the success of HUD's core housing and community
development programs. I know many of these issues are not sexy
and probably not especially interesting, but they are important
to the people who live in housing and want to live there.
Now, a year ago you were touting the fact that HUD received
its first clean audit as evidence that HUD has turned the
corner. This was the first time ever that HUD received an
unqualified opinion, and you got good press and were
justifiably proud.
Unfortunately, this year the books have slid back into
disarray, so much so that the auditors have been able to
actually audit them, and that's the report that we have here.
HUD's reaction? Attack the auditors, call them unprofessional,
even though they are the same ones who gave you the clean audit
last year. I think it is not time now, once again, to place the
blame on others but, rather, admit that HUD's operations
priorities or internal controls did not get the job done and
need to be improved.
Let's be honest. It is HUD's books that needed $17.6
billion in adjustments to the fiscal year 1998 balances, and it
is HUD's books that needed to make an additional $242 million
in adjustments totalling $59.6 billion in the fiscal year 1999
balances.
I started my career in Government service as Missouri State
Auditor, so I know a little about this, and Mr. Secretary, HUD
has a huge problem on its hands, and you have on yours. In
fact, if HUD were a private company, the SEC would probably
have already suspended the trading in its stock.
Nevertheless, I am more concerned at this moment to be on
balanced books. We need to have answers to the questions that
are fundamental to the mission of the Department, namely, how
is HUD performing its missions, do the programs work, if not,
why not, and is HUD a good neighbor and partner?
One of the many frustrations people have with their
Government is their gut feeling that no one is ever held
accountable, no one is actually responsible for failures or bad
ideas. Instead, the political culture comes out with phrases
such as, mistakes were made, or else rewrites the nature of the
problem.
In the case of HUD, the many programs it runs, and the
millions of people it is supposed to serve, I have noticed an
alarming pattern:
``Leadership quick to place responsibility or blame on
others, but unwilling to understand or accept its own failings,
and we have the extraordinary events of just this week, where
you, Mr. Secretary, issued your fourth report in 4 years
warning again about the crisis we are facing in affordable
housing needs and, in discussing the report, you have been
recorded as saying there was a 4-year hiatus when we went out
of the housing business.''
We are now paying for that hiatus, and moreover, from your
statements you have identified the decision not to fund any new
vouchers from fiscal year 1994 to 1998 is largely to blame for
this accelerating housing crisis.
Based on this, what, of course, you are saying is that
beginning in fiscal year 1994, with the House and Senate VA
Appropriations Subcommittees under the leadership of Chairman
Barbara Mikulski and Chairman Louis Stokes, their decision not
to fund any new vouchers sowed the seeds for the crisis, and
when Chairman Bond and Chairman Lewis continued the practice
over the next few years, as we attempted to dig out of our
budget quagmire, that we are responsible as well.
However, your own report states the problem is due to a
shrinking number of affordable units, and as I have said over
and over again, these vouchers you are so anxious for have not
and will not produce one additional unit of affordable housing,
but you have fixed the blame. It is Congress, Senator Mikulski
and her leadership, Senator Bond and his leadership.
But we ask the question about HUD's leadership. Where is
the discussion of what HUD has been doing over the past 4
years? Let's look at the record. Just between 1996 and 1998,
according to the National Housing Trust, we lost over 925
properties through opt-outs, prepayments involving nearly
98,000 affordable apartments. The National Housing Trust
further notes that these lost units have, quote, occurred in
many prime housing markets, which unfortunately led to the loss
of affordable housing from neighborhoods with better schools
and services, close quotes.
In past years, we asked you to devote your attention to and
solve the opt-out problem. Last year, this subcommittee became
so frustrated with HUD's lack of leadership and action to
preserve the units that we directed you through legislative
provisions to preserve this housing, as well as provided $100
million in new funding to get HUD to act.
According to HUD's 2001 budget summary, the good news was,
this legislation in 1999 cut the loss of section 8 housing by
75 percent, so maybe our work is beginning to pay off, but for
2 years the Majority and Minority on this subcommittee tried to
get HUD's attention, and the failure to act cost us at least
100,000 affordable, low-income housing units, and we think that
HUD's record on section opt-outs was abysmal.
Second, let us review how HUD has handled the multifamily
properties in the FHA portfolio. These could be HUD-held, or
HUD-owned. In both cases, the expectation that most of us have
is that when HUD steps in, that preserving the housing stock in
the inventory would be a priority. Unfortunately, what we found
is just the opposite.
HUD has lost a significant number of affordable rental
housing units that could have addressed the worst-case housing
needs that HUD often cites. In terms of properties that HUD
owned, then sold, only 14 properties containing 1,538 units
were maintained as section 8 housing, while 107 properties
containing 17,877 units were sold during your tenure, and the
units lost as affordable low-income housing.
When we looked at HUD-held properties that had been sold by
HUD, only 10 properties containing 830 units were maintained as
section 8 housing, while 72 properties containing 8,891 units
were sold and the units lost from inventory as low-income
housing. That is a retention rate of less than 10 percent.
By our overall calculation, Mr. Secretary, that means on
your watch we have seen the affordable housing inventory
decline by nearly 125,000 affordable, low-income housing units.
That, to me, is a record of failure, one that is felt Nation-
wide.
In the meantime, Congress, at your request, has provided
funding over the last 2 years for 110,000 vouchers, vouchers
which you say are an important step towards closing this
affordable housing gap. You have stated it is critical for
working families, because increased housing costs have left
them less able to afford food, medical care, education, and
other necessities.
But of those 110,000 working families who could have been
helped these past few years, only 3,300 actually have been
given a voucher. That is just about 3 percent. What is going on
at HUD that these vouchers are still sitting around? How could
HUD fail this badly, when people it is supposed to serve have
needs?
Of the 125,000 units of affordable housing lost, over
100,000 vouchers sitting around unused, and yet your reports
accuse this committee of causing the affordable housing crisis.
We look forward to hearing your comments, Mr. Secretary, but
first let me turn to my distinguished Ranking Member, Senator
Mikulski for her comments. Senator Mikulski.
[The statement follows:]
Prepared Statement of Senator Christopher S. Bond
The Senate VA, HUD and Independent Agencies Appropriations
Subcommittee will come to order. We welcome Secretary Cuomo and our
other guests from the Department of Housing and Urban Development who
have joined us here this morning to testify on the President's fiscal
year 2001 Budget Request for the Department of Housing and Urban
Development (HUD).
The President's Budget Request for HUD proposes $32.1 billion for
fiscal year 2001 which is an increase of some $5.8 billion over the
fiscal year 2000 appropriation of $26.2 billion. This includes a
request for 120,000 new incremental vouchers at a cost of some $690
million as well as 9 new housing initiatives costing another $200
million. While I have significant reservations regarding the creation
of these new boutique programs, I am pleased that the Administration
has included some additional funds for a number of HUD's core programs,
such as public housing, the CDBG program, the HOME program and section
202 elderly housing program. In most cases, these programs represent
our most important Federal investment in affordable low-income housing
and community development initiatives.
Nevertheless, despite rosy scenarios and high expectations caused
by a balanced budget, this will be another tough year for this
subcommittee. We have made a commitment to reform social security
first, and as always, this subcommittee has the responsibility for
funding a variety of agencies with different missions and priorities.
It is not easy to reconcile these missions and priorities and we again
have significant funding increases that must be provided for in VA
Medical Care as well as the need to address the escalating costs of
section 8 contract renewals which have been aggravated by the
Administration's and the Congress' decision to defer $4.2 billion of
fiscal year 2000 section 8 funding to fiscal year 2001. This funding
decision will have to be accommodated under our budget caps for fiscal
year 2001.
Mr. Secretary, I expect that this will be the last time that we sit
in a hearing to discuss the annual budget for the Department of Housing
and Urban Development. I know that you have worked hard to make the
Department a better agency, but I am disappointed that the early
promise of your energy and commitment has failed to make the necessary
reforms to ensure the success of HUD's core housing and community
development programs. I know that many of these issues are not sexy and
probably not especially interesting, but they are important.
Now a year ago, you were touting the fact that HUD received its
first ``clean audit'' as evidence that HUD has turned the corner. This
was the first time ever that HUD had received an unqualified opinion,
and you got good press and were justifiably proud. Unfortunately, this
year the books have slid back into disarray, so much so that the
auditors have been unable to actually audit them.
HUD's reaction? Attack the auditors. Call them ``unprofessional''--
even though they are the same ones who gave you the ``clean'' audit
last year. I think that it is time not to always place the blame on
others but rather admit that HUD's operations, priorities or internal
controls just didn't get the job done.
And let's be honest, it is HUD's books that needed $17.6 billion in
``adjustments'' to the fiscal year 1998 balances. And it is HUD's books
that needed to make an additional 242 adjustments totaling $59.6
billion to the fiscal year 1999 balances.
I started my career in politics as Missouri's state auditor--so I
know a little about all this--and Mr. Secretary, you have a huge
problem on your hands. In fact, if you were a private company, the SEC
would suspend trading of your stock.
Nevertheless, I am more concerned at this moment to look beyond
balanced books. We need to have answers to the questions that are
fundamental to the mission of the Department; namely, how is HUD
performing its mission, do the programs work, if not, why not, and is
HUD a good neighbor and partner.
First, HUD remains a high-risk area that is considered vulnerable
to waste, fraud, abuse and mismanagement. It is the only agency
designated as a high risk area by GAO on an agency-wide basis, and GAO,
the HUD Inspector General and others continue to raise questions and
concerns about HUD's capacity and ability to deliver on the promise of
its programs. This is a key question and concern. As we have discussed
in the past, as a matter of fiscal responsibility, HUD is one of the
nation's largest financial institutions, with sizable commitments,
obligations and exposure. HUD is responsible for managing more than
$496 billion worth of insured mortgages, $628.4 billion in outstanding
mortgage-backed securities, and some $106.9 billion in prior year
unexpended budget authority for which it has future financial
commitments.
Despite the magnitude of these responsibilities, HUD has never
matched its staffing requirements with program needs. This has become
especially critical as HUD has reduced its staffing from 12,000 staff
in 1995 to some 9,100 staff today. In addition, many of the key program
decisions within the Department have been transferred to Community
Builders, who are not only contract employees but in many cases are
without the necessary program expertise and knowledge to make
appropriate program decisions and recommendations. While this program
is being phased out, I worry about HUD's ability to develop the staff
capacity and expertise needed to ensure the appropriate delivery of our
housing and community development programs. In addition, HUD has an
aging staff with top heavy salaries. So not only does HUD need to
develop staff expertise and capacity, it needs to reinvigorate itself.
I also want to be very clear that I do not expect HUD to take
shortcuts to solving these institutional and systemic problems. We need
to establish a long-term staffing plan that is tied to program needs
and requirements. We also need to establish an information system that
can track funding decisions and integrate information on all HUD
programs; one that is accurate and dependable.
One of the frustrations many people have with their government is
their gut feeling that no one is ever held accountable, no one is
actually responsible for failures or bad ideas. Instead the political
culture spews out phrases such as ``mistakes were made'' or else
rewrites the nature of the problem.
In the case of HUD, the many programs it runs, and the millions of
people it is supposed to serve, I have noticed an alarming pattern--
leadership which is very quick to place responsibility or blame on
others but absolutely unwilling to understand or accept its own
failings. And thus we have the extraordinary events of just this week,
where you, Mr. Secretary, issued your 4th report in 4 years warning
again about the ``crisis'' we are facing in affordable housing needs,
and in discussing this report you have been quoted as saying that
``There was a 4 year hiatus when we went out of the housing business.
We are now paying for that hiatus.'' And, moreover, from your
statements you have identified the decision to not fund any new
vouchers from fiscal years 1995 through 1998 as largely to blame for
the accelerating this housing crisis.
Based on this, what of course you are saying is that beginning in
fiscal year 1995, with the House and Senate VA/HUD Appropriations
Subcommittees under the leadership of Chairwoman Barbara Mikulski and
Chairman Louis Stokes, that their decision to not fund any new vouchers
sowed the seeds for today's crisis. And that when Chairmen Bond and
Lewis continued this practice for the next few years, as we attempted
to dig out of our budget quagmire, that we are responsible as well.
Moreover, your own report states that the problem is ``due to a
shrinking number of affordable rental units''. And as I have said over
and over, these vouchers you are so anxious for--have not, and will
not, produce one additional unit of affordable housing.
But you have fixed the blame. It is Congress. It is Senator
Mikulski and her leadership. It is Senator Bond and his leadership. But
you have not commented on your own leadership.
Where is the discussion of what HUD has being doing over the past 4
years?
Let's look at the record.
Just between 1996 and 1998, according to the National Housing
Trust, we have lost over 925 properties through opt-outs and
prepayments involving nearly 98,000 affordable apartments. The National
Housing Trust further notes that these lost units have ``occurred in
many prime housing markets, which unfortunately led to the loss of
affordable housing from neighborhoods with better schools and
services.'' Last year, this Subcommittee became so frustrated with
HUD's lack of leadership and action to preserve these units that we
included a number of legislative provisions to preserve this housing as
well as $100 million in new funding to get HUD to act.
According to HUD's fiscal year 2001 budget summary this
``legislation in 1999 has cut the loss of Section 8 housing by 75
percent''. So maybe our work is paying off now--but for two years
democrats and republicans on this Subcommittee tried to get HUD's
attention and this failure cost us at least 100,000 units.
Second, let's look at how HUD handles the multi-family properties
in the FHA portfolio. These can be HUD-held, or HUD-owned. In both
cases, the expectation that most of us have is that when HUD steps in,
that preserving the housing stock in the inventory would be a priority.
Unfortunately, what we found is just the opposite.
In the case of this HUD multifamily inventory, HUD has lost a
significant number of affordable rental housing units that could have
addressed the worst case housing needs that HUD often cites. In terms
of properties that HUD owned then sold, only 14 properties containing
1,538 units were maintained as section 8 housing out of 121 properties
containing 19,415 units that were sold during your tenure. In terms of
HUD-held properties that have been sold by HUD, only 10 properties
containing 830 units were maintained as section 8 housing out of 82
properties containing 9,721 units during this period.
This means, Mr. Secretary, on your watch, we have seen the
affordable housing universe of HUD owned and HUD-held multifamily
housing decline by over 125,000 units. That is simply put, a record of
failure.
In the meantime, Congress has provided funding, per your
insistence, for 110,000 vouchers over the past two years--vouchers
which you say are ``important step in towards closing this affordable
housing gap''. You say it is ``critical for working families'', because
increased housing costs have left them less able to afford ``food,
medical care, education or other necessities''.
But of those 110,000 working families who could have been helped
these past few years--only 3300 have actually been given a voucher.
That's only 3 percent. What is going on at HUD that these vouchers are
still sitting around? How could HUD fail this badly, the very people it
is supposed to serve?
225,000 units of affordable housing lost, over 100,000 vouchers
sitting around unused--and you have the gall to accuse Senator Mikulski
and I of causing this so-called affordable housing ``crisis''.
In addition, while the FHA Mutual Mortgage Insurance Fund for the
FHA Single family Mortgage program is presently in good shape, FHA's
inventory of single family homes that HUD has foreclosed on and taken
ownership of has more than doubled under your tenure from 24,395 homes
in 1996 to over 47,000 homes currently, despite the fact that this
subcommittee has provided significant new tools to move this housing
into the hands of nonprofits and homeowners. Even more troubling is the
fact that from between April 1999 and January 31, 2000, the percentage
of properties in HUD's single family inventory for 6 months or more has
increased from 30 percent to 41 percent of the inventory, and the
percentage of properties in the inventory for more than 12 months has
increased from 10 percent to 17 percent. This is a disaster for
neighborhoods and sloughing off these properties on local governments
is not a responsible answer.
And the bad news is not over, The percent of FHA loans in
foreclosure has increased from 1.64 percent in 1996 to 2.2 percent in
1999. FHA's loan delinquencies has also increased from 8.05 percent in
1996 to 8.57 percent in 1999, whereas the delinquency rate for
conventional loans is some 2.63 percent. Even more disturbing is KPMG's
recent audit finding regarding FHA loans that HUD currently holds as
the mortgagee. KPMG found that FHA could have prevented further losses
to the fund if it was able to service its loans adequately.
Specifically, over 2,500 loans, or 22 percent of the portfolio were not
being actively serviced as of September 30, 1999. Lastly, KPMG found
that the quality of the portfolio had deteriorated significantly
between 1996 and 1999.
Again, when the federal government steps in to take over a property
from a failing landlord, or becomes the owner of a house down the
street through foreclosure, we expect that things will start to
improve; that repairs will be made, lawns mowed, and broken windows
fixed. What we don't expect is that the housing conditions will
deteriorate even further, that property values will fall in the
neighborhood, and that in some instances the property will become a
HUD-owned crack house.
What is HUD doing? And if it is true that HUD is running a huge
surplus in the FHA fund . . the fund that is used to maintain and
preserve HUD-owned properties . . while all these units are being
lost, it is a fair question to ask what is HUD thinking?
We look forward to hearing your comments, Mr. Secretary. But first,
let me turn to my distinguished Ranking Member, Senator Mikulski.
STATEMENT OF SENATOR BARBARA A. MIKULSKI
Senator Mikulski. Thank you very much, Mr. Chairman, and I
also want to thank you for allowing the VA-HUD Committee to
hold a very important field hearing in Baltimore on Monday on
the issues related to the flipping of property, where property
is bought at one price and then the poor are sold the housing
at an inflated price, with false information about the buyer's
credit, false information and deceitful and criminal
information by the appraiser, and so on, and we will talk more
about it, but we had an excellent hearing, and I want to thank
you for authorizing the hearing and for the participation of
your staff.
We were joined at that hearing by Senator Sarbanes so that
he, too, could get insights for corrective action through the
authorizing.
Mr. Cuomo, we want to welcome you today for today's
hearing, and I know this will be your last appearance before
the committee on the matter of the appropriation. Based on some
of the things that we've uncovered and discussed with you,
there might be additional, either a hearing or a roundtable or
something.
In our work together I know that you have focused very much
on the issues that I raised from time to time in hearings, on
the issues of the consequences of HOPE VI and section 8, are we
changing vertical poverty to horizontal poverty, your concern
about the digital divide, your taking on the challenge that I
raised about the need to look at housing for the elderly, and
look at the contemporary demands of people aging in place, and
what we need.
Ordinarily, those are things that I would go through in
detail at the hearing, because the appropriations put forth on
housing for the elderly are a significant increase, and a focus
on new ground-breaking initiatives and assisted living, and I
would hope perhaps to have additional conversations with you
and your staff on that.
In terms of HOPE VI, I believe it has been one of the most
successful antipoverty programs we have had. We have not only
created a new physical infrastructure but a new social
infrastructure, and I know that you are looking at ways to
improve the program, and under the leadership of Ms. Elinor
Bacon, who is in charge of HOPE VI, it was how we could keep
the momentum going, improve the program, and also make sure we
are not creating horizontal poverty, and we look forward to
further conversation on that.
Within the Senate itself, I have taken on the
responsibility within the Democratic Caucus to come up with
initiatives to ensure that there is no digital divide in this
country. Through extensive conversations with the President,
the Vice President, and his team, we really do have a
legislative framework, and one we would like to build on
lessons learned by bringing computer technology into HOPE VI,
which meant job-training for adults, after-school activities
for children, and again, those are areas for further
conversation.
But today, I really want to focus on the hearing that I had
in Baltimore and some of the issues raised prior to the
hearing, but the hearing confirmed my worst fears.
Mr. Secretary, you know my background. You know that I came
into politics to save lives, to save communities, and to save
neighborhoods.
When I met with the community in Baltimore several weeks
ago, with the advocates of a group called Coalition Against
Predatory Practices, Predatory Real Estate Practices, I was
horrified to see where the very tools of the Federal
Government, used to promote home ownership, had become the very
tools for scamming the poor, actually gouging the poor, and
that in that process of gouging the poor, forcing them into
bankruptcy then meant foreclosures, and that very often the
very HUD inventory itself, of holding FHA mortgages, were
destroying neighborhoods.
So in both my meetings with the coalition, and then in our
hearing, what we found was that HUD itself was a contributor to
the destruction of dreams, the erosion of neighborhoods--I will
wait until you finish reading Mr. Apgar's note.
Mr. Cuomo. Sorry.
Senator Mikulski. Mr. Apgar, I think you need to hear this.
I really think you need to hear this, because FHA is only one
part of what happened in flipping, but it is the one, perhaps,
that we have the most control over because of the sub-prime
underissue. I know that HUD did not directly do this, but HUD
has to know the consequences. HUD has to--perhaps Mr. Apgar--
has to get out of headquarters and go out and take the same
tour that I did to see that.
Now, what we see here is that people are buying and
reselling property for a 100-percent profit, sometimes within
the same day. Property-flipping is directly related to the
problem of predatory lending, scamming them, destroying their
lives, and ruining entire communities. These communities were
part of my original city council district. They were part of my
congressional district, and they are part of both my
neighborhood, and they are the home, they are literally my
home, and they are the home of my heart, so I am going to fight
for those neighborhoods.
But those neighborhoods are a metaphor, because if I
thought it was only going on in Baltimore, it would be like the
Superfund site that we would move in to contain. But it is more
like a virus, and it is spreading nationwide, in Milwaukee, in
Chicago, in Buffalo, in my own State, tell-tale signs already
in Prince Georges County, so it is more like a virus that is
spreading, and I think we need to jump in and do something
about it, to do something about the gouging of the poor, home
improvements scams, crooked appraisers, kick-back to mortgage
brokers, and then holding the destabilization of neighborhoods.
I know that you and I talked about this, and I know that
you have some very important thoughts and recommendations on
this. I personally want to thank you for taking very
constructively the results of that hearing and actually meeting
with the neighborhood people themselves, to leap-frog over our
staffs, bureaucracies, and going on, and going directly to the
people.
On behalf of them, I really want to thank you. They are in
the audience here today, and we will acknowledge them later on
in the testimony, but I want to thank you for going directly to
them to get a sense of the problem, and so today I look forward
to the solutions about not only what we could do about
Baltimore, but using Baltimore as the laboratory, because the
FBI said to me that this was the worst case situation in the
Nation, and of the 5,000 homes that were sold in Baltimore,
10,000 homes last year, 5,000 are now into default.
Now, 50 percent are into FHA default. Something is wrong
somewhere. Not all are a result of flipping, so I am going to
stop the crime. I am going to stop the scum from gouging the
poor in our communities nationwide, and I want to make sure
that when FHA takes hold of property, we deal with it in a way
that enhances and builds the neighborhoods. I know that is your
commitment. Let us work together, and I look forward to hearing
your testimony.
Senator Bond. Thank you, Senator Mikulski.
Senator Leahy.
STATEMENT OF SENATOR PATRICK J. LEAHY
Senator Leahy. Thank you, Mr. Chairman, and Secretary,
everybody has told you all that may go wrong. Let me say that
there is a lot of things have gone right, and I think a lot of
it reflects the hard work you have shown over the last 3 years
at HUD.
I recall when you were appointed as Secretary I told you I
did not know whether to congratulate you or offer you
condolences, because it is a very difficult area. You are never
going to have enough money to do all the things you want to do,
and the things you want to do can almost never be done
perfectly, because if there could be there would not even be a
need for HUD to be there. Usually you are facing some of the
most intractable problems.
You took over the most overburdened Department in our
Government, but at the same time you have reduced the size of
HUD's bureaucracy. The head of the GAO has publicly stated you
have made incredible progress toward implementing a plan to
remove your Department from the high-risk designation. You have
improved the HUD budget to better address the housing needs
across the country.
I think you have prepared a strong budget for fiscal year
2001. I congratulate you for that. The recent release of HUD's
worst-case needs report illustrates how important it is to
remain committed to the housing needs of low-income families,
and the irony is we are in a time of high economic prosperity,
the best in my lifetime, in this country but we still have some
real housing needs among low-income people.
You propose 120,000 new housing vouchers and $1.2 billion
in homeless assistance grants. I think they need it. They will
begin to address the real problem of those who are least able
to afford a place to live.
I am also encouraged by your commitment to the CDBG and
HOME programs. These have been two of the most effective
programs available for financing housing and economic
development. They have also--I know they have been helpful in
rural areas like my own State of Vermont, but also in other
parts of the country, and to risk sounding parochial, something
that rarely ever happens in the Appropriations Committee and
almost never here, I did look at a study recently conducted in
Vermont.
Now, to put this in perspective, Vermont has about 600,000
people. It shows on top of the 15,000 families already helped
by State and Federal programs, nearly 22,000 families still
need some sort of housing assistance. And 22,000 families is
not much in California or New York, or Illinois. It is an awful
lot of people in Vermont, and we have got one of the most
expensive and tightest housing markets certainly I have seen in
my lifetime.
In Chittenden County, one of our 14 counties, but one that
has about a quarter of our State's population, and Mr.
Secretary, you have visited that area, and you know many of the
people there, the residents are currently facing a 1-percent
vacancy rate, a 1 percent, and housing costs are expensive. The
middle income families are being left homeless. They can go to
a hotel. They can go--or just not have homes. And that is
happening in other parts of the country. I am not suggesting
that we are unique. Unfortunately it is happening in a lot of
other parts.
Now, let me mention New York City and the homeless program.
I am convinced from all I have read, all I have seen, all my
staff's been able to see, that HUD acted in the best interest
of the homeless in New York City. I want to make that very
clear.
Legitimate concerns about reduction in grant proposals by
city officials were identified by a Federal district judge in
Manhattan, and suggested it was done out of a sense of
vindictiveness. I think you were correct to take that program
away from the city until it could be determined that homeless
funds were being reviewed on their merits, not according to
some kind of litmus test set up in the mayor's office.
You know the funds that are awarded through the continuum
of care program are only as effective as the organization that
administers them. You can put the money in there, but it has
got to be administered well, and it has been the homeless
community in New York City which has been the victim throughout
this process, and I understand you are working with that
community and working with city officials.
I would hope that we can get politics out of it once and
for all, and I do not particularly care which party is
controlling HUD, or which party is controlling the city hall
for the purposes of getting this money out there. It should be
done where it is going to do the best. We know what we want to
do. We want to help the homeless, and they were not being
helped because too many litmus tests were being put for
whatever reason, but not for reasons that were intended by the
Congress or by your Department, so you were right to take it
over.
So I thank you for that, and I will have some questions
when we start, but I would also like to say again I enjoy
working both with the chair and the ranking Member of this
committee. I do not know two Senators who work harder on their
budget, go through more frustration, but have more hopes for
the future than the two of you.
Thank you. Thank you, Mr. Chairman.
Senator Bond. Thank you very much, Senator Mikulski, and
Senator Leahy, we thank you for your faithful attendance on the
appropriations subcommittees. With so many hearings we have, it
is difficult to get appropriations members of the committee to
join us, and you have been a faithful participant. We
appreciate that.
Now, Mr. Secretary, we would welcome your opening
statement. As always, we will make your full statement, the
budget request and all the information already submitted a part
of the record and ask you to summarize what you think would be
the most important parts of the information you have today.
STATEMENT OF ANDREW CUOMO
Mr. Cuomo. Thank you very much, Mr. Chairman, for the
opportunity to be here again, and thank you, Senator Mikulski
and Senator Leahy, not just for your attendance at this
hearing, but for all your good work and help over this past
year.
If I might, with the committee's permission, quickly
introduce the senior officials who are here today, who may be
responsive to your questions. At the table seated with me, to
my right, as you know, is FHA Commissioner William Apgar. To my
left is Deputy Secretary Saul Ramirez. I will ask these people
to stand quickly. It will also be good exercise.
Assistant Secretary Cardell Cooper, CPD, Assistant
Secretary Harold Lucas, Public Housing, Mr. George Anderson,
Acting President of GNMA, Assistant Secretary Susan Wachter,
Policy Development and Research, Assistant Secretary Eva Plaza,
Fair Housing, Gail Laster, General Counsel of the Department,
Stephen Carberry, Chief Procurement Officer, Joe Smith, Acting
Assistant Secretary for Administration, Mr. Donald Lavoy, who
runs the REAC, Real Estate Assessment Center, Mr. Ed Kraus, who
is a detailee from the FBI and runs the Enforcement Center, Mr.
Hal DeCell, Assistant Secretary for Intergovernmental
Relations, Jackie Lawing, Acting Chief of Staff, Dave Gibbons,
Acting CFO, Douglas Kantor, Deborah Vincent, Deputy Chiefs of
Staff, Rhoda Glickman, Deputy Chief of Staff, Mr. Fred Karnas,
who is in charge of the Homeless programs, Deputy Assistant
Secretary, Jackie Johnson, who is in charge of the Native
American Programs, and last but certainly not least, Ms. Elinor
Bacon, who is in charge of the HOPE VI program, which, as
Senator Mikulski rightly pointed out, has been a real success
story.
Senator Bond. Mr. Secretary, we welcome all the members.
Let me ask all the other representatives of HUD who were not
introduced, would you stand up as well, please, so everybody
else who works for HUD, if you would please stand up.
All right. Well, thank you very much. We feel somewhat
overmanned. You have more than the combined staff of the entire
Appropriations Committee here, and we are certainly glad, and
welcome all of them to participate in the discussions.
HUD'S ACCOMPLISHMENTS
Mr. Cuomo. Thank you very much, Mr. Chairman.
First let me also thank the committee, as this will be
probably the last time that I am before you. We have
accomplished great things in this past 4 years, past 3 years,
and I believe when they write the history book of housing,
outside of this political year, these 4 years will be a period
of great progress.
We have new section 8 vouchers over this period of time,
not what the President requested, but at least we are back into
business. We do have public housing legislation, which has
reformed public housing, the first legislation that has been
passed in 7 years. It has made a real difference,
deconcentrated poverty.
We have addressed the section 8 issues. Mr. Chairman, I
recall, I believe in this room at my confirmation hearing, with
then Senator D'Amato, we put two charts on an easel to my left
talking about the impending crisis of section 8 and how that
had to be the focus because we were going to be losing units.
Literally before I was in office, we identified that as the
major problem, and I am glad that we have been able to respond
to that.
We increased the FHA loan limits. We have made significant
management progress at the Department, and every non-political
credible source will confirm that management progress, starting
with the GAO, which is often referred to by Congress, but also
a raft of expert private consultants such as Price Waterhouse,
Booz Allen, Arthur Andersen, et cetera, and we more than
doubled the homeless assistance budget, and we changed the way
of doing business there and I think in many ways we are doing
much more service for those people who need it most, who make
up the homeless population.
So I think those are just some of the highlights of what we
have accomplished. Not that our job is done, certainly. We have
not reached management Nirvana at HUD. We have further to go.
We have not addressed the housing problem. It is getting worse
in the midst, but we have made progress, and we have another
good year ahead of us.
Predatory lending
Part of our responsibility is to address the changes that
occur, the challenges that arise on our watch. I think Senator
Mikulski has put her finger on probably the challenge to
housing and communities that face the Nation for the next few
years, and that is the issue of predatory lending.
The Senator has identified it in the City of Baltimore,
where it is a significant problem, but it is also a national
crisis, in my opinion, and it is going to be a priority for us
at HUD over this coming year. It is just evolving on us, and we
do not really see the full parameters of it yet, but what has
happened is, the sub-prime mortgage market has actually
exploded in growth.
If you look at the numbers just from 1993, the quote-
unquote sub-prime market went from about 100,000 loans to about
900,000 loans, the value of the sub-prime portfolio from $20
billion to $150 billion, so this has been a market----
Senator Mikulski. Can you move that? The person doing the
transcript sees it better than we do.
Mr. Cuomo. This has been an explosion in sub-prime lending.
Now, sub-prime lending in and of itself is not bad. It is good,
bringing credit to people who need it, but it has opened the
door for abuse of a very vulnerable population. That is what
has been now recently termed predatory lending.
National Consumer Law Center estimates 600,000 Americans
may lose their homes because they were duped into bad loans.
Now, the predatory lending comes in all types of forms.
Basically, the forms are excessive up-front fees and high
interest rates, up-front financing cost of credit life
insurance, excessive prepayment penalties that trap homeowners
in high-cost mortgages, and balloon loans that are structured
to include an extremely high final payment.
This issue is bigger, frankly, than HUD. It is certainly
bigger than the FHA. Alan Greenspan said that he is, quote,
concerned over the unfair and deceptive lending practices in
the mortgage industry that target the poor and underserved
communities.
Mayor Richard Daley sees this in Chicago and says that
predatory lenders are a new menace to our neighborhoods. These
people do not wear gang colors and flash hand signals. They
wear pinstripe suits, and they flash easy cash. But I think
there is much of the echo, Senator Mikulski, in your sentiments
in that quote.
We believe it is the obligation of HUD to rise to this
challenge. HUD is the housing organization for the Nation. HUD
is responsible for RESPA, the Real Estate Settlement Procedures
Act, which is applicable here, and this is primarily a housing
problem.
The methodology that we would employ to address this issue
over these next few months is as follows. First, rather than
dealing with the problem in the abstract, or as a concept, we
would deal with the issue as a practical, as it is presented in
practice.
The City of Baltimore for a number of factors probably
presents, in our opinion, one of the worst manifestations of
all of these phenomena. There is a confluence of circumstances
in the city that conspire to make this problem of, quote-
unquote, predatory lending even worse.
We would use the City of Baltimore as what we call an
operational laboratory. Let us address these issues as they are
presented in the city, use the experience then to arm a
national task force which could have hearings Nationwide to
make sure what we are seeing in Baltimore is also what we are
seeing in Chicago, also what we are seeing in Denver, also what
we are seeing in Los Angeles, and then come up with a report to
the Congress.
We would hope to do this in 8 weeks, so that Congress could
consider legislative changes this year, because we think time
is of the essence, and that is our plan going forward. We'd
like to establish a national task force, also a Baltimore task
force that focuses specifically on Baltimore, designing
practical solutions and a national policy.
While Baltimore faces challenges, there are also
significant opportunities in Baltimore. It has one of the
strongest networks of CDC's, Community Development
Corporations, in the Nation in our opinion, very organized,
grassroots groups who are energized but also sophisticated in
what they do, and we think that is a significant asset for us
to build on.
So that is our proposal. We hope to get this done in 8
weeks, get a report back to Congress, as well as making the
practical changes, and hopefully that can amount to legislative
changes for the Nation, because in the final analysis we will
need new laws for this new problem.
FHA has already done its part, and will do more. We have
started to crack down on lenders who are making bad loans with
what we call our credit watch program, but basically what this
does is, it terminates lenders with excessive default or claim
rates. If you are a lender, and you have an excessive claim
rate, you are automatically terminated based on the default
rate.
We are changing the appraisal process, because the
appraisal process is very much an element in all of these
schemes, and we are actually upgrading the appraisal process to
what we call the homebuyer protection plan, which tested our
appraisers for the first time, and makes the appraisal a
submission to FHA and, hence, a submission to a Federal agency,
and hence, a false appraisal a potential violation of the False
Claims Act.
Property disposition
We are also working at FHA on expediting the disposition of
our property. We are selling faster than we have ever sold
before. You see the numbers coming down from 323 days to 144
days, and our most critical problem, which is what we call the
aged inventory, our old properties, we have come up with what
is in our opinion some very creative ways to sell them, 50
percent off for a police officer, the officer-next-door
program--50 percent off for a teacher, to bring a teacher into
a revitalized community, and a discount for qualified not-for-
profits.
We have also gone the next step, which I believe is the
final solution, if you will, for the aged inventory. If we do
not sell a home after 6 months on the market, we give it to the
city for $1, period, and the city will then transfer it to a
not-for-profit, et cetera. We will do all of these things to
try to sell the property faster, but we will put--your point,
Mr. Chairman, about performance--an end point. If none of this
works within 6 months, rather than have an FHA property that
might deteriorate, we will give it to the city, period.
We announced this just a few days ago with Congressman
Kasich, who is concerned about this issue, and I am very
excited about that.
The last point on FHA is, so we do not lose the forest for
the trees with FHA--FHA is having a banner year.
Senator Bond. Mr. Secretary, in a kinder, gentler Congress,
somebody has killed the red light off. It should have gone off
several minutes ago, but I would like you to wrap up as quickly
as you conveniently can with hitting the main points you wish
to hit.
Budget request highlights
Mr. Cuomo. Fine, let me just wrap up in a couple of
minutes, then, with the chairman's permission.
FHA has come a long way since we started. When we took over
it was a negative $2.7 billion. Now it is now $16.6 billion.
That is where we have identified $5 billion to do more
affordable housing, which we desperately need, and then we
have, Mr. Chairman, the overall budget proposal by the
President, which is the best budget for HUD in 20 years. As you
pointed out, it goes up $6 million from $26 million to $32
million. We think we need that increase.
Affordable housing, which as the chairman pointed out is at
an all-time high, 5.4 million families need affordable housing.
We would suggest new vouchers once again, which we have
proposed in the past. We are not a total solution, but they are
a big step towards the solution. We propose 120,000 vouchers,
which would double last year's number, but start to make a dent
in the backlog of housing needs in the Nation.
We would also fully fund public housing, increase the HOPE
VI program, which is a real success story, by $50 million. The
HOPE VI program, following Senator Mikulski's vision of making
HOPE VI not just a different community, a better community, but
also a community of opportunity and lift, and bringing in e-
villages and closing the digital divide, that has been a
tremendous success.
We would also propose a new housing production program,
because as the chairman has pointed out, vouchers alone do not
make a housing program, and we also need a production program,
especially in those areas where vouchers are not working.
We need more senior citizen housing. We propose another
7,500 units of mixed income, and flexible use of the FHA
insurance.
Within the budget, we would also focus on the economic
revitalization. The President has made a priority out of the
quote-unquote, new markets, economic development in areas left
behind. We have an APIC program, $37 million, which would
leverage $1.5 billion from Wall Street, more empowerment zones
and the raise in CDBG, the fair housing, we are looking for 14
percent more in fair housing money, because we still get those
complaints daily of racial discrimination, and racism is very
much alive and well and, finally, the safe and livable
communities, where we are trying to come up with sustainable
metropolitan-based solutions that bring the city together with
the county in planning and action plans rather than dividing,
and that is a very important piece as we go forward.
As the chairman pointed out, the affordable housing crisis
has gotten worse. The vouchers have made a dent. I believe if
we get a production program and we come up to scale and we use
this surplus wisely, we can build on what is already a strong
record, and I thank the committee for having us today.
[The statement follows:]
Prepared Statement of Andrew Cuomo
Chairman Bond, Senator Mikulski, members of the Subcommittee, thank
you for inviting me here today to discuss HUD's proposed fiscal year
2001 budget. It is my pleasure to be here today. This year, HUD's
budget request is $32.1 billion. That represents a $6 billion increase
over the amount enacted last year. It's HUD's strongest budget in
twenty years.
Mr. Chairman, before discussing the details of this year's budget,
I would like to take a moment to thank you and this Committee for the
extraordinary support that you gave us on our budget request last year,
and for that matter, the year before. We have been able to accomplish
great things together.
While we have not always agreed on all of the specifics, by working
together we have been able to establish a remarkable record of
bipartisan cooperation. For the past two years in a row we have reached
unprecedented agreement on HUD's budget requests, with increased
funding for public housing, economic development, homeownership, and
rental housing. I look forward to another year of cooperation, and I
pledge every member of my Department's commitment to that end.
Mr. Chairman, I believe that this year we are at a crossroads. This
year, the first year of the new millennium, we must, make a choice.
That choice is whether we build on our success and take a bold step
towards once and for all addressing our nation's affordable housing
needs. This year we have an extraordinary opportunity to set this
nation on a new course, so that when the historians write the history
of housing in this century, they will be able to say that this was
truly the year we made good on the goal of a ``decent, safe and
affordable home for every American family''.
And there should be no doubt that we are facing a crisis. It is a
term that I do not use lightly. The evidence, unfortunately, is clear.
It is impossible to open the newspaper today without reading reports
describing the problem in communities in virtually every part of the
country. Almost every day there are articles about rising rents and the
lack of affordable housing--both in big cities like San Francisco, Los
Angeles, Dallas, Miami and New York, as well as in smaller and medium-
sized like Rochester, Norfolk, and Sacramento.
It is a cruel irony that while most communities ale doing very well
in this booming economy, the better they are doing the more acute their
shortage of affordable housing. Those that are doing the best are often
also facing the worst shortages. The stronger the economy, the stronger
the upward pressure on rents. Even some of America's strongest regions
for business are literally being ``priced out'' of housing by their
success. In Silicon Valley, the leading companies driving the global
information age have identified affordable housing as their number one
backyard concern.
HUD's new worst case housing needs report, which we released
earlier this week, gives us a nation-wide picture that confirms these
local reports. With your permission I would like to enter this report
into the record. It is entitled Rental Housing Assistance--The
Worsening Crisis. It's the most in-depth, comprehensive and respected
analysis of rental housing in the United States.
There are a number of dramatic findings in this report. I would
like to highlight three of them today. The first, and most important,
is that, despite the booming economy, the number of families with worst
case housing needs has increased to 5.4 million--an all-time high.
Since the last worst case housing heeds report was released two years
ago, the number of families with worst case needs has increased by 4
percent, twice the rate of growth for the U.S. population.
Households with worst case needs are defined as unassisted renters
with incomes below 50 percent of the local median, who pay more than
half of their income for rent or live in severely substandard housing.
Even more compelling than the record number of worst case needs is
the increase that we've seen over the past decade. There are now
600,000 more households with worst case housing needs than there were
in 1991 when the current economic recovery began--a rate of increase
that is almost twice as fast as overall household growth.
A second important finding of this report is that families with
worst case needs are working harder than ever. While you would expect
that the poorest families also have the worst case needs, the fact is
that the number of people who work full-time and have worst case
housing needs increased by 28 percent from 1991 to 1997--a rate of
growth that is almost twice as fast as the rate for all other low-
income renters. People used to think that if you were willing to work
hard, things would take care of themselves. You would be able to afford
housing and take care of your family. But that, unfortunately, is not
always the case any more.
The third finding I want to highlight is that low-income Americans
who live in the suburbs, not the cities, are more likely to have worst
case needs than elsewhere. It disproves the myth that the affordable
housing shortage in this country is an urban problem. It's the suburbs
where you're seeing the largest drop-off in the number of affordable
housing units available. In fact, over one third of all worst case
households live in the suburbs.
These findings make a clear and compelling case for greater federal
attention to our nation's housing needs. With this Committee's support
and through bipartisan cooperation, we have broken the gridlock and
affordable housing, when Congress approved new housing vouchers in each
of the past two years--60,000 last year and 50,000 the year before.
With worst case needs at record levels, there is now an urgent need
to strengthen federal efforts to assure adequate supplies of decent,
safe and affordable housing for America's struggling families.
That is the need that our fiscal year 2001 budget proposals
address, Mr. Chairman. That is why we have requested continued support
from Congress for incremental housing vouchers to help meet the housing
needs of low-income families struggling with rising rents.
And that is why the President has asked for an overall $6 billion
increase over last year's enacted level. It reflects his belief that we
must squarely address this rental housing crisis, that we must address
the needs of those people and places left behind in this new economy,
that we must help working families move closer to job opportunities--
and that HUD now has the strength to address these challenges
effectively and responsibly.
FISCAL YEAR 2001 BUDGET BUILDS ON SUCCESS
A few years ago, some would have argued that while the need was
there, HUD did not have the capacity to address it. I am pleased to
tell you that that is no longer the case. By virtually any measure, and
according to every independent expert, HUD today not only has the
capacity, but is better positioned than ever to help communities take
on the challenges of the 21st century.
This year's budget proposal is a direct outcome of the management
reforms we have put in place over the past three years. I am convinced
that we now have the tools, the resources, and the capacity to wisely
and responsibly spend the funds we have requested.
Our management reforms have succeeded in transforming HUD into an
agency that puts communities first. Fighting fraud, waste, and abuse,
our Public Trust Officers are cracking down on those who misuse
taxpayer dollars. Renewing our commitment to first-class customer
service, our Community Builders are connecting people to the full range
of HUD resources. As a result, HUD today is back in business--back in
the housing business, in the economic development business, and in the
community empowerment business.
But nowhere is HUD's turnaround more evident than in the FHA's
mortgage insurance programs. In 1990 FHA was virtually broke--$2.7
billion in the red. Despite a six-decade history of providing access to
mortgage capital, FHA had projected losses from claims on mortgage
insurance that were far in excess of projected revenue. Thanks to our
Management 2020 reforms, that's all changed.
Today, the FHA and its Mutual Mortgage Insurance Fund are the
healthiest they have been in decades. Last year FHA insured a record
1.3 million mortgages worth $124 billion. With FHA's help, the nation
is currently enjoying the highest homeownership rate in history.
And last month, the new Actuarial Review of the FHA Insurance Fund
for fiscal year 1999 brought more good news. The review--conducted by
Deloitte Touche--shows the value of the Fund stands at a record high of
$16.637 billion. According to the auditors, the value of the Fund is
$5.3 billion over previous estimates. The President has directed me to
work with the Office of Management and Budget to develop
recommendations on how these surplus funds can best be used to
strengthen federal housing efforts in the years ahead.
This past year has been a banner year for HUD in other areas as
well. President Clinton kicked off his New Markets Initiative with
historic visits to the Pine Ridge Indian Reservation, East St. Louis,
Los Angeles, the Mississippi Delta, Central Appalachia, and other
inner-city and rural communities served by HUD. These are the emerging
markets of the new century. They are the places that will provide the
consumer and labor markets needed to fuel economic growth in the
future--and through our economic development programs we will help them
tap this potential.
The budget also proposes to expand the successful Continuum of Care
program for homeless assistance and prevention--a winner this year of
the prestigious Innovations in Government Award from Harvard University
and the Ford Foundation. The national survey of homelessness in
America, conducted by the Census Bureau, showed that we are on the
right track with the Continuum--which has, so far, helped 400,000
people move from homelessness to self-sufficiency. But with an
estimated 600,000 Americans still homeless each night, there is still
much more to do.
In the past year we launched a major commitment to address one of
the key challenges facing us in the new millennium--the graying of
America. Our budget requests increased funding for HUD's new Housing
Security Plan for Older Americans--helping seniors stay in their own
homes as long as possible, increasing funding for the successful
Section 202 elderly housing program, converting existing elderly
housing to assisted living, and in 2001, building new assisted living
facilities.
We have seen historic, across-the-board gains on the homeownership
front--70.1 million American families own their homes today, more than
at any time in our history. With higher loan limits and through
internal reforms, a revitalized FHA is now on the leading edge of this
homeownership boom, serving minorities, first-time home buyers, and
cities in unprecedented numbers. This year's budget request positions
the FHA to do even more. And we are also investing more than ever in
our Native American programs to boost homeownership in Indian Country.
This year we are also proposing to tap the vital skills and
resources--and the commitment to social justice--of the non-profit and
faith-based community. Through our Center for Nonprofit and Interfaith
Partnerships, a $20-million initiative will expand access of community
and interfaith partnerships to HUD programs and help build new public-
private partnerships at the local level.
Finally, we are more committed than ever to building safe, secure
communities. The dramatic reduction in violent crime has been one of
the great success stories of this past decade. Our budget contains
several initiatives to further reduce the scourge of gun and other
types of violence, both in public housing and in surrounding
communities. Without safety there can be no prosperity.
Overall, this new budget affirms this Department's progress. HUD,
clearly, is back in business. These initiatives will allow America's
communities to make the most of this unique moment in our nation's
history. Together, they will put this record prosperity to work for
everyone, everywhere.
HUD's fiscal year 2001 budget addresses four major challenges: (1)
economic revitalization of our nation's communities by investing in new
markets; (2) increasing affordable housing and boosting homeownership;
(3) ending discrimination in housing through enforcement of our Fair
Housing laws; and (4) creating safe and livable communities.
ECONOMIC REVITALIZATION AND INVESTING NEW MARKETS
As we enter the 109th month of sustained economic growth--the
longest our nation has ever known--we have much to celebrate: the
lowest peacetime unemployment and inflation rates in decades; the
fastest and longest real wage growth in 20 years; and an all-time high
homeownership rate, which reflects both economic strength and consumer
confidence.
But there is another side to this success. Though most cities are
doing well, one in six still has unacceptably high levels of
unemployment; in older suburbs, crime, poverty, and homelessness have
become more prevalent; and in some parts of rural America, areas
persist that are virtually untouched by the economic boom.
In his State of the Union message earlier this year, the President
addressed these people and places when he said: ``To keep our historic
expansion going, we need a 21st century revolution to open new markets,
start new business and hire new workers right here in America--our
inner cities, poor rural areas, and on Indian reservations.''
With this fiscal year 2001 budget, HUD is on the front lines of
this 21st century revolution, building on HUD's successful track record
of promoting business investment and job creation in underserved
communities. Over the past seven years, we have retooled our job
creation and business investment programs, creating hundreds of
thousands of jobs in both urban and rural communities across the United
States.
HUD's economic development initiatives will not only help spur the
economic revitalization of distressed communities, they will contribute
to the continued economic growth of the nation as a whole. The goal of
these initiatives is straightforward: extend the national prosperity to
people and places left behind in the new economy.
CDBG.--Last year we celebrated the 25th anniversary of the
Community Development Block Program. A pioneer of devolution, CDBG has
developed a proven record as the most flexible federal aid to both
cities and smaller rural communities. This year's budget request builds
on 25 years of success, with a request for $4.9 billion, up $119
million over last year, and $195 million over the past three years.
However, the real increase for this program is even larger than these
totals imply. By reducing set-asides, we will increase the effective
amount of formula funding that that goes directly to communities by
$250 million, for uses they themselves designate.
American Private Investment Companies.--Last year, Congress
appropriated $20 million as an initial credit subsidy for the
cornerstone of the President's New Markets Initiative: for-profit
investment funds known as America's Private Investment Companies
(APIC). APIC will make sorely-needed private capital available to
larger businesses that are expanding, relocating, or joint venturing in
low- and moderate-income areas, both urban and rural. We have submitted
authorizing legislation for this initiative, which must be authorized
by June 30, 2000.
As we did last year, HUD is requesting $37 million to fully fund
APIC. These funds will subsidize and secure $1 billion in privately
issued, federally-guaranteed loans, which will leverage another $500
million in private equity commitments, for a total of $1.5 billion in
new private sector funds that will create an estimated 200,000 jobs.
EDI and Section 108 Guaranteed Loans.--The Community Empowerment
Fund streamlines two existing HUD programs that are important tools for
local communities to create jobs and attract business investment: our
Economic Development Initiative (EDI) grants and Section 108 guaranteed
loans. Overall, our budget seeks $1.2 billion in loan guarantee
authority under Section 108 of the Housing and Community Development
Act.
This year, HUD is requesting $100 million in EDI grant funds. The
$100 million in EDI grants will leverage an estimated $500 million in
Section 108 guaranteed loans, and create an estimated 73,000 jobs.
These grants and loans will leverage substantial additional private
sector commitments. Together, they will be used to create revolving
loan funds for small businesses, build inner-city shopping centers,
retain or expand industrial facilities, expand and modernize
businesses, and support other job creation or welfare-to-work
initiatives.
Empowerment Zones.--Over the past five years, led by Vice President
Al Gore, HUD has helped create Empowerment Zones and Enterprise
Communities (EZ/ECs) in more than 75 urban communities. In almost all
of these places, the EZ/ECs have achieved success in leveraging private
dollars and expanding job creation. The EZs and ECs report that more
than 30,000 people have been placed in jobs as a result of EZ/EC
programs, some $10 billion in public and private sector investment has
been committed to these places, 4,300 businesses have been served by
capital or credit access programs and another 4,500 businesses have
received technical assistance.
In short, EZs and ECs have successfully combined tax credits with
federal grants and loans along with local resources to attract billions
of dollars in private sector investments. Accordingly, we are
requesting $150 million in mandatory funding for the fifteen recently-
selected Round II Empowerment Zones, under Title XX of the Social
Services Block Grant program. The Administration is also proposing to
designate ten additional Empowerment Zones (eight urban and two rural).
In addition, the President has proposed significant extensions of the
wage tax credits and other tax incentives for business investment that
were such an important part Of the success of the original Empowerment
Zone concept.
Other Economic Development Initiatives.--HUD will participate in
the fourth phase of the National Community Development Initiative
(NCDI), to be funded at $24 million. This highly successful public/
private partnership will help build the capacity of CDCs and other
community-based organizations, allowing them to continue their
impressive track record as engines of economic growth in low-income
areas.
In 1998, the Rural Housing and Economic Development Program was
created to fund innovative strategies for rural housing and economic
growth. The fiscal year 2001 Budget requests $27 million for this
program, an increase of $2 million over last year. We will continue to
work closely with other Federal departments, including Agriculture,
Commerce, and the Appalachian Regional Commission, to design effective
responses to the needs of our nation's rural communities.
In addition, the President's budget supports the Mississippi Delta
Economic Development initiative, with proposed HUD funding at $22
million. This is a government-wide effort to jumpstart the economy of a
significant region of the country that has been left behind by the
economic boom of the past decade. HUD will work in partnership with
other Federal agencies to capitalize on our special expertise in
housing and economic development to help revitalize the region's
economy.
We are also requesting an increase in the successful Youthbuild
program from $42.5 million to $75 million. Youthbuild provides young
people with training in the building trades, as well as assistance in
securing high school diplomas. We estimate that the program will help
over 5,000 disadvantaged youth rebuild their communities at the same
time as they learn vital job skills.
ADDRESSING THE AFFORDABLE HOUSING CRISIS
At the core of HUD's mission is the charge to provide housing that
is decent, safe and, affordable to all. As I stated earlier, it is
actually becoming more and more difficult for low-income American
families to afford a decent place to live. Rents have soared in many
regions with strong economies. Worst case housing needs have reached an
all-time high of 5.4 million households, growing especially fast among
working families. As a result, there is a greater need than ever for
HUD's programs.
Our fiscal year 2001 initiatives build on recent efforts to reform
and restore public trust in HUD's housing programs. Historic
legislation created the Mark-to-Market program, which preserves
project-based Section 8 housing while bringing costs in line with the
private market. We have cracked down on program abuses. Our Real Estate
Assessment Center is on track towards meeting our goal of inspecting,
for the first time, all 40,000 properties in HUD's inventory of public
housing and multifamily insured or assisted housing. And more than 600
troubled properties have been referred to the new Enforcement Center,
with 45 percent of the cases resolved and revenues from fines imposed
in fiscal year 1999 up five times over the previous year.
Section 8 renewals and incremental vouchers.--HUD is requesting $13
billion in new budget authority to renew existing Section 8 contracts,
covering 2.6 million rental units. In addition, we are requesting $690
million for 120,000 new vouchers, the largest increase since 1981. Two
years ago, HUD got back into the housing business with 50,000 new
vouchers focused on families moving from welfare to work. We topped
that last year with 60,000. With this year's request, we are taking the
next step. These new vouchers will be targeted as follows: one half, or
60,000, will be ``Fair Share'' vouchers, to be used by public housing
authorities to reduce their waiting lists; 32,000 will be targeted to.
those moving from welfare to work; 18,000 will be for homeless persons;
and 10,000 will stimulate new housing production That will be
affordable to extremely low-income individuals.
New housing production vouchers.--Our proposal for new vouchers
includes the first Section 8 housing production vouchers in 17 years.
For decades, national housing policy has shifted back and forth between
production-oriented programs (that focus on expanding the supply of
affordable housing) and income-based initiatives (that provide cash
assistance to enable lower-income families to afford rental housing).
As we enter the 21st century, it is clear that both approaches are
needed if America is to realize the goal of decent housing for all. We
are proposing 10,000 housing production vouchers that, in tandem with
the Low Income Housing Tax Credit and FHA insurance, will leverage
40,000 total units (subsidized and unsubsidized).
Public housing.--Two years ago, Congress enacted landmark
bipartisan public housing legislation, that brought working families
into public housing without sacrificing our historic commitment to low-
income and very low-income persons. Through our new physical
inspections system, we have now inspected every property in public
housing--and the results are in: 84 percent of all public housing
properties are in sound or excellent condition, and customer
satisfaction surveys show that 75 percent of all public housing
residents are satisfied or very satisfied with their housing. That's a
customer satisfaction rating that beats the banking, the utility, and
the retail industries.
HUD's fiscal year 2001 budget continues our efforts to transform
public housing. We are requesting a $54 million increase in public
housing operating funds, to almost $3.2 billion, or 100 percent of PFS.
We also are proposing almost $2.96 billion for the Capital Fund to help
public housing authorities modernize or rehabilitate public housing
units that are in need of significant repairs or replacement, an
increase of $86 million over the fiscal year 2000 enacted level.
Finally, we are requesting $625 million for HOPE VI, which is
revolutionizing public housing by replacing obsolete high rises or
barracks-style projects with new, mixed-income, mixed-use livable
communities and housing vouchers. Through 2000, the program is expected
to approve the demolition of 100,000 units. By 2003, our goal is to
approve 145,000 units for replacement with hard units or with vouchers.
Home Investment Partnerships Program (HOME).--Since it was created
ten years ago, the HOME program has become a proven housing
rehabilitation and production tool in both urban and rural America. We
are requesting $1.65 billion, a $50 million increase over last year's
level. This will provide approximately 103,000 units of affordable
housing for both owners and renters through a combination of new
construction, rehabilitation, acquisition and tenant-based assistance.
Homeownership.--Over the past three years we have done more than
ever to bring homeownership to underserved markets. I'm proud of the
record homeownership rate of 66.8 percent; but the real success is what
we've done to close the gap for minorities, first time buyers, younger
couples, residents of cities. We have increased the affordable housing
goals of the GSEs from 42 percent to 50 percent. Fifty percent of their
total purchases must aid low- and moderate-income Americans. With
higher FHA loan limits enacted by Congress, in fiscal year 1999 we
boosted FHA loans to a record 1.3 million--40 percent of which were to
minority buyers. Automated underwriting has dramatically reduced
underwriting times for applicants. And the process for disposition of
foreclosed properties has been improved substantially.
Our fiscal year 2001 budget builds on this record of success. In
fiscal year 2001, FHA is proposing to develop a new hybrid adjustable-
rate mortgage product. In the conventional market, hybrid ARMs have
proven very popular because they offer the security of a fixed-interest
rate for periods of 3 to 10 years, while they are more affordable than
30-year fixed-rate mortgages because they carry lower interest rates.
Adding this product to FHA's lineup should help 55,000 additional
families become homeowners in fiscal year 2001, and will result in an
additional $114 million income for the Federal government.
Native American assistance.--Native American housing needs will be
served through the Indian Housing Block Grant Program, and the Indian
Housing Loan Guarantee Program. Overall, HUD's request for Native
American programs is the largest ever--$730 million, an increase of $37
million, including an increase of $30 million, to $650 million, for
Indian Housing Block Grants.
Homelessness and Special Needs.--Over the past seven years, we have
made significant progress on homelessness in America. When I first came
to HUD, the entire Federal government had been spending about the same
as just the state of New York on homeless assistance. Since then, we've
more than doubled the amount of federal homeless assistance.
But this is about more than just the dollars and cents. It is about
a new, comprehensive approach, the Continuum of Care, that we've put in
place--a holistic approach aimed at moving people into permanent
housing and self-sufficiency. According to a study by Columbia
University, we are now serving 14 times more people than we were in
1993. This progress was recognized when last year the Continuum won the
prestigious Innovations in Government Award from Harvard University and
the Ford Foundation.
By all measures, the Continuum of Care is working. Accordingly, for
fiscal year 2001, we are proposing $1.2 billion for homeless
assistance, an increase of $180 million. We also propose to shift the
source of funds for Shelter Plus Care contract renewals to the Section
8 Housing Certificate Fund, creating additional savings for localities
and homeless service providers. 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.
We are also proposing an increase of $28 million in the Housing
Opportunities for People with Aids program (HOPWA), to $260 million.
The Centers for Disease Control estimates that between 650,000 and
900,000 Americans are living with the HIV infection. In addition to
renewing all existing programs, the funds requested in fiscal year 2001
will provide for an additional 5,100 housing units for persons with
AIDS, bringing the total to nearly 50,000 units nationally.
Elderly and the disabled.--Our special needs programs also serve
the elderly and disabled. We are proposing $210 million for the Section
811 program, which serves persons with disabilities, increasing the
fiscal year 2000 enacted level by $9 million.
Recent decades have seen a dramatic shift in America's population,
with our elderly citizens leading longer, healthier, and more active
lives--a shift that will only accelerate in coining decades. The
challenge now is to meet the housing needs of this rapidly expanding
population of elders. Just as we work to save Social Security, we must
also work to provide housing security for our seniors.
Last year, Congress enacted major elements of HUD's Housing
Security Plan for Older Americans as part of our fiscal year 2000
budget. This year, we are proposing a total of $779 million for our
elderly housing programs, an increase of $69 million. We propose to
increase funding for Section 202 housing to $629 million; $50 million
to convert existing Section 202 housing to assisted living; $50 million
for new assisted living facilities; and another $50 million for service
coordinators. Within Section 202, we are also proposing up to $5
million to fund a small number of ``Intergenerational Learning
Centers'', an exciting concept that will tap the skills and energy of
seniors to help meet the needs of children in daycare centers located
in Section 202 housing.
JUSTICE FOR ALL--ENFORCING FAIR HOUSING LAWS
The Fair Housing Act prohibits discrimination in the sale, rental,
and financing of housing based on race, color, religion, sex, national
origin, disability, or family status. Yet, even at the dawn of the 21st
century, housing discrimination, in both blatant and subtle forms,
continues to plague our country. 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.
And now there's an even newer venue for discrimination--the
Internet. For all the good it can do, the Internet can also be a
distribution mechanism for hate, prejudice and bigotry. We recently
filed charges in a recent Fair Housing case that combines all three
types of discrimination: the old style, graphic discrimination that is
so shocking and appalling, the newer, institutionalized discrimination,
and the even newer frontier of cyber-hate.
So we must do more. Two years ago, 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 14 percent--to a total of $50
million.
Our budget request provides for increased funding of both the Fair
Housing Assistance Program (FHAP) and the Fair Housing Initiatives
Program (FHIP). In 2001, the focus of FHIP will be on requirements for
accessibility for people with disabilities, with an emphasis on
education and outreach programs to housing providers.
In 2000, Fair Housing Partnerships are being created to form a
formal links between private Fair Housing groups and state agencies.
These partnerships will be used in 2001 to provide training and
technical assistance to builders, developers, architects, building code
officials, and others on accessibility requirements through a
nationwide Project for Accessibility Training and Technical Assistance.
CREATING SAFE AND LIVABLE 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.
Promoting Livable Communities.--Congestion, hours-long commutes, a
decrease in the amount of open space, pollution, and other
environmental issues all have a detrimental effect on the livability of
American communities. HUD recently convened a two-day conference,
called Bridging the Divide, to focus on how cities, suburbs, and the
federal government can work together to achieve more livable,
sustainable communities. More than 200 state and local government
officials and civic, community, and business leaders participated. A
key theme that emerged from the conference was the importance of
revitalizing the core of our of central city areas in order to decrease
the negative effects of suburban sprawl.
We are proposing a $25 million Regional Connections initiative 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 that cut
across traditional municipal lines.
We also propose to double the funding for the Brownfields
Initiative, to $50 million in fiscal year 2001. This will accelerate
the Administration's previous commitment to a four-year, $100 million
program.
Because of an increased effort on the part of the Federal
government to reduce the exposure of children and their families to
lead poison, we are requesting $120 million for HUD's Lead-Based Paint
Hazard Control grant program, a 50 percent increase. As part of a new
national strategy and by leveraging private funds, the goal is to
eliminate childhood lead poisoning--including eliminating lead hazards
in approximately 2.3 million units of housing by the year 2010.
Promoting Safe Communities.--Despite the extraordinary success we
have achieved in reducing crime rates in public housing and elsewhere,
crime and gun-related violence poses a major threat to HUD's obligation
to help ensure ``a decent home and a suitable living environment for
every American family.''
Funds from a variety of HUD programs--including the Community
Development Block Grant program--have long been available to help make
areas in and around communities HUD serves safer. This year, however,
HUD plans a particular focus on improving the safety of America's
neighborhoods.
A recent HUD report, In the Crossfire, specifically looked at the
problem of gun violence in public housing. It found that public housing
authorities have made extraordinary progress in reducing crime of all
kinds, in some cases by as much as 70 or 80 percent. That is a result
of strong local initiatives, the Administration's community policing
and crime prevention efforts, and the added resources HUD has made
available to public housing authorities through the streamlined Drug
Elimination Grant program and other programs.
At the same time, our report showed that, according to reliable
data from the Department of Justice National Crime Victimization
Survey, public housing residents are still two and a half times more
likely to be victims of gun violence than the population at large. That
is a statistic that cannot be ignored, and HUD's fiscal year 2001
budget addresses it directly.
The fiscal year 2001 budget proposes $345 million in Public Housing
Drug Elimination Grant funds to support efforts to reduce drug use and
related activity and other crime in and around public housing. Of the
total, HUD has requested $30 million for a Community Gun Safety and
Violence Reduction Initiative, which will help address the critical
issue of gun violence in and around the communities HUD serves.
Strengthening community partnerships.--A key component of strong
communities is the strength and capacity of their organizations.
Because of the trust they build and the strong connections they forge,
community and faith-based institutions can be uniquely placed to help
bring about community change. We are proposing to support the work of
our Center for Interfaith and Community Partnerships with a $20-million
initiative to help community and faith-based organizations expand their
capacity to supply affordable housing, create economic opportunity, and
increase their use of HUD programs.
We are also proposing $69 million in Section 107 technical
assistance, including $37 million for colleges and universities to
carry out community and economic development activities in their local
communities. This will include grant funds for several successful
initiatives, including Community Outreach Partnerships (COPC), and New
Markets University Partnerships in ``new market'' areas. Another $5
million is proposed for new Tribal College Partnerships.
conclusion
HUD's fiscal year 2001 budget reflects the progress that HUD has
made over the past three years. It does more than add funds to
programs: it's a budget that contains innovative, smart, and creative
proposals for addressing the new challenges of the 21st century.
This budget gives those people and places left behind a unique
opportunity to share in this nation's overall success--not with bigger
government, but with smarter government. Not just with additional
resources, but by more effective use of the resources we have. Not by
top-down mandates, but through menus of opportunity. And not by
displacing private markets, but by clearing the way for them to invest.
HUD today is leaner, smarter, more effective than ever. The nation
is prospering economically and at peace in the world. Our cities and
rural areas, once lagging behind, are doing better than they have in a
decade. Now it's time to build on this extraordinary success--time to
bring this prosperity to every corner of America.
I look forward to working with this Committee, and with the Senate,
to make this vision a reality, not just for HUD, but for all Americans.
NBC REPORT ON HOUSING
Senator Bond. Thank you very much, Mr. Secretary.
To go back to the questions I raised in my opening
statement, put a human face on the issue of HUD's failure to
act as a good neighbor and a good landlord, over a year ago NBC
ran a piece on fleecing of America, on FHA's failure to manage
its inventory of single family properties. In that segment,
Commissioner Apgar challenged the finding and remarked how FHA
had instituted new controls and procedures to improve its
management and sale of homes, but as I have seen in Missouri,
and I am sure you are aware from Senator Mikulski's concerns in
Baltimore, it is questionable whether the evidence has showed
things have improved. Since the airing of the NBC report, the
inventory has grown by 10,000 homes, and HUD has foreclosed
over 70,000 homes.
To illustrate the problems of what happens when HUD is in
the position of preserving an affordable rental housing
complex, I want to air a video of a couple of these news
segments, and then I will ask a question related to them.
[The information follows:]
[From NBC Nightly News, February 25, 1999]
HUD as a Landlord
Voice. The Department of Housing and Urban Development in
Washington owns a lot of housing across this country. It can represent,
all that housing, a great deal of value if it is kept up, but for an
agency that specializes in dealing with housing problems, critics say
there are some big holes in its oversight responsibilities. NBC's Bob
Faw tonight on the fleecing of America.
Mr. Faw. Imagine the house next door is an eyesore, and the owner
is Uncle Sam, in this case the U.S. Department of Housing and Urban
Development.
Ms. Johnson. They said they were going to do something about it,
but they never did.
Mr. Faw. Bad as these properties look outside, inside they are even
worse. In here it is absolutely overwhelming, and according to the most
recent Government data, published a year ago, this is just one of 800
foreclosed properties which HUD owns in Chicago, many, say critics, in
shambles.
Our organization said the same pattern exists in Indianapolis, in
Buffalo, and in Cleveland. Foreclosed homes which HUD pays private
contractors to maintain are collapsing.
Voice. Bad housing isn't nice.
Mr. Faw. For 30 years she has complained that Washington has
fleeced homeowners, letting abandoned homes deteriorate, wrecking
property values in neighborhoods. Today she says the situation is just
as bad.
Ms. Cincotta. Now we have our Government, FHA, HUD being the
biggest slum landlord in the United States.
Mr. Faw. HUD says the charges are outrageous, insists scenes like
this are misleading and represent just a handful of its national
inventory of 40,000 properties.
Mr. Apgar. I think our programs are well-run. We've been engaged in
extensive reforms to improve our monitoring and oversight of our home-
selling process over the last several years.
Mr. Faw. But the Government's own watch-dog, the independent
General Accounting Office, strongly criticizes how HUD manages
property. No taxpayer money is involved, but for mortgage payments of 7
million FHA homeowners HUD spends $1 million every day to maintain
properties like this.
Ms. England-Joseph. I would say they aren't doing a very good job.
HUD is not providing the kind of contract management that it needs to
protect the Government's interest.
Mr. Faw. In its survey they found that 37 percent of the HUD
properties inspected in Illinois contained imminent hazards, and in
Boston it found continuing evidence of problems which the GAO that
could threaten the health and safety of neighbors and potential buyers.
Mr. Apgar. It is an old report that does not reflect where we are
today.
Mr. Faw. HUD maintains it does not permit situations like this, but
the GAO remains skeptical.
Ms. England-Joseph. They don't know how bad it is. Not a lot has
really happened to change, to improve the problem that we identified.
Mr. Faw. Certainly not the kind of problems some of our neighbors
want fixed.
Voice. I don't care for them, not really, because they don't do
their job.
Mr. Faw. Even where their job is costing millions.
Bob Faw, NBC News, Chicago.
Senator Bond. Mr. Secretary, to illustrate how things have
not improved, these are some still photos of dilapidated HUD
homes in Independence and Kansas City, Missouri.
Oak hollow apartments
This is a news clip from Dallas TV on the Oak Hollow
Apartments.
Voice. From last month's news, that HUD was taking over the Oak
Hollow Apartments to clean them up was like a gift from above to
residents like Takulah Robinson.
Ms. Robinson. Over here, they gave me a new stove, a new sink, and
a new refrigerator.
Voice. But now she's losing it all. Today, HUD held a meeting to
tell residents how they were going to help pay for them to leave the
apartments they had just fixed up, because they are tearing them down,
leaving many tenants with the question----
Voice. So why can't HUD fix our homes up so we can continue to stay
here?
Voice. HUD now says that it would be too expensive to completely
rehab Oak Hollow.
Mr. O'Brien. HUD is tearing down a lot more affordable housing than
they are building.
Voice. Tom O'Brien of the Dallas Tenants Association said HUD
watched this property deteriorate for 20 years, and it's throwing in
the towel.
Mr. O'Brien. Really, when they start improving HUD housing the same
thing is going to happen over and over again.
Voice. HUD officials told the displaced tenants they can use
vouchers to move to better properties, but some of them don't believe
they'll be moving up at all. Some tenants who have been moved before
said the shortage in affordable housing could put them in another bad
situation.
Voice. It's no better across the street than over here. I don't
want to move from one to another HUD.
Mr. Secretary, 100 residents have been displaced. Five
families remain. They have filed a lawsuit to block HUD's plans
to demolish it.
I know that Senator Mikulski is going to ask some questions
about single family problems, so I will not go into that, but I
am troubled about what we saw on the tape about Dallas, and I
understand it is not an isolated case. We have heard about
similar complaints from tenants evicted by HUD in Los Angeles,
New York City, Hartford, Connecticut. They are saying that
these evictions are HUD policy.
But what troubles me even more is what occurs in my own
backyard. I have the pleasure to introduce to you today, and I
would ask her to stand up, a constituent of mine, Mrs. Lizzie
Lewis, the elected leader of the Pickwick Plaza Tenant
Association. Thank you, Ms. Lewis.
Senator Mikulski. Hi, Ms. Lewis.
Senator Bond. She resides in a section 8 property in
downtown Kansas City. She is among 50 elderly, disabled--
elderly and disabled in the building, which is one block from
my district office, in an area of economic revitalization. My
staff reported to me that FHA Commissioner Apgar personally met
with Ms. Lewis and my staff to talk about the fate of Pickwick,
and that Mr. Apgar stated that he needed to have legislation
from us to get HUD to protect Mrs. Lewis from losing her home.
Mr. Secretary, I thought that was the job of HUD, but I
would ask you as my one question this segment, do you need us
to legislate a solution to Ms. Lewis' problem, or can you
commit today to solve the problem for Ms. Lewis and the people
of Pickwick?
Property disposition
Mr. Cuomo. Mr. Chairman, obviously, if there is anything we
can do within our current power to rectify the situation of
Pickwick, we will, and I would ask the Assistant Secretary,
William Apgar, who had the meeting, to respond specifically.
But on the overall point, let me just say this, Mr.
Chairman. I would agree with the thrust of the pieces. This has
been a long-term problem. You hear--in both pieces they said,
in one case they said it has been a 30-year problem, in one
case there has been a 20-year problem, but I would disagree
when you say we have not made progress. On this entire issue of
the run-down portfolio, we have made progress in almost every
regard.
The, quote-unquote, aged inventory, the time that we are
selling homes are coming down, the teacher next door, the
officer next door, and now the 6-months or out is really in
many ways the most you can do, which is you are just going to
give the house away if you cannot sell it.
It is one of the incumbent problems with the real estate
business, is when you have foreclosures the homes often get
run-down, and then you have to dispose of them.
Also, in conversation with the committee, and I believe
this was a collaborative effort, and one we are proud of. We
have now privatized the disposition process, so we have gotten
HUD out of the business of doing the very things that we saw on
the video, the maintenance, et cetera, and we have turned it
over to private contractors.
We had a problem with one of the contractors which caused
some of the problems, but I am so sure that the privatization
was the right way to go, to get HUD out of the business, turn
it over to private sector firms who do this, who manage the
real estate, and that was an issue that we discussed jointly,
and I was proud of that.
Pickwick plaza apartments
But on Pickwick specifically, let me turn it over to the
Assistant Secretary.
Senator Bond. Mr. Apgar.
Mr. Apgar. Yes, thank you. I have met several times with
Ms. Lewis when I was out in Kansas City last summer, and just
recently with your staff and our staff in Kansas City has been
working on this situation.
Pickwick is a story of HUD's effort to get a recalcitrant
property owner out of the way so we could come in, secure the
building, expand the services, and provide what the tenants
need. As you mentioned, this property has many tenants with
various sorts of disabilities, and it needs special attention.
In order to do that, given the fact that the owner was
incapable of upgrading the property, despite some initial
efforts, we have begun the foreclosure process. What I
explained in the meeting to Ms. Lewis, under the foreclosure
process it is our full intention to preserve that property as
affordable housing for the residents.
I might add, in the case of the Oak Grove situation, that
was still our intention with Oak Grove. The legislation we work
with, though, requires us to balance both the needs of the
residents, certainly to consult with them, have preservation as
an important goal, but also balance the financial interest of
the fund. You know we can get whacked either way of that
equation.
You are aware, perhaps, of the JVC properties in St. Louis,
where we worked for nearly 12 months in order to secure what we
think is a terrific outcome that managed to preserve the
affordable housing, bringing foundation funds and other things
together, a very good outcome for the residents and for the
City of St. Louis.
Our Inspector General, of course, criticized us for waiting
too long and not moving to the foreclosure sale, and that was
prominently featured in a recent audit of our Department, so
while we work with the tenants, there is this competing
interest, the financial interest. The process will be as it is
required by law. We will offer the city the right of first
refusal to take over the building and do what they want to.
That will happen in the first instance. If that does not
happen, we can decide that the building will be appropriate to
be saved and solicit bids through the RFP process.
Ms. Lewis' group is working with an excellent nonprofit,
and we anticipate that that bid could be competitive and win
the day. Only as a last resort do we sell the property off on
the private inventory.
I would suggest that your statistics also are misleading in
the sense that the disposition with section 8 is only one of
the ways in which we preserve affordability. Many, if not most
of our properties have long-term affordability contracts and
protections of the residents without the section 8 voucher, so
the idea that all the 114 properties that we sold without
section 8 were lost to affordable housing is just flat-out
wrong. You can go property by property and show the
affordability restrictions that are presently on those
buildings as part of our sales terms.
Senator Bond. Thank you very much, Mr. Apgar, and I turn it
to Senator Mikulski for her questions.
Senator Mikulski. Mr. Chairman, I note that the chairman of
the full committee is here, and before I go to my questions,
which will be extensive, I did not know if the chairman has a
statement and a question or two in the interests of his
responsibilities.
STATEMENT OF SENATOR TED STEVENS
Senator Stevens. You are very kind. As a matter of fact, I
do not have any questions. I would like to make a short
statement, and it is totally provincial.
Mr. Secretary, I am not one to get involved in too many
national things with the size of the United States. I have
enough problems of my own, without getting into that.
We are going to have a director, a State director I guess
it is, vacant now, now that Arlene Patton has left, and I would
urge you to name an Alaskan to fill that position, and here is
why. We did have a discussion with Mr. Apgar about FHA
appraising, and I received a letter that said, and I quote,
``as a consequence of the unique considerations that
implementing the process in Alaska brings, we will continue to
maintain the option for your constituents to ask questions and
resolve issues related directly to this directly with the FHA
staff in Anchorage.''
Now, that is working to a certain extent. However, the home
ownership centers now are concentrated in Santa Monica,
California. It is impossible for people in our State to deal
with Santa Monica, California. They are a different time zone
and, what is more, they have no understanding whatsoever of
Alaska conditions.
On the fair share section 8 vouchers, each region is
supposed to receive a fair allocation. I am told that Alaska,
which has one qualifying housing authority, was told to compete
for vouchers in Alaska. Our allocation was lumped together with
the State of Washington, and they obviously have a great many
more people than we do. The net result of that is, is that
Alaska has received not one single voucher.
As a matter of fact, I am told there was not one single
house built in Alaska last year under the Native section of our
State. There are 227 Native housing centers, housing
authorities, and they have been in to see me repeatedly this
year.
Wyoming, which has a smaller population, considerably
smaller than our State, had 81 vouchers, and we received some
welfare-to-work vouchers, but I understand that under the
lottery system we have never received one single voucher.
I am here to ask you to review the situation in Alaska. We
have still got people coming into the 20th Century. We are now
living in the 21st, and the areas we are talking about are so
remote that it is just impossible to deal with on a lottery
system competing with other areas, particularly with Washington
State.
I am one of those who fought for statehood for Alaska
because we did not want to become a county, or remain a county
of the State of Washington. That lumping with Washington is a
pill that is a little hard to swallow. Not that we do not love
our friends to the south, but they are our southern neighbors,
and they are 900 miles away from us.
So I would urge you to have someone take a look at the
Alaska scene. We had a regional authority in Alaska. It was
going very well. We had an allocation that went directly to the
State and, as you know, we--it is not political. Our State
government is in the Democratic Party. We are Republicans here,
but we are sort of different people in Alaska, and we are
working very closely with the State government, and the State
government is as perplexed about this as we are.
So I really--I have to go to another hearing. I appreciate
your courtesy, Barbara, in letting me make this statement, but
I would urge you, have someone take a look at the Alaska scene.
We just do not deserve to be left out completely in this
housing program.
SECTION 8 VOUCHERS FOR ALASKA
Mr. Cuomo. Mr. Chairman, I thank you for the comment, and I
agree that the State, while beautiful, poses many unique
challenges. With the chairman's assistance I had a great tour
of the State.
I do not know the numbers on our production in Alaska. What
you say troubles me, if the production is that low. I will find
out, and I will report back to the chairman on exactly what we
have done in Alaska, and on the State director's position,
obviously we have civil service guidelines to go through, but I
think to do that job well you would almost by definition need
to be from Alaska, otherwise you cannot really appreciate the
situation, and if there is any way we can do that, we will.
Senator Bond. Good answer, Mr. Secretary.
Senator Stevens. Thank you very much.
Senator Bond. Thank you very much, Mr. Chairman.
Senator Mikulski.
Senator Mikulski. Thank you very much, Mr. Chairman.
In my opening statement I did not acknowledge the role of
the HUD Inspector General, Ms. Gaffney, in her investigation of
flipping, and also her recommendations, and I look forward to
pursuing a line of questioning with you, Ms. Gaffney, and also
want to thank you, because the Federal law enforcement in
Maryland I know has been working very closely with your
inspectors.
INTRODUCTION OF ADVOCACY GROUPS
Mr. Chairman, the Secretary introduced his team. I want to
introduce my team. In addition to my very able staff, it is
wonderful networks in Baltimore that really are my advisors,
and I would like to acknowledge in the room Mr. Ken Straw, the
president and CEO of the Southeast Community Organization, a
group that I was one of the founding mothers to save the
neighborhood from a highway that was going to destroy several
neighborhoods. Now we are working with SECO to save the
neighborhood from FHA and predatory lending.
In addition to that, we have Mr. Vinnie Quayle from St.
Ambrose Housing, one of the largest groups associated with
advocacy for home ownership for the poor in Baltimore. Mr.
Quayle has worked in the community for 32 years.
Then there is Mr. Ed. Wittowski of the Patterson Park
Community Development Corporation. This CDC is new, and it came
in because of the need to prevent what was happening to a
neighborhood called North of the Park, because of what had
happened when we tore down Lafayette Housing for HOPE VI the
housing commissioner took the poor and literally dumped them
into a neighborhood that was quite fragile, causing
neighborhood destabilization.
But rather than turn against the poor, we turned to each
other and established a very dynamic community development
corporation, only then to find that the very poor we were
helping began to be exploited by predatory lending. They have
outstanding testimony that they gave on Monday.
PROPERTY FLIPPING
I want you, Mr. Chairman and members of the committee, to
see this chart. See all those little dots? Now, first of all,
this is not my chart. This is not Barbara Mikulski who takes
old neighborhoods and puts little red, pink, and blue dots up.
Every dot, that chart was developed by Southeast Community
Organization after on their own did labor-intensive searches
about what was happening to the exploitation of the poor.
Every dot represents a flipper, a flipper who bought a
house for 15 grand, bilked a consumer, usually someone moving
from welfare to work, false appraisals, mortgage bounty hunters
and up. Each one of those represents that.
If you looked--and the blue dots represent one major
investor-flipper, and he is currently under criminal indictment
in Baltimore. I will not go into his case, because again, legal
proceedings, but there is heartbreak there. That is really
heartbreak.
Senator Bond. What are the red dots?
Senator Mikulski. Well, the red dots are other flippers,
and they each represent a particular owner or investor, or
those that are being under investigation.
We want to acknowledge the role of the IG Inspector, the
United States Attorney in Baltimore, and also the FBI, and the
Post Office Inspectors are involved because of wire and mail
fraud.
Now, five more indictments that have occurred in Baltimore,
and essentially we have the need for two strategies, Mr.
Chairman, one the prosecutor strategy, in which if you are a
flipper, you have broken criminal laws, and we are coming after
you. That is number one. But number two is the preventive
strategy to prevent predatory lending, and also to deal with
the results of FHA-held property.
Now, what I would like to do is ask the Secretary to
outline in more detail what his solutions are for doing this.
Mr. Secretary, I will not--because of your responsiveness to
the Baltimore hearing, I will not go into a set of questions I
had for your FHA Administrator. I will not go through the
questions that I had about what did you know and when did you
know it, and what the hell did you do about it, but I feel that
I have confidence in you, that you now know about it, and now
you want to do something about it.
I am not here to finger-point, but I am here to pinpoint
solutions. Could you elaborate on the methodology that you want
to have on the preventive aspects while we are working in
another dimension for the prosecutions?
BALTIMORE TASK FORCE
Mr. Cuomo. Yes. It would be my pleasure, Senator.
The challenge, in my opinion, of this predatory lending
problem is, while we have been very good in the past in dealing
with isolated parts of this issue, unless we really grab the
comprehensive situation, we are not going to make the kind of
progress we should. We have done a lot in piecemeal ways, but
what predatory lending is saying is, in many ways the entire
system is corrupted. The sub-prime has opened up this new
vulnerability, and the predatory lenders have rushed in.
We want to take the City of Baltimore, which again for a
number of factors poses, in our opinion, one of the worst
manifestations in the country, and design a comprehensive
approach using the City of Baltimore in a working partnership,
FHA, the full HUD team, the local CDC's, the City of Baltimore,
literally coming up with a physical strategy on how to fix this
problem in the City of Baltimore.
In the meantime, we will have a moratorium----
Senator Mikulski. Let's just stop with that. So you are
going to use Baltimore as a laboratory because we are the worst
case, and I can assure you, with our mayor and our commissioner
of housing working with you, along with our community groups--
and I must say the professional realtors have come in, the
appraisers that want to have a professional relationship.
So you are going to use Baltimore as a laboratory for your
solutions while you then pursue a national task force, is that
right?
Mr. Cuomo. Exactly, Senator.
Senator Mikulski. And who will chair that, and when will it
become operational?
Mr. Cuomo. It will become operational next week. We want to
come up with a proposed membership that we could share with the
Senator's office to see what your opinion is of who should be
on this, but we will have the full complement of the senior HUD
staff, because to do it right, we have to do all of it. We have
to do the public housing piece, the economic development piece,
the FHA piece, and we would have the senior Assistant
Secretaries from HUD, because I think this can be a very
valuable experience for the Nation.
It will do something practical for the City of Baltimore,
which we have to do, but it will also be the genesis for
national policy.
Senator Mikulski. Very good. Now, let's talk about
national.
Mr. Cuomo. Okay.
Senator Mikulski. Which goes to this thing called RESPA.
Mr. Cuomo. Yes. The predatory lending, of which FHA often
gets caught up in it, is beyond FHA, beyond HUD, as we said. It
deals with truth in lending. It deals with RESPA violations,
which is the laws and regulations that regulate the real estate
market, fair lending laws.
We would, using Baltimore in the practical, then come up
with a set of proposals which represent what we have learned in
Baltimore and what we have implemented in Baltimore and
recommend that to the Congress through a national task force
which would also be having a series of hearings across the
country, just to make sure what we have resolved in Baltimore
answers the questions in the other cities.
This predatory lending may be a little different in
different parts of the country. Baltimore is posing almost all
of the different facets, but it may be a little different in
Denver, a little different in Los Angeles, so we would have
hearings in those areas, four, five, six different areas across
the country before we come up with a full national----
Senator Mikulski. And I would hope you would look at these,
following some of these, but not limited to these factors:
Number one, how best to ensure that buyers have prepurchase
counseling so that they know what they are getting into, they
know the full range of this. Because there are two issues here,
the predators, and the other is that people get into a
situation, and not know.
So one, how is a buyer going into this, but how can we
protect the buyer without needless regulations?
Two, the appraiser process. Because of the way FHA has
changed the way it does business, the seller now furnishes his
own appraiser. Well, that is like Bonnie calling up Clyde to
see if he wants to be an appraiser, and let's rob the bank
together, so we do not want Bonnie calling Clyde. We do not
want Clyde to be an appraiser, and we do not even want Bonnie
and Clyde any more, so the question is, what do we do about the
appraisers? Community groups have ideas, et cetera. I know the
appraiser community has those as well.
Third, you have to look at the mortgage bounty hunters,
because there are now bounty hunters on getting mortgages. They
get commissions. They get fat fees. They do not care. Again, I
know in my own home town of Baltimore the banks are not
necessarily the problem, and in fact they have worked with the
community for the solutions, but there are these mortgage
bounty hunters--and again, not every mortgage broker is a bad
guy, and we need to separate that out and how to deal with it,
so we need to look at that.
I know that my time is up. I am going to come back for a
second round of questions, but those are the core issues, and I
think it is in the national interest for the professional
associations to work with you, otherwise there are going to be
50 State laws. My own Maryland General Assembly is already
working on this, again lessons learned from them, but we either
have a national framework, or we are going to be dealing with
50 State laws.
Senator Bond. Thank you very much, Senator Mikulski, and I
would just add one thing. Having recently become a condo owner
within the last couple of weeks, I can tell you that an hour-
and-a-half of going through forms challenged all the training I
had in law school and beyond to stay with it, and it has become
so complex that even with a law degree, we are protected.
There is a story about the elves who disclosed the location
of a pot of gold under a tree. When they went back to dig it up
they found that the elves had put yellow ribbons around every
tree in the forest and they could not find it, and I have felt
like the guy walking into the forest with every tree with a
yellow ribbon around it.
Senator Mikulski. Well, you see, Mr. Chairman, I concur
with you. This is also what came out at the hearing. First of
all, when the appraiser, HUD mandates, FHA mandates a license
for a certified appraiser for a property over $250,000. Well,
three cheers for those who can buy that. And we are glad that
FHA protects people who buy property worth more than $250,000.
But FHA is not protecting people who buy less than $250,000.
Second, and this then goes to our own mandates, I think in
our desire to protect the consumer, we have so many forms that
tell so many people so much that they really ground in the
settlement. And when we asked the people who had been bilked
and really gouged, did you know what was going on at
settlement, they said no, we were so overwhelmed we relied on
the seller. Well, again, Bonnie put on her lipstick and said
everything was okay.
Senator Bond. Thank you very much, Senator Mikulski. I
resemble that remark.
Now I would like to turn to a distinguished member of the
committee and one who has been a real champion for oversight.
We appreciate your being here, Senator Kyl.
CUOMO'S TRAVEL
Senator Kyl. Thank you, Mr. Chairman.
Before Senator Mikulski leaves, I just have to say that
nobody puts it in more colorful terms than she does.
Mr. Secretary, you are well aware of a lot of news reports
relating to your travel for political purposes, and I wanted to
give you the opportunity to respond at least in a general way.
I will give you an example of one of the reports, and then
would ask that you send us, for the record, a list of all of
the transportation and related expenses paid by HUD for you to
attend and participate in political rallies, and also ask that
you tell us what you have done to comply with the Hatch Act
requirements for reimbursements.
[The information follows:]
HATCH ACT
All transportation and other related expenses associated with the
attendance of any HUD political appointee at a political rally are not
paid by HUD, but the organization sponsoring the political event. On
those rare occasions when a trip taken by a HUD political employee
includes both political and official activities, our Office of General
Counsel has established clear guidelines governing the procedures for
ensuring that HUD is reimbursed in accordance with the Hatch Act for
any portions of such trips that involve political activity. These
guidelines are communicated to all HUD political appointees through
Hatch Act training seminars conducted by the Ethics Law Division of our
Office of General Counsel.
Senator Kyl. One of these events was alleged to occur on
March 3rd of this year in Huntington, New York, reported in the
Suffolk Life Newspapers and the Long Islanders Record. One of
the headlines reads: Politics, not housing forum as posted. And
the concerns expressed by attendees was that the forum was
posted as an opportunity to come hear you talk about housing
programs and how people might participate in them, but in fact
it turns out to be a rally for Vice President Gore.
Do you recall that particular event, and can you tell us
what was the purpose of the event? Did HUD pay for any of the
costs associated with that event, including any travel or
lodging of food?
Secretary Cuomo. Thank you very much, Senator, for the
question. There is a Presidential election going on obviously.
And I have a preference in that election, which is Vice
President Gore. And I have campaigned for him. When I campaign
for him, that is, quote, unquote, a political trip and it is
paid for by the political committee. And the trip I believe
that the Senator is referring to was a trip to Long Island to
campaign for Vice President Gore. And that is what it was. And
that is what it always was when I am doing campaigning, as any
other official, Senator, Congressperson, et cetera. I was
campaigning. I was doing political work, political activity,
which is different than when I am in the official capacity.
Senator Kyl. And so that was paid for then by the Gore
campaign or some other political entity?
Secretary Cuomo. Yes, sir. Whenever I am on political
activity, it is paid for by the political committee.
Senator Kyl. I would suggest that, given the concern
expressed by at least one of the attendees and backed up by one
of the area aging representatives that the event was publicized
as an opportunity to hear you talk about housing matters, and
with no indication it was political, that you might ask your
folks to ensure that when word goes out about such an event
that it is very clear as to whether or not it is an official
function of HUD as opposed to a political event.
Secretary Cuomo. Senator, when I go to an event--I think it
was clear that it was a political event. Unfortunately, people
still sometimes take the opportunity to pose their HUD-related
questions even though I am on a----
Senator Kyl. I am sure about that.
Secretary Cuomo. Yes. And I wish I could say, oh, no, I am
sorry, I am not going to talk about that today because I am on
a political day. So they will often ask a housing-related
question or a Federal-related question, even though I am there
for a different purpose. But I am sure everyone experiences
that.
Senator Kyl. And certainly people can have different views.
But I re-initiate my request, because here is a representative
of the Suffolk County Office of Aging who said that she sent a
member of her staff to the meeting because she was informed
that the subject would be senior housing. So I think it is
important to make sure that people are not misled about the
subject of those meetings.
Secretary Cuomo. Senator, if I might just so we are clear,
I may also talk about housing as an issue when I am doing
political activity.
LOS ANGELES COMMUNITY DEVELOPMENT BANK
Senator Kyl. That is clearly understood. Let me ask you a
question about the Los Angeles Community Development Bank. As
you know, in 1992, HUD funded the bank at over $400 million.
The idea was to rebuild part of the riot-torn Los Angeles at
that time. But also, as you know, the bank has been a disaster
from the beginning. It is barely solvent at this time, I
understand.
Most recently, I am informed, the bank lost a $7.2 million
lawsuit because the court found that the bank directly caused
the total loss--that is a quotation--of Summit Industries. But
the administration still continues to push for funding for HUD
to administer a new program, called America's Private
Investment Companies, under which HUD would underwrite loan
guarantees for private businesses, totalling some $1.5 billion
in private debt and equity.
When you look at Los Angeles and the fact that HUD contends
that it has closely monitored the situation--in fact, in an
answer to a question, the concluding sentence is: HUD will
continue to closely monitor the City's oversight of the bank.
Given HUD's obvious inability to closely monitor well, why
would we ever think that HUD actually has the capacity to pick
the winners and losers in these kinds of complex economic
deals?
Secretary Cuomo. Senator, the Los Angeles Community
Development Bank was very much an example of the methodology
that this committee has suggested over the years. This was a
proposal, the bank, by the local government, the City of Los
Angeles, which was their proposal, their idea for the best way
to do economic development in their city. And we at HUD have
very much respected local government. We do not believe there
is one size fits all. We do not sit here in Washington and say
to the City of Los Angeles, let us tell you what to do.
The City of Los Angeles said, this is what we think we need
to do. We need to put together a community development bank,
use it as a model to engender economic development. And they
requested funds from the Federal Government to do this. They
came in with a full proposal. We funded their proposal to do
this community development bank. There has been, obviously, at
best, fits and starts with the development bank. The City
government is working very closely with the bank. We have been
monitoring the situation.
The City feels, and the bank represents, that they are
improving--and they have a new business plan and a new CEO--and
that the situation is going to get better. Obviously if the
situation does not improve, we are going to have to take
action. But, whenever possible, we do defer to the local
governments, the State governments, on the best way to solve a
problem in their backyard.
Senator Kyl. I think that is a good principle. But in view
of the fact that my time is up, let me just make the comment
that this whole business of underwriting and the APIC proposal,
to me, suggests, and what has occurred in Los Angeles, suggests
the danger of trying to pick these winners and losers with this
kind of federally funded kind of programs.
APIC
Secretary Cuomo. I understand, Senator. Just so we are
clear, APIC is a different model, however.
Senator Kyl. Well, it may be a different program, but it
does require the picking of the winners and losers from an
economic point of view, in who you are going to lend the money
to.
Secretary Cuomo. No, I am sorry, Senator. Under APIC, we
would have a private capital firm do that. We know what we are
not good at. And under APIC, it says we bring in a private
firm, let them do the underwriting, let them make the
decisions, because they are in a better position to do that
than HUD.
Senator Kyl. Well, since my time is up, I will not pursue
that.
Secretary Cuomo. Thank you.
Senator Kyl. Thank you, Mr. Chairman.
Senator Bond. Thank you very much, Senator Kyl.
I am going to impose on the very good nature of my friend,
Senator Leahy, because I have some good news and bad news for
you, Mr. Secretary. The bad news is that I have to leave here
at 11 o'clock, so I will not be able, at least for the next
half hour or 45 minutes, to participate in the questioning, and
I want to have one more round of questioning, turn it over to
Senator Leahy.
Senator Mikulski. But I will be here.
Secretary Cuomo. Is that the good news?
Senator Bond. That is the good news.
Senator Mikulski. That is the good news.
PRESERVATION
Senator Bond. The other good news is I have to be in the
budget committee to vote out a budget, which will get us the
money that we need here. We feel we need at least $6 billion
for the expiring section 8 contracts alone. So I go forward
with a mission that I think we could all agree on.
But let me go back to some of the questions and statements
made about the video. You discussed the need to create a
production program, suggesting using FHA single-family default
reserves as a way to leverage funding for low-income,
multifamily housing. However, HUD's stated policy for its HUD-
owned and HUD-held properties is to voucher out all families,
even the elderly and disabled. This means that we are likely
losing these units for low-income use and certainly for very
low-income use.
For the record, I include a property disposition memorandum
for Gary Eizerman, Deputy Assistant Secretary for Housing, that
compels the vouchering out of these properties and replaces
existing handbook requirements. Mr. Apgar, you mentioned that
HUD preserves its HUD-owned inventory through other means
besides section 8. But I understand that you only do this by
setting ceiling rents at levels often that are not affordable
to very poor people.
In fact, the folks in Dallas told us that these ceiling
rents for Oak Hollow would be above the real market rent. So
that does not sound like affordable housing to me. How would
you square this policy with your acknowledgment that we need to
produce additional affordable, low-income housing?
Secretary Cuomo. Thank you, Mr. Chairman. In general, as I
said in the previous question, this has been--and as the video
said--a 20- to 30-year challenge for HUD. My point was we are
making more progress on this issue today than we have at any
time certainly in the past 7 years. The numbers, the arrows are
headed in the right direction. There is further to go, but the
arrows are headed in the right direction.
Also, we have undertaken, again, in coordination with the
committee, the first physical inspection of all HUD properties
in the country. Before, HUD never knew the condition of their
physical properties. We literally would ask the owners, what is
the condition of the building? But we did not have an
independent physical inspection. We have completed, for the
first time ever, physical inspection of every property. So now
we can say, if it is rundown, if it is a slum, we are not going
to continue to subsidize a slum. The Federal Government should
not be in that business. And I am very proud of that also. And,
again, in coordination with the committee.
Let me ask Assistant Secretary Apgar to respond to your
specific question.
Mr. Apgar. Well, of course, the Department's policy is to,
with every instance, preserve the affordable housing. That is
why we launched our mark-to-market initiative last May, and we
are preserving a significant number of housing through that.
That is why we work with the authorizing committee to produce
new authorities to allow us to preserve the aging 236
inventory. And that is having a dramatic effect.
So it is not our policy to voucher out all HUD properties.
The memorandum you refer to is simply clarifying how we finance
the funding of the property during the period in which HUD
holds the property. The properties typically have been getting
section 8 funding prior to that. And while HUD is in possession
of the mortgage or in the process of moving the owner out, we
continue to fund the property through access to the vouchers.
And so that simply was a reminder of how to go about the
mechanism of funding the property during the period of HUD
holding.
Again, with respect to Oak Hollow, we are awaiting a
response from our offer to sell the property. And we anticipate
there will be a number of development proposals that will use
various resources in order to produce affordability in that
development. So we still are looking for a good outcome in Oak
Hollow.
Senator Bond. Do you provide section 8 funding on
disposition?
Mr. Apgar. Not always. In selected instances, for the
project-based funding of section 8. We always provide resident-
enhanced vouchers, which is of course the law. And the
vouchers, in most instances, work. And if it is a tough
situation, we bring relocation specialists in, and others. As
you are aware, we did that in the Kansas City case, where we
had to relocate residents out of the Brush Creek development,
where there were families and other folks that needed special
assistance in order to relocate.
Secretary Cuomo. Mr. Chairman, just so we are clear, we run
into the issue which you have raised repeatedly, which is
sometimes you are in an area where the section 8 voucher does
not work especially well because the market is so hot and the
market is so tight that you cannot find the unit that you can
afford with a voucher. And it is in those areas, as the
chairman has pointed out correctly so I think, that we need to
talk about production, because vouchers are not doing the
trick.
Senator Bond. How will you solve the problem Mrs. Lewis and
her neighbors have?
Mr. Apgar. How are we going to solve it?
Senator Bond. Yes.
Mr. Apgar. Under our current authority, of course, we are
working with the State to make sure the residents are provided
appropriate social services. The city has the right of first
refusal to purchase the property and do what it can in terms of
bringing in affordable housing. We have a decision to make as
to whether or not we are going to go the negotiated sales
route, in which we would put the property forth for an RFP
competition. And, again, that would allow the residents to form
a nonprofit group and purchase the property, as was done in
many instances.
If it turns out that the property is judged to be too far
gone--and this is one of the worst properties in the inventory,
probably in the lowest 2 percent in terms of overall physical
condition--it may require so much resources that the decision
is that it is not able to financially secure a preservation
outcome, in which case we may not be able to go that route. And
then a sale on the open market is the final and last choice.
Believe me, our goal is to preserve every property we can
through as many means as we have.
SMALL CITIES PROGRAM
Senator Bond. Mr. Secretary, we will be watching. And let
me conclude by saying that last year's appropriations bill
transferred the administration of the CDBG Small Cities Program
from HUD to New York. I assume the transfer is complete. Could
you give me assurances that that is done?
Secretary Cuomo. Yes, sir.
Senator Bond. Thank you.
Now it is with great regret that I leave, turn the gavel
over, and call on Senator Leahy to continue the questioning.
NBC REPORT ON HOUSING
Senator Leahy. Thank you, Mr. Chairman.
I watched with interest the NBC piece. And I rarely ever
watch television news, but I seem to recall that one. And I am
told that that was actually aired over a year ago and used data
from 2 years ago. I assume that there has been a great deal
that has gone on in the past 2 years since that. Am I correct
that the gross sales price per property has increased over the
last year and the average time homes are held in the inventory
has decreased?
Secretary Cuomo. Yes, Senator, your observation is exactly
correct. First, the piece was dated. Also, the piece was, in
our opinion, overly sensationalized. The pictures in that video
in no way reflect the HUD inventory. The average home sale for
an FHA home is $70,000. Those were not $70,000 homes that we
were looking at obviously. As a matter of fact, with that NBC
piece, some of the homes that have been shown, we did not even
own. And we went back and we demonstrated that to NBC.
And NBC corrected, on air, that piece, which was not shown
in the video, the NBC correction. But they were fed, obviously,
information for different reasons and they were duped, NBC. But
they corrected it on air, which, as you can imagine, NBC
Network does not easily correct or admit error, but they did
off that piece, which was just aired once again.
As I said to Chairman Bond, we have made tremendous
progress in this regard, Senator. We have privatized the
disposition process. The values have gone up. The time to sell
has gone down. We have done what I consider very creative
things with the Police Officer Next Door Program, Teacher Next
Door Program, and then the 6-month sale or $1 disposition to
the city. You cannot do any more than that. Basically, what you
are saying is if it takes us more than 6 months, we are going
to give up, forfeit the value of the home, and turn it over to
the city.
So I am confident that we are doing just about all we can
do with FHA alone. And this piece is in no way representative
of where we are. That is not to say the entire situation is
going to be remedied. Because the real problem here is not FHA.
Senator Mikulski accurately points out that the real problem is
predatory lending. And the real problem is fraud in the
appraisal process or the lending process or the sale process
and victimizing a vulnerable population.
And that issue has to be dealt with, otherwise this is
going to be recurring. Because, in some ways, while the piece
was unfair to FHA and incorrect to FHA, it is worse than the
piece would suggest. Because it is not just FHA, it is private
banks all across the country that are falling prey to this
predatory lending scheme.
GAO HIGH-RISK LIST
Senator Leahy. Am I also correct that the GAO is
reevaluating HUD's status?
Secretary Cuomo. Deputy?
Mr. Ramirez. Yes, sir.
Senator Leahy. Any indication that the current risk status
may change?
Mr. Ramirez. Well, as it was mentioned earlier, Mr. Walker,
from GAO, has acknowledged that we have made considerable
progress. We have addressed the issues that have led the agency
to a high-risk designation, and have made credible progress in
regard to addressing them, and feel very confident that as a
result of our HUD 2020 management reform that, by the end of
this year, when the review will be complete and a report will
be coming out on all agencies, that we will be prepared to come
off this high-risk designation, sir.
Secretary Cuomo. And, Senator, if I might quickly state.
There is no doubt that this is a political year and there is
political posturing all around. But on the management of HUD,
we have come a long way. And GAO, which is always used as the
credible source of the criticism--and I have been here for 7
years and I have heard GAO bandied about whenever convenient--
GAO says we have made credible progress. They say that we are
on the right track from a management point of view and that we
have made management progress. And if we can use the GAO to
criticize, then we should also use the GAO to confirm.
SMITH & WESSON/HUD AGREEMENT
Senator Leahy. Let me go into another area that has
probably seen some controversy. HUD and Smith & Wesson, you
normally do not think of those two in the same sentence, but
you have gone into an agreement to provide trigger locks with
all firearm sales, requiring authorized dealers to conduct
background checks and so on. My understanding is you want to
keep the guns out of the hands of criminals, but also we all
know how tragically the results are when they get in the hands
of unsupervised children.
You and I, Mr. Secretary, are both gun owners. You have
young children in your home, and my wife and I now have a young
grandchild who comes around. And I think we both know how to
keep weapons out of the hands of children and take all the
usual steps. Unfortunately, not everybody does.
I just wanted to clarify some confusion, because I got some
calls about this from some members of the law enforcement
community. They were wondering whether the Federal Government
was mandating the purchase of firearms from only those
manufacturers that have entered into HUD agreements.
My understanding, and what I have told them, was that HUD
is advocating only voluntary preferences to Smith & Wesson or
any other firearm manufacturer that adopts similar public
safety measures, but the final purchasing decision is still
going to be up to State and local law enforcement agencies. Am
I correct in that?
Secretary Cuomo. That is exactly right, Senator.
Senator Leahy. I thought it would be good to clarify that.
It is amazing--if I might just take a moment, Senator Mikulski,
on this--because I come from the only State in the Union, as
near as I can tell, that has no gun control laws, except during
deer season we limit the number of rounds in a semiautomatic to
give the deer at least a sporting chance.
But we also have a real sense of gun safety in our State,
mainly because most of the, or a large percentage, of the
households grew up with firearms in the household. But I hear
from Vermonters across the political stripe that we have got to
do something to have some area of restriction. And most of the
gun control measures that have been proposed have been very
modest.
We have the juvenile justice bill which Senator Mikulski
voted for and I voted for. It passed the Senate, I believe, 73
to 25 last year. And now we are coming up on the anniversary of
Columbine and it is still sitting, tied up in a conference
committee because the gun lobby has said it cannot come out.
And I think that is a mistake.
Again, as a gun owner, I would say, for whatever it is
worth, and I have said this in other places, the gun lobby may
be making the same mistake it made when it opposed a ban on the
sale of cop killer bullets, that they wanted to allow the cop
killer bullet sales to continue. A lot of people in law
enforcement, a lot of people I worked with when I was a
prosecutor, were pretty upset with that. I think a lot of
parents are very upset with what is happening now. And I think
a lot of parents, you are going to find, are going to agree
with the position you have taken with Smith & Wesson.
Thank you.
Secretary Cuomo. Thank you, Senator.
Senator Mikulski [presiding]. Thank you, Senator Leahy.
Mr. Secretary, I do want to continue one line of
questioning, but, before I do, I am going to say a couple of
things. First of all, the President's request is for $32
billion in a variety of categories that I want you to know I
support. And I look forward to working in the appropriations
process, as the budget committee goes through its analysis, to
do what I can to ensure the integrity and follow through on the
President's request.
I think it is an outstanding request and it does go to
HUD's core programs. And we can talk about the elderly, HOPE
VI, increased section 8's, about those things. And I do not
want them, in this conversation, to get overlooked.
Secretary Cuomo. Thank you, Senator.
Senator Mikulski. So I want to assure you of that and look
forward to working with you and your team on it. Because, under
President Clinton's leadership, not only has the HUD budget
been restored, but I think innovations in housing have been. So
we do not want to have this hearing end without acknowledging
the significant efforts there and the reforms, the continuum of
care for the homeless, which continue as your signature issue,
and so on. So I really do want to say that and acknowledge that
for the many people who work with you.
Secretary Cuomo. Thank you very much, Senator.
Senator Mikulski. Now, just to continue again on our other
conversation related to flipping and FHA disposal. Senator
Leahy, in his questions with you, really you were able to cover
the ground. But, once again, it is in the macro level. So if
you look at all of FHA, all of FHA is a success. But there are
these significant Super Fund sites at FHA that need to be
contained.
I personally am very enthused about the teacher/cop
initiative, in which we can have public servants, often who are
on very spartan income for their contribution to the community,
often can maybe buy homes in the very neighborhoods we would
really enthusiastically welcome their presence in. What I see
in my own hometown of Baltimore, we have three kinds of
neighborhoods: siege, stress and stable.
By focusing really one set of strategies on siege,
hopefully we contain it. But if we focus on stress, which is
really what we are talking about here, we want to see them go
to stable and not to siege. And the cops and the teachers are
just a wonderful tool. We would welcome them in all three of
our categories, but, still, a very welcome thing. I look
forward to really being an advocate for the teacher and cop
program, and I think it is a very innovative one, and also
rewards public service and teaching and public safety.
BALTIMORE FHA DEFAULT RATE
Let us go back to the FHA. One, there is the predatory
lending issue, but then there is also the regular consumer
issue. One of the significant flashing yellow lights in
Baltimore has been the tremendous default rate with FHA
housing. Over 50 percent of the houses bought in Baltimore have
resulted in default on their mortgage payments. Now something
is wrong somewhere.
Part of that is the predators, the bums, the scum, that we
are really going to go after, both preventive and prosecution.
Remember, we have got our two strategies: prevention and
prosecution. But I really need either your comments or as part
of your overall review here to focus on why there was such a
mortgage rate. We are not laggards in Baltimore. We are not a
culture that abdicates responsibility. And it is enormously
troubling that something is wrong somewhere, when people get
into perhaps housing or buying a mortgage that they cannot.
Do you have any comments on that?
SECTION 8 VOUCHERS
Secretary Cuomo. Yes, I do, Senator. And if I might just
quickly make a comment on the Senator's first point, which is
the overall HUD budget, and clarify for the record a statement
that the chairman made that suggested that I said that Senator
Mikulski and Congressman Stokes were responsible for a budget
that zeroed out vouchers. That was never the case. I never said
that and it is not a fact.
The vouchers from 1994 were rescinded by the 1995 Congress.
And that is the first time the number of vouchers went to zero.
It stayed that way for 4 years, and then we got back into the
business. And that is, in my opinion, one of the causes for the
backlog of affordable housing today. And I understand the
sensitivity when that number keeps going higher and higher and
we did so little for that 4-year period. But it was not under
your leadership or Congressman Stokes.
BALTIMORE FHA DEFAULT RATE
On the overall default rate, the Assistant Secretary is
going to comment on the FHA default rate, but I think you are
exactly right, Senator. That is not just a flashing yellow
light, that should be a flashing red light and a bell and a
gong. Everything should go off. Because that default rate
really just shows the total dysfunction of the system.
It is a bad appraiser or a bad appraiser and a bad lender
or a bad appraiser and a bad lender and a bad broker. But that
higher default rate says something is not right. It is the
calling card of predatory lending, et cetera. It is corruption.
And a 50-percent default rate, to me, just is so outrageously
high that it is almost hard to imagine that it has been that
high a level. But let me ask the Assistant Secretary for his
comment, if I might.
Mr. Apgar. Just one point of clarification. There are
undoubtedly in the neighborhoods--and we were talking to Mr.
Quayle yesterday--where half of the FHA mortgages are in
default. And when you factor in the whole city, counting the
stable neighborhoods and the like, we are still above the
national average.
Senator Mikulski. I do not want to hear this.
Mr. Apgar. But let me tell you----
Senator Mikulski. I do not want to hear this. I do not want
to hear about national averages.
CREDIT WATCH SYSTEM
Mr. Apgar. No, no. I said the rest of the city. The
defaults in the city are 11,000 mortgages that are in default.
But I agree exactly with what Secretary Cuomo said. And that is
why we created our Credit Watch System. When we see areas where
the defaults are higher, we see lenders that are higher, we do
not go through this lengthy legal process. We bring them in. We
ask them to explain what is up. We make sure the data is right.
But if they are way out of whack, we terminate them. That is
the Credit Watch System.
You know, much to the cheers of the residents of Baltimore,
one of our first entities terminated was a Baltimore lender,
Capital Mortgage. And that system shows that we can quickly go
in and address people who are generating bad loans through
defaults. We are also now bringing online this new appraisal
reform system where, for the first time, starting on March 1,
all the lenders are required to send information to us about
their appraisals online. So we can screen the appraisals and
get a handle on who the bad appraisers are.
We have kicked 12,000 appraisers off our list. We are stuck
with this kind of lender-select, Bonnie and Clyde system. That
was what Congress gave us. But we have been doing a whole lot
of appraisal reform, saying given that we have to run our
system that way, we have, for the first time, testing
requirements for all our appraisers and we have the new
appraiser guidelines, and we have this new automated appraisal
fraud system. So, we are on it.
But there is no excuse in these neighborhoods for these
high default rates. You are exactly right.
Secretary Cuomo. And also, Senator, if I may, let me give
you one of the reasons why we need legislation. We have this
Credit Watch, which says if you are a lender who has a
disproportionate default rate, you are out. We had a
notoriously bad lender who had a disproportionate default rate.
We said, you are out. They went to court and they are still in.
Senator Mikulski. Well, let us look at the legislative
recommendations. But also there is another aspect here which I
would look at, which is buyers needing really to be prepared to
enter into home ownership. One of the great successes of
welfare reform is when these people move from welfare to work
they want to be homeowners. We heard in our hearing, though,
that no one told them about, gee, you have to pay property
taxes. And there are just a whole series of other things. There
were the gougers and the schemers, but there are people who are
buying houses that do not really understand that, because they
look at a monthly payment that seems like that is what they are
going to pay for the month, until they get in it.
So I do not want to go over repeating the Baltimore
hearing. You have the testimony on that. And you will be
meeting with this Baltimore ops task force that I think will be
very good.
The other thing is I am going to refer you to the fact that
GAO and the I.G. found that there were inadequate controls over
the real estate assessment management, otherwise known as REAM
contractors, and that this had resulted in the deteriorating
conditions in HUD properties. I am going to be discussing this
with the I.G. in a minute, but I think we really do need to
take a better look at that.
The second thing is that in your testimony you said that
you hope to have a report to Congress in 8 weeks. We understand
that that is not a magic number because we want you to be
rigorous and thorough. But we also do not want to process it to
death. I think there is the mood of the Congress, the chairman
and I, and so on, who want to do it. So I want to discuss with
Senator Bond what is the best way to follow up. Should we hold
another hearing with you? Should we have a roundtable with you
and some others? Should we have a meeting?
We will discuss this with Senator Bond and move on, and
then see how we can really have not only just a report filed.
Because I do not want a report that goes to the staff and we
all look at it, and golly, gee whiz. You know there is a
heightened urgency to move our appropriations. We will be
moving in June and July. The chairman is committed to moving
our bill promptly.
So we want to have whatever we can do through the
appropriations there and the opportunity to review authorizing
with Senator Gramm and Senator Sarbanes as to what would be
appropriate to do through the appropriations process. But
promptness, so we do not want to make the perfect the enemy of
the good.
Secretary Cuomo. Senator, if I might say, I cannot tell you
how excited we are about this opportunity. And we are going to
get you the report in 8 weeks, because we do not want to lose
this moment. It feels like there is an energy about this
moment. Chairman Greenspan has talked about this. There have
been numerous newspaper articles about this. And we want to
seize the moment, if you will. We want to get you the report in
8 weeks.
We will make a difference to Baltimore. We will also make a
difference to the Nation. And with your leadership, Senator, I
think we can do some of the best work that we have done over
these 4 years this last year. Because this is the problem, in
our opinion, that can make a marked difference.
NONPROFITS AND PROPERTY FLIPPING
Senator Mikulski. I really thank you for your hands-on
approach to this, number one, the attitude and frame of mind to
really let us get this done. Number two, I really again
appreciate the hands-on approach that you have taken to that.
And I know that you will continue this through the process.
Because there are two other issues I am going to bring. As we
look at FHA, we really need FHA to approach this and not be
defensive and not give you any recommendations that are CYA.
We do not want CYA recommendations and macro this and
national that and so on. We know macro and national. While we
knew macro and national, we had this rotting in other areas. So
we do not want a CYA approach from FHA.
The other concern that I have--and I would like the
analysis on this rather than giving my opinion--but I do not
want HUD to become a flipper to nonprofits in the city.
Nonprofits do not have, often, any more money than the very
poor in their own neighborhoods, nor do very strapped city
governments have this. So I do not want HUD, FHA, to say, we
will cosmetic our own situation and flip it to a nonprofit or
flip it to a city that cannot afford to do anything anyway. And
a Mayor O'Malley or a Mayor Daley or a Mayor Riordan or other
mayors end up holding the inventory with no money to do
anything with it again. So let us not become enablers here.
And I believe my concerns are valid; your solutions might
be very good. But I think if we are going to turn them over to
nonprofits and we are going to turn them over to a city, that
nonprofit in that city is going to need to have the money to
make the repairs. Because the homes I walked in are in pretty
bad shape. And whether that movie was a year old, 2 years old,
still, the conditions have validity. I mean the deteriorating
conditions.
So let us really think this through, and do not
inadvertently create more of a problem, by shifting the problem
out of FHA and shifting it to a nonprofit and shifting the
problem to a city. So let us be very careful. Because we like
to have this nostalgia, oh, let us give it to the community.
The community is saying, hey----
Secretary Cuomo. No, thanks. Yes.
Senator Mikulski [continuing]. We do not have the resources
either. They are busy. I know the three groups over there are
always foraging for funds. So we cannot have them foraging for
funds just because we are going to unload a problem on them.
Secretary Cuomo. I agree, Senator.
Senator Mikulski. I want to thank you. And I think for this
situation this concludes my questions.
Senator Bond [presiding]. Thank you very much, Senator
Mikulski.
Something toward and unusual happened when I arrived at the
budget committee to vote at 11 o'clock. They finally told me
they were not going to vote at 11 o'clock. This has never
happened before. So, fortunately, I am with us for a few more
minutes, until they decide to start the votes.
FNAM/FREDDIE MAC
Changing the subject, Mr. Secretary, recently I sent a
letter to Mr. Apgar, the FHA Commissioner, regarding a
Washington Post article that attributed statements to him that
Fannie Mae and Freddie Mac's underwriting policies are
essentially discriminatory by leaving blacks out at a rate that
is disproportionate to other minorities. I am troubled by this
statement on several levels.
First, my view and my experience in my State at least, I
have seen Fannie Mae and Freddie Mac leaders--being the leaders
in fact--in making housing credit available to all people,
regardless of race or any other characteristic. And I wondered
if that is the view of the Department or if that is only Mr.
Apgar's views or whether he was misquoted. Could you clarify
the position of the Department on that?
Secretary Cuomo. Yes, Mr. Chairman. I will ask Mr. Apgar to
speak to his comments. The Department's position is this. We
are the regulators of Fannie Mae and Freddie Mac. They get
significant public benefits. Some estimates say that Fannie Mae
gets $6 billion in public benefits. One of the questions is:
What does the public get back for their $6 billion? How many
affordable, quote, unquote, loans is Fannie Mae actually doing?
And how many is Fannie Mae doing compared to the private banks,
commercial banks, that get no subsidy?
You will hear many private bankers who say, look, we are
doing more than Fannie Mae does and we are not getting any
subsidies. Why is Fannie Mae getting $6 billion to do less than
we are doing as private lenders?
We try to balance all of that out. And we set the
affordable housing goals, which are basically the percent that
Fannie/Freddie must do to justify their public benefits. We
just raised those goals from 42 percent to 50 percent. We did
that in cooperation with them.
That will, Mr. Chairman, do more to provide affordable
housing than the entire HUD budget combined over the next 10
years. So that is a massive contribution to affordable housing.
But let me refer to Assistant Secretary Apgar to clarify
his statement.
Mr. Apgar. Right. And the reason we raised the affordable
housing goals is because our analysis--a view which is shared
by Fannie Mae--is that they can do more in these market areas.
The particular comment in the Washington Post related to
their lending in African-American communities. And our data
suggests that Fannie Mae in fact does not lead. This is the
same as the Secretary was saying. Their record is not as strong
as other lending institutions.
In that very same article that you quoted, Frank Raines
himself conceded that point, by saying, Fannie Mae today does
not lead in the African-American lending, but we will. Which is
the partnership we formed with them in order to expand their
lending and to embrace the higher goals.
Now, with respect to discrimination, that relates to issues
that the Department is reviewing relative to a totally
different set of authorities. We have engaged with Fannie Mae
to review their automated underwriting system. This is being
done by Gail Laster, our General Counsel and Eva Plaza our
Assistant Secretary for Fair Housing and Equal Opportunity.
Again, Fannie Mae has been cooperative in that. It has been
a very difficult undertaking, because this involves very
complicated software and other things that they believe contain
proprietary secrets. So we have set up a separate division to
do that in order to protect the confidentiality of their
information. That review is not completed, and I did not
comment on that review in the article or anywhere.
The same article pointed out that HUD officials were
careful to note that Fannie Mae does not discriminate. And we
have no evidence that they did or not. The review is underway.
And it is not a review under my control.
Senator Bond. Mr. Apgar, the sense I got from that article
was that you had reached the conclusion that they were
discriminating.
Mr. Apgar. I did not reach such a conclusion. I reached the
conclusion that they were not lending at the same rate as other
banks in the area; that approximately 5 percent of all the
loans done in the conventional conforming market are made to
African-Americans. Fannie Mae, that year that was under review,
did 3.2 percent of their business. Freddie Mac was even further
behind at 3 percent. And I simply pointed out the fact that
they were not serving this community as well as others in the
marketplace.
That is the basis. This general need to improve their
outreach to a variety of underserved communities is the basis
for expanding the affordable housing goals, as the Secretary
mentioned.
Secretary Cuomo. Mr. Chairman, if I might comment. I think
the difference comes in the inference. It was not Mr. Apgar's
statement, as I read the statement. The story did say the
conventional lenders, who get no subsidy, are doing about 5
percent to the African-American community. Fannie and Freddie
are doing about 3 percent. Why are Fannie and Freddie doing
less than the conventional lenders, who are getting no
subsidies? You could argue they are doing it through CRA.
And is the reduced amount the result of discrimination is
the inference, is the hanging question. But no one at HUD said
that. The exact opposite happens to be true. We announced the
affordable housing goals cooperatively, and we are doing a fair
housing review right now. Currently, we have no conclusion, no
outcome, no opinion.
FHA COMMISSIONER'S RESPONSIBILITIES
Senator Bond. The second part of it that concerns me about
Mr. Apgar's statement is relating to fair housing and their
underwriting policies and business decisions. I think HUD has
acknowledged that the FHA, in fact, acts as a competitor to
these government-sponsored enterprises. And as a result, since
FHA, which is in Mr. Apgar's responsibility, runs a competitor,
HUD decided it was necessary to build a firewall, a formal
delegation of Mr. Apgar's authority, on all GSE fair housing
matters to the Assistant Secretary.
That means that Mr. Apgar should not be reviewing or
commenting on information that would reasonably be considered
proprietary business information for Fannie Mae and Freddie
Mac. So, in a nutshell, what are Mr. Apgar's responsibilities
with regard to HUD's regulation of Fannie Mae and Freddie Mac?
And what safeguards has HUD put in place to protect Fannie Mae
and Freddie Mac's proprietary business information?
Mr. Apgar. I will be happy to answer these questions, but I
would like to propose, with your permission, that I enter into
the record the letter that I sent to you just on Monday which
gave my full answer to all these questions, which are very
similar to the letter that you sent me last week.
Senator Bond. I look forward to receiving it. Thank you.
[The information follows:]
Letter From William C. Apgar
Department of Housing and Urban Development,
Washington, DC, March 27, 2000.
Hon. Christopher Bond,
United States Senator,
Washington, DC.
Dear Senator Bond: Thank you for your letter of March 20, 2000,
regarding the level of service that the Government Sponsored
Enterprises (GSEs), Fannie Mae and Freddie Mac, provide minority
borrowers. As you know, HUD has recently published for comment proposed
new affordable housing goals for Fannie Mae and Freddie Mac. While
recognizing the progress that both organizations have made in expanding
access to capital for low- and moderate-income borrowers and
underserved communities, the rule proposes that both entities
substantially expand their efforts in these areas. Indeed, both GSEs
have broadly endorsed the proposed higher goals and have pledged to
expand their affordable housing efforts. Although I have already had
the pleasure of briefing your staff on this rule, I would be happy to
provide any additional information you request.
Your letter also references a recent Washington Post article which
states that, ``Apgar and others said that the two companies' policies
have had the effect of leaving blacks out at a rate that is
disproportionate to other minorities, whether intended or not, and has
been a pattern for years.'' You then say with respect to this quote
from the article that ``this presumes that these two companies are
guilty of discrimination in their housing underwriting policies.'' I
would suggest to you that based upon the facts known today that you
should not reach this presumption, as I and others at HUD also have not
done. In fact the paragraph in the article you quote from begins by
stating that, ``HUD officials have been careful, to avoid the word
discriminate when talking about the companies' practices because they
say that would imply that Fannie Mae and Freddie Mac are purposely
denying blacks access to mortgage loans.''
First, let me clarify for you that I never said, nor to my
knowledge does HUD have any evidence that Fannie Mae and Freddie Mac
are acting in a discriminatory manner, nor to my knowledge has HUD
charged that the GSEs are operating in a manner that is inconsistent
with fair lending laws. Rather, as part of HUD's effort to develop a
proposed rule on new affordable housing goals for the GSEs, HUD
prepared an assessment of GSE performance in the market place, and an
analysis of whether or not the GSEs ``lead or lag the market'' in their
purchases of mortgages from various categories of lending, including
lending to particular demographic groups. The Post article presented
information from the rule showing that in terms of home purchase and
refinance mortgage lending in 1998, both Freddie Mac and Fannie Mae
purchases failed to match market rates of lending to minorities,
particularly African-Americans. This is factual information which is
the basis of HUD's proposed rule requiring the GSEs to be more active
in this market sector. It in no way supports the presumption which you
have suggested.
Fannie Mae disputes HUD's analysis as it relates to all minority
families, but does not dispute the conclusion as it applies to African-
Americans. Indeed to Fannie Mae's credit, they recently, announced
major new initiatives to significantly increase their outreach to
minorities in general, and African-Americans in particular.
Your letter also referenced the fair lending review of the GSEs'
automated underwriting systems and requests information on FHA's role
in this review. You also state that your concern stems in part from the
fact that ``FHA is a competitor of these government sponsored
enterprises.'' As you note, Secretary Cuomo has delegated to the
Assistant Secretary for Fair Housing and Equal Opportunity the
authority to review Fannie Mae's and Freddie Mac's underwriting and
appraisal guidelines, including its automated underwriting systems. And
as you note, HUD has augmented its usual safeguards by establishing
internal protocols and ``firewalls'' to protect the confidential
business and/or proprietary information that may be provided by the
GSEs. These firewalls are as thorough and complete as both Fannie Mae
and Freddie Mac required. Indeed, neither Fannie Mae or Freddie Mac
would turn confidential business and/or proprietary data over to HUD
until the Department had agreed in writing to the GSEs' respective
satisfaction that these ``firewalls'' were in place and effective. HUD
is committed to maintaining these safeguards in accordance with our
agreements.
Your letter does not distinguish (as I do), my role in monitoring
GSE progress in meeting their obligations under the affordable housing
goals, and the equally important, yet clearly separate, obligations of
other HUD officials in the area of fair lending and fair housing. At no
time have I made public statements. concerning any of the details of
the Department's review of underwriting and appraisal guidelines, other
than to state that this review is underway. Nor do I have access to any
proprietary or confidential information received by the Department as
part of this review.
In contrast, my public statements concerning the GSEs performance
focused on market analysis completed as part of the development of the
affordable housing goals rule. In establishing these goals, among other
things, I am required by law to consider national housing needs;
economic, housing, and demographic conditions; the ability of the GSEs
to lead the market in making mortgage credit available to low- and
moderate-income families, very low-income families, and families in
areas underserved by mortgage credit. Accordingly, I am responsible for
taking into account the housing needs of minorities in relation to any
shortfall in the GSEs' performance in the purchase of mortgages made to
African-Americans, Hispanics or other minorities.
Next, I would like to reassure you that FHA is not a competitor of
Fannie Mae and Freddie Mac. The GSEs provide liquidity and stability in
the mortgage market, by purchasing and holding loans originated by
private lenders. In contrast, the FHA provides mortgage insurance to
millions of families not able to obtain financing in the private
market. FHA has an important public mission which is a complimentary
relationship with the GSEs, not a competitive one. The Congressional
plan for addressing the Nation's housing needs is that both FHA and the
GSEs should work side by side in helping more Americans realize the
dream of homeownership. The ongoing partnership between FHA and both
Freddie Mac and Fannie Mae to develop and deploy automated underwriting
systems for FHA loans is a good example of the benefits of cooperation
between FHA and the GSEs.
Finally, you request information on HUD's effort ``to ensure
consumers have full information about how mortgage decisions are made
by the GSEs.'' In a speech last fall at the University of Virginia,
Secretary Cuomo challenged the mortgage industry to ``demystify'' the
homebuying process by helping consumers better understand the decision
making process. At the same time, he said that FHA should lead by
example. As a result, FHA is now developing new tools designated to
increase the transparency of the FHA's underwriting process.
The Secretary's speech was widely hailed by all segments of the
mortgage industry, including the GSEs. Indeed, in January, Fannie Mae
announced its own plans to expand consumer information about their
underwriting systems. More recently, they have pledged to develop
underwriting systems that are not dependent on FICO scores, a
proprietary credit scoring system that has been over the years the
source of considerable concern among housing advocates.
My comments on this topic simply reflect my own belief in the
importance of expanding consumer knowledge and information about the
homebuying process. As you know, HUD has requested expanded funding for
our Homebuying Counseling Initiative in our fiscal year 2001 budget
request to your Committee, a request that I trust you will support. I
believe in the power of consumer information and education. Despite
your statements to the contrary, I never said that I intended to
``force'' disclosure of trade secrets of the GSEs. As noted earlier,
HUD has detailed procedures in effect, procedures that were formulated
after extensive conversation with the GSEs, to protect any proprietary
or confidential information received as part of HUD's regulatory
responsibilities.
In closing, let me once again thank you for your interest in the
GSE affordable housing goals and the equally important effort to assure
that the GSEs adhere to applicable fair housing and fair lending
requirements. I stand ready, along with my HUD colleagues, to provide
you or your staff any additional information you request.
Sincerely,
William C. Apgar,
Assistant Secretary for Housing-Federal Housing Commissioner.
______
FNMA AND FREDDIE MAC PROPRIETARY INFORMATION
As Congress continues its deliberations in the development of the
fiscal year 2001 Budget for the U.S. Department of Housing and Urban
Development (HUD), I would like to express my ongoing willingness to be
of assistance during this important stage of the legislative process.
As you know, HUD continues to make great strides in meeting our
mutually shared goal of helping to build stronger American communities.
Over the past several years, HUD has made significant progress in
implementing key management reforms contained in the HUD 2020 Reform
Plan and in providing states and localities with much-needed assistance
for affordable housing and economic development activities.
There is much good news on the state of the nation's housing and
job markets. A total of $70.7 million American families owned their own
homes in the first quarter of this year--more than at any time in our
history--raising the nation's home ownership rate to an all-time high
of 67.1 percent. In addition, the nation's economic expansion--the
longest period of peacetime economic growth in U.S. history--continues
to create new jobs and economic opportunities at a steady pace.
Despite these encouraging trends, there is still a tremendous need
for targeted federal investments, particularly for communities that
have not fully benefited from the nation's unprecedented economic
growth. For instance, HUD's latest estimates place the number of very-
low income renters with worst case needs for housing assistance at a
record-high 5.4 million families. These very low-income families are
either paying more than half their incomes for rent or are living in
severely substandard conditions. In addition, a recent study conducted
by the Urban Institute underlines the need for continued assistance to
combat homelessness. According to this study, between 2.3 million to
3.5 million Americans are likely to become homeless at some point each
year, including 900,000 to 1.35 million children. These are but a few
examples of why HUD's role will be as vital as ever for the families
and communities that have been left behind.
I believe the subcommittee hearings conducted earlier this year on
the status of the President's fiscal year 2001 budget proposal resulted
in a constructive dialogue and raised important issues for improving
Federal efforts to expand affordable housing and spur the creation of
new jobs and economic development opportunities. What emerged from our
discussions was a clear consensus on the importance of HUD's mission to
serve at-risk families and communities. Since then, I have worked
diligently to see that the particular issues of mutual concern that
were raised during these hearings are addressed in a timely and
effective manner. We have continued our efforts to transform public
housing, to combat homelessness and to improve the operation of key HUD
programs such as the HOME block grant, the Housing for Persons With
AIDS (HOPWA), and the Section 202 Housing for the Elderly and Section
811 Housing for the Disabled programs.
In addition, HUD has moved swiftly to address other critical
housing issues such as predatory lending and the impact of deceptive
and unfair lending practices in specific neighborhoods. The Joint Task
Force, convened by HUD and the Department of Treasury has held the
second in a series of regional forums on this important issue. The Task
Force plans to release a comprehensive report and a list of
recommendations for possible legislative proposals to ensure that the
scourge of predatory lending, which has impacted too many of the
nation's elderly, low-income families, and at-risk communities, is
stopped.
I look forward to continuing to work together to strengthen
American communities and families through sensible government reforms
and investments in affordable housing and economic development
activities. As always, please do not hesitate to contact me if I can be
of further assistance.
Mr. Apgar. I hope you have received it, since we faxed it
on Monday. But, if not, we will make sure that you see a copy
of it.
Let me just start off by saying that it is our opinion that
FHA is not a competitor in the sense that you describe it. FHA
is mortgage insurance. We operate in the primary market. Fannie
Mae is a secondary market actor. It provides liquidity and
stability to the secondary market. So we are in different
businesses. So we do not compete. In fact, Fannie Mae could
purchase FHA mortgages, and they are doing so today. So we are
in different businesses.
We do have this interest in automated underwriting, which
is central to some of their proprietary interests. We are
developing our own system. In fact, we are developing our
system to move us beyond where we started. Fannie Mae and
Freddie Mac, together, helped us get our first automated
systems up and running, and now we are developing our own.
In order to make sure that our work in providing our own
development of our automated underwriting systems in no way
benefitted or in no way let information from the automated
underwriting review move out into the broad universe of people
concerned about these matters, I was asked not to participate,
and be firewalled off from that automated underwriting review
that is happening on the fair housing side.
With respect to the firewalls, all I can say about that is
there was extensive negotiations with Fannie Mae and Freddie
Mac about the firewalls. And based on that information, they
were able and willing to send over to the Department literally
thousands and thousands of records of data. Fannie Mae I think
came to the conclusion that the firewalls were sufficiently
rigorous--and we can get you more on that if you would like--
that they were comfortable with going through in the process of
reviewing the loans. So that is the best I can say. They have
signed off on the firewalls and I think they are effective.
Secretary Cuomo. Mr. Chairman, this was somewhat puzzling.
Fannie Mae requested, in essence, the firewalls. Because they
wanted to make sure, when they were providing their information
for this fair housing review, that there was no advantage to
FHA, which was also developing something called an automated
underwriting system, where they have secret recipes, we call
them, secret formulas. So we created the firewalls at Fannie
Mae's request essentially. They were satisfied. They sent over
the information. We are now reviewing the information.
So I do not understand why they would have a problem with
the firewalls which they requested.
Senator Bond. I think the question was whether those
firewalls were being implemented.
Secretary Cuomo. They are.
Senator Bond. And that is the question that was raised by
the comments I saw from Mr. Apgar. But let me ask another
question.
Mr. Apgar. The part about my authorities, of course, in
terms of monitoring the GSE goals, commenting on their
performance with respect to underserved communities is central
to my role as the person involved in the goal-setting
operation. Making comments about different demographic groups,
different racial groups, how they are faring in the marketplace
is essential.
As a matter of fact, our rule, which is now under public
comment, has extensive comments on how Fannie Mae and Freddie
Mac's lending is doing in low-income communities generally, in
Hispanic communities, in African-American communities, in all
types of communities. That is a congressionally mandated
obligation of us as we put forth these goals, to look at
different market conditions, to look at different demographic
groups. So my comments were well within my authority in the
goal-setting and had nothing to do with the issues relating to
the automated underwriting review. And again, I do not
understand why there would be confusion over my role and
comments as a goal-setter in the affordable housing arena.
MARK-TO-MARKET
Senator Bond. Mr. Secretary, let me ask you one last
question before turning it back over to Senator Mikulski again.
We appreciated your statement that you acknowledge that the
mark-to-market legislation we worked on over 2 years ago was a
need corrective to a serious situation. In this body, though,
sometimes we forget that passing a law is just the first step
and that implementing the law is often a bigger challenge. One
of the complaints that we have heard about HUD's implementation
of the program has been the failure to use fully the housing
finance agencies in administering the program as intended by
Congress.
I know there have been numerous disputes about
compensation, conflict of interest requirements, and perhaps
most troubling, is the objection to the prescriptive nature of
the program that HUD has designed. Finally, I understand that
not one mortgage has undergone a complete restructuring yet.
That means that a significant amount of section 8 savings that
we had previously anticipated have not yet been realized.
What is the status on this? And has HUD fully complied with
the letter and the intent of the law?
Secretary Cuomo. Yes, Mr. Chairman. As you rightly pointed
out, this section 8 crisis--the chairman was referring in his
opening comments by the loss of units--I think one of the
greatest challenges we faced were these expiring section 8
contracts, and still today. The mark-to-market was a way to
deal with it. And Mr. Peppercorn is here. He is the Director of
the unit called OMHAR that does that.
This is, as the chairman pointed out, a very difficult
transaction in general, because you are trying to renegotiate.
But I believe we have made more progress than the chairman's
comment would suggest. And I would ask Mr. Peppercorn to give
you the updated information. I believe we have about $60
million in savings.
Senator Bond. If we could make that very brief. I just want
to know the overview. If you could do that in less than 60
seconds.
Mr. Peppercorn. I certainly will. To your first point, I
have a copy of the GAO report with me which actually says that
what we did in terms of the negotiations with State and local
agencies was absolutely within the statutory requirements. In
terms of what we have completed, I will not go into too much of
the technical details, but there are actually 122 transactions
that have been approved by OMHAR.
These are what are called LITES. They are not
restructurings. They are rent reductions without
restructurings. The estimated savings will be $215 million. The
discounted savings over 20 years are $128 million, against
$12.2 million that we have spent. In other words, we are saving
money at a rate, once fully implemented, at ten and a half
times the cost of doing the deals.
Senator Bond. Thank you very much. And we will follow up
with you on those.
Now I turn the questioning back to Senator Mikulski.
Senator Mikulski. Mr. Chairman, I have really concluded my
questions for this phase. I think we now move on to the
implementation of the excellent methodology presented by the
Secretary. Mr. Chairman, the Secretary wants to and is going to
move as promptly as he can on these national and Baltimore
laboratory task forces, and hopes to have something for us in
the 8-week, roughly, period. And I would like to then discuss
with you whether you would want to hold another hearing on this
or a roundtable or just meet with the Secretary.
Senator Bond. Let us see what the schedule is. We may be
asked to move more quickly. We still have a number of hearings
in the other agencies in this committee.
Senator Mikulski. Why do not you and I talk.
Senator Bond. We will discuss this and see whether we can
take care of all of our responsibilities and come back to a
hearing on this.
Senator Mikulski. But I hope you would concur that when the
Secretary finishes his analysis that we really have a face-to-
face conversation with him, using whatever is appropriate to
our schedule.
Senator Bond. We will, yes.
Senator Mikulski. I have advised the Secretary that both
Senator Stevens and Senator Byrd have instructed us to move it
in terms of moving your bill to the floor in June.
Senator Bond. And we may have to do a truncated version of
a hearing to get that done or just set up a meeting.
Senator Mikulski. To see how to go, okay.
Senator Bond. Yes, we will hold that open and work with
you.
Senator Mikulski. Thank you very much, Mr. Secretary. We
look forward to working with you, both on this despicable
situation that we find ourselves in, but also on the HUD core
programs that I believe are working very well and empowering
the poor.
SINGLE-FAMILY FORECLOSURES
Secretary Cuomo. Thank you very much. Thank you, Senator,
again. We are excited by the opportunity that you have given us
to resolve a national problem. Thank you.
Senator Bond. Mr. Secretary, while the FHA Mutual Mortgage
Insurance Fund is presently in good shape, FHA's inventory of
single-family homes that HUD has foreclosed on and taken
ownership of has more than doubled under your tenure, from
24,000 homes in 1996 to over 47,000 homes currently, despite
the fact that this subcommittee has provided significant new
tools, including a single-family property disposition program
as part of the VA-HUD fiscal year 1999 bill to move the housing
into the hands of nonprofits and homeowners. Why the big
increase and why have we not seen a decrease in the inventory?
NBC CORRECTION TO REPORT ON HOUSING
Secretary Cuomo. Thank you very much, Mr. Chairman. First,
as I just mentioned when you were out of the room, the NBC
video piece which you showed is dated and slightly misleading.
NBC actually ran a correction on the air about that piece,
because there were factual errors in the NBC piece. And you can
imagine how hard it is to get a network to run a correction.
They do not do that easily, I trust. So there were serious
flaws in that piece.
There is no doubt that the long-term HUD problem has been
this so-called aged inventory and moving those properties. It
is the challenge of any real estate organization, public or
private. We have made significant progress. The reason we have
more homes is we are doing many more loans. The whole FHA
business has gone through the roof. So we are also having more
foreclosures.
But, as I mentioned, the radical privatization which
changed the entire way we did business is starting to show the
positive effect. The average resale is up. The average time of
sale is down. And we are now solidly in keeping with the rest
of the market. I will ask Commissioner Apgar to respond to your
specific point.
Mr. Apgar. Right. The buildup of the inventory has a couple
of factors. First of all, we came to the conclusion that our
HUD process, the private sector process, just was not able to
be up to the task. That is why we brought in the private sector
contracts. We had built up from 24,000 to almost 42,000. And
many of those homes had no work being done on them, in the
sense that they were not appraised, they were not ready for
sale.
We brought the new contractors in. There was a period of
transition. And for the last 6 months, the inventory has been
coming down steadily. As a matter of fact, today we have almost
half of those homes that you mentioned in the inventory under
contract. Somebody is there waiting to close in the next week
or two to buy them. The number of FHA homes we have available
for sale--that means are not under contract--is actually down
over a year ago and is falling rapidly because of the new
private sector contractors.
Secretary Cuomo. And one of the problems, if I might
quickly say, Mr. Chairman, when we went to the privatization,
one of the contractors who we selected defrauded us. A company
called In-Town. And that has caused us operational problems
that we are working through. We are bringing action against In-
Town. But one of those contractors who we privatized to did
misperform, did mislead us. We believe we have a legal action.
But that has caused a delay.
Senator Bond. Mr. Secretary, I understand that before the
privatization of FHA management and disposition, the average
loss on the sale of one of these houses was $31,872. After the
new program was implemented, I am advised that the loss has
increased slightly, to $31,940. Is this a widespread problem?
Are we losing more money under this privatization concept?
Secretary Cuomo. I have not heard those numbers, Mr.
Chairman. But between HUD being in the real estate business and
managing its own properties and privatizing it, the
privatization is clearly a much better course of conduct. This
committee made that suggestion to us years ago, and they were
correct. We should not be boarding up buildings and cutting
lawns and doing the resale whenever you can privatize the
function. That is much of the advice that I got from this
committee.
Mr. Apgar. Yes, I believe the numbers you are referring to
relate to an Inspector General audit of this matter. We were
unable to replicate their methodology. Our own statistics
suggest that, in fact, our recovery rates are up prior to the
contract versus now. We are recovering about $4,500 more per
home. When you multiply that times the 60,000 homes we signed
onto the new contracting process, that returns over $260
million of savings. So we are saving money by selling the homes
faster and at a higher price, as Secretary Cuomo mentioned.
Senator Bond. Mr. Secretary and Mr. Apgar, my apologies
again. That is my master's voice calling, and I will turn it
back over to Senator Mikulski.
Secretary Cuomo. That is an important vote for all of us.
Vote twice, Mr. Chairman.
Senator Bond. Early and often.
Senator Mikulski [presiding]. We are back to the good news.
Secretary Cuomo. That is right.
HOUSING FOR FIREFIGHTERS
Senator Mikulski. Mr. Secretary, I think that concludes my
questions. I think we have had a very rigorous and thorough
hearing. We look forward to the implementation of your
methodology and ongoing conversations on the other aspects of
the HUD budget.
One of the things I would like you to ponder for when we
talk again--let us go to the teacher/cop program that I know we
are mutually bullish on--would you think about expanding the
part also to firefighters? Because if we think about teachers,
cops and firefighters in a community, that is really wonderful
community leadership and so on. Because both are involved in
public safety. And our firefighters risk their lives every day.
They truly are on the line of fire--no pun intended. And their
compensation is often quite modest.
Secretary Cuomo. Senator, as this is an appropriations
hearing, I think HUD is going to do a little appropriating of
many good ideas--this idea of the firemen next door program, I
think I now hear it being called. We had a meeting yesterday
with Mr. Quayle, who had some good ideas. We are going to
appropriate those also. So, yes, there is a lot we can do
together. And I think the firemen next door program has a nice
ring to it.
IG EFFORTS IN HOUSING FRAUD
Senator Mikulski. Thank you very much. This phase of the
hearing is concluded and we look forward to working with you.
We now turn to the HUD I.G., Ms. Gaffney. Thank you very
much.
Secretary Cuomo. Thank you very much. Thank you for having
us.
Senator Mikulski. Ms. Gaffney is next. Could I have some
order here. I know the enthusiasm you all want to share with
each other. We can do that out in the hall.
I understand Ms. Gaffney is not scheduled to testify
formally. But, Ms. Gaffney, would you take the witness table,
because I would like to say a few things, please.
Anybody who would wish to be enthusiastic in their
conversation, we love enthusiasm, but we need to hear the
witness.
Ms. Gaffney, first of all, I know you are not prepared to
give testimony.
Ms. Gaffney. No, Senator.
Senator Mikulski. But I would like to just review a few
things with you, if I might.
Ms. Gaffney. Please.
Senator Mikulski. First of all, thank you, thank you. I
know that, on a bipartisan and a bicameral basis, we
appropriated $18 million to the HUD I.G. for their to be
respective HUD I.G. audits in key cities. I know you caught a
lot of grief over that. And that was a melancholy situation in
which accusations to both you, against you, and also the
members of the House were unfounded.
It is my observation that the HUD I.G.'s office and that
appropriations of funds, along with many other things that you
have identified, led to really significant work on this
predatory lending. Am I correct in that?
Ms. Gaffney. You are correct.
Senator Mikulski. And I know that there are ongoing
investigations. I will not ask about those. It would not be
appropriate to ask about them. But the task force, under the
aegis of the Baltimore U.S. Attorney, has apprised me of your
work--meaning your team's work--and we really want to thank you
for the housing fraud initiative in uncovering these flipping
issues and also the issues related to FHA disposal, which are
not criminal.
So we have got two areas that we are looking at, and we
invite, as we move along with the Secretary's methodology, your
advice and insights. I have got your letter to me in response
to my questions.
And there are two issues that I am deeply concerned about.
One, how we can prevent predatory lending and any insights you
have on preventing well-intentioned people getting in over
their head and thus contributing to the default rate of FHA.
But predatory lending is the number one issue. So we welcome
your insights that will come out of your task force work on
what we can do to prevent this virus, and essentially giving
too many Bonnie and Clydes too many opportunities to rob the
taxpayer and gouge the poor.
The other is what we would call the prosecution part. And
whatever tools the I.G. needs to continue their housing fraud
initiative, the committee would like to be aware of, to be able
to continue investigations and work with appropriate law
enforcement for both investigation, which will, for those that
are criminals, lead to indictments and prosecutions. I must say
that your presence and the vigorous response by the U.S.
Attorney in Baltimore, and other U.S. Attorneys, and the
acknowledgement of that--not going into the details of
investigation--by the press has already had a chilling effect
on the flippers.
Because, you see, they know you are coming. They know the
FBI is coming. They know the postal inspectors coming. They
know the HUD I.G. is coming. Really, it is like Silverado, with
you coming over the hills. And the fact that they know that you
are coming, you--literally, you, meaning the HUD I.G.--but the
full muscular, vigorous weight of the Federal law enforcement
coming after the flippers and the chain of gougers who are
committing criminal offenses has had a chilling effect. Because
they know prosecutions could very well lead to convictions. And
as you know, under our current Federal statutes, these would be
sentences without parole.
So for all those white collar criminals, we have already
said, if you are a flipper, pack it up and go away, because we
are coming and we are here to stay. And if you are thinking
about being a flipper, do not even go there, because we are
coming, all of us are coming.
So I want to thank you for the professionalism of your
team. I think, for all the pretty vitriolic criticism directed
at you in some local quarters, I think both you, the work of
the housing fraud initiative and your vigorous team, I think
you have truly been vindicated. And today I think the beginning
results speak for themselves.
So I would like to thank you for staying the course and
bringing us such a professional team to our own community and
many other communities.
Ms. Gaffney. Thank you so much.
Senator Mikulski. So we look forward to hearing from you
what other tools, financial or whatever, to be able to continue
to stay the course on the housing fraud initiative. And I am
going to wrap up by saying we are here.
Ms. Gaffney. Okay.
ADDITIONAL COMMITTEE QUESTIONS
Senator Mikulski. We are here. We are going to stay here.
This is directed at the gougers. We are here and we are going
to stay here until you go away.
Ms. Gaffney. We will be there, too.
[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 CHRISTOPHER S. BOND
DISCRIMINATION IN NEWSPAPER ADVERTISING
Question. Mr. Secretary, it has come to my attention that a number
of newspapers have been subject to risk of fine or other penalty under
the Fair Housing Act in cases where a newspaper may have run an
advertisement that is later determined to have a discriminatory effect.
Several news organizations have raised concerns that they want to do
the right thing but that there are no set or established standards. It
has also been suggested that a better approach would be to allow
notification to newspapers where there is an issue of discrimination
and then allow the newspaper an opportunity to remedy the issue before
there is a risk of penalty. This would promote dialogue on issues of
discrimination, protect innocent parties and allow for the development
of standards that everyone could rely upon. How would you look at this
type of system as a way to promote dialogue rather than litigation and
what steps would HUD be willing to make to implement such a system?
Answer. Typically, the complaints HUD receives regarding allegedly
discriminatory advertising come from private parties who allege that
such advertising has resulted in lost housing opportunity. HUD, itself,
has not initiated such a case in over 5 years. When HUD receives a case
from a person who alleges an advertisement is discriminatory and has
caused that person harm, HUD, as a neutral fact-finder, must
investigate the complaint. The HUD administrative process, however,
affords the parties the opportunity to resolve the matter before HUD
makes a determination on whether discrimination has occurred. HUD
participates in that process and assists the parties in arriving at a
reasonable resolution. Parties have resolved matters alleging
discriminatory advertising with the publisher agreeing to cease
publication of the subject advertisement.
Individuals also have a private right of action under the Fair
Housing Act. HUD is not involved in cases filed directly in court. HUD,
however, has provided guidance on how it believes the Act's provisions
regarding advertising should be interpreted. This guidance provides a
reasonable common sense approach. It recognizes that advertisers and
publishers are in very different circumstances. At one time, there was
much misinformation circulating among the housing industry and
newspaper publishers. For example, there was a belief that the Fair
Housing Act prohibited the use of certain words and phrases that a
common-sense reading of the Act or the pertinent case law would not
have supported. We put out guidance and wrote letters to individual
parties to clarify our interpretation of the law, which we understood
addressed most concerns. That guidance is attached.
HUD is open to further discussion on how to promote common-sense
enforcement of the Act's advertising provisions. HUD already notifies
parties of alleged violations prior to taking enforcement action, and
there is nothing which prevents a private party from contacting a
person who has published a discriminatory advertisement before taking
legal action.
Attachment
MEMORANDUM FOR: FHEO Office Directors, Enforcement Directors, Staff,
Office of Investigations, Field Assistant General Counsel
FROM: Roberta Achtenberg, Assistant Secretary for Fair Housing and
Equal Opportunity,
SUBJECT: Guidance Regarding Advertisements Under Sec. 804(c) of the
Fair Housing Act
The purpose of this memorandum is to provide guidance on the
procedures for the acceptance and investigation of allegations of
discrimination under Section 804(c) of the Fair Housing Act (the Act)
involving the publication of real estate advertisements.\1\
---------------------------------------------------------------------------
\1\ This memorandum does not address fair housing issues associated
with the publication of advertisements containing human models, and
does not address 804(c) liability for making discriminatory statements.
---------------------------------------------------------------------------
Recently, the number of inquiries involving whether or not
potential violations of the Act occur through use of certain words or
phrases has increased, and these issues cannot, in some situations, be
answered by referring to decided cases alone. In some circumstances,
the Advertising Guidelines, published at 24 C.F.R. Part 109, have been
interpreted (usually by persons outside of HUD) to extend the liability
for advertisements to circumstances which are unreasonable.
This guidance is meant to advise you of the Department's position
on several of these issues.
Previous guidance already requires that Intake staff review a
potential complaint, gather preliminary information to ascertain
whether the complaint states a claim under the Act, and consult with
counsel on any legally questionable matters before the complaint is
filed. Likewise, jurisdictional issues such as standing and timeliness
should also be established prior to filing.
If the Advertising Guidelines, this memorandum, or a judicial
decision clearly indicate that the language used in the advertisement
is a potential violation of Section 804(c) and the criteria for
establishing jurisdiction are met, the complaint should be filed and
processed. Any complaint concerning an advertisement which requires an
assessment of whether the usage of particular words or phrases in
context is discriminatory, requires the approval of Headquarters FHEO
before a complaint is filed. If the advertisement appears to be
discriminatory, but the Advertising Guidelines, this memorandum, or a
judicial decision do not explicitly address the language in question,
supervisory staff must also obtain approval of Headquarters FHEO before
the complaint is filed. Potential complaints regarding advertisements
which do not meet the above descriptions should not be filed.
Where there is a question about whether a particular real estate
advertising complaint should be filed, relevant information regarding
the factual and/or legal issues involved in the complaint should be
gathered, and counsel should be consulted prior to contacting the
potential respondent publisher. The matter should then be referred to
the Office of Investigations for review. Such referrals may take the
form of a short memo, reciting the applicable advertisement language,
and any factual or legal analysis which is appropriate.
Section 804(c) of the Act prohibits the making, printing and
publishing of advertisements which state a preference, limitation or
discrimination on the basis of race, color, religion, sex, handicap,
familial status, or national origin. The prohibition applies to
publishers, such as newspapers and directories, as well as to persons
and entities who place real estate advertisements. It also applies to
advertisements where the underlying property may be exempt from the
provisions of the Act, but where the advertisement itself violates the
Act. See 42 U.S.C. 3603(b).
Publishers and advertisers are responsible under the Act for
making, printing, or publishing an advertisement that violates the Act
on its face. Thus, they should not publish or cause to be published an
advertisement that on its face expresses a preference, limitation or
discrimination on the basis of race, color, religion, sex, handicap,
familial status, or national origin. To the extent that either the
Advertising Guidelines or the case law do not state that particular
terms, or phrases (or closely comparable terms) may violate the Act, a
publisher is not liable under the Act for advertisements which, in the
context of the usage in a particular advertisement, might indicate a
preference, limitation or discrimination, but where such a preference
is not readily apparent to an ordinary reader. Therefore, complaints
will not be accepted against publishers concerning advertisements where
the language might or might not be viewed as being used in a
discriminatory context.
For example, Intake staff should not accept a complaint against a
newspaper for running an advertisement which includes the phrase female
roommate wanted because the advertisement does not indicate whether the
requirements for the shared living exception have been met. Publishers
can rely on the representations of the individual placing the ad that
shared living arrangements apply to the property in question. Persons
placing such advertisements, however, are responsible for satisfying
the conditions for the exemption. Thus, an ad for a female roommate
could result in liability for the person placing the ad if the housing
being advertised is actually a separate dwelling unit without shared
living spaces. See 24 CFR 109.20.
Similarly, Intake staff should not file a familial status complaint
against a publisher of an advertisement if the advertisement indicates
on its face that it is housing for older persons. While an owner-
respondent may be held responsible for running an advertisement
indicating an exclusion of families with children if his or her
property does not meet the ``housing for older persons'' exemption, a
publisher is entitled to rely on the owner's assurance that the
property is exempt.
The following is policy guidance on certain advertising issues
which have arisen recently. We are currently reviewing past guidance
from this office and from the Office of General Counsel and will update
our guidance as appropriate.
1. Race, color, national origin.--Real estate advertisements should
state no discriminatory preference or limitation on account of race,
color, or national origin. Use of words describing the housing, the
current or potential residents, or the neighbors or neighborhood in
racial or ethnic terms (i.e., white family home, no Irish) will create
liability under this section.
However, advertisements which are facially neutral will not create
liability. Thus, complaints over use of phrases such as master bedroom,
rare find, or desirable neighborhood should not be filed.
2. Religion.--Advertisements should not contain an explicit
preference, limitation or discrimination on account of religion (i.e.,
no Jews, Christian home). Advertisements which use the legal name of an
entity which contains a religious reference (for example, Roselawn
Catholic Home), or those which contain a religious symbol, (such as a
cross), standing alone, may indicate a religious preference. However,
if such an advertisement includes a disclaimer (such as the statement
``This Home does not discriminate on the basis of race, color,
religion, national origin, sex, handicap or familial status'') it will
not violate the Act. Advertisements containing descriptions of
properties (apartment complex with chapel), or services (kosher meals
available) do not on their face state a preference for persons likely
to make use of those facilities, and are not violations of the Act.
The use of secularized terms or symbols relating to religious
holidays such as Santa Claus, Easter Bunny, or St. Valentine's Day
images, or phrases such as ``Merry Christmas'', ``Happy Easter'', or
the like does not constitute a violation of the Act.
3. Sex.--Advertisements for single family dwellings or separate
units in a multi-family dwelling should contain no explicit preference,
limitation or discrimination based on sex. Use of the term master
bedroom does not constitute a violation of either the sex
discrimination provisions or the race discrimination provisions. Terms
such as ``mother-in-law suite'' and ``bachelor apartment'' are commonly
used as physical descriptions of housing units and do not violate the
Act.
4. Handicap.--Real estate advertisements should not contain
explicit exclusions, limitations, or other indications of
discrimination based on handicap (i.e., no wheelchairs). Advertisements
containing descriptions of properties (great view, fourth-floor walk-
up, walk-in closets), services or facilities (jogging trails), or
neighborhoods (walk to bus-stop) do not violate the Act. Advertisements
describing the conduct required of residents (``non-smoking'',
``sober'') do not violate the Act. Advertisements containing
descriptions of accessibility features are lawful (wheelchair ramp).
5. Familial status.--Advertisements may not state an explicit
preference, limitation or discrimination based on familial status.
Advertisements may not contain limitations on the number or ages of
children, or state a preference for adults, couples or singles.
Advertisements describing the properties (two bedroom, cozy, family
room), services and facilities (no bicycles allowed) or neighborhoods
(quiet streets) are not facially discriminatory and do not violate the
Act.
Please contact Sara K. Pratt, Director, Office of Investigations or
Susan Forward, Deputy Assistant Secretary for Enforcement and
Investigations, for further information.
SECTION 8 FAIR SHARE VOUCHERS
Question. Mr. Secretary, HUD recently published on March 10th the
regulations that will govern the award of fair share vouchers. How do
these requirements differ from how HUD used to award fair share
vouchers?
Answer. In order to underscore the importance the Department places
upon effective and efficient management of the Section 8 programs by
Public Housing Authorities (PHA), the fiscal year 2000 Notice of Fund
Availability (NOFA) established more stringent threshold requirements
that PHAs with an existing program must meet in order to be eligible to
submit an application. These threshold requirements are a prerequisite
to a PHA reaching the review stage where its application would then be
rated under the NOFA's rating criteria. Examples of the more stringent
threshold requirements in fiscal year 2000 NOFA versus the ``fair
share'' NOFA in 1994 include an increase in the required certificate
and voucher lease-up rate from 85 percent to 90 percent, and automatic
disqualification of the application if the applicant has been debarred.
With this lone exception, the fiscal year 2000 NOFA, as amended on May
18, 2000, is substantially similar to the last ``fair share'' NOFA
published in fiscal year 1994.
Question. How were these new regulations and requirements developed
and what is the reason for any differences from prior requirements?
Answer. The more stringent threshold requirements imposed in this
year's Notice of Fund Availability (NOFA) arise from the Department's
continuing oversight and experience with the program, and concerns
noted by both the Department and the Congress regarding the incidence
of Public Housing Authority (PHA) program under-utilization. As noted
above, the fiscal year 2000 NOFA closely adheres to the 1994 ``fair
share'' NOFA.
Question. In particular, we understand that this new award formula
has reduced the emphasis on ``need'' as a criteria for making an
allocation of incremental vouchers. Were outside comments collected and
considered, and if so, to what extent?
Answer. ``Housing needs'' in this year's Notice of Fund
Availability (NOFA), as amended, are afforded the same weight as the
fiscal year 1994 Fair Share NOFA. This weighting was increased in the
May 18th NOFA amendment to parity with the 1994 NOFA as a result of
comments received from Congressional representatives, Public Housing
Authorities (PHA), and an organization representing PHAs.
Question. Also, please provide a chart of the proposed allocation
under the new regulations as compared to the last 3 years in which the
previous fair share requirements were used?
Answer. A comparison of the fiscal year 2000 fair share
distribution with the most recent three fair share distributions is
provided for your information as requested. During 1992-1994, the fair
share funds were allocated to each of the field offices where the
application review and selection process was conducted. Starting in
fiscal year 1999, this process is centralized in the Grant Management
Center and the available funds are now fair shared to the HUD State
offices for suballocation.
SECTION 8 ALLOCATION
----------------------------------------------------------------------------------------------------------------
Fiscal years--
HUD Office ---------------------------------------------------------------
1992 1993 1994 2000
----------------------------------------------------------------------------------------------------------------
Boston, Massachusetts........................... $27,333,770 $40,283,741 $38,398,961 $12,456,208
Hartford, Connecticut........................... 10,938,225 17,682,339 16,854,723 4,676,595
Manchester, New Hampshire....................... 7,647,715 9,884,600 9,421,767 1,162,548
Providence, Rhode Island........................ 3,126,325 5,516,955 5,258,799 1,753,494
Maine........................................... .............. .............. .............. 1,304,156
Vermont......................................... .............. .............. .............. 771,380
Buffalo, New York............................... 14,343,710 22,050,566 21,018,739 ..............
New York, New York.............................. 86,396,880 145,990,084 139,158,680 ..............
New York........................................ .............. .............. .............. 57,048,507
Newark, New Jersey.............................. 28,872,470 49,116,756 39,029,408 12,981,233
Delaware........................................ .............. .............. .............. 663,416
Baltimore, Maryland............................. 8,700,130 14,246,528 13,579,882 ..............
Maryland/D.C.................................... .............. .............. .............. 7,250,808
Charleston, West Virginia....................... 3,435,150 4,326,916 4,124,446 1,430,622
Philadelphia, Pennsylvania...................... 19,425,085 31,952,008 30,456,864 ..............
Pittsburgh, Pennsylvania........................ 7,605,025 11,758,164 11,207,956 ..............
Richmond, Virginia.............................. 8,576,665 12,563,658 11,975,758 5,404,073
Washington D.C.................................. 12,574,955 21,298,947 20,302,293 ..............
Pennsylvania.................................... .............. .............. .............. 14,791,053
Atlanta, Georgia................................ 12,132,235 17,512,207 10,092,747 6,522,548
Birmingham, Alabama............................. 6,259,470 9,179,087 8,749,565 2,998,660
Carribean Office................................ 5,509,880 8,295,312 7,907,138 2,902,466
Columbia, South Carolina........................ 4,925,230 6,918,479 6,594,738 2,713,819
Greensboro, North Carolina...................... 10,164,280 13,979,053 13,324,927 5,908,423
Jackson, Mississippi............................ 4,661,515 5,500,811 5,243,399 1,894,043
Jacksonville, Florida........................... 22,061,785 38,059,737 36,278,784 13,396,457
Louisville, Kentucky............................ 6,341,045 8,455,756 8,060,077 3,003,250
Knoxville, Tennessee............................ 2,716,360 4,053,689 3,864,000 ..............
Nashville, Tennessee............................ 5,352,405 8,043,878 7,032,006 ..............
Tennessee....................................... .............. .............. .............. 4,026,565
Chicago, Illinois............................... 34,212,580 55,942,844 53,325,075 16,635,009
Cincinnati, Ohio................................ 5,014,945 7,904,856 7,534,960 ..............
Cleveland, Ohio................................. 9,732,400 15,677,798 14,944,178 ..............
Columbus, Ohio.................................. 4,975,880 7,313,556 6,970,378 ..............
Ohio............................................ .............. .............. .............. 12,346,480
Detroit, Michigan............................... 11,335,885 18,362,838 17,503,578 10,673,680
Grand Rapids, Michigan.......................... 5,158,135 7,313,277 6,970,492 ..............
Indianapolis, Indiana........................... 8,099,740 12,258,621 11,684,997 4,820,548
Milwaukee, Wisconsin............................ 8,486,820 14,522,144 13,842,595 6,178,218
Minneapolis, Minnesota.......................... 8,513,845 12,870,342 12,268,096 4,248,602
North Dakota.................................... .............. .............. .............. 584,150
South Dakota.................................... .............. .............. .............. 729,568
Fort Worth, Texas............................... 15,355,330 23,459,608 21,273,603 ..............
Houston, Texas.................................. 7,503,520 12,426,209 11,844,738 ..............
Little Rock, Arkansas........................... 3,868,995 4,933,989 4,703,102 1,685,154
New Orleans, Louisiana.......................... 8,961,110 12,649,543 12,057,626 4,117,360
Oklahoma City, Oklahoma......................... 4,694,415 6,161,940 5,873,603 2,370,698
San Antonio, Texas.............................. 7,390,955 11,234,597 9,295,150 ..............
New Mexico...................................... .............. .............. .............. 1,276,507
Texas........................................... .............. .............. .............. 18,465,474
Des Moines, Iowa................................ 5,059,970 6,598,054 6,289,307 2,636,009
Kansas City, Missouri........................... 6,888,030 10,124,217 9,650,470 4,419,025
Omaha, Nebraska................................. 2,615,555 3,513,222 3,348,910 1,509,926
St. Louis, Missouri............................. 5,250,360 7,750,766 7,388,082 ..............
Idaho........................................... .............. .............. .............. 790,875
Kansas.......................................... .............. .............. .............. 1,964,068
Montana......................................... .............. .............. .............. 799,469
Wyoming......................................... .............. .............. .............. 349,048
Denver, Colorado................................ 13,553,495 19,152,407 18,255,790 4,344,651
Utah............................................ .............. .............. .............. 1,525,394
Honolulu, Hawaii................................ 5,246,810 8,137,064 7,756,300 2,395,085
Los Angeles, California......................... 76,242,830 119,271,894 121,397,995 59,653,051
Phoenix, Arizona................................ 5,440,360 7,500,192 7,149,233 3,891,871
Sacramento, California.......................... 5,417,265 8,687,681 8,281,153 ..............
San Francisco, California....................... 38,790,070 64,197,064 61,193,051 ..............
Nevada.......................................... .............. .............. .............. 1,611,636
Anchorage, Alaska............................... 1,107,395 1,520,386 1,449,244 ..............
Portland, Oregon................................ 9,281,635 12,953,101 12,346,978 4,050,157
Seattle, Washington............................. 10,373,565 15,974,473 15,226,969 7,431,525
---------------------------------------------------------------
Total..................................... 647,672,205 1,015,081,954 957,761,310 346,563,562
----------------------------------------------------------------------------------------------------------------
INCREASED HUD INVENTORY OF SINGLE FAMILY FORECLOSED PROPERTY
Question. While the FHA Mutual Mortgage Insurance Fund is presently
in good financial condition, FHA's inventory of single family homes
that HUD has foreclosed on and taken ownership of has more than doubled
under your tenure from 24,395 homes in 1996 to over 47,000 homes
currently, despite the fact that this subcommittee has provided
significant new tools, including a Single Family Property Disposition
program as part of the VA/HUD fiscal year 1999 Bill, to move this
housing into the hands of non-profits and homeowner.
Answer. HUD has in fact reduced the rate at which it acquires
foreclosed properties (a 7 percent decline over last fiscal year). This
drop reflects both an improved economy, enhancements to the
Department's underwriting standards, and the very positive effect of
HUD's explosive loss mitigation program, which supports foreclosure
avoidance actions by borrowers and lenders.
There is no doubt that poor housing market conditions in the late-
1990s adversely impacted many homeowners, especially the lower income
families which FHA serves. The increase in defaults, foreclosures and
new HUD home acquisitions in the late-1990s was similar to a trend in
the late-1980s, when HUD's inventory of foreclosed homes increased from
26,000 in 1985 to 54,000 in 1989. What has differed is the
effectiveness of HUD's response in addressing both individual and
community needs.
New property disposition tools are designed to use private sector
skills to improve disposition approaches once properties are acquired.
Remarkably, under HUD's new Management and Marketing (M&M) strategy
this recent growth in the portfolio due to higher acquisition rates has
been swiftly addressed, and through August 2000 the Department had
reduced its inventory to 35,000 homes. A similar reduction in inventory
in the early 1990s took 2\1/2\ years to accomplish, while the same
reduction was realized in nearly half the time thanks to HUD reform
measures.
While accomplishing this inventory reduction, HUD has been careful
to meet its fiscal responsibilities and employ Congressional
authorizations for community reinvestment. The Department invests an
average of $10,000 per property in holding costs over a 5-month
period--it's average time in inventory. In the first 6 months of fiscal
year 2000, HUD recovered 65 percent of the insurance claim paid to
acquire a property. Through PD Reform measures, recoveries on claims
paid have increased an average of $4,000 per property over the prior
12-month period. As the portfolio of HUD-held properties declines, the
Department has made inroads in disposing of its hard-to-sell
properties, reducing its homes in inventory for more than 6 months by
12 percent.
Question. Why the big increase in foreclosures and why has HUD
failed to implement effectively the Single family Property Disposition
program?
Answer. The surge in foreclosures which was experienced last year
resulted to a great degree from a loss of home equity in certain parts
of the country, most notably southern California and the New England
states. The Department provides a broad safety net to help more
homeowners avoid foreclosures, even in less than favorable market
conditions. Further, the Department has employed new tools and new
approaches to dramatically reduce the inventory of HUD-held homes.
FHA has taken steps to tighten lax underwriting standards existing
prior to 1996, most particularly regarding adjustable rate mortgages.
The Department is now beginning to realize the benefits of this change,
as default and foreclosure rates decline. Further, the success of FHA's
loss mitigation program has been proven by the ability this program has
had in avoiding foreclosures and helping to keep homeowners in their
homes. During fiscal year 1999, FHA paid over 26,000 loss mitigation
claims, nearly 2\1/2\ times the number paid in the previous fiscal
year. Through August 2000, fiscal year to date loss mitigation activity
has increased by 35 percent, and the number of foreclosure avoidance
actions is expected to exceed 35,000 for fiscal year 2000. Over 85
percent of all of FHA loss mitigation actions not only help homeowners
avoid foreclosure, it enables them to remain in their home while these
families work to overcome the financial difficulty which caused them to
default on their mortgage.
HOLDING PERIOD FOR HUD-OWNED HOUSING
Question. Mr. Secretary, it is very troubling that from between
April 1999 and January 31, 2000, the percentage of properties in HUD's
single family inventory for 6 months or more has increased from 30
percent to 41 percent of the inventory, and the percentage of
properties in the inventory for more than 12 months has increased from
10 percent to 17 percent.
This HUD failure is a disaster for neighborhoods. In particular,
when the Federal government steps in to take over a property from a
failing landlord, or becomes the owner of a house down the street
through foreclosure, we expect that through foreclosure, we expect that
things will start to improve; that repairs will be made, lawns mowed,
and broken windows fixed. What we don't expect is that the housing
conditions will deteriorate even further, that property values will
fall in the neighborhood, and that in some instances the property will
become a HUD-owned crack house. It is this failure to maintain and
dispose of its foreclosed inventory in the 1980s on the part of HUD
that destroyed a number of neighborhoods throughout the country--a
number of these neighborhoods remain distressed even today. I also know
that you saw examples of these failures at the field hearing in
Baltimore on Monday.
What is the average cost to the Federal government to hold a
property for 6 months? What is the average cost to the Federal
government to hold a property for a year? What was the total in holding
cost for each of fiscal years 1997, 1998, 1999 and the first half of
2000?
What is the average loss in value to a house that is held by HUD
foreclosed properties to local jurisdictions. While it sounds good, it
looks like HUD is merely clearing its books while passing on troubled
properties to jurisdictions. Why can't HUD take care of its own
responsibilities and problems?
Answer. As stated above, the time a property is held in HUD's
inventory has decreased by 13 percent over the past 12 months. Of HUD's
current inventory, 49 percent is currently under a sales contract. In
May 2000, HUD acquired 5,164 properties and placed 10,481 under a sales
contract. The appraised value of HUD homes has increased by 12 percent
from the previous year, with a net recovery rate increase of 4.6
percent. The value the real estate market places on HUD homes is the
best indicator of overall improvements in the condition of HUD homes.
These homes are often in poor condition when HUD acquires them, but
aggressive maintenance and repair efforts under PD Reform are helping
to swiftly transform the tragedy of foreclosure into the opportunity of
homeownership.
To accomplish this objective FHA invests an average of $10,267 per
property in holding costs over a 5-month period--it's average time in
inventory. FHA currently recovers 65 percent of the insurance claim
paid to acquire a property. Through PD Reform measures, recoveries on
claims paid have increased an average of $4,000 per property over the
prior 12-month period.
Before FHA dramatically reduces prices on its hard-to-sell
properties, it wants to offer a partnership with local governments in
transforming a house acquired from the tragedy of foreclosure into a
home and a community asset. Local governments are better positioned to
ensure that communities not only find a new neighbor to occupy a vacant
home, but a good neighbor. This can mean specific uses for homes such
as community centers, or police sub-stations, or rehabilitated
properties consistent with local standards. If local governments are
not interested in purchasing a house because of its poor condition, FHA
will also consider demolishing the home, and offer the land to local
governments, for use as parkland or to meet similar community needs.
FHA estimates that sales to local governments will make of 1 percent of
its overall sales. An estimate of 10 percent of HUD home sales will
fall into the Good Neighbor program, 1 percent of which is estimated to
go to local governments.
FHA SINGLE FAMILY FORECLOSURE RATES
Question. Mr. Secretary, the percent of FHA loans in foreclosure
has increased from 1.64 percent in 1996 to 2.2 percent in 1999. FHA's
loan delinquencies has also increased from 8.05 percent in 1996 to 8.57
percent in 1999, whereas the delinquency rate for conventional loans is
some 2.63 percent. Why are these delinquency and default rates so high?
What is HUD doing to lower them?
Answer. The FHA claim rate is quite lower than the 2.2 that is
often cited. The rate has remained relatively unchanged at
approximately 1.1 percent over the last 2 years, according to
information from the Mortgage Bankers Association.
The figure of 8.57 percent rate reflects a 30-day rate. Most
independent industry analysts focus primarily on 90-day defaults in
evaluating performance. Independent analysts of FHA activity focus on
the more serious 90-day default figures, which indicate a default rate
of between 3 and 3.5 percent over the last several years. FHA's default
rate has been steadily declining during this entire fiscal year--as of
April 30, the default rate stood at 3.3 percent. That equals a 4
percent reduction from 1 year ago, when the rate stood at 3.46 percent.
Question. In addition, I have a huge concern that we are in a
policy mode of putting families in homes without regard to whether they
can afford to maintain the home. Isn't it likely that we are going to
see a lot of families lose their homes if there is a downturn in the
economy, and that this will destroy the credit of these families? What
policies does HUD have in place to address this potential set of
problems?
Answer. HUD seriously considers the likelihood of a person's
ability to maintain a home when someone applies for an FHA loan. The
criteria are fairly straightforward but serve as qualifications or
indicators. They are: having the income HUD believes to be necessary to
support the mortgage payment and pay other obligations; having an
acceptable (if not perfect) credit history that indicates a willingness
to repay obligations. A downpayment of at least 3 percent of the sales
price is also considered a sign of the ability to maintain the
household.
It is difficult to speculate about a possible economic downturn,
but there are loss mitigation tools that can assist a mortgage holder
who may have difficulty making payments. These tools are designed for
lenders to use to maintain ownership when families have a change of
circumstance. There are three tools that are particularly helpful for a
family that is trying to avoid foreclosure while retaining possession
of their home. They are:
--Special forbearance.--Written repayment agreement between a lender
and a mortgagor which contains a plan to reinstate a loan that
has been delinquent--FHA reduced its minimum delinquency
requirement from 4 months to 90 days to make this option more
attractive for lenders. This option provides the family the
chance to repay the money owed while allowing the borrower to
recover from the cause of the default.
--Loan modification.--A permanent change in one or more of the terms
of a borrower's loan which, if made, allows the loan to be
reinstated and results in payment the borrower can afford.
Modifications may include a change in the interest rate;
capitalization of delinquent principal, interest or escrow
items; extension of time available to repay the loan; and/or
re-amortization of the balance due.
--Partial claim.--A lender will advance funds on behalf of a borrower
in an amount necessary to reinstate a delinquent loan(not to
exceed the equivalent of 12 months PITI). The borrower, upon
acceptance of the advance, will execute a promissory note and
subordinate mortgage payable to HUD.
There are two options for the family that is unable to use the
three tools described above, but who is looking for an option less
harmful to its credit rating than a foreclosure. The first of these is
the pre-foreclosure sale, which allows a borrower in default to sell
his or her home and use the sale proceeds to satisfy the mortgage debt
even if the proceeds are less than the amount owed. This option is
appropriate for borrowers whose financial situation requires that they
sell their home, but who are unable to sell without FHA relief, because
the value of the property has declined to less than the amount owed on
the mortgage.
Borrowers must make a commitment to actively market their property
for a period of 4-to-6 months, during which time the lender delays
foreclosure action. Owner-occupant borrowers who successfully sell to a
third party within the required time, are paid a cash consideration up
to $1,000. Lenders also receive a $1,000 incentive for successfully
avoiding the foreclosure. Since the pre-foreclosure sale was introduced
in 1994, it has helped thousands of borrowers in default avoid
foreclosure and make a smooth transition to more affordable housing.
If the property does not sell, borrowers are encouraged to convey
the property to FHA through a deed-in-lieu of foreclosure. Deed-in-lieu
of foreclosure (DIL) is a disposition option in which a borrower
voluntarily deeds collateral property to HUD in exchange for a release
from all obligations under the mortgage. Though this option results in
the borrower losing the property, it is usually preferable to
foreclosure because the borrower mitigates the cost and emotional
trauma of foreclosure and is eligible to receive borrower's
consideration of $500. Also, a DIL is generally less damaging than
foreclosure to a borrower's ability to obtain credit in the future. DIL
is preferred by HUD because it avoids the time and expense of a legal
foreclosure action, and due to the cooperative nature of the
transaction, the property is generally in better physical condition at
acquisition.
FHA STAFF
Question. Please identify the HUD staff assigned to the FHA single
family and multifamily housing programs by program, function and salary
for fiscal years 1992 through 2000. Please identify all contracts,
including individual contractors, for activities under the FHA single
family and multifamily housing programs by program, activity and cost
for fiscal years 1992 through 2000. Please identify all contracts that
were not competitively bid during this period.
Answer. The Department has assembled payroll and contract data in
response to this request which will be transmitted to the Committee.
HUD STAFFING
Question. Mr. Secretary, HUD has a very old and expensive workforce
which has gone from 12,000 employee in 1995 to 9,100 today. In 1995,
the average cost per FTE was $58,000. The cost per FTE then rose to
$78,000 by the end of 2000.
Mr. Secretary, I think you know how unhappy I am with HUD's lack of
capacity to administer its programs. I also believe there is a
tremendous need to ensure that staff capacity is tied to program needs.
Please identify the specific components which make up the growth in FTE
costs in each fiscal year from 1995 through fiscal year 2000.
Answer. Like most Federal agencies, HUD has undergone increased FTE
costs due, in part, to natural changes in the workforce. The Agency has
incurred increased costs as a result of the following responsibilities
and obligations as a Federal employer:
Employee Benefits
Cost of Living Adjustments.
Percent
1995.............................................................. 2
1996.............................................................. 2
1997.............................................................. 2.3
1998.............................................................. 2.3
1999.............................................................. 3.1
2000.............................................................. 3.8
Spending for health benefits continues to grow.
Increasing numbers of HUD's staff are covered under the Federal
Employees Retirement System (FERS). These costs to the Agency are more
significant due to the 1 percent agency contribution and the government
matching funds for employee contributions to the Thrift Savings Plan
(TSP).
Employee Transit Subsidy.
Quality Step Increases for employee recognition.
In general, employees are working longer.
Legislative Mandate for Office of Multifamily Housing Assistance
Restructuring (OMHAR)
As of May 2000, OMHAR has 82 staff onboard. Pay is Administratively
Determined (AD) at a rate that is significantly higher than the General
Schedule.
Question. What does HUD plan to do to address the growing costs of
FTE's at HUD as well as the need to develop a young infrastructure of
staff that will grow with HUD's programs?
Answer. We have established and implemented a Departmental
Succession Plan which focuses heavily on targeting critical position
needs and filling those positions with available qualified staff from
within, utilizing in particular, staff in developmental programs. We
are encouraging managers and supervisors to identify more positions for
developmental opportunities so that aspiring employees, demonstrating a
potential for more challenging assignments, may advance to address the
Department's future critical needs. We are using more targeted
recruitment for external hiring. We also are encouraging managers to
examine and reengineer positions to capture the most essential job
elements and maximize the performance of the work at the lowest grade
levels. We are continuing to support the Agency's ability to exercise
the Voluntary Early Out Retirement Authority, as well as, reconsidering
the benefits of another Buyout Program.
To ensure that the appropriate talent exists to carry out HUD's
revitalized mission, well into the future, executives, managers, and
supervisors have examined the human potential of their organizations.
We are actively developing an increased capacity by utilizing several
key programs and staffing activities. A majority of the candidates for
these programs represent a developing younger infrastructure of staff
within the Department.
For entry level positions, the Welfare to Work Program has yielded
over 200 hires (Worker Trainees). Immediately, these hires were
assigned to fill much-needed clerical support positions and placed in
an extensive training and development program. By providing high
quality training and skills development opportunities, we expect these
employees will build their skills and be committed to working for the
Department well into the 21st century.
Also, to ensure a steady recruitment source of candidates for
worker trainee positions, HUD supports a strong Work Experience
Program. Under this program, candidates volunteer to work in the
Department to gain experience in various clerical and office management
functions. These volunteer opportunities prepare them to compete for
entry level positions. This program has attracted a younger cadre of
interested candidates, many of whom have subsequently joined the HUD
staff as permanent hires.
The Bridge Positions Program provides advance opportunities for
employees who have completed the Worker Trainee Development program.
Through merit staffing, this program offers career progression from GS-
4 into one-grade interval positions at GS-5/6/7. Typical positions
include office automation assistants; management assistants; program
assistants; and personnel assistants.
The Professional Development Institute for HUD Assistants provides
opportunities for HUD Assistants and other staff in developmental
positions to gain technical skills for advancement into non-clerical
technical positions. Established in 1997, this program has been both
successful and rewarding for 1,215 employees who were committed and
motivated for advancement (815 Assistants; 200 Upward Mobility
candidates; and 200 Worker Trainees).
The Upward Mobility Program provides opportunities for existing
staff with clerical and technical one-grade interval positions to move
into more responsible two-grade interval positions. Since 1998, HUD has
filled 209 upward mobility positions and 73 candidates have graduated
the program into targeted positions.
The Leadership Development Program for executives, managers and
supervisors strengthens their ability to lead and manage in an agency
undergoing dynamic and constant change as a result of HUD 2020 reforms.
This program also contains a module for aspiring managers and
supervisors. It allows eligible employees, with leadership potential,
to develop core competencies and team building skills.
The new Senior Executive Service Candidacy Program will prepare a
cadre of managers for executive level assignment in HUD's most
responsible career positions.
The current Staffing 2000 Initiative is a major recruitment effort
to attract highly qualified candidates for permanent employment with
the Department. Approximately 700 full time positions, in a wide range
of administrative and professional series occupations, will be filled
throughout the Department. The recruitment outreach was very broad, and
it is likely that these employment opportunities will draw more staff
for a younger infrastructure.
Finally, as part of succession planning, using the above training
programs, HUD is developing career paths for qualified employees to
move from entry level positions into responsible specialist and
leadership positions. These career development opportunities will be
very attractive for workers who are far from retirement and seeking
both permanence and longevity in a Federal career.
Question. Also, for the record, please provide a 5 year comparison
of staffing by GS level, salary, office and job responsibility.
Answer. An attachment has been provided that provides a 5-year
comparison of staffing by GS level, salary, office and job
responsibility.
MCKINNEY HOMELESS ASSISTANCE PROGRAMS
Question. Mr. Secretary, there are a lot of issues that we need to
look at in the McKinney Homeless Assistance programs over the next few
months. I have serious concerns over how well continuums of care work
as well as concerns about HUD's oversight of the homeless assistance
programs. A number of homeless assistance programs also face serious
funding problems.
As you know, HUD funds local McKinney Homeless Assistance programs
through a block grant funding formula allocation that is not authorized
under the Supportive Housing program or the Shelter Plus Care program.
This approach depends on local convenors to identify local homeless
priorities through a continuum of care but the funding formula itself
uses no indicators of need that are associated with homeless issues and
concerns. How does HUD justify this approach outside the argument that
the formula is already used for Emergency Shelter Block Grant program?
Answer. HUD does not fund McKinney Homeless Assistance programs
through a block grant formula, but rather a competition which uses the
Emergency Shelter Grant formula as the basis for determining relative
need to ensure a more equitable distribution of dollars to those
communities which successfully compete for funding. The actual
determination of who receives funding is based on various selection
criteria mandated by Congress, including: capacity of the applicant,
the extent of supplemental resources provided by the applicant, the
cost-effectiveness of the project, the extent to which the applicant
has demonstrated coordination with other entities, and the need for the
project.
You raised a concern that the formula used to assign need uses no
indicators associated with homelessness. There is no precise measure of
homeless need because homeless persons are difficult to regularly
enumerate. As such, HUD looked to Congress for direction on how best to
reflect need in selecting projects. The McKinney Act requires that the
allocation of Emergency Shelter Grant Program (ESG) funds shall be made
using the Community Development Block Grant (CDBG) formula factors. The
factors are population, poverty, housing overcrowding, growth lag, and
age of housing. Given that Congress directed HUD to use these factors
in allocating ESG funds for homeless persons, the Department chose to
follow this lead and use these same factors in assigning need for the
HUD's competitive McKinney programs.
Question. What oversight procedures does HUD have in place to
ensure that the continuum of care approach provides appropriate
decisionmaking?
Answer. Several components of the continuum of care process
facilitate appropriate decision making at the community level. First,
each community must include, in their funding application, a list of
the names and types of organizations that were part of their planning
process. This list includes the populations served by each organization
and the level of participation of each entity. Second, communities must
provide a description of the process and rationale used for
establishing the community's priorities. Finally, a description must be
included that shows how the project selection process was fair and gave
equal consideration to projects proposed by nonprofit organizations.
These components are evaluated, as part of HUD's review of
applications, and communities that do not address these components may
not receive funding.
Question. What oversight procedures does HUD have in place to
ensure that funds are being used appropriately?
Answer. The Department does a number of things to ensure that funds
are being used appropriately. First, grantees receive funds through an
automated voice response letter of credit system. The system contains
checks and balances so that payments are made only after certain
requirements are satisfied. Each grantee must submit an Annual
Performance Report (APR) to HUD. If the APR is not submitted after 110
days, the letter of credit system is edited so that grantees may not
draw down funds. The APR is reviewed at the field office and
Headquarters levels.
Both on and off-site monitoring is a critical part of grant
oversight. Field office staff perform the monitoring, using written
standards and procedures. Results of monitoring are issued in writing
to the grantee, and the monitoring process includes follow-up.
Expert technical assistance is available to grantees that may be
having specific problems in implementing their projects. The Department
oversees the provision of technical assistance by subcontractors.
Grantees applying for renewal funding must meet threshold
eligibility and capacity standards. Monitoring results, audits, general
oversight and other information are taken into account in determining
whether a renewal grantee meets these threshold standards.
Question. Please identify for each of fiscal years 1998, 1999 and
2000 all HUD staff (by name, title and responsibility) that are
responsible for the oversight of McKinney Homeless Assistance funds in
each HUD region and at headquarters.
Answer. The following is the listing of Headquarters employees and
the geographic areas for which they are responsible in administering
HUD's homeless assistance programs.
Attached is ``Report 1'' which details the staffing for each CPD
Field Office with responsibility for McKinney Homeless Assistance
programs. There are 233 CPD staff in Field Offices working on homeless
assistance programs. Their titles are provided. However, it is
important to note that CPD Field Office staff are generalists. CPD
staffers that work on McKinney Act programs also have numerous other
responsibilities. While CPD Field Office staff are not dedicated solely
to McKinney Homeless Assistance programs, each of the persons listed
below has considerable experience in these programs and maintains
personal responsibility for various grants.
SNAPs HEADQUARTERS STAFF AND RESPONSIBILITIES
----------------------------------------------------------------------------------------------------------------
Fiscal years--
Region/State Current (fiscal year -------------------------------------------------
2000) 1999 1998
----------------------------------------------------------------------------------------------------------------
New England:
MA............................. Robin Raysor............. Robin Raysor........... Robin Raysor.
RI............................. Betty Nola............... Betty Nola............. Betty Nola.
ME............................. Gloria Montgomery........ Robin Raysor........... Robin Raysor.
VT............................. Gloria Montgomery........ Robin Raysor........... Robin Raysor.
NH............................. Gloria Montgomery........ Robin Raysor........... Robin Raysor.
CT............................. Marian Jones............. Marian Jones........... Marian Jones.
New York, New Jersey:
Buffalo, NY.................... Marian Jones............. Marian Jones........... Marian Jones.
NYC............................ Allison Manning.......... Michelle Smith......... Michelle Smith.
NJ............................. Tonya Johnson............ Tonya Johnson.......... Susana Limon.
Mid-Atlantic.......................
Washington, DC................. Robin Raysor............. Robin Raysor........... Robin Raysor.
Alexandria; Arlington, Fairfax, Tonya Johnson............ Tonya Johnson.......... Susana Limon.
Prince George's, Montgomery, Robin Raysor............. Robin Raysor........... Robin Raysor.
Loudoun, Prince William Mary Douglas.
Counties, Southern VA.
MD............................. Alma Thomas.............. Alma Thomas............ Alma Thomas.
PA, DE, WV..................... Rebecca Wiley............ Rebecca Wiley.......... Rebecca Wiley.
Southeast:
MS............................. Vanessa Barnard.......... Vanessa Barnard........ Alma Thomas.
SC............................. Vanessa Barnard.......... Vanessa Barnard........ Alma Thomas.
FL............................. Alma Thomas.............. Alma Thomas............ Alma Thomas.
NC............................. Kathy Burruss............ Kathy Burruss.......... Kathy Burruss.
AL............................. Kathy Burruss............ Kathy Burruss.......... Kathy Burruss.
GA............................. Kathy Burruss............ Kathy Burruss.......... Kathy Burruss.
KY............................. Gloria Montgomery........ G. Montgomery.......... G. Montgomery.
TN............................. Gloria Montgomery........ G. Montgomery.......... G. Montgomery.
Caribbean: Puerto Rico, VI......... Susana Limon............. Susana Limon........... Michelle Smith.
Midwest:
IL............................. Mike Roanhouse........... Mike Roanhouse......... Mike Roanhouse.
IN............................. Susana Limon............. Susana Limon........... Susana Limon.
OH............................. Delores Randall.......... Delores Randall........ Delores Randall.
MI............................. Elaine Braverman......... Elaine Braverman....... Mike Roanhouse.
WI............................. Mike Roanhouse........... Mike Roanhouse......... Mike Roanhouse.
MN............................. Larry Blume.............. Larry Blume............ Alexa Mitrakos.
Southwest:
Southern TX (San Antonio)...... Vanessa Barnard.......... Mary Douglas........... Mary Douglas.
Northern TX (Fort Worth)....... Susana Limon............. Mary Douglas........... Mary Douglas.
OK............................. Susana Limon............. Mary Douglas........... Marv Douglas.
NM............................. Susana Limon............. Mary Douglas........... Mary Douglas.
AR............................. Delores Randall.......... Betty Nola............. Betty Nola.
LA............................. Elaine Braverman......... Betty Nola............. Betty Nola.
Great Plains:
KS............................. Marian Jones............. Marian Jones........... Marian Jones.
NE............................. Marian Jones............. Marian Jones........... Marian Jones.
IA............................. Marian Jones............. Marian Jones........... Marian Jones.
MO............................. Elaine Braverman......... Elaine Braverman....... Marian Jones.
Rocky Mountain:
Denver, CO..................... Polly Cooper............. Polly Cooper........... Polly Cooper.
CO............................. Polly Cooper............. Alexa Mitrakos......... Alexa Mitrakos.
MT............................. Polly Cooper............. Alexa Mitrakos......... Alexa Mitrakos.
ND, SD......................... Polly Cooper............. Alexa Mitrakos......... Alexa Mitrakos.
UT, WY......................... Polly Cooper............. Alexa Mitrakos......... Alexa Mitrakos.
Pacific, Hawaii:
Northern CA, HI................ Allison Manning.......... Allison Manning........ Allison Manning.
Southern CA.................... Beverly Moore............ Beverly Moore.......... Beverly Moore.
AZ, NV......................... Susana Limon............. Susana Limon........... Susana Limon.
Northwest, Alaska:
WA, AK......................... Larry Blume.............. Larry Blume............ Larry Blume.
OR, ID......................... Mildred Bush............. Mildred Bush........... Mildred Bush.
----------------------------------------------------------------------------------------------------------------
REPORT 1.--MCKINNEY HOMELESS ASSISTANCE INFORMATION FOR SENATE REQUEST
----------------------------------------------------------------------------------------------------------------
Field Office Continuum of Care Staff Number Fiscal Year 1998 Monitoring
----------------------------------------------------------------------------------------------------------------
Alabama........................ Beverly Gosnell, Public Trust Officer..... Huntsville/Madison County.
Ed Coberly, Public Trust Officer.......... New Futures.
Charles Franklin, Public Trust Officer.... City of Huntsville.
June Franklin, Public Trust Officer.......
Steve Hand, Public Trust Officer..........
Dale Richards, Public Trust Officer.......
David Roarke, Public Trust Officer........
Alaska......................... Andrew Smith, Senior CPD Rep.............. None.
Kim Davis, CPD Rep........................
Arkansas....................... Anne Golnik, Director..................... None.
Charles Blevins, Senior CPD Rep...........
Danny Carter, Senior CPD Rep..............
Freida Nunez, CPD Rep.....................
Rhonda Shannon, CPD Rep...................
Buffalo........................ James Bates, CPD Rep...................... None.
Tom Perl, CPD Rep.........................
Barbara Barksdale, CPD Rep................
Gary Kerr, Financial Analyst..............
Ken Naples, Financial Analyst.............
Linda Moore, CPD Rep......................
Robert Guadagno, CPD Rep..................
Cheryl Sullivan, CPD Rep..................
Nancy A. Peacock..........................
Alex Vilardo, CPD Rep.....................
Nancy Lesakowski, CPD Rep.................
Rosemarie Canestro, CPD Rep...............
Eilene Krasselt, CPD Rep..................
Peggy Meinl, CPD Rep......................
Jan Galena, CPD Rep.......................
California..................... Millie D. Dusha, Senior CPD Rep...........
Mary Bandiera, CPD Rep.................... Center for Employment Training.
Rafael Cedillos, Senior CPD Rep........... Emergency Housing Consortium.
Maria Cremer, Program Manager............. Phoenix Programs, Inc.
Michael Dawe, CPD Rep..................... Resources for Community
Development.
John Enos, CPD Rep........................ Transitional Living and Community
Support.
Lou Kislin, Senior CPD Rep................ ...................................
Evelyn Lam, Financial Analyst.............
Dan Louie, Financial Analyst..............
Marty Mitchell, Program Manager...........
Winston Moy, CPD Rep......................
Lorraine Perez, Financial Analyst.........
Sandy Peters, Senior CPD Rep..............
Jimmy Prater, Deputy Director.............
Lillian Pyne, CPD Rep.....................
Ron Pagusa, Financial Analyst.............
Steven B. Sachs, Director.................
Yvonne Swift, Senior CPD Rep..............
Cathy Thrash, CPD Rep.....................
Angelo Tom, Program Support Director......
Larry Wuerstle, Senior CPD Rep............
Caribbean...................... Michele K. Smith, Senior CPD Rep.......... None.
Elinson Acosta, Senior CPD Rep............
Frances Arroyo, Senior CPD Rep............
Maria Guzman, Senior CPD Rep..............
Jose R. Rivera, Program Manager...........
Carmen R. Cabrera, Director...............
Colorado....................... Edward Atencio, CPD Rep................... None.
Karen Clark, CPD Rep......................
Ramona Elizalde, CPD Rep..................
Susan Hermanson, CPD Rep..................
Dave Jacops, CPD Rep......................
Jade Santoro, CPD Rep.....................
Loretta Tinkum, CPD Rep...................
Mary Ann Geissel, CPD Rep.................
Lyle Konkol, CPD Rep......................
Judy Padgett, CPD Rep.....................
Jade Santoro, Program Manager.............
Charles Kreiman, Program Manager..........
Connecticut.................... Mary Ellen Morgan, CPD Director........... None.
Caroline Carlson, Program Manager.........
John Carella, CPD Rep.....................
Gary Reisine, CPD Rep.....................
Peter Blomstrom, CPD Rep..................
Karen Davis, CPD Rep......................
Florida........................ Ann Chavis, Program Manager............... None.
Rafael Portuondo, CPD Rep.................
Jack D. Johnson, Director.................
Georgia........................ John Perry, CPD Director.................. Cobb Family Resources, Inc.
Russell Douglas, Program Manager.......... Metro Atlanta Task: Southside
Healthcare.
Earl Mecham, CPD Rep...................... Metro Atlanta Task: Housing
Initiatives.
Alma Cooper, CPD Rep...................... Alternate Life Paths Program, Inc.
Mary Presley, Senior CPD Rep.............. Our Common Welfare, Inc.
Stella Taylor, CPD Rep.................... Metro Atlanta Task: Fulton Atlanta
Comm.
Hak-Keun Chang, CPD Rep................... Calvary Refuge, Inc.
Charles Greenfield, CPD Rep............... House of TIME.
Hawaii......................... Mark A.Chandler, Senior CPD Rep........... None.
Richard L. Knight, CPD Rep................
Marsha E. Ito, CPD Rep....................
Robert Zurowski, CPD Rep..................
Illinois....................... Ray Willis, Program Manager............... South Side Office of Concern.
Perry Vietti, Program Manager............. Human Service Center.
Darlene O'Keefe, CPD Rep.................. City of Urbana.
Ray Canchola, CPD Rep..................... CEFS.
Valton Nunn, CPD Rep......................
Roger McMurray, CPD Rep...................
Wivina Stremel, CPD Rep...................
Winston McGill, CPD Rep...................
Darrel Bugajsky, CPD Rep..................
Belinda Twitty, CPD Rep...................
City of Rockford (SHP)....................
City of Rockford (SPC)....................
Community Mental Health...................
Peoria YMCA...............................
Crittenton Care...........................
Julian House..............................
Indiana........................ Robert F. Pofenberger, CPD Director....... City of Gary/The Ark.
Dolores Koziol, Program Manager...........
Jeanne Meggs, Program Manager.............
John Dorgan, Senior CPD Rep...............
Karen Bishop, Financial Analyst...........
Brent Isaacs, CPD Rep.....................
Patrick Phillips, CPD Rep.................
Jacksonville................... James N. Nichol, Director................. None.
Linda Dresdner, Public Trust Officer......
Duane Gilliland, Public Trust Officer.....
Sybil Grissett, Public Trust Officer......
Lance Folsom, Public Trust Officer........
Phil Tallon, Public Trust Officer.........
Kathy White, Public Trust Officer.........
Sandra Huey, Public Trust Officer.........
Larry Gordon, Program Manager.............
Gary Cuasey, Program Manager..............
Marion Guilford, Public Trust Officer.....
Susan McGeHee, Public Trust Officer.......
Lugia Milanese, Public Trust Officer......
Dan Shargas, Public Trust Officer.........
Linda Shively, Public Trust Officer.......
Debra Dye, Public Trust Officer...........
Elizabeth Dixon, Public Trust Officer.....
Kansas......................... William Boyd, Director.................... None.
Tom Corwin, Financial Analyst.............
Kentucky....................... Ben A. Cook, Director..................... Commonwealth of KY (KY Housing
Corp.).
Barbara Cottrell, Senior CPD Rep..........
Carol C. Beeler, CPD Rep..................
Louise D. Thompson, CPD Rep...............
Los Angeles.................... William K. Barth, Director................ None.
Sara Hunley, Senior CPD Rep...............
Jana Bickel, Senior CPD Rep...............
Juanita Villalobos, Public Trust..........
Harold Butler, CPD Rep....................
Sandra Taylor, CPD Rep....................
Wayne Itoga, Act., Program Manager........
Faye Barnes, CPD Rep......................
Salim Rahemtulla, CPD Rep.................
Chin Woo Choi, Program Manager............
Jean Prohoroff, CPD Rep...................
Joseph Lisante, CPD Rep...................
John Cook, Senior CPD Rep.................
Louisiana...................... Gregory J. Hamilton, Director............. None.
Maryland....................... Joseph O'Connor, Director................. None.
Ann Schenning, CPD Rep....................
Bob Cummings, CPD Rep.....................
Massachusetts.................. Richard L. Hatin, Program Manager......... None.
Katherine Baumgardner, CPD Rep............
Nicholas Kallan, Financial Analyst........
James Joyce, Rehab. Mgmt. Spec............
Mary Ann Martel, CPD Rep..................
Edwin Gleba, Reloc. Acq. Spec.............
Darlene Xintras, Program Support Spec.....
Michigan....................... R. Perry, Director........................ None.
M. Sykes, CPD Rep.........................
K. Kiihr, CPD Rep.........................
C. Patrick, CPD Rep.......................
G. Carter, CPD Rep........................
J. Roney, CPD Rep.........................
Minnesota...................... Thomas Koon, Program Manager.............. Gardner, Martin Hotel.
Doug Olson, CPD Rep....................... Mary Hall.
Dennis Williams, CPD Rep.................. YWCA.
Mary Burbank, CPD Rep..................... The Heritage.
John Swanson, Program Manager............. Human Dvlpt. Ct. and Range Mental
Hlth.
Cindy Behnke, Senior CPD Rep.............. Churches United in Ministry.
Maria Paulson, Senior CPD Rep............. Life Housing Harbor House.
Ruth Drolsum, CPD Rep..................... St. Louis County.
Gerald Patiuk, CPD Rep.................... Range Transitional Housing.
American Indian Housing
Organization.
Women's Transitional Housing of
Duluth.
Arrowhead Economic Opportunity
Agency.
Violence Intervention Project.
Mississippi.................... Donna Keshel, CPD Rep..................... None.
Linda F. Tynes, Senior CPD Rep............
Nebraska....................... Greg A. Bevirt, Director.................. None.
New Jersey..................... Kathleen A. Naymola, Director.............
Richard Kotuski, Program Manager.......... Bayonne.
Nelson Diamond, CPD Rep................... Newark.
Elizabeth Williams, CPD Rep...............
Pa-Kota Cobb, Program Assistant...........
New Mexico..................... Thomas Walker, Program Manager............ Town of Taos Community Against
Violence.
St. Elizabeth's Shelter.
Mesilla Valley Homeless Shelter.
Albuquerque Health Care for the
Homeless.
Catholic Social Services.
New York City.................. Kathy J. Mullins, Director................
Michael Litvin, CPD Rep................... Westchester County.
Bob Biegen, CPD Rep....................... Mount Vernon.
Lois De Poalo, CPD Rep.................... Rockland County.
Seth Margolies, CPD Rep................... Yonkers.
Melissa Lockley, CPD Rep.................. Islip.
Kevin Crean, Program Manager.............. Nassua County.
Stefanie Chait, CPD Rep................... Suffolk County.
Vincent Hom, CPD Rep......................
Barbara Maultsby, CPD Rep.................
Robert Cooper, CPD Rep....................
Nicholas Andreo, CPD Rep..................
North Carolina................. Libby G. Stanley, Program Coordinator..... Hope Haven.
Gary A. Dimmick, Program Manager.......... City of Charlotte.
Charles T. Ferebee, CPD Director.......... Interlace.
Ohio........................... Brenda Pinkston, CPD Rep.................. Springfield.
Vicki Miller, Public Trust Officer........ Jefferson County Community (SRO).
Johanna Ryan, CPD Rep..................... Beatitude House.
David Fekete, Program Manager............. Youngstown Area Community Action
Coun.
Kaye Smith, CPD Rep....................... Potential Development Programs,
Inc.
Rich Hendershot, Program Manager.......... The Greater Youngstown Point
Cheryl Andrews, CPD Rep................... YWCA of Youngstown.
Rob Milburn, Public Trust Officer......... City of Cincinnati.
Larry Goodwin, Public Trust Officer....... Jefferson County Community (SHP).
Jorgelle Lawson, Program Manager.......... Metropolitan Residential Services.
Oklahoma....................... Ivan Wisley, CPD Rep...................... None.
Richard McConahay, CPD Rep................
Will Williamson, Senior CPD Rep...........
Oregon......................... Doug Carlson, Director....................
Jan Olson, Financial Analyst.............. Multnomah County.
Philadelphia................... Joyce Gaskins, Director................... Project HOME.
Louis Williams, Deputy Director........... Drueding Center/Project Rainbow.
Gerard Lester, Program Manager............ Impact Services Corporation.
Mary Anne Bellacima, CPD Rep.............. Penn Foundation.
Mary Lou DeNardo, CPD Rep................. Travelers Aid Society.
James Keegan, CPD Rep..................... Valley Housing Development Corp.
Patrick Mulligan, CPD Rep................. Lehigh County Housing Authority.
Michelle Patterson, CPD Rep...............
Don Polce, CPD Rep........................
Susan Shackelford, CPD Rep................
John Thompson, CPD Rep....................
Christopher McDonnell, Financial Analyst..
Francis Zane, Financial Analyst...........
Pittsburgh..................... Lynn Daniels, CPD Director................ None.
James Getsy, Program Manager..............
John Tolbert, Program Manager.............
William Kauffman, Senior CPD Rep..........
Pamela Coll, Senior Financial Ana.........
Roger Allen, CPD Rep......................
John Brennan, CPD Rep.....................
Carl Bryer, CPD Rep.......................
Raymond Hluska, CPD Rep...................
Thom Sumpter, CPD Rep.....................
San Antonio.................... John T. Maldonado, Director...............
Elva Garcia, CPD Rep...................... Housing Authority of Hidalgo
Estela Garcia, CPD Rep.................... County.
Nathan Ratner, CPD Rep.................... City of McAllen.
St. Louis...................... Ann Wiedl, Director....................... St. Louis.
Allen Howard, CPD Rep.....................
Elvira Kollar, CPD Rep....................
Sam McClarney, CPD Rep....................
Sandy Freeman, Senior CPD Rep.............
Jim Geraghty, CPD Rep.....................
Sherman Brazil, CPD Rep...................
South Carolina................. Bernard Jenkins, Program Manager.......... None.
C. Noel Morphis, CPID Rep.................
John Suber, CPD Rep.......................
Kirk Van Laan, CPD Rep....................
Jamie Spakow, CPD Rep.....................
Barbara Harris, CPD Rep...................
Brad Evatt, CPID Rep......................
Tennessee...................... Virginia Peck, Director................... Buffalo Valley, Inc.
Mary C. Wilson, Program Manager...........
Brenda Therry, Senior CPD Rep.............
Geri Clark, Financial Analyst.............
Susan Miller, CPD Rep.....................
Chris James, CPD Rep......................
Jerry Osbourn, CPD Rep....................
Texas.......................... Katie Worsham, Director................... S.E.A.R.C.H. (Houston).
Carlos R. Renteria, Deputy Director.......
Jerry Jensen, Senior CPD Rep..............
Linda Clark, CPD Rep......................
Ellen Melendez, CPD Rep...................
Linda Richards, Senior CPD Rep............
Kristin Hadawi, CPD Rep...................
James M.Johnson, Senior CPD Rep...........
Leona Hutchinson, CPD Rep.................
Elizabeth Herron, CPD Rep.................
Eddie Violette, Program Advisor...........
Johnnie Charles, CPD Rep..................
Debbie Reynolds, Program Assistant........
Art Zavala, Senior CPD Rep................
Brenda Jennings, Financial Analyst........
Julie Lundin, Financial Analyst...........
Betty Domian, CPD Rep.....................
Patricia Jones, Program Assistant.........
Gary Holtberg, Program Manager............
Virginia....................... Leroy Brown, Program Manager.............. VMH, Inc.
John Baker, CPD Rep....................... City of Newport News.
Robert Jennings, Financial Analyst........ Smaritan House.
Judeo-Christian Outreach Center.
Virginia Beach CDC.
Tap.
Washington..................... Dana Buckner, Senior CPD Rep.............. LIHI (Seattle).
Julie Bruce, CPD Rep...................... Arion Court (Seattle).
Kaycie Collins, CPD Rep................... Seattle.
David Foster, CPD Rep..................... Spokane.
Carol Goodman, CPD Rep....................
Alfred Heston, CPD Rep....................
Thomas Kenny, CPD Rep.....................
Lori Martin, CPD Rep......................
Wil May, CPD Rep..........................
Cristina Yamamoto, CPD Rep................
Wash., DC...................... Patricia Myers, CPD Rep................... None.
Millicent Grant, Program Manager..........
Ronald J. Herbert, CPD Rep................
Wisconsin...................... Donna-Lou Hertz, CPD Rep.................. None.
Marivel Turman, CPD Rep...................
Kathleen Schmidt, CPD Rep.................
Judy Pringle, CPD Rep.....................
----------------------------------------------------------------------------------------------------------------
Total = 294
Question. Please identify all (non-Inspector General) audits of
McKinney projects conducted by HUD staff in the last 3 years, including
the dates of the audits, the staff involved, the activities reviewed
and the results of each audit in summary.
Answer. Attached are all of the audits (excluding Inspector General
audits) of McKinney projects conducted during the last three years. The
first set of reports is entitled, ``CPD Program Monitoring National
Totals'' (Reports 2 and 3). These reports provide a summary for fiscal
year 1999 and fiscal year 2000 of all on-site monitoring visits
conducted by CPD Field Offices. McKinney Homeless Assistance programs
are detailed in the reports as ``Continuum of Care.'' The reports
indicate that 322 on-site monitoring visits were made in fiscal year
1999 and that, to date, 133 on-site monitoring visits have been made in
fiscal year 2000. The reports also detail the findings, concerns, and
sanctions taken by CPD staff. The ``Amount'' is the dollar amount
requested to be repaid for ineligible activities found during on-site
monitoring of grantees.
The second set of reports, ``Field Office Summary Monitoring
Reports,''(Reports 4 and 5) provides an office by office listing of the
grants monitored and the concerns, findings, and sanctions associated
with each review. Also included is a report (Report 6) that provides
greater detail for each of the findings with associated sanctions. The
system contains a report on each monitoring that provides the level of
detail requested.
The large report entitled, ``Field Office Detailed Monitoring
Report,'' (Report 7) provides the detailed information on each
monitoring visit, including the date of the visit, the staff person who
conducted the visit, the activities reviewed, and a brief summary. The
report provided is for fiscal year 2000. Because of the extensive
monitoring activities undertaken by CPD Field Offices, the report is
large. We selected the fiscal year 2000 report because the fiscal year
1999 report is approximately 1,000 pages in length. If the purpose of
the request is to determine the depth of monitoring undertaken
currently by CPD Field Offices, then we are hopeful that this report
will meet that purpose. If additional information is required, we will
provide the larger report.
Please note that CPD's existing computer systems do not capture all
the information on the monitoring activities for fiscal year 1998.
Available information is listed in Report 1. The information is limited
in nature because there was no standardized reporting requirements at
the time for Field Office monitoring. The overall level of monitoring
of these programs was also lower during fiscal year 1998, as the report
indicates.
As the information provided indicates, the level of on-site
monitoring by CPD Field Offices rose sharply in fiscal year 1999 and
continues at high levels for fiscal year 2000. The Office of Community
Planning and Development is committed to professional oversight of
McKinney Homeless Assistance programs as these reports attest.
[Clerk's note: The reports required can be found by contacting HUD
due to the fact that the reports were not supplied in format suitable
for printing.
--CPD Program Monitoring National Totals, fiscal year 1999 (Report 2)
--CPD Program Monitoring National Totals, fiscal year 2000 (Report 3)
--Field Office Summary Monitoring Report, fiscal year 1999 (Report 4)
--Field Office Summary Monitoring Report, fiscal year 2000 (Report 5)
--Findings With Sanctions Report, fiscal year (Report 6)
--(Field Office Detailed Monitoring Report, fiscal year 2000 (Report
7)]
Question. Isn't it true that HUD supports the funding of expiring
rental contracts under the Supportive Housing programs and the Shelter
Plus Care program that have not been renewed under the local continuum
of care selection process even where the President's budget does not
support additional funding?
Answer. No. HUD's policies are consistent with the President's
budget. Some Supportive Housing Program renewals have been funded
outside of the annual competition to ensure that services are not
disrupted in highly ranked projects, and taxpayer's investment in these
projects are protected. Such renewals are allowable under the law and
are always paid for out of the budget for the year their project
funding expires. In addition, no project is ever funded that has not
been ranked a priority in the previous year's Continuum of Care
application by the local community.
In addition, the Department has never funded Shelter Plus Care
projects outside of the annual competition. By law, the Department
cannot fund Shelter Plus Care projects outside of an annual
competition. The Administration does, however, support funding Shelter
Plus Care renewals out of the Housing Certificate Fund, and has asked
that $37 million be made available to do so beginning in fiscal year
2001.
Question. Isn't it true that these expiring contracts are not
funded because they do not rank high enough at the local level in the
local continuum of care?
Answer. Grant applications, including expiring grants requesting
renewal, may go unfunded in a competition for any of three reasons: (1)
they are part of a Continuum of Care that scores below the national
funding line; (2) they are not placed high enough on the priority list
by a funded Continuum of Care; or (3) the renewal project is found to
be ineligible or of poor quality, or the project applicant or sponsor
lacks the capacity to continue to operate the project. The standards to
be used in making the determinations under number 3 are specified in
the Notice of Funding Availability.
Question. Should expiring homeless assistance contracts be renewed
where a local continuum of care does not support the renewal of these
contracts?
Answer. No. This question goes to the essence of the Continuum of
Care concept. The local continuum of care is in the best position to
determine whether a specific renewal project should be included as a
priority for funding through its analysis of local needs, understanding
of the range of resources available in the community, and in-depth
knowledge of the capacity, efficiency and the role of the sponsoring
organization in the homeless assistance delivery system.
Question. Isn't it true that localities, including convenors and
local homeless assistance providers, know the minimum amount of Federal
homeless assistance each jurisdiction will receive at the time the
locality or convenor makes its continuum of care application in each
fiscal year and therefore know to some degree of certainty whether an
expiring contract will be renewed?
Answer. The publicly available information provided to all
potential applicants as they prepare for the 2000 competition allows
them, for the first time, to know with confidence the minimum prorata
need share, adjusted for renewals, that is available to the continuum
if they are successful in the competition. While they cannot know the
exact amount (because HUD does not know the exact amount until it has
determined how many areas of the country did not seek funding and those
funds are redistributed to the applying continuums), the convenor and
other participants in the process have sufficient information to
determine prior to application submission whether a specific project,
new or renewal, falls within the continuum's prorata need share
depending upon its placement on the priority list. It should be noted
that a significant increase in the Fair Market Rents for a community
published in the Federal Register in October of each year, after the
submission of applications, would increase the budgets for any Shelter
Plus Care and SRO project applications submitted and could, therefore,
result in a project going unfunded that would otherwise have been
funded under that continuum.
HOMELESS ASSISTANCE BLOCK GRANT PROGRAM
Question. Does HUD support a block grant for states and localities
to address homeless assistance needs, especially since such an approach
could rely on local decisionmaking while integrating funding decisions
with the procedures and decisions associated with the existing HOME,
CDBG, Public Housing, and Section 8 programs?
Answer. HUD does not believe it is necessary to implement such a
legislative change. Current procedures best address the multi-faceted
needs of the program. Originally, in coordination with the Interagency
Council on the Homeless, HUD held 17 regional interactive forums across
the country early in President Clinton's first term in office to
discuss how the Federal government should proceed to better address
homelessness. Valuable input was provided from more than 10,000
representatives of state and local governments, not-for-profit
providers of housing and services, advocates for homeless people, and
currently and formerly homeless persons. As a result, HUD made numerous
changes to how competitive program funds are awarded.
HUD has continued to improve and refine the competitive award
process since initial implementation in 1994. In addition to having a
single application for all three competitive programs, the continuum
helps assure all parties are given an opportunity to be involved in
developing the community wide application. Moreover, communities are
able to prioritize their projects as they would through a formula
approach. Finally, retaining a national competition helps assure a high
level of quality and performance that a formula approach might not
achieve. As a result of the successes we've been able to accomplish
through the competitive process, HUD no longer deems it necessary to
implement a legislative change.
HOPE VI
Question. Mr. Secretary, as you know, I am a big fan of the HOPE VI
program and have supported the significant funding of this program
since its inception. Nevertheless, it is a costly program and there
will come a time in the next few years where we will have taken down
the worst public housing and replaced it with mixed income public and
private housing. How should this program evolve?
Answer. Although HOPE VI has been successful in revitalizing many
of this nation's most severely distressed public housing developments,
a significant need still remains that will not be adequately addressed
by HOPE VI appropriations in the next couple of years.
Each year, the Department receives four times the number of
applications than can be funded through annual appropriations.
Moreover, there are 30,000 units identified under the Section 202
mandatory conversion provision that have not yet been addressed.
Finally, a HUD-sponsored study by Abt Associates, completed in April
2000, estimated that the backlog of unmet capital needs as of June 1998
was $23 billion and the annual accrual was $2.1 billion. If funding for
Capital Programs is insufficient to eliminate the backlog, it is
possible that conditions at under funded developments will worsen.
Question. In addition, I am very concerned about costs of the HOPE
VI program and how HUD keeps the costs of this program down. How does
the per unit costs of HOPE VI projects compare to similar private
sector multifamily housing?
Answer. The Department has taken great efforts to ensure that costs
are in line with relevant industry standards. HUD instituted cost
control guidelines for soft costs and a stringent TDC policy that does
not permit exceptions. To oversee this effort, a quarterly tracking
system has been implemented that monitors data on costs, leveraging,
construction progress and other management indicators.
--Total Development Cost.--In a March 1999 notice, the Department
established Total Development Cost (TDC) and Cost Control
Policy consistent with the Public Housing Reform Act of 1998.
The notice established clear cost limits for public housing
funds used in the three elements of HOPE VI developments,
namely, housing units, community renewal efforts, and community
and resident social services. The new Housing Cost Cap (HCC)
was based on an average of RS Means (Average) and Marshall and
Swift (Good) regional estimates for housing construction costs
based on housing type and size. The new cap is higher than the
prior HCC which was based on Boeckh (Average) and Marshall and
Swift (Average). The new HCC standard reflects the quality of
housing needed to attract middle income families into HOPE VI
developments. Unlike the previous policy, no exceptions from
the current TDC will be granted. The policy has been in effect
for 1 year and is now being evaluated. An analysis of changes
in costs over the years has been conducted, and the findings
have been discussed with OMB and congressional staff. Based on
the analysis and input received, the modified guidance is
expected to be published as a Proposed Rule in the near future.
Soft Cost Controls--The Department instituted cost control
guidance that will limit the development of soft costs
associated with mixed-finance development (e.g., developer
fees, administration fees, program management fees), and create
incentives for competitive pricing. The controls include ``safe
harbors'' and maximum fee ranges that are based on industry
standards which were developed with input from housing
authorities, developers and other housing industry
representatives. If a project is at or below a ``safe harbor''
standard, no further review is required. If a project is above
a ``safe harbor'' standard, additional review by, and
negotiation with, HUD are necessary. These guidelines, ``Cost
Control and Safe Harbor Standards'' are included in a document
developed by the program office. This document has been
distributed to all HOPE VI program sites, and is also included
in the NOFA application completed by prospective grantees.
--Competitive Procurement.--HUD requires that developers and program
managers be competitively procured thereby assuring that costs
and fees are consistent with the private market. The Department
reviews and approves developer and program manager procurements
and contracts to verify that the processes are open and
competitive.
--Management Controls.--As noted below, a computerized tracking and
data collection system for effective program management and
data retrieval and analysis has been developed. Every quarter
grantees report data regarding costs, funds obligated/expended,
construction progress, leveraging, and other management
indicators. The Department is currently expanding the scope of
the data collected to document what is happening to the people
in a HOPE VI site (i.e., how many people gain employment, how
many in job training, how many receiving case management,
etc.). The Department has prioritized the receipt of accurate
and timely information and has instituted a policy that freezes
receipt of a grantee's HOPE VI funds if reports are not
submitted within 30 days following the end of the quarter. This
data tracking system enables more effective oversight by HUD
grants managers and Public Housing Authority (PHA) staff.
--HOPE VI Construction Costs as Compared with Private Sector.--Per
unit construction costs are, by design, comparable to similar
private sector housing. Because the HCC is based on regional
industry standards, it ensures that public housing funds that
are spent on construction do not exceed what the private sector
would pay for a comparable unit. 1999 grantees reported that
public housing funds would be used for $58,722 per unit cost
\1\ to public housing funds associated with a HOPE VI
construction--well below the average HCC of $88,000 in l999. In
most cases, the construction cost are supplemented with Low
Income Housing Tax Credit (LIHTC) funds and other funding. An
informal survey of HOPE VI developers yielded similar
conclusions--the per unit hard cost of HOPE VI construction,
adjusted for Davis-Bacon wages and Section 3 requirements, is
very comparable with private and subsidized developments.
---------------------------------------------------------------------------
\1\ This figure includes dwelling unit construction and equipment
and 50 percent of site improvement costs. It assumes that builder's
overhead and profit are included in dwelling unit construction.
TABLE 1.--AVERAGE PUBLIC HOUSING FUNDS PER PH UNIT RELATED TO HCC BY YEAR
--------------------------------------------------------------------------------------------------------------------------------------------------------
Grant Year 1993 1994 1995 1996 1997 1998 1999
--------------------------------------------------------------------------------------------------------------------------------------------------------
PH $Related to HCC \1\.................. $323,300,312 $226,466,180 $237,755,257 $222,259,707 $261,509,345 $278,428,844 $321,032,692
Avg. PH $per PH Unit Related to HCC..... 61,558 37,321 39,672 41,865 61,186 45,236 58,722
Average PH $Per PH Unit Related to HCC
for All Years.......................... $48,568
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ PH $'s Related to HCC include the following: Dwelling Unit Construction and Equipment and 50 percent of Site Improvement Costs.
NOTE: Assumes that builders' overhead and profit is included in Dwelling Unit Construction.
Source: HOPE VI Quarterly and Baseline Data as of 12/31/99.
TABLE 2.--HCC COST PER UNIT CALCULATIONS BY GRANTEE
[HOPE VI Quarterly Data as of 12/31/99]
----------------------------------------------------------------------------------------------------------------
Public
Housing
Award Public Cost per
Year Main City Development HCC Cost Housing Unit
Units Related
to HCC
----------------------------------------------------------------------------------------------------------------
1993 Atlanta Techwood Homes/Clark Howell Homes.. $25,382,913 360 $70,508
1993 Boston Mission Main....................... 28,596,695 445 64,262
1993 Charlotte Earle Village...................... 20,357,066 294 69,242
1993 Cuyahoga Outhwaite Homes/King Kennedy 33,089,097 503 65,783
(combined).
1993 Houston Allen Parkway Village.............. 21,118,346 600 35,197
1993 Kansas City Guinotte Manor..................... 31,389,803 412 76,189
1993 Los Angeles Pico Gardens & Aliso Apartments.... 26,057,887 429 60,741
1993 Milwaukee Hillside Terrace................... 27,813,071 456 60,994
1993 New Haven Elm Haven.......................... 21,093,297 454 46,461
1993 Philadelphia Richard Allen Homes................ 31,626,743 408 77,517
1993 Pittsburgh Allequippa Terrace................. 13,886,600 535 25,956
1993 San Francisco Bernal/Plaza....................... 29,236,491 356 82,125
1993 Washington DC Ellen Wilson Homes \1\............. 13,652,305 129 105,832
-------------------------------------
Subtotal ................................... 323,300,312 5,381 60,082
=====================================
1994 Baltimore Lafayette Courts................... 11,607,960 311 37,325
1994 Camden McGuire Gardens.................... 25,795,888 253 101,960
1994 Chicago Cabrini-Green...................... 500,000 700 \2\ 714
1994 Columbus Windsor Terrace.................... 24,231,323 372 65,138
1994 Dallas Lakewest........................... 13,698,934 335 40,892
1994 Denver Quigg Newton Homes................. 11,126,593 400 27,816
1994 Detroit Jeffries Homes..................... 28,610,345 537 53,278
1994 New Orleans Desire............................. 23,148,032 433 53,460
1994 Newark Archbishop Walsh Homes............. 29,686,740 498 59,612
1994 Oakland Lockwood Gardens/Lower Fruitvale... 13,651,975 438 31,169
1994 Puerto Rico Cristantemos y Manuel A. Perez..... 13,225,005 1,080 12,245
1994 San Antonio Spring View........................ 21,712,237 421 51,573
1994 Springfield John Hay Homes..................... 9,471,150 290 32,659
-------------------------------------
Subtotal ................................... 226,466,180 6,068 37,321
=====================================
1995 Baltimore Lexington Terrace.................. 9,586,865 250 38,347
1995 Boston Orchard Park....................... 15,084,196 380 39,695
1995 Cuyahoga Carver Park........................ 13,760,535 471 29,216
1995 Detroit Parkside Homes..................... 27,723,553 462 60,008
1995 El Paso Kennedy Brothers................... 20,729,652 364 56,950
1995 Indianapolis Concord/Eagle Creek................ 17,148,599 190 90,256
1995 Memphis LeMoyne Gardens.................... 27,879,624 343 81,282
1995 New York Arverne/Edgemere Houses............ 29,359,071 1,789 16,411
1995 Pittsburgh Manchester......................... 5,500,000 132 41,667
1995 San Antonio Mirasol............................ 24,528,409 500 49,057
1995 San Francisco Hayes Valley (B&C)................. 12,962,971 117 110,795
1995 Seattle Holly Park......................... 18,417,524 400 46,044
1995 St. Louis Darst-Webbe........................ 15,074,260 595 25,335
-------------------------------------
Subtotal ................................... 237,755,257 5,993 39,672
=====================================
1996 Atlanta Perry Homes........................ 11,668,286 375 31,115
1996 Baltimore Hollander Ridge.................... 14,226,891 225 63,231
1996 Charlotte Dalton Village..................... 10,495,145 186 56,426
1996 Chester Lamokin Village.................... 8,418,294 150 56,122
1996 Chicago ABLA (Brooks Extension)............ 19,547,698 396 49,363
1996 Chicago Henry Horner....................... 15,417,283 376 41,003
1996 Chicago Robert Taylor Homes................ 16,288,460 251 64,894
1996 Cleveland Riverview/Lakeview................. 9,991,250 290 34,453
1996 Detroit Herman Gardens..................... 16,814,591 672 25,022
1996 Holyoke Jackson Parkway.................... 7,097,788 125 56,782
1996 Jacksonville Durkeeville........................ 11,664,000 200 58,320
1996 Kansas City Theron B. Watkins Homes............ 7,936,372 99 80,165
1996 Louisville Cotter & Lang Homes................ 9,401,715 610 15,413
1996 New Orleans St. Thomas......................... 11,100,000 387 28,682
1996 Pittsburgh Bedford Additions.................. 21,273,764 340 62,570
1996 San Francisco North Beach........................ 12,412,868 229 54,205
1996 Spartanburg Tobe Hartwell/Extension............ 9,279,680 128 72,498
1996 Tucson Connie Chambers.................... 2,958,493 200 14,792
1996 Wilmington Robert S. Jervay Place............. 6,267,130 70 89,530
-------------------------------------
Subtotal ................................... 222,259,707 5,309 41,865
=====================================
1997 Allegheny County McKees Rocks Terrace............... 10,601,385 124 85,495
1997 Baltimore Murphy Homes, Julian Gardens....... 10,555,543 260 40,598
1997 Buffalo Lakeview Homes/Lower West Side..... 10,559,280 545 19,375
1997 Chester County Oak Street......................... 8,750,026 130 67,308
1997 Elizabeth Pioneer Homes, Migliore Manor...... 9,633,696 300 32,112
1997 Helena Enterprise Drive................... 801,655 14 57,261
1997 Houston Allen Parkway Village 2............ 11,721,030 185 63,357
1997 Jersey City Curries Woods...................... 18,156,869 469 38,714
1997 Kansas City Heritage House..................... 6,765,714 79 85,642
1997 Knoxville College Homes...................... 14,993,250 144 104,120
1997 Nashville Vine Hill Homes.................... 9,672,273 136 71,120
1997 Orlando Colonial Park...................... 4,043,603 68 59,465
1997 Paterson Christopher Columbus............... 7,936,799 137 57,933
1997 Peoria Colonel John Warner Homes.......... 5,665,221 141 40,179
1997 Philadelphia Schuylkill Falls................... 19,374,797 108 179,396
1997 Portsmouth Ida Barbour Revitalization......... 15,137,500 278 54,451
1997 Richmond Blackwell \3\...................... 13,445,300 472 28,486
1997 San Francisco Valencia Gardens................... 16,720,835 246 67,971
1997 St. Petersburg Jordan Park........................ 14,418,771 261 55,244
1997 Stamford Southfield Village................. 16,644,279 215 77,415
1997 Tampa College Hill/Ponce de Leon \3\..... 12,848,160 403 31,881
1997 Washington DC Valley Green/Sky Tower............. 13,003,825 282 46,113
1997 Winston-Salem Kimberly Park Terrace.............. 10,059,536 152 66,181
-------------------------------------
Subtotal ................................... 261,509,345 5,149 50,788
=====================================
1998 Albany Edwin Corning Homes................ 20,567,888 250 82,272
1998 Atlanta Carver Homes....................... 24,775,489 399 62,094
1998 Baltimore Flag House Courts.................. 7,175,000 140 51,250
1998 Charlotte Fairview Homes..................... 19,466,251 330 58,989
1998 Chester McCaffery Village.................. 7,259,678 118 61,523
1998 Chicago ABLA Homes......................... 22,258,001 945 23,553
1998 Cincinnati Lincoln Court...................... 12,420,865 250 49,683
1998 Dallas Roseland Homes..................... 22,232,707 511 43,508
1998 Denver Curtis Park Homes & Arapahoe Cts... 14,160,409 261 54,254
1998 Greensboro Morningside Homes.................. 9,338,561 456 20,479
1998 Lexington Charlotte Court.................... 7,132,855 218 32,720
1998 Los Angeles Aliso Village...................... 16,071,918 269 59,747
1998 Milwaukee Parklawn Housing Development....... 17,800,250 420 42,382
1998 New Brunswick New Brunswick Homes................ 3,984,007 86 46,326
1998 New York Prospect Plaza..................... 7,137,589 284 25,132
1998 Oakland Chestnut Court and 1114 14th Street 6,880,924 95 72,431
1998 Philadelphia Martin Luther King Plaza........... 15,709,884 168 93,511
1998 Roanoke Lincoln Terrace.................... 9,100,388 276 32,972
1998 Seattle Roxbury House and Village.......... 6,083,477 211 28,832
1998 Tulsa Osage Hills Apartments............. 20,343,911 388 52,433
1998 Wilmington Eastlake Family Public Housing..... 8,528,794 80 106,610
-------------------------------------
Subtotal ................................... 278,428,844 6,155 45,236
=====================================
1999 Allegheny County FDR & Homestead Apartments......... 1,790,392 230 \4\ 7,78
4
1999 Atlanta Joel C. Harris Homes............... 18,571,737 300 61,906
1999 Atlantic City Shore Park/Shore Terrace........... 22,196,379 214 103,721
1999 Baltimore Broadway Homes..................... 9,506,690 84 113,175
1999 Birmingham Metropolitan Gardens............... 21,055,785 420 50,133
1999 Bradenton Rogers Garden Park & Rogers 7,498,832 180 41,660
Addition.
1999 Cambridge John F. Kennedy Apartments......... 3,242,500 50 64,850
1999 Cincinnati Laurel Homes....................... 20,320,994 259 78,459
1999 Columbia Saxon Homes........................ 14,547,081 186 78,210
1999 Dayton Edgewood Court, Metro Gardens and 9,208,801 140 65,777
Metro Gardens Annex.
1999 Decatur Longview Place..................... 22,177,622 322 68,875
1999 Gary Duneland Village................... 8,947,489 93 96,210
1999 Greenville Woodland/Pearce Homes.............. 9,558,376 129 74,096
1999 High Point Springfield Townhouses............. 11,400,790 160 71,255
1999 Lakeland Washington Park Homes & Lake Ridge 11,547,533 359 32,166
Homes.
1999 Miami Scott/Carver Homes................. 19,090,434 223 85,607
1999 Miami Ward Tower......................... 4,072,500 95 42,868
1999 Mobile Central Plaza Towers............... 2,907,500 100 29,075
1999 Nashville Preston Taylor Homes............... 22,917,642 370 61,940
1999 New Bedford Caroline Street Apartments......... 2,142,415 57 37,586
1999 Newark Stella W. Wright................... 21,408,000 588 36,408
1999 Oakland Westwood Gardens................... 3,533,500 46 76,815
1999 Raleigh Halifax Court...................... 5,583,857 122 45,769
1999 Seattle Rainier Vista Garden Community..... 20,866,185 250 83,465
1999 Washington DC Frederick Douglass Dwellings & 18,052,431 370 48,790
Stanton Dwellings.
1999 Wheeling Grandview Manor/Lincoln Homes...... 8,887,229 120 74,060
-------------------------------------
Subtotal ................................... 321,032,692 5,467 58,722
=====================================
Total--All Years All ................................... 1,870,752,335 38,518 48,568
Sites
----------------------------------------------------------------------------------------------------------------
\1\ Ellen Wilson homes has 129 Cooperative Agreement Units.
\2\ Cabrini Green's HCC figures are unusually low because the Chicago Housing Authority does not plan to
build new units, but buy scattered site housing. The HCC does not include acquisition costs which are
estimated at $33 million. As a result, the HCC figure only reflects the cost of site improvements. If
acquisition costs were included, hard construction costs would be $47,900/unit.
\3\ For Richmond--Blackwell and Tampa--College Hill/Ponce De Leon 3/31/2000 unit data was used.
\4\ Allegheny's HCC costs are low because the housing authority is rehabbing instead of building new
units. The authority is also leveraging significant resources for the hard construction costs which are
not reflected in the figures above (only public housing dollars are included). $1.7 million of public
housing funds and $5.6 million of leverage funds are going towards hard construction costs. If all
sources are considered, the costs related to HCC average $32,000/unit.
Notes: HCC cost is estimated as the HOPE VI Dwelling Unit Construction Cost, Dwelling Unit Equipment Cost
and 50 percent of Site Improvements.
On a program wide basis, this correlates to the information provided on the HOPE VI TDC Guidance Chart.
Only 128 sites--Alexandria not required to report this information.
Question. What accounts for any differences in the per unit costs
of HOPE VI projects with similar private sector multifamily housing?
Answer. Because the Housing Cost Cap (HCC) is pegged to regional
industry standards by housing type, ``vertical'' construction costs are
comparable with the private sector. However, there are additional
construction costs associated with HOPE VI projects that increase
overall development costs and do not similarly impact private
development projects, as described below.
1. Demolition and Site Remediation.--The HOPE VI program was
created to revitalize severely distressed public housing which makes it
unique when compared to other types of private-sector construction and
development. Unlike the majority of private-sector multifamily
developments which are built on environmentally safe, vacant sites,
many HOPE VI projects incur extraordinary costs to demolish distressed
buildings and remediate existing environmental hazards that are often
associated with large-scale urban redevelopment, (e.g., lead and
asbestos abatement, soil remediation, etc.). Such costs are not
directly attributable to the cost of new construction, but are
unavoidable in the HOPE VI revitalization process.
2. Community Revitalization.--HOPE VI developments also include
provisions for services and facilities that will revitalize the
community and help residents become self-sufficient (e.g., community
facilities, community and supportive services and relocation of
residents). These costs, not required in traditional private sector
development, are vital to achieve the intended transformation of
neighborhoods and the lives of the residents.
3. Federal Wage and Hiring Regulations.--Compliance with federal
wage and hiring regulations, including Davis-Bacon wages, Section 3,
and resident participation requirements, tends to apply upward pressure
on construction costs.
Question. Also, how do the administrative costs of this program
compare with private sector costs and what is the average
administrative cost (i.e. including attorney fees, etc.) per project?
Answer. Public Housing Authorities (PHAs) provide a unique link
between the residents of the local community and the Federal Government
for both the development and administration of assisted housing. Due to
this unique role of PHAs, this function has been contracted out to the
private sector. However, this indispensable role in the process also
contributes to higher soft costs for HOPE VI than those associated with
private sector development. Additional costs incurred by the PHAs
include: administrative costs, program and construction management
fees, external legal counsel, and other consultants, as well as
increased coordination and oversight due to complex financing
partnerships and other business arrangements between the Housing
Authority and the city, developers, business sector, etc. Since HOPE VI
began in 1993:
--PHA's internal administrative costs have averaged 2.79 percent of
total project costs.
--Planning and professional services (includes program/construction
management, external legal counsel, other fees) have averaged
4.22 percent of total project costs.
--The impact of these higher HOPE VI soft costs add an average of 7
percent to the total project costs.
These additional costs are explained in the following paragraphs:
PHA Administration.--HOPE VI developments must pay for the PHA's
overall administrative costs associated with HOPE VI. There is no
comparable cost in private sector projects.
PHA Capacity.--Many HOPE VI developments also include costs for
program management and construction management due to the complexity of
the program and the lack of in-house capacity. Typical private sector
developers do not incur these costs since the required skills are
resident with existing staff.
Complex Financing.--Virtually all HOPE VI developments involve
complex financing mechanisms which include multiple funding sources,
increasing the legal and financing costs of the project. It is
estimated that the legal costs and time delays for approvals associated
with mixed-finance closings can increase costs by as much as 10-15
percent over unsubsidized, non-Federal, privately financed development.
TABLE 2.--PERCENTAGES OF BUDGETED HOPE VI SOFT COSTS TO TOTAL PROGRAM
BUDGET
------------------------------------------------------------------------
Average Range
for all -----------------
Soft cost category HOPE VI
sites Low High
------------------------------------------------------------------------
PHA's Internal Administrative Costs.......... 2.79 ....... 13.6
Planning and Professional Services (PM/CM, 4.22 ....... 16.7
Legal Fees, and Other Fees).................
--------------------------
HOPE VI Soft Cost Total................ 7.01 ....... .......
------------------------------------------------------------------------
Source: HOPE VI Quarterly Data as of 12/31/99.
Question. Please provide a list of all current HOPE VI projects and
the per unit costs of each project.
Answer. See table 2 on page 537.
hud income verification requirements for public and assisted housing
Question. As you know, we have been very concerned that each year
an independent audit of HUD's financial statements indicate that some
$900 million is lost through improper, illegal or negligent reporting
of income by tenants in HUD's public and assisted housing programs.
This is a significant amount of money that could help maintain the
funding level of HUD programs. This is an important responsibility and
I would like to know the status of HUD's efforts to implement a system
that ensures the residents in the HUD's rental assistance programs are
paying the appropriate level of rent.
Answer. The tenant income verification process is a state-of-the-
art fraud prevention system that addresses a long-standing material
weakness. This system is also designed to ensure that eligible American
families receive the correct amount of rental assistance. The system
uses computer matching software to compare tenant reported information
from HUD systems with income data stored in Social Security
Administration (SSA) and Internal Revenue Service (IRS) databases.
Tenants who under report income may have their rental assistance
reduced or terminated, or potentially face prosecution. Tenants also
may be required to re-pay any excess rental assistance. However, the
focus on HUD's efforts this year are on setting correct baseline
incomes and rents.
HUD is planning to mail out most, if not all, of the income
discrepancy letters in June 2000; 230,000 in all. In February 2000,
about 875 letters were sent to tenants.
In the interest of fairness to all parties, the Department is also
addressing over-reporting of income and will soon be mailing letters,
as part of this initiative, in the near future, to tenants who might
not have received all of the rental assistance to which they were
entitled.
The next steps will be HUD monitoring of progress in the resolution
of the income discrepancies. This will include:
--1. an analysis of data that public housing authorities, owners and
agents (POAs) will submit to HUD on income discrepancy
resolution;
--2. visits to some POAs to review progress and techniques employed;
and
--3. supplemental training for POAs, as needed.
Additional training is underway. The Department has also developed
a fact sheet explaining the tenant income verification process and
HUD's intent to have eligible tenants pay correct amounts. This fact
sheet will be provided to approximately 6.1 million tenants occupying
HUD assisted housing.
Attachment A
The $900 million underpayment figure calculated by the Inspector
General is wrong.
--It is wrong because the IG made very dubious assumptions in
calculating its figure-sampling indicates that the figure may
be far lower.
--The figure does not attempt to calculate the extent of overpayments
by tenants.
--The figure does not take into account the fact that many kinds of
income have been excluded from rent calculations at the
direction of Congress.
--Sheila Crowley, President of the National Low Income Housing
Coalition told Congress ``we believe that a substantial percent
of the discrepancy between rent certifications and tax returns
that is identified in the Inspector General's report has
occurred for one of a number of legal and legitimate reasons or
is the result of honest mistakes or is rooted in errors on the
part of housing authorities or property owners.''
--The underpayment estimate is also misleading because it is not a
reasonable estimate of the actual amounts that could
realistically by recovered by the government. In fact,
verifying income will probably lead to an additional $80
million.
--Studies show that, once presented with this information, many
tenants simply move away.
--It often costs more to collect the money than the amount the
tenant owes.
--Tenants often simply do not have the money for the landlord to
collect.
--Verifying tenant income will be most helpful in making sure the
right people receive assistance. The Department is
committed to ensuring that only those eligible receive
assistance and that others be replaced by someone
languishing on long waiting lists due to the failure of
Congress to adequately fund the Section 8 program.
Question. In addition, please advise on the safeguards that HUD is
putting in place to ensure that the process itself does not become an
unreasonable burden on PHAs and tenants, and how personal privacy
rights are protected and respected.
Answer. The tenant income verification process imposes minimal
additional requirements on Public Housing Agencies, Owners, and Agents
(POAs) and tenants. Tenants have always had the obligation to report
their income completely and accurately and POAs have always had the
responsibility to verify their incomes. This Program provides a new
tool to POAs to verify tenant income. The only additional requirement
for tenants is to resolve discrepancies identified by the income
matching, and for POAs to report on their resolution of these
discrepancies.
Under this program, the personal privacy rights of tenants are
fully protected and respected. HUD strictly follows Social Security
Administration (SSA) and Internal Revenue Service (IRS) guidelines
regarding release of confidential income data. The computer matching
program provides a high degree of accuracy. Extensive software testing
has been completed to assure that the computer matching is properly
conducted. Real Estate Assessment Center (REAC) has developed
procedures to minimize the ``false positive'' results that may
sometimes occur and reduce related administrative burdens or other
adverse effects.
The following steps have been taken to ensure that tenants do not
receive erroneous income discrepancies letters were:
--1. Annualization of income to produce income for the calendar year
that would be comparable to SSA and IRS data;
--2. Eliminating residents who did not receive rental assistance for
the entire calendar year for the match; and
--3. The use of income thresholds.
Procedures were also developed to minimize the effects on tenants
who do receive letters and who have complied with applicable income
reporting requirements. These include:
--1. Careful wording of the letter to the tenant;
--2. Written instructions and training for POAs that describe ways to
minimize the burden on the POAs and the tenants,
--3. Establish enhanced grievance procedures for tenants to ensure
due process, and
--4. Establish special toll-free phone numbers for tenants and POAs
to answer all program questions.
hud policy to voucher out all hud-owned and -held properties
Question. Mr. Secretary you have discussed the need to create a
production program, even suggesting using FHA single family mortgage
insurance default reserves as a way to leverage funding for the
development of new units of affordable low-income multifamily housing.
However, HUD's stated policy for its HUD-owned and HUD-held multifamily
properties is to voucher out all families, even the elderly and
disabled. This means that we are likely losing these multifamily
housing units for low-income use, especially very low-income use. In
addition, many of these multifamily housing projects are designed for
the elderly or disabled and are hooked into needed services for these
populations. In other cases, the housing is in better neighborhoods
where there are good schools, transportation and job opportunities
which will be lost to these residents. For the record, I am including a
property disposition memorandum from Gary Eisenman, General Deputy
Assistant Secretary for Housing, that compels the vouchering out of
these properties and replaces existing handbook requirements.
How do you square this policy with your acknowledgment that we need
to produce additional affordable low-income housing and the request for
additional, incremental vouchers?
Answer. The Department shares the Senator's concern for the
preservation of affordable housing. A careful reading of HUD's
outstanding guidance to the field shows that we preserve affordable
housing projects which can and should feasibly be preserved. Given the
nature of elderly housing, we continue the project based Section 8 when
they are sold, provided it is needed as elderly housing and is feasible
to preserve. On family projects, rather than using project based
Section 8 as the affordability tool, we provide eligible tenants with
Section 8 Vouchers. With Vouchers, an individual can remain in the
preserved project, or move to other accommodations. In addition, when
these properties are sold at foreclosure or from the owned inventory,
if they need to be preserved as affordable housing, they are sold with
requirements that they be repaired, and operated as affordable housing.
These requirements are enforced through land use restrictions that
generally last at least 20 years. Many purchasers utilize the Low
Income Housing Tax Credit program, which is another way to maintain
affordable housing without the use of project-based Section 8.
Requiring that projects be repaired and remain affordable provides the
tenants with Vouchers an opportunity not afforded to them if we were to
sell the projects with project based Section 8. It gives the tenants a
choice, and an ability to decide whether to stay, or relocate. Many
choose to stay, and many choose to relocate. Freedom of choice is not
something found with project-based Section 8.
HUD also uses its ability to provide Up Front Grants for projects
that need to be preserved We have sold over 60 projects in the last few
years with such grants. This is consistent with our policy to preserve.
Not all projects are needed as continued sources of affordable
housing, and some that may be needed cannot cost effectively be
repaired or rebuilt. In those cases, residents are offered Vouchers and
assistance in finding alternate decent, safe and sanitary housing.
In addition, the memorandum from General Deputy Assistant Secretary
Eisenman that the Senator introduced into the record has nothing to do
with vouchering out properties. Unfortunately, the word ``voucher'' has
several meanings at HUD. It not only means a Section 8 voucher that can
be given to a tenant to seek affordable housing, it also means the
document that is prepared by the owner of a Section 8 project to obtain
the monthly Section 8 payment; in that instance, its more like a
monthly invoice. The subject memorandum was simply guidance to HUD's
field staff that it must voucher (invoice) for Section 8 payments on
projects in HUD's owned inventory and those for which HUD is Mortgagee-
in-Possession. While it is true that this memorandum did supersede
outstanding handbook instructions, the change continues the project-
based contracts in an active status.
We are not abandoning affordable housing that needs to, and
feasibly can be preserved. If preservation is feasible, projects are
being preserved. Projects can and are being preserved as affordable
housing using preservation tools other than project-based Section 8
(except for elderly projects).
GNMA AND FHA APPLICATION OF CREDIT REFORM
Question. Mr. Secretary, for the first time since the enactment of
credit reform in 1992, the Administration has requested $40 million for
GNMA administrative contract expenses. This also has become an FHA
issue with appropriations having to pay for ``non-administrative
overhead'' for both single family and multifamily mortgage insurance
programs. Why are these additional costs being charged to the
appropriations process and what do these additional costs cover? Also,
please provide a legal analysis on why and how credit reform applies to
GNMA and FHA activities despite the availability of program revenues
which should be available to cover all costs? Also, please provide a
legal analysis on why and how credit reform applies to GNMA and FHA
activities despite the availability of program revenues which should be
available to cover all costs?
Answer. Section 1 of the National Housing Act (NHA) contains a
permanent indefinite appropriation which permits GNMA to pay
administrative expenses, including contracting expenses, from revenues.
Section 209 of the HUD Administrative Provisions printed in the
Appendix to the President's Budget for fiscal year 2001, if enacted,
would eliminate such authority for the payment of contracting expenses
under section 1 of the NHA, and in effect, require that GNMA's
contracting expenses become an appropriated line item.
Until the enactment of HUD's fiscal year 2000 Appropriations Act
(Public Law 106-74), Section 1 of the NHA also permitted FHA to pay
contracting expenses from revenues. In the fiscal year 2000
Appropriations Act, Section 212 eliminated FHA authority for the
payment of contracting expenses under Section 1 of the NHA, while the
FHA accounts included appropriated amounts for FHA administrative
contract expenses. Section 209 and the GNMA account language proposed
in the Administration's fiscal year 2001 budget would establish the
same funding mechanism for GNMA contracting expenses.
The proposed changes for GNMA and enacted changes for FHA with
respect to funding of contracting expenses have not been based on the
application of the Federal Credit Reform Act (FCRA) to GNMA and FHA as
a matter of law.
In fact OMB's general counsel has issued a legal opinion that
explicitly notes the legal appropriateness and applicability of Section
1 of NHA. Rather, these amendments have been proposed by the
Administration solely to make the administration of these GNMA and FHA
contracting expenses conform with the policies of the Administration
with respect to the FCRA. It should be noted that GNMA's contracting
expenses under Section 1 of the NHA are reviewed annually by Congress
and OMB as part of the President's Budget and are reviewed quarterly by
Treasury and OMB in the SF 133 Report on Budget Execution.
FHA REVENUES
Question. Mr. Secretary, you have made a number of statement
indicating that the FHA Mutual Mortgage Insurance account has an
additional $5 billion in revenues that could be made available for
other housing programs, including a new multifamily housing production
program. What are these funds?
Answer. These estimates of additional funds were calculated by
using the results of the 1999 Actuarial Review in the MMI models used
for the 2001 Budget. New subsidy rates were calculated for fiscal years
2002-2006 using the 1999 Review data. Then the difference in the
subsidy rates before and after the 1999 actuarial review was multiplied
by the dollar value of each year's estimated book of business for 2002-
2006. The sum of those figures was rounded to $5 billion.
Question. Are they currently maintained in the FHA Mutual Mortgage
Insurance account or are they projections of future income subject to
income rate fluctuations and other market forces?
Answer. The $5 billion is a projection of additional negative
subsidy estimated to be generated in fiscal years 2002-2006. Under
Credit Reform, subsidy rates are calculated on the basis of expected
performance over the entire life of a particular group of loans; thus,
any subsidy rate calculation is subject to future market forces. The $5
billion is based on the most recent data, which was used in the fiscal
year 1999 Actuarial Review.
Question. In, addition, are these funds available for spending
without being subject to offsets or pay-go considerations?
Answer. The additional $5 billion in negative credit subsidy is a
offset of both budget authority and outlays and represents budgetary
resources which could be applied towards critical housing needs of the
Nation without diminishing the currently projected budget surplus of
the Government. Whether Congressional budget procedures require
specification of a discretionary offset, or subject this proposal to
pay-go requirements for mandatory activities, will depend on the
applicable Congressional Budget Resolution, and the specific nature of
the proposal under development by the Administration.
Question. Please provide a legal analysis on how these funds may be
made available for non-FHA housing and community development programs?
Answer. As just indicated, the $5 billion may serve as an offset
for other spending within the unified Federal budget. These funds are
deposited into the FHA Mutual Mortgage Insurance Fund and whether
additional legal authority is necessary will depend on how the funds
would be utilized (as an offset or a fund source) and on the specific
nature of the proposed use. Direct use of these funds for non-FHA
programs would require an amendment to sections 1 and 202 of the
National Housing Act and/or obligational authority in an appropriations
act.
FHA HYBRID ARM LEGISLATION
Question. Mr. Secretary, the Administration has proposed a new FHA
adjustable rate mortgage (ARM) insurance program. What is HUD's prior
experience in underwriting ARMs, including the default and foreclosure
rates?
Answer. As one would expect with a riskier product line such as the
adjustable rate mortgage (ARM), historically ARMs have had a higher
default and claim rate than the relatively low risk fixed-rate
mortgages (FMRs). The performance gap between these two products
however has narrowed since FHA tightened its underwriting standards for
ARMs in 1998.
Question. Why would this new ARM program be less financially risky
to the Department?
Answer. The risk of the current ARM program was substantially
reduced in January 1998 by requiring consideration of the second year
rate in the underwriting analysis (rather than the entry rate) and by
eliminating any form of buydowns on these loans that contributed to
payment shock.
If the hybrid ARM proposed legislation is enacted, we would
continue to impose underwriting requirements that mitigate against
unacceptable risk. Further, the hybrid ARMs would lock in an interest
rate for several years (rather than just the first year) thus allowing
those first-time homebuyers borrowers that may (a) need the mortgage
for only a few years and/or (b) need the lower initial payments to take
advantage of the program either to acquire some equity, and then sell
the property and move to a more desirable home or to refinance the
current home.
AMERICAN PRIVATE INVESTMENT COMPANIES (APIC)
Question. Mr. Secretary, the Department does not have an
outstanding track record in providing targeted funding for economic
development, such as APIC. How would APIC work?
Answer. As configured in the proposed legislation (Title 3, H.R.
2848 and H.R. 2764), APIC would create a number of companies licensed
by HUD as for-profit, private venture capital firms. The program would
provide government guarantees of company debentures, provided the
licensed APIC's committed at least $25 million in private equity
capital. Each APIC would be entitled to receive $2 in government
guarantees of company debentures for every $1 of its private committed
equity. HUD's debt guarantees cannot, however, exceed $300 million for
APIC-issued debentures in fiscal year 2000. APICs will invest in a
broad array of firms and industry sectors. As you know the President
submitted legislation to authorize the APIC program and this
legislation is proceeding through Congress. In addition, the President
and the Congress have focused on a broad community revitalization
package which would include APIC as an important capital development
tool.
Question. Why wouldn't Treasury, the Small Business Administration
or CDFI be a more appropriate agency to administer an APIC-like
program?
Answer. Neither the SBA nor the Treasury can target their resources
to low-income areas, as HUD is able to. Further, SBA restrictions on
the size and types of businesses it assists would prevent that agency
from financing the large-scale businesses and real estate developments
envisioned that APICs will financially assist in urban and rural low-
income areas. HUD has the experience in working on such projects
through the Community Development Block Grant and other economic
development programs. Nevertheless, the Department of Treasury and the
SBA will act as program advisors to HUD in development and
administering the APIC program.
Question. Wouldn't HUD or intermediaries be picking ``winners and
losers'' in the APIC program?
Answer. HUD or intermediaries will be ``picking'' winners and
losers in the APIC program, only in the sense that some competition
applications are better than others. The proposed APIC legislation
enables HUD to competitively select APICs and to license them for
making equity and credit investments in large scale business
developments that benefit low-income communities. We will be looking to
the experience of the Overseas Private Investment Companies when
structuring our selection criteria and licensing process. The selection
of award recipients by HUD will be based on sound evaluation criteria.
EMPOWERMENT ZONES
Question. Mr. Secretary, we remain concerned over the HUD's
inability to provide adequate oversight of empowerment zone funds.
What procedures does the Department have in place to ensure that
these funds are being used appropriately and what criteria and
benchmarks are in place to measure the success and failure of
empowerment zones and enterprise communities?
Answer. HUD has adequate controls to ensure taxpayer funds are
spent according to all laws and regulations as provided in the
following details. In addition, HUD has a system to adequately measure
and assess EZ/EC success.
To ensure compliance with applicable laws and regulations, the
Assistant Secretary has increased EZ/EC staff, and assigned a Public
Trust Officer (PTO) to monitor and assess the progress of each EZ/EC.
The EZ/EC PTO Network works with the EZ/EC Initiative Office at
Headquarters to help ensure full compliance with HUD's statutory
monitoring responsibilities for Round I and Round II EZs.
To ensure EZ/ECs are making adequate progress in implementing their
strategic plans, the EZ/EC Office has instituted a cutting-edge
Internet-based performance measurement system called PERMS. HUD
requires each EZ/EC to keep track and evaluate all the projects and
programs they are implementing to achieve their local strategic plan.
The EZ/EC Office developed PERMS to ensure that there is adequate
information to measure and assess EZ/EC success. The EZ/EC Office and
the PTOs use PERMS to monitor and evaluate the progress of each EZ/EC.
Each year the EZ/EC designees use PERMS to submit an annual performance
report which identifies progress made in achieving project/program
milestones and output measurements, and which tracks the performance of
EZ/EC governance boards. PERMS not only cuts down on the paperwork
burden facing the EZ/ECs, but provides HUD with a low-cost mechanism
for continually monitoring the progress of each EZ/EC. PERMS also
provides detailed information on the over 2,500 projects and programs
the EZ/ECs are implementing to achieve their strategic plans.
Congress has split oversight of the Urban EZ/EC Initiative between
the U.S. Department of Housing and Urban Development, the U.S.
Department of Health and Human Services, the States and the 89 Urban
Designees. Each plays a different, but important role in ensuring
program integrity. By statute, HUD is the designating agency for urban
EZ/ECs. HUD is also statutorily responsible for making a periodic
determination to ensure each of the 89 designees is making progress.
HUD's legal responsibility regarding monitoring derives primarily from
section 1391(d)(2) of the Omnibus Budget Reconciliation Act, which
provides for the revocation of an EZ's or EC's designation if the
Secretary determines, among other things, that a designated EZ or EC
has failed ``to make progress in achieving the benchmarks set forth in
their strategic plan. This provision applies to both Round I and Round
II designations, and implies that information must be submitted to and
reviewed by HUD in order for the Department to make such
determinations. To further implement this responsibility, the
Department's regulations at 24 CFR Sec. Sec. 597.400-403 provide for
reporting, performance reviews, validation of designation and
revocation of designation under appropriate circumstances. Similar
provisions apply to Empowerment Zones designated in Round II pursuant
to 24 CFR Sec. Sec. 58.415-430.
The U.S. Department of Health and Human Services (HHS) has primary
oversight responsibility for EZ/EC funds. Section 13761 of the Omnibus
Budget Reconciliation Act of 1993 amended title XX of the Social
Security Act to provide funds to the States for designated Empowerment
Zones and Enterprise Communities pursuant to Round I. Neither the 1993
legislation nor sections 951 and 952 of the Taxpayer Relief Act of
1997, which authorize additional EZ designations by HUD, speak to any
additional monitoring or audit responsibilities of HHS. These statutes
deal primarily with the designation process, which is HUD's
responsibility. Therefore, audit and related responsibilities
concerning EZ/EC SSBG funds are subject to the HHS procedures
applicable to the parent title XX program. In general, under Title XX,
HHS delegates oversight responsibilities for the EZ/EC SSBG funds to
the States. The States are responsible for ensuring program integrity
just like they are with all Title XX, SSBG funds. The States are
responsible for monitoring EZ/EC spending to ensure compliance with EZ/
EC legal requirements.
For Round II EZs, Congress has approved $100 million in HUD
funding. HUD uses a process similar to the HUD Community Development
Block Grant (CDBG) program to distribute the EZ funding. HUD sends its
funding to the lead locality (city or county) which in turn may
distribute the funding to a non-profit 501c(3) corporation.
OPTIONAL ENTITLEMENT CITIES AND COMMUNITIES
Question. The Department has suggested that the CDBG program should
be revised to provide a new class of small cities with entitlement
funding. What is the justification for this proposal?
Answer. Last year, the Department considered a proposal to create
``Optional Entitlement Communities (OEC)'' that would provide
consistent Community Development Block Grant funding to meet the needs
of smaller urbanized areas. To implement this proposal would require
legislative action.
The proposal originated not because of any particular failure by
states to meet the priorities of non-entitlement areas in their states.
Rather, it came from recognition that some of the larger small
communities, below the entitlement threshold, could also greatly
benefit from reliable annual funding to carry out a broader range of
community development activities to address local priorities
characteristic of urbanized areas like the entitlement communities.
Most states set the funding priorities and limit the range of eligible
community development activities. The proposal follows the same
bipartisan concept of devolution that created the Community Development
Block Grant program in 1974--that a single block grant allows cities
and counties, not the Federal government, to make decisions about the
community development projects in their neighborhoods. An annual
formula allocation allows communities more flexibility in determining
how best to address local community and economic development needs. It
provides predictable annual funding. It allows the community
flexibility in carrying out multiyear projects.
We are reviewing the numerous comments and issues raised to date.
We are consulting with cities, counties, states, their representative
interest groups, and other interested parties and, of course, will
continue to work with you in the legislative process.
VOUCHER SUCCESS FUND
Question. Mr. Secretary, the Administration is recommending $50
million in fiscal year 2001 for a Voucher Success program. This program
is designed to facilitate the use of section 8 assistance by voucher
holders, especially since the Administration is beginning to admit that
voucher holders are having significant problems in using vouchers as
well as finding affordable rental housing. However, this appears to be
a double payment since PHAs already receive administrative fees that
are intended to compensate PHAs in making the Section 8 program work.
What are PHAs doing with their administrative fees?
Answer. Public Housing Authorities (PHA) administer units for the
owners, and process subsidies for families in the tenant-based
assistance programs. The fees that they receive covers a broad range of
ongoing routine program responsibilities, including:
--marketing, accepting applications, maintaining a waiting list,
selecting families for admission;
--verifying eligibility, monitoring income mix, providing outreach to
owners and fostering owner relations;
--briefing families on (a) the housing search process, (b) housing
opportunities, (c) fair market rents, (d) housing quality
standards (HQS);
--managing voucher search terms/extensions;
--approving leases;
--determining reasonable rent for each unit leased;
--establishing payment standards, establishing and maintaining
utility allowance schedule;
--performing pre-leasing and annual HQS inspections;
--enforcing HQS and performing HQS quality control inspections;
--coordinating portability moves & billing;
--managing the process of family moves within HA jurisdiction;
--reporting family data;
--processing annual and special rent increases for each unit leased;
--terminating assistance and conduct hearings;
--making monthly housing assistance payments; and
--maintaining program/project accounts.
These administrative fees would be both inadequate and
inappropriate to respond to the types of issues/concerns for which the
Voucher Success Fund is proposed. The Voucher Success Fund is intended
to improve lease-up rates in difficult markets, and concomitantly
reduce recaptures. By design, the funds would be targeted to
communities running sound programs, but still experiencing problems.
Some of the activities that are clearly beyond normal program
operations, and which would be the focus of the Voucher Success Fund
include:
--focused technical assistance to local PHAs or communities to
improve program outcomes;
--counseling (including mobility counseling) and security deposit
assistance for families using vouchers; and
--intensive outreach programs to encourage landlord participation.
Question. Are these fees too low for PHAs to administer their
Section 8 Programs?
Answer. Only in isolated instances have Public Housing Authorities
(PHA) found the current administrative fees to be inadequate. This is
mostly true in their attempt to fulfill obligations to administer
particular unfunded mandates that go beyond usual program operations,
i.e., Family Self-Sufficiency, Family Unification, and the Mainstream
Housing Opportunities for Persons with Disabilities Programs. For such
programs which provide a large influx of vouchers at one time, staff
time and resources are stretched beyond capacity.
Question. Please identify all audits and/or studies that review the
use of administrative fees by PHAs.
Answer. Only one study of the Public Housing Authority (PHA)
administrative fees has been conducted during the last decade, namely,
``Section 8 Administrative Fees: A Report to Congress,'' prepared by
the Department's Office of Policy Development and Research in June 1994
(A copy of the Study is enclosed.) Information derived from that Study
was used as the basis for the formulation of the Department's policy:
``Annual Factors for Determining Public Housing Agency Administrative
Fees for the Section 8 Rental Voucher and Rental Certificate
Programs,'' issued January 24, 1995 (copy attached). The policy
established in that Rule was used to determine PHA administrative fees
until enactment of the Public Housing Reform Act of 1998, which amended
Section 8(q) of the 1937 Act.
NATIVE AMERICAN HOUSING BLOCK GRANTS PROGRAM
Question. How well has the Native American Block Grant program met
the housing needs of the Native Americans?
Answer. The Indian Housing Block Grant (IHBG), authorized by the
Native American Housing Assistance and Self-Determination Act (NAHASDA)
was initially implemented in fiscal year 1998. The number of grantees
receiving funds since the implementation of NAHASDA represents a
substantial increase in the number of clients assisted since the
transition from the programs administered under the U.S. Housing Act of
1937 (1937 Act). Under the 1937 Act, assistance was provided to
approximately 200 Indian housing authorities (IHAs). In the first year,
368 Indian housing plans (IHPs) (representing 552 tribes) were approved
for allocations from the fiscal year 1998 appropriation of $585
million. In fiscal year 1999, 356 IHPs representing 527 tribes were
approved for a share of the $610 million appropriation.
The IHBG has also increased the number of eligible activities for
the development of new affordable housing activities. The result has
been an increase in housing opportunities for many eligible tribal
families throughout the country. Activities proposed by tribes in their
IHPs include: down payment and other mortgage assistance, revolving
loan funds for rehabilitation of housing units, transitional housing,
spousal abuse shelters, elderly homes and congregate housing. In many
cases IHBG funds have been used effectively to leverage other funds for
affordable housing activities.
Training and technical assistance activities have also increased
under NAHASDA. The Act required tribes to act either as a direct
housing provider or to designate a tribally designated housing entity
(TDHE), as opposed to their prior role providing indirect oversight.
Consequently, more intensive, hands-on training is needed for Office of
Native American Programs (ONAP) staff, tribal officials and TDHE
personnel. A staff training plan was developed during the early stages
of implementing the Act, and is routinely modified and updated to
reflect the training conducted, as well as to reflect new needs that
are identified. The Tribal Training and Technical Assistance Center is
a vital part of the overall training plan. It is internet-based, and
provides a centralized repository for training and technical assistance
products, a calendar of upcoming training sessions, and a mechanism for
tribes and TDHEs to directly request assistance from ONAP.
A more in-depth review of NAHASDA was provided in the Department's
report that was submitted to the House Subcommittee in March 2000. A
copy of that report is attached.
The Department remains strongly committed to providing safe, decent
and affordable housing for American Indian and Alaska Native families.
Attachment
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Report to the U.S. House of Representatives Committee on
Appropriations, Indian Housing Program Plan
PREPARED BY THE OFFICE OF NATIVE AMERICAN PROGRAMS
The following report is respectfully submitted, pursuant to the
request contained in House Report 106-286, accompanying the fiscal year
2000 Department of Veterans Affairs and Housing and Urban Development,
and Independent Agencies Appropriations Act.
The objective of this report is to share with the Committee our
performance goals and objectives for the Indian housing programs. We
also offer detailed background information on these programs to inform
you of our recent successes, our challenges and how these programs are
operating. Taken together, this information will provide the Committee
with a better understanding of how we will achieve our goals and
objectives.
Within the Department of Housing and Urban Development (HUD), the
Office of Native American Programs (ONAP) carries principal
responsibility for development, delivery and monitoring of programs for
Native Americans. The authorizing statute for ONAP's primary programs
is contained in the Native American Housing Assistance and Self-
Determination Act of 1996 (NAHASDA).
The performance goals for HUD and ONAP are as follows:
--to increase the availability of decent, safe and affordable housing
in all Native American communities
--to increase homeownership opportunities in Native American
communities by increasing the number of Section 184 guaranteed
mortgage loans
--to increase the availability of affordable rental housing to low-
income Native American families residing within an American
Indian and Alaska Native area
--to create additional housing opportunities by increasing the
technical expertise of Indian tribes and Tribally Designated
Housing Entities (TDHEs)
--to promote self-sufficiency and asset development by poor and
disadvantaged Native American families and individuals
--to enhance the development of affordable housing through the use of
successful, innovative models in the Title VI program
--to increase access to private capital
--to further economic growth on Indian reservations and other Indian
areas
--to contribute to the overall decline in housing discrimination from
1989 levels
The performance objectives which have been established are
reflective of HUD's Business and Operating Plan and our Annual
Performance Plan. They are the following:
--increase the number of Native American families served by the
Indian Housing Block Grant program by 3 percent in fiscal year
2001 from the baseline established in fiscal year 2000
--provide training sessions to tribes, TDHEs and financial
institutions covering the Section 184 and other mortgage loan
programs, in order to increase homeownership opportunities
--provide Section 504 training to a minimum of 20 percent of NAHASDA
grant recipients in order to help reduce discrimination levels
--encourage the investment and participation of traditional financial
institutions that have not served Indian reservations and other
Native American areas
BACKGROUND INFORMATION ON HUD'S INDIAN PROGRAMS
The Indian Housing Block Grant Program
The Office of Native American Programs (ONAP) has successfully
completed its second year of reviewing the Indian Housing Plans (IHP)
submitted by participants in the Indian Housing Block Grant (IHBG)
Program, as required by section 103 of the Native American Housing
Assistance and Self-Determination Act of 1996 (NAHASDA). Figure 1
illustrates client and funding levels for fiscal year 1998 and fiscal
year 1999. This represents a substantial increase in the number of
clients that ONAP has assisted since the transition from the programs
administered under the U.S. Housing Act of 1937 (1937 Act). Under the
1937 Act, ONAP provided assistance to approximately 200 Indian housing
authorities.
FIGURE 1
[Funds in millions of dollars]
------------------------------------------------------------------------
No. of No. of
plans tribes Funds
submitted represented allocated
------------------------------------------------------------------------
Fiscal year:
1998........................... 368 552 $585
1999........................... 356 527 610
------------------------------------------------------------------------
NAHASDA has provided tribes with the ability to develop new
affordable housing activities that were not eligible under the 1937
Act. The result has been an increase in housing opportunities for many
eligible tribal families throughout the country. Examples of the
activities proposed by tribes in the IHPs include: downpayment and
other mortgage assistance, revolving loans funds for rehabilitation of
housing units, transitional housing, spousal abuse shelters, elderly
homes and congregate housing. NAHASDA has been used in many cases to
leverage funds for affordable housing.
In addition to the review of plans, we have continued to administer
the IHBG formula developed by the Negotiated Rulemaking Committee. This
included the successful completion of challenges and corrections to the
NAHASDA funding formula. In fiscal year 1999, we enlisted the
assistance of a contractor to assist the Department and our recipients
in this effort. These challenges and corrections are submitted for the
purpose of correcting the data used in developing the formula
allocation for each tribe. See Figure 2.
Figure 2.--Indian Housing Block Grant
No. of formula
challenges
Fiscal year:
1998.......................................................... 120
1999.......................................................... 137
We also have developed a ``Toll Free'' hotline so that tribes and
tribally designated housing entities can receive immediate assistance
with formula allocation questions and problems.
ONAP will be convening a work group this year to re-examine the
formula, pursuant to the requirements contained in 24 CFR 1000.306.
This regulation states that the IHBG formula can be modified by
developing a set of measurable and verifiable data directly related to
Indian and Alaska Native housing needs; determining if NAHASDA units
should be included under Formula Current Assisted Stock (FCAS) or other
changes that may be needed with respect to funding under the FCAS
component of the formula; and/or, reducing the Section 8 units by the
same percentage that the current assisted rental stock has diminished
since September 30, 1999. The goal of the work group will be to
determine if the formula should be modified as a result of the data
uncovered.
Title VI: Federal Guarantees for Financing for Tribal Housing
Activities
Title VI of NAHASDA authorizes HUD to guarantee notes or other
obligations issued by Indian tribes or TDHEs for the purpose of
financing affordable housing activities as set forth in Section 202 of
NAHASDA. Indian tribes, or their TDHEs, leverage IHBG funds to secure
financial obligations to a maximum of five times their annual grant
allocation. Current and future IHBG funds are pledged as security to
the repayment of the Federally-guaranteed financial obligation. In its
third year of funding, ONAP issued Preliminary Letters of Acceptance to
seven potential borrowers representing potential loan commitments of
$34,155,000. With continued training, technical assistance and sharing
of model loans from those first funded, ONAP expects continued growth
of the program.
Section 184 Indian Home Loan Guarantee Program
The Indian Home Loan Guarantee 184 Program was created under
Section 184 of the Housing and Community Development Act of 1992, as
amended by Title VII of the Native American Housing Assistance and
Self-Determination Act of 1996 (NAHASDA). The Section 184 program gives
Native Americans access to sources of private mortgage financing by
providing loan guarantees to lenders. Section 184 covers one-to-four
family homes located in an Indian or Alaska Native area where the land
may be tribal trust, allotted individual trust or fee simple land.
Native American and Alaska Native families, individuals, Indian
Tribes or Indian Housing Authorities (including TDHEs) may obtain
Section 184 financing in order to purchase an existing home, construct
or rehabilitate a home within an Indian area. In the event of a
foreclosure, only these eligible borrowers may purchase the home from
HUD.
SECTION 184 ACTIVITY TO DATE FROM PROGRAM IMPLEMENTATION IN 1994 TO
JANUARY 31, 2000
------------------------------------------------------------------------
No. of Amount of
Ownership Type Loans Loans
------------------------------------------------------------------------
Fee Simple.................................. 433 $46,966,523
Tribal Trust................................ 185 14,737,222
Allotted Trust.............................. 13 1,093,011
---------------------------
Totals................................ 631 62,796,756
------------------------------------------------------------------------
TRAINING AND TECHNICAL ASSISTANCE SUCCESSES
The passage of NAHASDA and its implementation through the program
regulations developed by the Negotiated Rulemaking Committee challenged
tribes and ONAP staff to create a new atmosphere of consultation and
coordination. Asking a tribe to adopt procedures to become the direct
housing provider was vastly different than their prior role as an
indirect oversight entity. More intensive, hands-on training may be
needed for ONAP, tribes and their housing entities to meet those
challenges along with the skillful use of all technological tools to
reduce costs and maximize the utilization of Federal funds.
As part of the ONAP reorganization, a Training and Technical
Assistance Committee was formed consisting of a representative from
each ONAP field and Headquarters offices. One of the first priorities
of the committee was to develop a staff training plan. In the past two
years the training plan has been modified and updated as training has
occurred and new needs are identified. The committee conducted a staff
survey in December 1999 and has continued to receive input from the
local offices.
In order to meet the committee's mission of achieving the most
effective and efficient use of training resources, many of the training
courses are consolidated sessions for grant recipients and ONAP staff.
In many instances, ONAP uses outside contractors to develop and conduct
the training sessions; therefore, the annual procurement plan is
prepared in conjunction with the training plan.
In the past year, the following training sessions have been held
for grantees, ONAP staff, financial institutions or all of these
participants:
--Indian Housing Plan preparation and submission
--Environmental Review requirements
--Grants Monitoring Business Processes
--NAHASDA Grant Requirements
--Indian Community Development Block Grant
--Internal Controls and the Audit Process
--Section 184 Loan Guarantee Program
--Homeownership Counseling
--Homeownership Summit Seminars
--Low-income Housing Tax Credit Workshops
--Policy Development Workshops
--Implementation Skills for Boys and Girls Clubs
--Boys and Girls Club Executive Directors Training
--Crime Prevention and Drug Elimination Conference
The technical assistance plan developed by the committee provides
for periodic assessment of needs, local Area ONAP involvement,
evaluation of requests and short- and long-term evaluation. Based on an
analysis of technical assistance requests, workshops providing hands-on
technical assistance for small groups of housing or tribal
representatives are scheduled. The workshop environment allows for a
more cost effective method of delivering technical assistance while
providing one-on-one assistance.
A Tribal Technical Assistance and Training (TTAT) Center has been
established on the Internet to provide a central location for tribes
and TDHEs to request technical assistance in program planning,
development, and management. The TTAT Center maintains a training
calendar and provides training and technical assistance products.
Under the Drug Elimination technical assistance program, training
manuals and newsletters have been developed to support the Boys and
Girls Club Initiative. Five guidebooks have been developed for the
Youth Development and Community Leadership program. Under the Community
Anti-Crime in Indian Country initiative, needs assessments and site
visits have been conducted by our contractor.
During fiscal year 1998 and fiscal year 1999, ONAP conducted over
13 regional training and technical assistance sessions for recipients
on submission of IHPs. Additionally, we completed numerous sessions
with ONAP staff, instructing them on how to review these IHPs in order
to ensure national consistency across the program. ONAP developed a
National Review Committee, comprised of program staff from throughout
the country, to assist in the review of IHPs during these first two
years of NAHASDA implementation. The purpose of the NRC was to ensure
consistency in the interpretation of NAHASDA and its implementing
regulations.
In fiscal year 2000, we continue to work on improving the IHP
review requirements and open further channels of communication between
our staff and our grant recipients. Staff training was held in December
of 1999 with follow-up training provided in January of 2000. Training
is also scheduled for the third or fourth quarter of this year.
Sessions on IHP and NAHASDA requirements are also planned for grant
recipients. We continually work with staff to ensure that the 60-day
statutory deadline for IHP review is met.
In order to successfully implement the new Title VI program, HUD
published a Notice of Funds Availability (NOFA) to provide ``capacity-
building'' (i.e. the transferring of skills and knowledge) to potential
borrowers. The purpose of the NOFA was to solicit a qualified technical
assistance to: (1) strengthen the economic feasibility of projects
guaranteed under Title VI of NAHASDA; (2) directly enhance the security
of guaranteed loans; (3) finance affordable housing activities and
related projects that will provide near-term results; (4) demonstrate
economic benefits such as homeownership opportunities, increase housing
availability, housing accessibility and visibility, and job creation
related to the approved project; and (5) attain Indian Housing Plan
goals and objectives.
Thus far, the contractor selected has provided training at
approximately 20 tribal and association meetings and developed an
assessment program that screens potential borrowers. The multi-step
assessment program includes a telephone assessment to determine initial
qualification and needs, followed by an on-site review to determine the
extent of technical assistance that may be required. This is
accomplished by reviewing records, audits, resident accounts,
maintenance schedules, work orders and other housing activities. Data
is assembled and a Technical Assistance Plan is custom designed to meet
the needs of the borrower. The Technical Assistance Plan is then
submitted to ONAP for approval and Capacity-Building grant funds are
reserved. Three Technical Assistance Plans have been approved by ONAP
and another is currently under ONAP review.
Outreach and training has continued under the Section 184 home loan
guarantee program. A significant change took place in fiscal year 1999
in the delivery of this training, as a result of the One-Stop Mortgage
Center Initiative. In August 1998, President Clinton held an Economic
Development Summit to focus on Indian country issues. One of the by-
products of the Summit was the Initiative, co-chaired by HUD and the
Treasury Department. The goal of the joint committee was to increase
homeownership opportunities in Indian country through streamlining the
mortgage loan process.
HUD and Treasury were requested to put together working groups to
identify the barriers to mortgage lending in Indian country, and
develop solutions to those barriers. In the course of this process many
participants identified the need for education about available loan
products sponsored by Federal agencies. The result was inter-agency
training sessions, sponsored by ONAP, which cover not only the Section
184 program, but also loan programs sponsored by the U.S. Department of
Agriculture and Veterans Affairs. Speakers from the Bureau of Indian
Affairs also participate in order to train attendees on land issues.
Three inter-agency trainings were held in fiscal year 1999 and four
have been planned for fiscal year 2000. ONAP staff continue to
participate in conferences around the country, to promote the Section
184 program.
ONAP has also developed many technical assistance products which
have been made available to grant recipients on the Internet or through
distribution of CD-ROMs. Some of these products include:
The Side-by-Side Guidebook.--Allows the user to easily refer to
NAHASDA along with the applicable program regulation(s). The Guidebook
also includes all regulations and laws included or cross-referenced in
NAHASDA or in 24 CFR Part 1000.
The Tribal Legal Code Project.--An outline and illustrative guide
for drafting tribal-specific housing codes, including representative
examples of land use, building, and zoning codes. The project utilized
existing tribal codes and identified best practices.
The ONAP Online Training Modules.--A web-based training tool that
allows users to learn whenever they want, at their own pace. The online
training currently includes basic level modules on housing finance,
procurement, homeownership, financial management, construction
management, and property management. Additional topics and intermediate
and advanced modules will follow.
The NAHASDA Development Model Series.--Models crafted to help
tribes and TDHEs design eligible programs using NAHASDA funds. Each
model includes, where appropriate, an outline of new regulations and
detailed guidance on program design, implementation strategies and
effective approaches.
The Guide to Creating a Nonprofit Homeownership Entity.--A resource
guide for launching a nonprofit with the mission of promoting
homeownership opportunities. The guide leads the user through the
planning stages, the legal creation of an entity, the application
process for Internal Revenue Service 501(c)(3) status, the development
of the organization, and program operations.
The HUD ONAP Community Builders have been actively involved in the
provision of direct technical assistance to tribes and TDHEs in all six
Area Offices. Their regular activities include site visits, responding
to telephone requests for assistance or information, preparation of
explanatory materials on Federal programs, and conducting workshops and
training sessions. ONAP Community Builders carried out some of the
sessions noted above and in addition provided the following technical
assistance sessions:
--Muckleshoot Tribal Housing Authority.--Considered different
financing alternatives including developing their own lending
firm.
--Lower Elwha, Jamestown Klallarn and Makah Tribes.--Provided
information and training on Section 184, tribal programs, and
tribal employment.
--Port Madison Tribe.--Explained Title VI, purchase of fee simple
land, downpayment assistance and the purchase of HUD Acquired
Properties.
--Yakama and Port Gamble S'Kallam, Tribes.--Provided examples and
models of homeownership counseling programs.
--Coquille Tribe, the Coos, Lower Umqua, & Siuslaw Confederation of
Tribes, the Silitz Tribe and the Grand Ronde Tribe.--Providing
training on Section 184, Title VI, and other financing options.
--Lummi, Tulalip, Quinault and Puyallup Tribes.--Gave training and
materials on the Title VI program.
--Santa Clara Pueblo Housing Authority.--Explored establishing
homeownership programs and utilization of the Title VI program.
--Jemez Housing Authority.--Provided examples of homeownership and
rehabilitation programs for the elderly.
--Santo Domingo Housing Authority.--Provided training on various
homeownership programs, Title VI and low-income housing tax
credit project.
TRAINING AND TECHNICAL ASSISTANCE GOALS AND OBJECTIVES FOR FISCAL YEAR
2000
Objectives fully or partially completed:
--Provide job-specific training to 100 percent of the ONAP staff.
--Job-specific training was provided to over 95 percent of the ONAP
staff at the first ever all-staff training in December
1999.
--Workshops on Low-income Housing Tax Credits, Special Needs
Assessment, Indian Housing Plans, Policy Development, Project
Implementation for Rehabilitation and Internal Controls and
Self-Monitoring, have been held in October and December 1999
and January and February 2000 in three locations.
--Issue at least six Dream Catchers; a newsletter offering up-to-date
program information. The last issue in this on-going series was
issued December 1999.
Training and Technical Assistance projects being finalized:
--Hold training sessions in each region for IHBG recipients and ONAP
staff on a minimum of five topics.
--Develop additional modules for the ONAP Online Training.
--Develop and distribute additional technical assistance products.
--Maintain quality Internet sites (Code Talk) as a resource for
tribes.
--Conduct workshops on at least eight different topics in at least
six different locations for IHBG recipients.
ONAP TECHNOLOGY HIGHLIGHTS
ONAP utilizes technology to better serve its clients, administer
its programs, and manage its most important corporate asset--knowledge
capital. Since 1997, ONAP has provided its clients and the general
public with improved Internet access to the latest reference
documentation, frequently asked questions, collaboration forums, and
grant program assistance information. Additionally, annual plans and
reports can be submitted via the Internet by grant recipients directly
to ONAP staff for review, tracking, and approval as part of an
efficient Lotus Notes workflow system. This system also allows ONAP to
track work-load by assigning reviewers to plans and reports, as well as
determining benchmarks for process improvements by capturing specific
metrics such as how long it takes to review plans and reports.
ONAP's success in providing information to our clients through the
use of the internet is proven by examining the number of ``hits'' on
our various web pages during the months of December 1999 and January
2000.
ONAP Web Site Tracking
[December 1999 and January 2000]
No. of ``hits''
to web page
Web-based Training................................................ 6,083
Planet Youth......................................................32,600
Tribal Consultation Information................................... 1,656
E-Library......................................................... 2,665
The Planet Youth web site is designed for and primarily used by
Native American youth. It is the third most popular site among ONAP's
various web sites. Additionally, ONAP's web pages have proven to be a
vital and ready source of information. Program information and
publications such as the Dream Catcher newsletter are frequently
downloaded, according to tracking information.
ONAP established a Knowledge Management Committee (KMC) focused on
standardizing office processes, increasing staff efficiency and
effectiveness, sharing knowledge, working smarter, and helping ONAP
achieve its mission and objectives. The KMC also manages ONAP's
Electronic Library (eLibrary), which is our Front Page for weekly
messages from the Deputy Assistant Secretary, contact information,
calendar events, meeting minutes, best practices, and reference
materials. The eLibrary also allows for electronic dialogue between
geographically dispersed ONAP staff members through the use of
discussion databases.
During fiscal year 2000, ONAP will expand the use of the Internet
and other leading-edge technologies to continue to lead HUD and the
Federal Government with Electronic Business. They will continue their
commitment to grant recipient technology enablement through a new
initiative designed specifically to help the Native American community
obtain Internet access. ONAP will provide hands-on, on-site support to
these groups. The benefits of this initiative include expediting the
grant allocation process by allowing ONAP staff to review the plans and
reports on-line. Increasing on-line submissions will enable ONAP staff
to spend more time assisting grant recipients in developing successful
housing programs. Additionally, the Recipient Technological Enablement
initiative helps to shrink the digital divide by providing Internet
access and skills to geographically remote groups who might otherwise
be left behind in the new technology-based economy.
ONAP will continue to promote the KMC and eLibrary. Our plans are
to reevaluate the roles of the KMC representatives so that they have
more time and incentive to contribute to its success. An active KMC and
a well-utilized eLibrary will help reduce paper transactions and rework
as well as increase ONAPs responsiveness to clients. This initiative
also supports ONAP's Virtual Office goals by allowing ONAP staff
located across the country to collaborate, sharing data and ideas.
During fiscal year 2000, ONAP will also begin development of the
Native American Economic Development Access Center (NAEDAC), as
directed by President Clinton. The NAEDAC will provide tribes, Indian-
owned businesses, the private sector, and non-profit organizations easy
access to information on a wide range of Federal economic development
programs and initiatives. The NAEDAC will initially consist of a toll-
free telephone number answered by ONAP staff, who will direct callers
to sources of obtain information on federal resources for economic
development. Ultimately, the Internet and other technologies will be
used for the Native American community to conduct their own research
through a single access point on the Internet.
MONITORING AND OVERSIGHT OF INDIAN PROGRAMS
During fiscal year 1999, ONAP created a team of managers, staff,
and subject-matter experts to develop a business process for the
evaluation of grantee performance. The outcome of this effort is a
risk-based monitoring effort wherein the recipients with the highest
potential for not accomplishing their objectives receive the greatest
attention, such as closer oversight and access to available technical
assistance, from the Department. The ONAP recognizes the benefits of
reviewing all recipients on a regular basis to identify best practices,
so that they may be shared with other program participants. In addition
to regular monitoring of the poorer performers, an objective has been
established to visit at least 20 percent of all program participants
each year, so that all recipients will be monitored not less frequently
than every five years. During fiscal year 2000, 116 recipients have
been scheduled for monitoring with 96 planned for on-site review. This
level of effort reflects review of approximately 20 percent of all
active recipients.
ONAP will extend its use of the Internet during fiscal year 2000 to
provide the public with access to the schedule of upcoming monitoring
visits, copies of final monitoring reports on recipient performance,
and the guidelines and tools used by ONAP in its monitoring efforts.
The planned monitoring visit schedule is currently posted on the
``CODETALK'' website and is updated monthly. This information will
assist grant recipients in preparing for HUD monitoring of its'
programs and provide relevant information on what is or is not working
for other tribes.
The business process development team created a guidebook to
provide instruction to HUD staff in monitoring requirements and to
improve consistency in the application of program requirements among
all ONAP offices. During fiscal year 2000, ONAP plans to refine and
expand the contents of the guidebook to incorporate knowledge obtained
during the monitoring process. The initial guidebook, along with any
improvements, will be made available to tribes and tribally designated
housing entities for their information and use via the electronic
medium.
During fiscal year 2000, ONAP will constantly review and refine its
monitoring processes and procedures to improve the efficiency and
effectiveness of its oversight functions. This will include, as
mentioned in the previous paragraph, regular updates to its internal
guidance (self-evaluation), assessment of its performance by outside
experts to solicit recommendations for streamlining and other
improvements, assessing the availability for out-sourcing monitoring
elements such as analysis of physical condition of housing stock,
financial reviews of recipients and incorporating greater use of
technology in monitoring.
ONAP continues to monitor the performance of lenders and individual
loan performance in the Section 184 program. Loss mitigation options
are strongly encouraged for servicing mortgagees. When quality control
reviews of guaranteed loans reveal potential lender problems, on-site
monitoring reviews will be scheduled.
CONCLUSIONS
HUD and the Office of Native American Programs, remains committed
to providing safe, decent and affordable housing for Native Americans
and Alaska Natives. In order to accomplish our goals and objectives, we
will maintain a dynamic program of technical assistance and training.
An aggressive monitoring program will assure quality program delivery.
Question. How does HUD measure the success of this program under
the Results Act?
Answer. The fiscal year 2001 performance goal under Government
Performance Results Act (GPRA) for the Indian Housing Block Grant
(IHBG) is to increase the number of Native American families served by
3 percent over the baseline that will be established in fiscal year
2000. The Department will accomplish this by analyzing the Annual
Performance Reports (APRs) which are required to be submitted by grant
recipients pursuant to sections 403(b) and 404(b) of NAHASDA and its
implementing regulations at 24 CFR 1000.512-521. The Department's
Office of Native American Programs (ONAP) staff reviews the APRs to
determine if the grantee was successful in meeting its stated Indian
Housing Program (IHP) goals. Staff also monitor each grantee's
performance and track data submission through on- and off-site
monitoring.
Question. What significant reforms need to be made to this program
to ensure its success?
Answer. The Office of Native American Programs (ONAP) has been
deeply involved in consulting with its clients to reach consensus on
how to improve program operations and delivery. A number of issues have
been identified for further discussion, including:
--reviewing the established allocation formula to ensure that it
meets tribal needs;
--expanding Native American Housing Assistance and Self Determination
Act's (NAHASDA) six eligible affordable housing activities to
include comprehensive planning activities, housing services,
and certain infrastructure needs when the low-income families
are residents of housing not developed under NAHASDA (these and
similar activities are currently prohibited by statute); and
--resolving problems associated with reaching cooperative agreements
with local jurisdictions and the tax-exempt status of housing
units developed with NAHASDA funds.
PUBLIC HOUSING OPERATING FUND
Question. What is the status of the rule making for establishing a
new operating subsidy formula and when will this new formula be ready
for implementation?
Answer. Regulatory negotiations for establishing a new operating
subsidy formula were completed on March 8, 2000, with the adoption by
consensus of preamble and regulatory language drafted by the
established Negotiated Rulemaking Committee. Following internal, OMB,
and Congressional Committee reviews, the draft material is expected to
be issued as a proposed rule later this month. The Department will
consider the public comments received on the proposed rule and, per the
consensus agreement, issue an interim rule that would govern the
determination of funding distributions to Public Housing Authorities
(PHA) under the Operating Fund, until a final rule, reflecting the
results of a Congressionally requested public housing cost study, is
developed and published. The interim rule will first be effective for
PHAs with fiscal years beginning on or after January 1, 2001.
PUBLIC HOUSING CAPITAL FUND
Question. What is the current estimate of unmet capital needs for
the entire stock of public housing?
Answer. A major study conducted by Abt Associates for HUD,
completed in March 2000, concluded that the backlog was approximately
$23 billion in June 1998. The Study, which also concluded that the
requirements have an annual accrual of $2.1 billion, was based on
physical inspections of 684 developments with 229,973 units at 219
housing authorities. A copy of the referenced Study is enclosed.
[Clerk's note: A copy of ``Capital Needs of the Public Housing
Stock in 1998'', formula capital study, can be obtained by contacting
the U.S. Department of Housing and Urban Development.]
Question. Should these capital needs be considered as a priority
among HUD programs?
Answer. Yes. Public housing developments are a vital source of
housing for low-income families. Vast improvements have been achieved
in rehabilitating and integrating public housing into the fabric of the
community through HOPE VI and Public Housing Capital Fund
appropriations. To forestall and reverse the deterioration of the
aging, existing stock, including failing infrastructure, and the
consequent negative impact on communities, continued funding at
significant levels for both programs is critical.
Question. Does HUD have a long-term plan for addressing these
capital needs?
Answer. The Department has a three pronged approach for addressing
the capital needs as follows: (1) Annual physical inspections are
conducted by the Real Estate Assessment Center (REAC) to document and
provide a current assessment of the conditions of all public housing
developments; (2) Based on the annual assessment, Public Housing
Authorities (PHA) develop long-range strategies in order to target
capital fund resources and additional assessments of capital needs to
correct those deficiencies through renovation of viable developments
and/or demolition of non-viable developments; and (3) HOPE VI funds are
used in select cases, where the PHA, the local community, the City, and
private entities are able to form a partnership for a comprehensive
plan to revitalize a community, and capital funds otherwise would be
inadequate.
Question. Has HUD conducted a cost benefit analysis of what is the
appropriate level of funds needed to meet public housing capital needs
over the next 10 years?
Answer. The 1998 Abt Study, commissioned by the Department,
documented a modernization backlog of approximately $23 billion, and an
annual accrual of $2.1 billion. The results of this Study (copy
provided with previous answer) can be used as a guide for the
appropriators.
SECTION 202 ELDERLY HOUSING CONVERSION TO ASSISTED LIVING
Question. Mr. Secretary, the administration is proposing $50
million for the conversion of section 202 housing to assisted living
units. What is the status of this new initiative and what is the
nation-wide need for this type of housing?
Answer. The Notice of Funding Availability (NOFA), announcing
fiscal year 2000 funds, was published in the Federal Register on March
17, 2000 and applications are due July 17, 2000. The number of Section
202 elderly residents 85 years and older are increasing rapidly. As
these residents continue to age in place, they are becoming frailer and
consequently need more accessibility features and more supportive
services in order to remain independent and not be prematurely
displaced to nursing homes. In most cases, nursing homes provide the
primary option for the very low-income frail elderly since most
assisted living facility are not affordable. As we have been informed
by the industry, the $50 million for converting existing Section 202
projects to assisted living facilities allows their residents to remain
in place and provides their frail elderly residents with an affordable
option to nursing home placement.
SECTION 811 HOUSING FOR PERSONS WITH DISABILITIES
Question. Mr. Secretary, the Department continues to propose
increased funding annually for the Housing for Persons with AIDS
housing program (HOPWA) while Section 811 Housing for Persons with
Disabilities has primarily received flat funding under recent
Administration budgets?
Answer. The Department has also proposed an increase in funding for
the Section 811 program since fiscal year 1999. In fiscal years 1999,
2000, and 2001, the Department proposed $174 million, $194 million, and
$210 million respectively. The Department has proposed an increase in
the HOPWA program to help address growing needs and provide support for
additional communities that are projected to become eligible for the
formula. For the Section 811 program, the Department has proposed an
increase in funding to further address the housing needs of persons
with disabilities who, as a population, have the worst case housing
needs.
In addition to the increased funding the Department is proposing to
expand the ``earned income disregard'' that is now applicable only to
HUD's public housing program to the calculation of income for persons
with disabilities to many of the programs at HUD. HUD has the authority
to implement the ``earned income disregard'' immediately for the
following four programs: HOME, Housing Choice Voucher Program, HOPWA,
and Supporting Housing for the Homeless. For other programs at HUD,
statutory language change will be required. The language is being
drafted by the Department at this time. The earned income disregard
will assist persons with disabilities in obtaining and retaining
employment, which obtaining and retaining employment, which is an
important step toward economic self-sufficiency.
Question. In fact, HOPWA funding receives more annual HUD housing
funding than Section 811 housing despite the fact that persons with
AIDS are housed in Section 811 housing?
Answer. Since 1992, the HOPWA program has been the Federal
Government's primary targeted response to the pressing housing needs of
low income persons who are living with HIV/AIDS and their families.
Although persons with HIV/AIDS are eligible for Section 811 housing, it
is estimated that only 800 of the more than 16,000 housing units funded
through the Section 811 program over the past 10 years are for this
population. Therefore, the funding that the HOPWA program has received
over the years which covers the cost of a wide array of activities such
as housing assistance, supportive services and program planning and
development, is necessary to address the often unique and diverse
housing needs of a growing population of persons with HIV/AIDS.
Question. How do you explain the difference in the funding
priorities by the Administration between these programs?
Answer. The HOPWA program and the Section 811 program are different
in many respects. The Section 811 program provides funding for the
development of new permanent housing for persons with disabilities. The
HOPWA program is responding to a national epidemic. Although the HOPWA
program serves one population of persons with disabilities and its
primary focus is on housing assistance, the assistance is quite
different than what is provided through Section 811.
Under Section 811, the majority of the assistance is project-based.
Of the HOPWA funds used for rental assistance (78 percent of total
funding), 84 units supported through 57 percent of the HOPWA funds are
for tenant-based rental assistance and short-term rent, mortgage and
utilities payments to prevent homelessness. These funds may be used to
support residents in their existing housing which enables them to
maintain their independence. Only 16 percent of the units, supported
with 43 percent of rental assistance funds are for facility-based forms
of housing assistance. The remaining 22 percent total of HOPWA funds
are used for supportive services. No Section 811 money can be used for
supportive services. The above is indicative of the fact that the large
population of persons with HIV/AIDS in this country has needs that, in
most cases, are not well served through the project-based Section 811
program. Funding for HOPWA is essentially based on caseload levels and
again represents the existence of a national epidemic and the basic
fact that the number of persons living with AIDS continues to increase.
In addition, the Department has in recent years requested additional
Section 811 funding, reflecting growing demand for this program as
well.
Question. Should these programs be merged?
Answer. No, the programs should not be merged because, as described
in the answer to the previous question, the two programs are very
different with respect to the types of activities that can be
implemented. In addition, eligible applicants for the two programs are
different. Under the Section 811 program, eligible applicants are
nonprofit organizations with a Section 501(c)(3) tax exemption. Under
Housing Opportunities for People With Aids (HOPWA), grants are provided
by formula allocations for 90 percent of the appropriation to States
and metropolitan areas with the largest number of cases and incidence
of AIDS, and for 10 percent of the appropriation, by competitive
selection of projects proposed by State and local governments and
nonprofit organizations. Both programs have very different legal
structures. Under HOPWA, funding is provided in the form of a grant
that must be expended within three years or the funding will be
deobligated. A grant agreement is used to obligate the funds. Under
811, however, funding is in the form of capital advances and project
rental assistance funds for the development and operation of the
projects. The project must operate for at least 40 years; otherwise the
Owner must repay a prorated share of the capital advance to HUD. There
is no grant agreement under Section 811. Instead, there is a capital
advance agreement and a mortgage note, among other legal documents.
LEAD-BASED PAINT HAZARD REDUCTION
Question. Mr. Secretary, the Administration is proposing a
significant increase in the Lead-Based Paint Hazard Reduction program
from $80 million in fiscal year 2000 to $120 million in fiscal year
2001. What activities will these funds be used for? In addition, I
understand that HUD funding of remediation far exceeds private sector
costs for similar activities.
Answer. Of the proposed $40 million increase, $30 million will be
used to increase funding for states and local governments to control
lead-based paint hazards in privately owned low-income dwellings where
the risk of childhood lead poisoning is greatest. For the past several
years, HUD has received grant requests totaling over $200 million each
year; most of these applications demonstrate very real need and
capacity. The need for funding has consistently exceeded the
availability of funds. Without a significant increase in funding, low-
income children will continue to be unnecessarily exposed to lead paint
hazards.
Eligible activities under the grant program include lead-based
paint inspections, risk assessments, correction of detected hazards,
post-abatement clearance testing (to ensure the work was done properly
and the property is safe to occupy), blood lead testing (if not
reimbursable from Medicaid or another source), public education to
provide parents with the information they need to protect their
children and to encourage landlords and other property owners to enroll
in the program, relocation expenses (to ensure children are not exposed
to hazards during the work), and administration (limited to 10 percent
of the award). Many local jurisdictions are able to leverage private
sector funds or set up revolving loan programs with the Federal
funding. The proposed increase in funding is part of a governmentwide
strategy to eliminate childhood lead paint poisoning by the year 2010
(this strategy report was sent to Congress in March 2000).
Grants are currently active in over 200 cities, but without
increased funding, many jurisdictions will not have the resources
needed to eliminate this disease. Funds are also used to provide
technical assistance to grantees and conduct research to promote
innovation and drive down hazard detection and abatement costs. Recent
data from a scientific evaluation of the grant program show that blood
lead levels have declined by approximately 25 percent in children
living for at least 1 year in abated housing and that dust lead levels
have declined by 66 percent over a 3-year period. Updates on the
evaluation have been provided in reports to Congress each year for the
past several years, with a major report expected in 2001.
The remaining $10 million will be used to enforce lead paint
regulations and to provide compliance assistance. At the Federal level,
HUD has new responsibility to enforce both the lead paint disclosure
regulation and a new regulation that consolidates, streamlines and
modernizes lead paint regulations for all Federally assisted housing.
The latter will take effect on September 15, 2000. Without increased
resources, HUD will be unable to provide the necessary training,
technical assistance and enforcement oversight needed to ensure
compliance and to ensure that Federal resources are not being used to
subsidize housing that poisons children. The fiscal year 2000 budget
provided $70 million for the lead paint grant program, technical
assistance and research and $10 million for the Healthy Homes
Initiative.
See next question for details on HUD versus private sector costs.
Question. Please provide a comparison of HUD costs as opposed to
private sector costs for remediation. Explain any differences in costs?
Answer. There are no data on privately funded abatement costs. As a
practical matter, most hazard control actions are performed under
orders of local health departments investigating cases of poisoned
children, or publicly funded projects through federal state and local
funding. HUD estimates the average costs of interim controls to be
approximately $2,500 per unit and $9,000 for permanent abatement.
However, since most homes do not have lead paint hazards and,
therefore, will not require treatment, the average cost per unit of the
regulation is only $196.00. The costs for individual dwellings can vary
widely, due to differences in size, number and type of surfaces with
lead hazards, and condition. The costs of lead hazard control are best
detailed in the Economic Analysis for HUD's lead hazard control
regulation, available upon request or at www.hud.gov/lea. The Economic
Analysis relies on the cost data collected from the evaluation of the
grant program, as well as interviews with private lead hazard control
contractors. The analysis shows that the cost of complying with the new
HUD lead paint regulation for federally-assisted housing is $235
million. The cost of not implementing the regulation (i.e. the benefit)
is $1.1 billion due to increased medical care, special education, and
reduced lifetime earnings (due to reduced IQ).
Question. Please identify the targets and benchmarks for this
program under the Results Act.
Answer. Performance indicators are contained in the Department's
Strategic Objective (1.3.5) of the Annual Performance Plan. They
include the number of units made lead-safe, the percent reduction in
dust lead levels in homes treated under the grant program, the number
of cooperative agreements completed under the Healthy Homes Initiative,
and the reduction in children's blood lead levels. The target number of
units treated under the grant program for fiscal year 1999 was 6,000
units and the actual number was 7,471. The overall cumulative number of
units treated is currently about 25,000 (which does not include the
units treated as a result of public education undertaken by grantees).
The target percent reduction in dust lead levels for fiscal year 1999
was 25 percent compared to baseline levels before abatement. Actual
performance was 64 percent. The fiscal year 1999 target for the Healthy
Homes Initiative was 8 awards; the actual performance was 11 awards.
The fiscal year 1999 target reduction in blood lead levels for children
living for at least 1 year in abated housing was 20 percent. The actual
reduction was 26 percent. Blood lead levels decline more slowly than
dust lead levels due to body stores of lead in the bone. National blood
lead levels should be available from the Centers for Disease Control
and Prevention in 2003 in the next National Health and Nutrition
Examination Survey.
Question. How does HUD measure the success of this program?
Answer. The two chief outcome measures are blood lead levels and
dust lead levels. Population blood lead levels are measured through
Center for Disease Control's (CDC) National Health and Nutrition
Examination Survey and dust lead levels are measured through the on-
going HUD Evaluation of the Lead Hazard Control Grant Program. The
report of the President's Task Force on Environmental Health Risks and
Safety Risks to Children contains new projections of the number of
children with elevated blood lead levels and the number of housing
units at risk of lead paint hazards. We estimate that there are about
250,000 low-income children with lead poisoning living in pre-1960
housing units. The last estimate from CDC was about 800,000 children
(from 1991-1994). While this represents enormous progress (due in part
to the HUD lead paint grant program) it is noteworthy that the
prevalence of this disease is still very large among certain
populations. Among low-income children living in older housing, the
prevalence is 16 percent (compared to 4.4 percent for all children).
Among African-American children in older housing, the prevalence is 21
percent. Unfortunately, childhood lead poisoning continues as one of
the major childhood environmental diseases. The report estimates that
by the year 2010, unless further actions are taken, about 135,000
children annually will be poisoned. The proposed expansion of the grant
program and implementation of the new HUD regulation is designed to
eliminate this problem over the coming decade. HUD will also complete a
new national survey of the prevalence of lead paint hazards in the U.S.
housing stock by December 2000. This will enable HUD to measure
progress in making housing lead-safe.
Question. What is HUD's role in remediation efforts in the private
sector?
Answer. HUD encourages its grantees to leverage private sector
funding to augment the Federal resources available. We also play an
important role in setting standards to create a level, competitive
playing field that promotes innovation and new technology in the lead
hazard control industry. For example, HUD produces Performance
Characteristics Sheets for XRF lead paint analyzers, which has helped
fuel a new generation of quicker, more accurate and less costly methods
of lead paint analysis. HUD also enforces the lead paint disclosure
regulation, which enables new homebuyers to obtain a 10-day opportunity
to have a lead paint inspection or risk assessment performed. If
hazards are identified, their correction can be financed through the
normal mortgage financing systems or through home improvement loans.
Some jurisdictions are now providing ``lead-safe'' certificates for
housing found to be lead-safe to encourage property owners to make
investments in lead-safety, as much as they would any other capital
improvement or on-going maintenance program. HUD also funds training
programs for remodeling, renovation, painting contractors, landlords,
maintenance workers, housing inspectors and the public to promote the
broad adoption of lead-safe work practices.
SYNCHRONIZATION
Question. HUD staff have indicated that the HUD Budget office is
pursuing a policy of synchronization of HUD section 8 and public
housing contracts. What is this policy and program?
Answer. Synchronization is a concept which was introduced by
housing industry groups during the negotiated rule-making meetings on
the Section 8 renewal policy. The term ``synchronization'' means to
align contract expiration dates for a public housing authority (PHA) to
occur at the same time. This concept is only applicable to the Section
8 tenant-based programs.
Over the years, housing agencies have been awarded numerous funding
increments through Notice of Fund Availability (NOFA) competition,
conversions of tenant-based assistance, demonstration programs, etc.
Each allocation of funding provided by HUD is unique, having effective
and expiration contract dates based on: (1) the length of the contract,
(2) the date funding was awarded by HUD, and (3) the execution date of
the annual contributions contract.
Currently, although there are only 3,000 PHAs, there are over
20,000 funding increments with renewal dates occurring throughout the
year. Given an annual renewal policy with a 1-year term, the process is
time and staff intensive for both the Department as well as the PHAs.
Moreover, multiple contracts expiring at different times throughout
the year increase the complexity of formulating budget projections,
creates confusion, and has, in fact, contributed to under-utilization
of the unit inventory by some PHAs. During the negotiated rule-making
sessions conducted during 1999, the housing industry groups requested
that the Department realign all contracts for a housing agency to
expire on the same date, which would result in one contract renewal
date each year for a housing agency.
Question. What are the costs associated with it and what is and
will be the impact of this policy and program on section 8 and public
housing programs?
Answer. The realignment of contract expiration dates for each
housing agency involves both contract extensions as well as
truncations. The net effect of the realignment results in a cost since
most contracts need to be extended to a new future date. The current
estimate to synchronize the increments is a one-time cost of
approximately $1.8 billion.
The impact of this policy on the Section 8 program is that both HUD
and the housing agencies will be able to manage program funds in more
effectively and efficiently. Budgetary projections will be facilitated,
and the Department will be able to quickly identify program under-
utilization, and reallocate unused resources to other housing
authorities. Recaptures would be minimized.
Question. Please identify all budget and other documents provided
to the Congress that identify and discuss this policy and program?
Answer. As one of the discussion items during the Congressionally
mandated negotiated rule making session for the development of a
Section 8 renewal formula, a discussion of the Department's
``synchronization'' is included in the Federal Register: ``Renewal of
Expiring Annual Contributions Contracts in the Tenant-Based Section 8
Programs; Formula for Allocation of Housing Assistance; Final Rule,''
published October 21, 1999. A copy of this document is attached for
your information.
[From the Federal Register, October 21, 1999]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 982
[Docket No. FR-4459-F-03]
RIN 2577-AB96
Renewal of Expiring Annual Contributions Contracts in the Tenant-Based
Section 8 Program; Formula for Allocation of Housing Assistance
AGENCY: Office of Public and Indian Housing, HUD.
ACTION: Final rule.
SUMMARY: This rule specifies the method HUD will use in allocating
housing assistance available to renew expiring contracts with public
housing agencies (PHAs) for Section 8 tenant-based housing assistance.
As required by statute, this rule is the product of a negotiated
rulemaking, following implementation, as further required by statute,
of a HUD notice on this subject.
EFFECTIVE DATE: November 22, 1999.
FOR FURTHER INFORMATION CONTACT: Robert Dalzell, Office of Public and
Indian Housing, Department of Housing and Urban Development, 451
Seventh Street, SW, Room 4204, Washington, DC 20410; telephone (202)
708-1380. (This is not a toll-free number.) Persons with hearing or
speech impairments may access that number via TTY by calling the
Federal Information Relay Service at (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
The statutory provision that provides the foundation for this rule
is section 8(dd) of the United States Housing Act of 1937 (the 1937
Housing Act)(42 U.S.C. 1437(dd)), as added by section 556(a) of the
Quality Housing and Work Responsibility Act of 1998 (Pub. L. 105-276,
112 Stat. 2461, approved October 21, 1998) (``Public Housing Reform
Act''). The new section 8(dd) directs HUD to establish an allocation
baseline amount of assistance (budget authority) to cover the renewals,
and to apply an inflation factor (based on local or regional factors)
to the baseline. The new provision states as follows:
(dd) Tenant-Based Contract Renewals.--Subject to amounts provided
in appropriation Acts, starting in fiscal year 1999, the Secretary
shall renew all expiring tenant-based annual contribution contracts
under this section by applying an inflation factor based on local or
regional factors to an allocation baseline. The allocation baseline
shall be calculated by including, at a minimum, amounts sufficient to
ensure continued assistance for the actual number of families assisted
as of October 1, 1997, with appropriate upward adjustments for
incremental assistance and additional families authorized subsequent to
that date.
Section 556(b) of the Public Housing Reform Act required the
Department to implement section 8(dd) of the 1937 Housing Act through
notice not later than December 31, 1998, and to issue final regulations
on the allocation of tenant-based Section 8 annual contributions
contract renewal funding that are developed through the negotiated
rulemaking process no later than October 21, 1999.
On December 30, 1998, the Department issued HUD Notice 98-65 to
implement the provision, satisfying the requirement of section 556(b)
to implement the new provision through Notice not later than December
31, 1998. The Department published a notice in the Federal Register on
February 18, 1999, advising the public of the provisions of HUD Notice
98-65. The Department has developed this final rule implementing the
requirements of section 8(dd) of the 1937 Housing Act through a
negotiated rulemaking process, in accordance with the statutory
requirements of section 556.
II. Negotiated Rulemaking
HUD convened a negotiated rulemaking advisory committee to assist
in developing this final rule--the Section 8 Housing Certificate Fund
Negotiated Rulemaking Committee. (See publication of notice of
establishment of the Committee on April 26, 1999, 64 FR 20232.) The
charter for the Committee stated: ``The purpose of the Committee is to
discuss and negotiate a rule that would change the current method of
distributing funds to public housing agencies (PHAs) for purposes of
renewing assistance contracts in the tenant-based Section 8 program.
The committee will consist of persons representing stakeholder
interests in the outcome of the rule.'' Records of the advisory
committee's deliberations can be found at http://www.hud.gov/pih/
pih.html.
The members of the advisory committee were as follows:
Housing Agencies
Massachusetts Department of Housing and Community Development,
Boston, MA
New Jersey Department of Community Affairs, Trenton, NJ
Southeastern Minnesota Multi-County Housing and Redevelopment
Authority, Wabasha, MN
Oklahoma Housing Finance Agency, Oklahoma City, OK
Fort Worth Housing Authority, Fort Worth TX
Minneapolis Metropolitan Council Housing and Redevelopment Agency,
Saint Paul, MN
Santa Cruz County Housing Authority, Santa Cruz, CA
Burlington Housing Authority, Burlington, VT
Michigan State Housing Development Authority, Lansing, MI
New York City Housing Authority, NY, NY
Atlanta Housing Authority, Atlanta, GA
Cincinnati Metropolitan Housing Authority, Cincinnati, OH
Housing Authority of the City of Los Angeles, Los Angeles, CA
Stillwater Housing Authority, Stillwater, OK
Spokane Housing Authority, Spokane, WA
Jacksonville Housing Authority, Jacksonville, FL
Panama City Housing Authority, Bay County, FL
Alameda County Housing Authority, Hayward, CA
Housing Authority of New Orleans, New Orleans, LA
Stustman County Housing Authority, Stustman County, ND
Public Interest Groups
Center on Budget and Policy Priorities, Washington, DC
New Community Corporation, Newark, NJ
Disability Rights Action Coalition for Housing
Section 8 Resident Council of New Orleans, Inc., New Orleans, LA
Independent Accounting and Consulting Firms
Fenton, Ewald & Associates, PC
IMRglobal--Orion Consulting, Inc.
National/Regional PHA Associations
National Leased Housing Association (NLHA)
National Association of Housing and Redevelopment Officials (NAHRO)
Council of Large Public Housing Authorities (CLPHA)
Public Housing Authority Directors Association (PHADA)
(Note that 1. Fenton, Ewald & Associates, PC was made an alternate
due to its representative's time constraints and that the Southeast
Regional Section Eight Housing Association (SERSHA) was added as a
member of the Committee)
Federal Government
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
The Committee met in Washington, DC, on April 27 and 28, 1999, on
June 2 and 3, 1999, on June 21 and 22, 1999, on July 19 and 20, 1999,
on August 19 and 20, 1999 and on September 28 and 29th, 1999. (See
notices of meetings: 64 FR 26923, May 18, 1999 and 64 FR 30450, June 8,
1999.) These Committee meetings were led by Larry Susskind and David
Fairman of the Consensus Building Institute (``CBI''), as facilitators/
mediators. Tom Fee and Michael Lewis, also of CBI, assisted in the
facilitation/mediation. Kelly Davenport of CBI provided further
assistance, taking minutes of the meetings.
HUD appreciates the active participation in this negotiated
rulemaking process by such knowledgeable groups. The participants spent
many days reviewing materials, working with others in small groups to
prepare draft position papers, attended meetings of the Committee, and
participated in teleconferences. Ultimately, the members reached
consensus on the content of this rule. During the course of their
deliberations, they provided valuable advice to the Department on
broader issues, not reflected in this rule.
III. Discussion of Comments
A. General
This section provides a brief overview of the most important issues
discussed in the meetings of the Committee over the course of its
deliberations. This overview of the issues is not a detailed recitation
of the more than 12 days of meetings or the multiple additional work
group meetings/conference calls that took place during the term of the
Committee's charter but rather highlights the significant issues
considered by the Committee. In addition to providing HUD with
recommendations related to this regulation on the methodology for
allocating Section 8 renewal funding, the Committee also provided
recommendations on related issues (including policy on ACC reserves)
that HUD intends to implement through a Federal Register Notice. This
overview of the discussion of the Committee focuses only on the issues
related to the regulation itself and not on the issues discussed in
conjunction with developing separate Notice(s).
B. Establishing the Baseline
To initiate discussion of housing assistance allocation methods,
HUD staff provided background information to the Committee regarding
the various methods used over time to calculate renewals. An
explanation of the current renewal funding Notice, PIH 98-65 (HA),
including the process for setting the baseline and awarding renewal
funding for Fiscal Year 1998, was reviewed by HUD staff.
Issue. The Committee discussed specific details regarding
accounting rules and anomalies of the current method of calculating the
allocation of renewal funding. Several members expressed concern that
there was the possibility of discrepancies between historical
documented unit counts and the unit counts in HUD's data systems.
Members questioned whether a crosscheck of the data in the HUDCAPS
system against their own data was possible. Some members felt that the
October 1, 1997 baseline data were somewhat arbitrary and could
adversely impact agencies. Members suggested alternative ways to
setting the baseline units, such as choosing dates other that October
1, 1997. Concerns about using October 1, 1997 included that this date
``freezes'' many inequities among PHAs (e.g., rewarding those who
continued leasing during the 90-day freeze period declared by HUD). A
suggestion was made to use October 1, 1998 as the baseline date,
because at this time all PHAs would have had time to adjust to HUD
interim rules and guidelines on baseline accounting and renewal
funding.
Response. HUD noted that it had confidence that data discrepancies
in HUDCAPS are minor, and that most of the discrepancies between
HUDCAPS and PHA data would be attributable to data entry problems, or
differences in interpretations of unit or project classifications. HUD
representatives stated that they would check the kinds of information
that could be shared and how this information could be shared. HUD
representatives stated that they had revised the baseline determination
method to ensure that each PHA would receive the higher of the number
contracted or the number leased on October 1, 1997. HUD indicated that
the statute required a focus on the state of housing authorities as of
October 1, 1997 and that using other dates would not satisfy the
statutory mandate.
Conclusion: The Committee reached consensus that the baseline
number of units should be the higher of the number of units leased as
of October 1, 1997 or the number of units reserved by HUD as of October
1, 1997. The Department has added approximately 19,000 units to its
previously reserved number of units as a result of the comparison. This
increase in the number of units as well as transactions that have taken
place since October 1, 1997 will be reflected in the baseline
established as of December 31, 1999, in accordance with the rule. In
response to the Committee's recommendation, HUD will establish a
mechanism for PHAs to request an adjustment of the baseline unit number
assigned to them if they can demonstrate that the number in HUD's
system is inaccurate.
C. Unit-Based vs. Dollar Based Funding Allocation
Issue. The Committee discussed moving from the current ``unit-
based'' funding system (using units multiplied by an adjusted per unit
cost as the basis for determining annual funding amounts) to a
``dollar-based'' system: A dollar-based system would fund PHAs by
adjusting their previous year's dollar grant amount to account for
changes in local rental costs, without considering how many units were
rented through the program in the previous year. Initially there
appeared to be a preference for a dollar-based system, for reasons of
administrative simplicity and ability to serve more households if costs
are contained. Some Committee members raised concerns regarding
switching to a dollar-based system, because it might lead to
significant swings in the number of families assisted year-to-year.
The Committee extensively explored possible adjustment factors that
would be applied to PHA's previous year grant amount in a dollar-based
system. The Committee reviewed data analysis from Andersen Consulting
Corporation that compared the accuracy of different adjustment factors
against the actual experience of approximately 400 housing authorities
over the course of 3 years (1995-1997) for which reliable historical
data was available. The most reliable predictor of future costs proved
to be changes in a housing authority's most recent year's actual costs
in HUDCAPS. The analysis uncovered significant problems in using MTCS
data for the purpose of calculating renewals at this time.
Response. HUD indicated that it is cognizant of its obligation to
protect existing assisted families from losing their assistance due to
a shortfall in funding. In addition a number of the reasons why per
unit costs might vary would not be related to the PHA's discretionary
actions (e.g., the need to meet new income targeting requirements).
Conclusion: After much discussion, the Committee and HUD reached
consensus that the Department should have authority to use the current
unit-based method for the next several years. Given the limitations of
current data systems and adjustment factors, the unit-based system has
the best potential to predict fluctuations in per unit costs and to
ensure reasonably adequate funding to support the reserved number of
units in a housing authority's inventory.
Issue. Some members of the Committee, including HUD, expressed
concern that the current method creates a disincentive for PHAs to
contain per-unit costs, because the higher a PHA's per-unit costs, the
higher its funding for the next year. Additionally, the current system
creates a disincentive for PHAs to lease more than their contracted
number of units, because their funding allocations are determined based
on the number of reserved units, not the leased number of units.
Other members of the Committee asserted that costs are largely
outside of the control of a PHA. Rents are set by the local market and
the size of the family. The PHA does not control the local rental
market and has little control over the family size, because it has to
follow the waiting list. Tenant contributions are affected for the most
part by tenant incomes. Again, this factor is largely controlled by
residents themselves, as well as the local job market. However, in some
important instances, a PHA can influence the per-unit cost. These
instances include, but are not limited to, rent reasonableness, subsidy
standards, and payment standards. (For this purpose, ``subsidy
standards'' refer to a PHA's policy for determining the appropriate
unit size for a particular household.)
Committee members also made the point that PHAs themselves do not
benefit from an increase in the grant amount for renewals, because
their administrative fee is not tied to the grant amount used to
subsidize families. The administrative fee formula actually provides an
incentive for cost containment, because a PHA would benefit from being
able to lease more units--which could only be accomplished by lower
per-unit costs.
Members of the Committee also emphasized how difficult it would be
to isolate how much of a change in per-unit costs was attributable to
actions taken by a PHA as opposed to market/demographic changes totally
outside the control of the PHA.
Response. HUD is concerned that the regulation's methodology not
create an incentive or bias toward higher per-unit costs as a result of
PHA policies that can affect per-unit costs. Such a bias can result
both from the current rule's characteristic of adapting to higher costs
over time without penalty and from its subtraction of funding to
support additional units that a PHA is able to put under lease because
of cost saving measures. HUD acknowledged that there are very
significant difficulties administratively in isolating the effects of
PHA policies on cost per unit. HUD proposed that the rule give it
flexibility to put in place checks and balances that would offset the
impact of PHA policies on per-unit costs and ultimately the allocation
amount.
Conclusion: HUD's proposed mechanism for addressing cost
containment is embodied in paragraph (g) of the rule. Paragraph (g)(1)
permits HUD to put in place mechanisms to step in to prevent a PHA from
becoming overextended and exceeding its allocated funding. Paragraph
(g)(2) gives HUD the ability to act on either a case-by-case or a
systemic basis. If the Department's analysis of the program costs and
related factors determines that systemic adjustments, including cost
containment and other cost adjustments, to the program are necessary
because of threats to the future availability of funding, HUD has
agreed that it would consult with PHA representatives and other
relevant stakeholders before putting such a policy in place. HUD
further indicated that any such cost adjustment would be consistent
with the legitimate program goals. These goals are:
(1) Deconcentration of poverty and expanding housing opportunities;
(2) Not imposing unreasonable rent burdens on residents;
(3) Compliance with the income targeting requirements of the Public
Housing Reform Act;
(4) Consistency with applicable consolidated plan(s);
(5) Assuring rent reasonableness;
(6) Maintaining program efficiency and economy;
(7) Providing service to additional households within budgetary
limitations; and
(8) Providing service to the adjusted baseline number of families.
Paragraph (g)(3) gives HUD the flexibility to keep PHAs with
declining per unit costs from losing funding under the regulation and
to allow additional households to be served if costs are contained.
Many factors are intersecting to influence per unit costs at this time
(including the merger of the certificate and voucher program, the
requirement for income targeting, the requirement that payment
standards not impose unreasonable rent burdens, the flexibility of
housing authorities to set payment standards between 90% and 110% of
FMR on their own as well as the continued implementation of this rule's
methodology that indexes funding closely to per unit costs). HUD will
gain program experience as it monitors program costs and analyzes the
reasons for fluctuations in costs.
D. Inflation Factors
Issue: The Committee considered other more up-to-date measurement
of rents, or weighting the Annual Adjustment Factor so that the most
recent inflation data count for more than older data. Additionally, the
Committee recommended that inflation factors be more closely attuned to
individual PHAs' housing markets: examples included local rents, and
the use of local government or real estate agency data on rents.
Response: Based on its program experience, HUD staff advised that
some of these options could work, but that the smaller the sample area,
the higher the cost to obtain statistically valid data on costs.
Sometimes the more accurate the Annual Adjustment Factors (AAFs) could
produce lower rather than higher inflation factors for some PHAs. A
review and comparison of the Annual Adjustment Factor and the National
Inflation Factor were presented.
Conclusion: The Committee agreed to keep the AAF as it exists in
the rule for the time being. HUD will examine whether it can get better
data and more predictable information in the future. At the Committee's
request, HUD added a provision that will allow it to consider requests
from PHAs on a case-by-case basis in instances where because of special
circumstances the AAF is not accurately predicting per unit cost.
IV. Renewal Funding Level Consideration
The renewal formula included in this regulation assumes
continuation of the current system, in which the Department allocates
sufficient funds to renew 100 percent of the units reserved for a PHA,
even though many PHAs do not use all of the allocated funds. The
Department subsequently recaptures funds that PHAs do not use after the
end of their fiscal years. This system of initially overfunding on a
national basis and then recapturing, has the advantage of assuring that
each PHA will have the necessary renewal funds, but it also has created
some confusion in Congress and elsewhere.
At the end of the fiscal year 2000 appropriations process, the
Senate Appropriations Committee raised substantial concerns about the
tenant-based assistance program that appear to be partly related to
this system. The Administration is exploring the feasibility and
desirability of an approach that would minimize overfunding and
subsequent recapture, while still meeting the basic requirement that
each PHA have the necessary funding for timely renewals. The evaluation
and any Administration proposals will be mindful of the consensus
reached by the negotiated rulemaking committee.
V. Explanation of Rule Text
Renewal Units
This rule revises part 982, governing tenant-based assistance. It
adds a new defined term, ``renewal units'' to the definitions found at
Sec. 982.4. This rule also adds a new Sec. 982.102 to outline a multi-
step process for calculating the number of units that constitute
``renewal units.'' The total number of renewal units will be assigned
to one or more (if applicable) of a housing agency's funding
increments. Ultimately, the Department will multiply the number of
renewal units times the adjusted per unit cost to calculate the amount
of funding a housing agency will receive to renew a given funding
increment.
Applicability
This rule will apply to the renewal of funding increments that
expire in calendar year 2000 and thereafter (the initial increments
covered by the regulation would be those that expire on January 31,
2000). The Department adjusted to a calendar year basis for allocating
renewal funding in the first quarter of 1999. The Department adjusted
to a calendar year basis to ensure that it would have adequate time to
process renewal funding in advance of expirations even if
appropriations are not finalized until late in a given fiscal year or
early in a subsequent fiscal year. The regulation also makes it clear
that it applies to units that a housing agency project bases pursuant
to regulatory flexibility to project base up to 15% of the tenant-based
units that are reserved for it.
Renewal Methodology
The new Sec. 982.102 outlines the method for calculating renewal
funding. The Department does have the ability to adjust the amounts
allocated if the Department's appropriation is not sufficient to fully
fund all housing agencies pursuant to the regulation.
Determining the Amount of Budget Authority Allocated for Renewal of an
Expiring Funding Increment
The basic calculation the Department performs to determine the
renewal funding for an expiring increment is multiplication of the
number of renewal units assigned to the increment by the adjusted per
unit cost.
For example, the Department calculated the adjusted baseline number
of units for the Main Street Housing Authority to be 115 for the year
2000. It then multiplied the adjusted baseline number of units (115) by
the final per unit cost ($4979) to calculate the gross amount of
renewal funding for the housing authority, $572,585.
Determining the Number of Renewal Units
The Department will determine the number of renewal units for each
calendar year as of the last day of the previous calendar year through
a 3-step process.
Step 1--The Department will calculate the initial baseline. It will
be set at the reserved number of units (the number of units awarded to
the housing agency during the history of the program) as of December
31, 1999. The statute requires that the Department ensure, at a
minimum, sufficient funding for the number of families assisted as of
October 1, 1997. The Department has already compared the number of
reserved units as of October 1, 1997 with the number of program
families assisted as of that date. In instances in which the number of
program families exceeded the reserved units as of October 1, 1997, the
Department reserved additional units to account for the difference.
These additional units were awarded to housing agencies in or before
September of 1999. Because of the actions the Department has taken to
account for the October 1, 1997 statutory minimum, it believes the
number of reserved units will already have taken into account the
statutory October 1, 1997 requirement when it sets the initial baseline
as of December 31, 1999. In the event the Department has made an error
in its analysis to ensure adherence to the statutory minimum, the
Department has the ability to correct for such an error in
982.102(d)(3).
For example, on December 31, 1999, the Department's records
indicated that it had reserved 110 units for the housing authority. The
Department would set the initial baseline at 110 units.
Step 2--Each calendar year, the Department will review all of the
transactions that have altered the number of reserved units since it
set the initial baseline. The Department will make adjustments to add
to the initial baseline any additional units awarded to the housing
authority by the Department supported from additional funding reserved
since setting of the initial baseline. Adjustments to the baseline
number of units will include units supported by incremental funding as
well as other funding such as that awarded to provide continued
assistance to assisted families pursuant to the conversion of project
based assistance to tenant-based assistance. The Department also will
include adjustments for budget authority reallocated from one housing
authority to others. In this case, the adjusted baseline of the PHA
whose budget authority is being reallocated would decrease, reflecting
the decrease in budget authority, and the adjusted baseline of PHAs to
which the budget authority is being reallocated would increase.
For example, in calendar year 2000, the Main Street Housing
Authority received 10 incremental units in the Family Unification
Program. In 2000, the authority also had 10 units added to its
inventory as a result of the conversion of a property from project
based to tenant-based assistance. All 20 of these additional units
would be added to the initial baseline to calculate the adjusted
baseline number of units, 130 for the year 2001.
Step 3--In its final step in determining the number of renewal
units that will be used to calculate renewal funding, the Department
will further adjust the baseline number by subtracting the number of
units supported by contracts that are not scheduled to expire until
after the end of the calendar year. The baseline number of units
includes such non-expiring units; however, the Department has
previously allocated sufficient budget authority to support such units
beyond the time period for which it is allocating renewal funding.
For example, the Department's records indicate that the Main Street
Housing Authority has 15 units in its Initial Baseline number of units
that are not scheduled to expire until 2002. The Department would then
subtract 15 units from the Main Street Housing Authority's 130 units to
revise the Adjusted Baseline Number of Units to 115. Similarly, in the
event that the Department awarded budget authority for 50 incremental
units for Welfare to Work in 2000 that would not expire until 2001, the
Department would subtract the 50 units from the baseline in 2000
because they would not expire during that year.
Determining the Adjusted per Unit Cost
The Department will derive an annual actual per unit cost using a 3
step process.
Step 1--The Department will extract the total expenditures for all
of the housing authority's Section 8 tenant-based assistance programs
and the unit months leased information from the most recent approved
year end statement (Form HUD-52681) that each housing authority has
filed with the Department. The Department will divide the total
expenditures for all of the housing authority's Section 8 tenant-based
assistance programs by the unit months leased to derive an average
monthly per unit cost.
Step 2--The Department will multiply the monthly per unit cost by
12 (months) to obtain an annual per unit cost.
Step 3--The Department will then multiply the result of step 2
above by the Section 8 Housing Assistance Payments Program Contract
Rent Annual Adjustment Factors (table 1 amount with the highest cost
utility included) for the applicable intervening Federal Fiscal Years
between the time of the last year end statement and the time of the
renewal to generate an adjusted annual per unit cost.
For example, the Main Street Housing Authority's 1998 Year End
Statement (the most recent one approved) indicated that it expended
$120,000 in its tenant-based Section 8 assistance programs and that it
achieved 300 unit months leased. The Department would take the total
expenditure ($120,000) and divide it by the unit months leased (300) to
calculate the monthly per unit cost ($400) and then multiply the result
by 12 months to obtain an actual annual per unit cost ($4,800).
To continue the example, the Annual Adjustment Factors for the Main
Street Housing Authority were 1.5% in 1999 and 2.2% for 2000. The
Department would take the original annual per unit cost ($4,800) and
adjust it by 1.5% ($4,872) and then again by 2.2% to obtain the
resulting adjusted per unit cost ($4,979).
Many housing agencies have jurisdictions that cover multiple rental
markets with separate AAFs. In such instances, the Department will use
the highest AAF that applies to a portion of the housing agency's units
and use it as the adjustment factor.
For example, the Main Street Housing Authority is a regional agency
that covers a metropolitan area with an AAF for 1999 set at 2.1% and
for 2000 set at 1.9%. The housing authority's jurisdiction also covers
several non-metropolitan counties outside of the metropolitan area
assigned an AAF for 1999 of 1.5% and for 2000 set at 2.0%. In this
instance, the Department will use the higher metropolitan area AAF for
1999 (2.1%) and the higher non-metropolitan area AAF for 2000 (2.0%).
CACC Amendment To Add Renewal Funding
The Department intends to process renewal funding if possible at
least a month before a given funding increment is due to expire. A
normal renewal will extend the expiration date for one year.
Modification of Allocation of Budget Authority
The regulation permits HUD to address the issue of cost containment
through this provision. Paragraph (g)(1) permits HUD to put in place
mechanisms to step in to prevent a PHA from becoming overextended and
exceeding its allocated funding. Paragraph (g)(2) gives HUD the ability
to act on either a case-by-case or a systemic basis. If the
Department's analysis of the program costs and related factors
determines that systemic adjustments to the program, including cost
containment and other cost adjustments, are necessary because of
threats to the future availability of funding, HUD has agreed that it
would consult with PHA representatives and other relevant stakeholders
before putting such a policy in place. Paragraph (g)(3) gives HUD the
flexibility to keep PHAs with declining per unit costs from losing
funding under the regulation and to allow additional households to be
served if costs are contained.
Ability To Prorate and Synchronize Contract Funding
Increments
Notwithstanding the formula amount that HUD derives pursuant to the
regulation, the Department is permitted to prorate the renewal of units
that expire on different dates throughout the year in order to have
their expiration date match the expiration of other units within the
housing authority's inventory and/or a given point in time in relation
to the housing authority's fiscal year. The Department will consider
using this flexibility in order to merge the multiple sets of units for
the purpose of allocating renewal funding in the future. The Department
desires to consolidate increments as much as possible in order to
reduce the tracking required for thousands of separate increments. The
Department will endeavor to synchronize and/or merge all increments so
as to expire 6 months after the housing agency's fiscal year. Such a
schedule would permit the Department to use a year end statement that
is less than a year old to calculate current per unit costs at the time
of the renewal.
For example, the Main Street Housing Authority has 115 units that
require renewal on April 1, 2000 and also has 20 units that were
awarded to it on August 1, 1999 that would require renewal on August 1,
2000. If the Department decided to merge the two sets of units for
future renewals, it would have the ability to prorate the renewal of
the 20 units so that they would expire on April 1, 2001, simultaneously
with the expiration of the other 115 units. The Department would be
able to merge the two sets of units into one set of 135 units for the
purpose of calculating future renewal funding.
Reallocation of Renewal Units
This provision gives HUD the ability by Federal Register notice to
permanently de-reserve units and their associated budget authority from
a PHA with performances deficiencies (particularly underleasing) and to
reallocate the budget authority to other PHAs. The reallocation would
not preclude a PHA from being awarded new units in the future.
VI. Findings and Certifications
Impact on Small Entities
The Regulatory Flexibility Act, 5 U.S.C. 601-612, requires that an
agency analyze the impact of a rule on small entities whenever it
determines that the rule is likely to have a significant impact on a
substantial number of small entities. Most small PHAs do not qualify as
``small governmental entities'' under the Act. However, this rule,
developed in consultation with a negotiated rulemaking committee
including representatives of small PHAs, will not be likely to have a
significant impact on a substantial number of small PHAs or on the few
of them that qualify as ``small governmental entities.'' Therefore, no
further analysis is required under the Act.
Environmental Impact
This final rule does not direct, provide for assistance or loan and
mortgage insurance for, or otherwise govern or regulate, real property
acquisition, disposition, leasing (other than tenant-based rental
assistance), rehabilitation, alteration, demolition, or new
construction. This rule also does not establish, revise or provide for
standards for construction or construction materials, manufactured
housing, or occupancy. Accordingly, under HUD regulations (24 CFR
50.19(c)(1)), this rule is categorically excluded from the requirements
of the National Environmental Policy Act of 1969 (42 U.S.C. 4321) and
is not subject to environmental review under related laws and
authorities (24 CFR 50.4).
Federalism Impact
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that the policies
contained in this rule will not have substantial direct effects on
states or their political subdivisions, or the relationship between the
federal government and the states, or on the distribution of power and
responsibilities among the various levels of government. As a result,
the rule is not subject to review under the order.
Unfunded Mandates
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532)
establishes requirements for Federal agencies to assess the effects of
their regulatory actions on State, local, and tribal governments and
the private sector. This proposed rule does not impose a Federal
mandate that will result in the expenditure by State, local, or tribal
governments in the aggregate, or by the private sector, of $100 million
or more in any one year.
Regulatory Review
The Office of Management and Budget (OMB) has reviewed this
proposed rule under Executive Order 12866, Regulatory Planning and
Review, issued by the President on September 30, 1993. Any changes made
in this proposed rule after its submission to OMB are identified in the
docket file, which is available for public inspection during regular
business hours in the Regulations Division, Office of General Counsel,
Room 10276, U.S. Department of Housing and Urban Development, 451
Seventh Street, SW, Washington, DC 20410.
Catalog
The Catalog of Federal Domestic Assistance numbers for these
programs are 14.855 and 14.857.
List of Subjects in 24 CFR Part 982
Grant programs--housing and community development, Housing, Rent
subsidies.
Accordingly, HUD amends part 982 of title 24 of the Code of Federal
Regulations as follows:
PART 982--SECTION 8 TENANT-BASED ASSISTANCE: HOUSING CHOICE VOUCHER
PROGRAM
1. The authority citation for part 982 continues to read as
follows:
Authority: 42 U.S.C. 1437f and 3535(d).
2. Amend Sec. 982.4(b) by adding the definition of Renewal units,
in alphabetical order, to read as follows:
Sec. 982.4 Definitions.
* * * * * * *
(b) * * *
Renewal units. The number of units, as determined by HUD, for which
funding is reserved on HUD books for a PHA's program. This number is
used is calculating renewal budget authority in accordance with
Sec. 982.102.
* * * * * * *
Sec. Sec. 982.102 and 982.103 [Redesignated as Sec. Sec. 982.103 and
982.104]
3. Redesignate Sec. Sec. 982.102 and 982.103 as Sec. Sec. 982.103
and 982.104, respectively.
4. Add a new Sec. 982.102 to read as follows:
Sec. 982.102 Allocation of budget authority for renewal of expiring
CACC funding increments.
(a) Applicability. This section applies to the renewal of CACC
funding increments in the program (as described in Sec. 982.151(a)(2))
that expire after December 31, 1999 (including any assistance that the
PHA has attached to units for project based assistance under part 983
of this title). This section implements section 8(dd) of the 1937 Act
(42 U.S.C. 1437f(dd)),
(b) Renewal Methodology. HUD will use the following methodology to
determine the amount of budget authority to be allocated to a PHA for
the renewal of expiring CACC funding increments in the program, subject
to the availability of appropriated funds. If the amount of
appropriated funds is not sufficient to provide the full amount of
renewal funding for PHAs, as calculated in accordance with this
section, HUD may establish a procedure to adjust allocations for the
shortfall in funding.
(c) Determining the amount of budget authority allocated for
renewal of an expiring funding increment. Subject to availability of
appropriated funds, as determined by HUD, the amount of budget
authority allocated by HUD to a PHA for renewal of each program funding
increment that expires during a calendar year will be equal to:
(1) Number of renewal units. The number of renewal units assigned
to the funding increment (as determined by HUD pursuant to paragraph
(d) of this section); multiplied by
(2) Adjusted annual per unit cost. The adjusted annual per unit
cost (as determined by HUD pursuant to paragraph (e) of this section).
(d) Determining the number of renewal units.--(1) Number of renewal
units. HUD will determine the total number of renewal units for a PHA's
program as of the last day of the calendar year previous to the
calendar year for which renewal funding is calculated. The number of
renewal units for a PHA's program will be determined as follows:
(i) Step 1: Establishing the initial baseline. HUD will establish a
baseline number of units (``baseline'') for each PHA program. The
initial baseline equals the number of units reserved by HUD for the PHA
program as of December 31, 1999.
(ii) Step 2: Establishing the adjusted baseline. The adjusted
baseline equals the initial baseline with the following adjustments
from the initial baseline as of the last day of the calendar year
previous to the calendar year for which renewal funding is calculated:
(A) Additional units. HUD will add to the initial baseline any
additional units reserved for the PHA after December 31, 1999.
(B) Units removed. HUD will subtract from the initial baseline any
units de-reserved by HUD from the PHA program after December 31, 1999.
(iii) Step 3: Determining the number of renewal units. The number
of renewal units equals the adjusted baseline minus the number of units
supported by contract funding increments that expire after the end of
the calendar year.
(2) Funding increments. HUD will assign all units reserved for a
PHA program to one or more funding increment(s).
(3) Correction of errors. HUD may adjust the number of renewal
units to correct errors.
(e) Determining the adjusted per unit cost. HUD will determine the
PHA's adjusted per unit cost when HUD processes the allocation of
renewal funding for an expiring contract funding increment. The
adjusted per unit cost calculated will be determined as follows:
(1) Step 1: Determining monthly program expenditure.--(i) Use of
most recent HUD-approved year end statement. HUD will determine the
PHA's monthly per unit program expenditure for the PHA certificate and
voucher programs (including project-based assistance under such
programs) under the CACC with HUD using data from the PHA's most recent
HUD-approved year end statement.
(ii) Monthly program expenditure. The monthly program expenditure
equals:
(A) Total program expenditure. The PHA's total program expenditure
(the total of housing assistance payments and administrative costs) for
the PHA fiscal year covered by the approved year end statement; divided
by
(B) Total unit months leased. The total of unit months leased for
the PHA fiscal year covered by the approved year end statement.
(2) Step 2: Determining annual per unit cost. HUD will determine
the PHA's annual per unit cost. The annual per unit cost equals the
monthly program expenditures (as determined under paragraph (e)(1)(ii)
of this section) multiplied by 12.
(3) Step 3: Determining adjusted annual per unit cost. (i) HUD will
determine the PHA's adjusted annual per unit cost. The adjusted annual
per unit cost equals the annual per unit cost (as determined under
paragraph (e)(2) of this section) multiplied cumulatively by the
applicable published Section 8 housing assistance payments program
annual adjustment factors in effect during the period from the end of
the PHA fiscal year covered by the approved year end statement to the
time when HUD processes the allocation of renewal funding.
(ii) Use of annual adjustment factor applicable to PHA
jurisdiction. For this purpose, HUD will use the annual adjustment
factor from the notice published annually in the Federal Register
pursuant to part 888 that is applicable to the jurisdiction of the PHA.
For a PHA whose jurisdiction spans multiple annual adjustment factor
areas, HUD will use the highest applicable annual adjustment factor.
(iii) Use of annual adjustment factors in effect subsequent to most
recent Year End Statement. HUD will use the Annual Adjustment Factors
in effect during the time period subsequent to the time covered by the
most recent HUD approved Year End Statement and the time of the
processing of the contract funding increment to be renewed.
(iii) Special circumstances. At its discretion, HUD may modify the
adjusted annual per unit cost based on receipt of a modification
request from a PHA. The modification request must demonstrate that
because of special circumstances application of the annual adjustment
factor will not provide an accurate adjusted annual per unit cost.
(4) Correction of errors. HUD may correct for errors in the
adjusted per unit cost.
(f) CACC amendment to add renewal funding. HUD will reserve
allocated renewal funding available to the PHA within a reasonable time
prior to the expiration of the funding increment to be renewed and
establish a new expiration date one-year from the date of such
expiration.
(g) Modification of allocation of budget authority.--(1) HUD
authority to conform PHA program costs with PHA program finances
through Federal Register notice. In the event that a PHA's costs
incurred threaten to exceed budget authority and allowable reserves,
HUD reserves the right, through Federal Register notice, to bring PHA
program costs and the number of families served, in line with PHA
program finances.
(2) HUD authority to limit increases of per unit cost through
Federal Register notice. HUD may, by Federal Register notice, limit the
amount or percentage of increases in the adjusted annual per unit cost
to be used in calculating the allocation of budget authority.
(3) HUD authority to limit decreases to per unit costs through
Federal Register notice. HUD may, by Federal Register notice, limit the
amount or percentage of decreases in the adjusted annual per unit cost
to be used in calculating the allocation of budget authority.
(4) Contents of Federal Register notice. If HUD publishes a Federal
Register notice pursuant to paragraphs (g)(1), (g)(2) or (g)(3) of this
section, it will describe the rationale, circumstances and procedures
under which such modifications are implemented. Such circumstances and
procedures shall, be consistent with the objective of enabling PHAs and
HUD to meet program goals and requirements including but not limited
to:
(i) Deconcentration of poverty and expanding housing opportunities;
(ii) Reasonable rent burden;
(iii) Income targeting;
(iv) Consistency with applicable consolidated plan(s);
(v) Rent reasonableness;
(vi) Program efficiency and economy;
(vii) Service to additional households within budgetary
limitations; and
(viii) Service to the adjusted baseline number of families.
(5) Public consultation before issuance of Federal Register notice.
HUD will design and undertake informal public consultation prior to
issuing Federal Register notices pursuant to paragraphs (g)(1) or
(g)(2) of this section.
(h) Ability to prorate and synchronize contract funding increments.
Notwithstanding paragraphs (c) through (g) of this section, HUD may
prorate the amount of budget authority allocated for the renewal of
funding increments that expire on different dates throughout the
calendar year. HUD may use such proration to synchronize the expiration
dates of funding increments under the PHA's CACC.
(i) Reallocation of budget authority. If a PHA has performance
deficiencies, such as a failure to adequately lease units, HUD may
reallocate some of its budget authority to other PHAs. If HUD
determines to reallocate budget authority, it will reduce the number of
units reserved by HUD for the PHA program of the PHA whose budget
authority is being reallocated and increase the number of units
reserved by HUD for the PHAs whose programs are receiving the benefit
of the reallocation, so that such PHAs can issue vouchers. HUD will
publish a notice in the Federal Register that will describe the
circumstances and procedures for reallocating budget authority pursuant
to this paragraph.
Dated: October 15, 1999.
Deborah Vincent,
General Deputy Assistant, Secretary for Public and Indian Housing.
[FR Doc. 99-27445 Filed 10-20-99; 8:45 am]
BILLING CODE 4210-33-P
consultant costs
Question. Mr. Secretary, please identify all consultants who have
worked for or are working for the Department since the beginning of
fiscal year 1999 by name, amount of the contract, purpose of the
contract, duration of the contract and the type of bidding process
used?
Answer. An attachment has been provided that identifies all
consultants who have worked for or are working for the Department since
the beginning of fiscal year 1999 by name, salary rate, purpose of
project, and duration of employment. These consultants are hired
through the Office of Human Resources and not via contracts, therefore
the type of bidding process used is not applicable in this case.
CONSULTANTS
--------------------------------------------------------------------------------------------------------------------------------------------------------
Name Salary Dates of employment Office Nature of project
--------------------------------------------------------------------------------------------------------------------------------------------------------
Elizabeth Burdock................... $264.00 PD..................... 08/26/96 to present..... Office of Housing....... To work with staff to
develop task orders for
the National Partners in
Homeownership program.
Shaun Donovan....................... 333.60 PD..................... 10/13/98 to 07/17/99.... Office of Housing....... To provide advice on
multifamily housing,
finance and policy
matters.
Andrew Fay.......................... 191.66 PD..................... 10/25/98 to 04/10/99.... Office of Multifamily To draft interim and final
Housing Assistance regulations on Owner
Restructuring. eligibility section of
Operating Procedures guide
and provide assistance in
drafting Portfolio
Restructuring Agreement
and protocols.
Todd Richardson..................... 38.40 PH..................... 10/08/99 to 05/20/00.... Office of Community To perform analysis,
Planning and comparison and evaluation
Development. of state and SBA reported
disaster data.
Catharine Vernon.................... 384.62 PD..................... 01/03/99 to 05/22/99.... Office of Multifamily To develop and implement
Housing Assistance the Asset Allocation and
Restructuring. Critical data Tracking
system.
Michael Murphy...................... 269.23 PD..................... 12/10/98 to 07/17/99.... Office of Multifamily To develop system
Housing Assistance requirements and implement
Restructuring. a system to plan, monitor,
and review the status of
assigned assets, as well
as create oversight
controls.
Howard Menell....................... 482.61 PD..................... 03/14/99 to 04/24/99.... Office of Multifamily To negotiate final
Housing Assistance Portfolio Restructuring
Restructuring. Agreement for public and
private PAE's.
Frederick Tombar.................... 364.16 PD..................... 01/19/99 to O6/19/99.... Office of Housing....... To advise the Assistant
Secretary on Section 8
contract administration
issues. Represent the
Assistant Secretary before
GAO, OMB and Congressional
Budget Committees.
Engram A. Lloyd..................... 372.64 PD..................... 11/29/99 to 02/12/00.... Office of Single Family To advise on impact,
Housing. efficiencies and benefits
derived from
organizational realignment
within Home Ownership
Centers. To evaluate the
adequacy of property
disposition program
controls and recommended
necessary changes to
safeguard HUD's assets and
insurance fund.
Ruth Roman.......................... 275.00 PD..................... 10/07/99 to 05/20/00.... Office of Housing....... To work with Grants
Technical Representatives,
contracts office and
contractor to manage
development of new
commercials and media
campaign for Federal
Housing Administration
(FHA).
Bonnie Jouhari...................... 124.08 PD..................... 03/06/00 to present..... Baltimore Field Office.. To provide research, fact
finding, telephone and in
person interviews, and
file reviews with regard
to counseling, and housing
mobility.
Emmanuel Cleaver, II................ 46.59 PH..................... 09/21/99 to present..... Office of Senior To provide the Secretary's
Community. Representative, Great
Plains, with advice on
matters involving
development and public
service diversification.
Analyzes and evaluates the
Department's current
procedures and makes
recommendations for
improvements and refines
in the methodology.
Truman Holland...................... 362.00 PD..................... 07/20/98 to present..... Office of Multifamily To make written
Housing Assistance recommendations to
Restructuring. Congress outlining the
characteristics of the
Mark to Market process
that need change and
restructuring related
mortgage issues.
Cherylayne B. Walker................ 372.64 ....................... 04/03/00 to present..... Office of Housing....... To provide advice to the
Deputy Assistant Secretary
for Single Family Housing
on the review and
formulation of real estate
owned disposition
procedures.
Michael Stegman..................... 46.57 PH..................... 07/21/99 to present..... Office of Housing....... To assess conditions and
trends for affordable
housing in the U.S. and
report on major trends,
needs and HUD's policy
responses to these.
David Snell......................... 236.32 PD..................... 11/08/98 to 01/15/99.... Office of Public and No records could be
Indian Housing, Denver. obtained.
Steven Kilkelly..................... 206.67 PD..................... 08/28/98 to 10/08/98.... Office of Community No records could be
Planning and obtained.
Development.
William Apgar....................... 453.86 PD..................... 10/01/97 to 10/24/98.... Office of Housing....... To provide a wide range of
knowledge on matters
involving programmatic
development and
diversification in and for
the Office of Housing.
Susan Wachter....................... 453.92 PD..................... 11/25/98 to 11/30/99.... Office of Policy To analyze and evaluate
Development and current procedures and
Research. make recommendations on
possible refinements and
improvements, as well as
conducting a review of
proposed strategies.
Virginia Terzano.................... 56.54 PH..................... 06/22/99 to 11/26/99.... Office of Public Affairs To advise and provide
expertise on the
preparation of remarks,
speeches, and talking
points on issues,
policies, and procedures
confronting the Secretary.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: PH = per hour; PD = per day.
MORTGAGE PARTNERSHIP PROGRAM
Question. The Mortgage Partnership Program offered by the some
Federal Home Loan Banks has allowed members of the Federal Home Loan
Bank System to offer FHA loans to consumers at a lower rate--as much as
100 basis points--for first time home buyers in the first year.
However, that program is currently capped at $9 billion.
When will the cap be lifted on this program, and what assurances
can you give me that first time home buyers will continue to have
access to these new FHA loan products?
Answer. The Mortgage Partnership Finance Program (MPF) offered by a
number of Federal Home Loan Banks is currently subject to a limit of $9
billion in outstanding residential mortgages that was established by a
resolution of the Federal Housing Finance Board, the regulator of the
Federal Home Loan Bank System. This program is not under HUD's
jurisdiction. However, Secretary Cuomo is a member of the Finance Board
and Assistant Secretary Apgar serves as his designee.
On May 3, 2000, the Finance Board's Federal Home Loan Bank Acquired
Member Assets, Core Mission Activities, Investment and Advances (AMA/
CMA) proposed rule was published for public comment. The rule would
authorize the Federal Home Loan Banks to hold acquired member assets
(AMA), whole loans acquired from or through Bank System members or
associates. Under the proposed rule, the MPF investments, including FHA
loans funded through the MPF, would be considered AMA. The proposed
rule would place no limit on the amount of AMA the Federal Home Loan
Banks could hold, in effect eliminating the $9 billion aggregate limit
currently applied to the MPF by resolution.
In addition, the proposed rule does not limit the amount of FHA
insured single family loans that a FHLBank could acquire under its MPF,
so that any new FHA loan products that the FHLBanks are facilitating
under the MPF could continue. Under the proposed rule, AMA would be
considered core mission activities (CMA), except that only a proportion
of the amount of federal government insured or guaranteed single family
mortgage loans (including FHA insured loans) acquired as AMA after
April 12, 2000, would be considered CMA. One dollar of government-
insured single family AMA would be counted as CMA for every two dollars
of conventional loans acquired as AMA. While the proposed rule does not
contain any requirement that the FHLBanks engage in any particular
amount of CMA, it would encourage the FHLBanks to see to it that the
composition of their mortgage portfolios more closely reflects the
distribution of loans made in the financial marketplace.
The proposed rule public comment period closes on June 15 and the
Finance Board expects to issue the AMA/CMA final rule shortly
thereafter.
DOWNPAYMENT SIMPLIFICATION
Question. The fiscal year 1999 VA/HUD spending bill contains an
extension of the simplified FHA down payment calculation on a
nationwide basis. However, the bill restricted the calculation to a
two-year pilot program which is set to expire at the end of this fiscal
year.
The Administration's budget contains a permanent, nationwide
extension of the simplified down payment calculation. How has the pilot
program fared so far, and why do you believe this permanent extension
is necessary?
Answer. From the pilot, we learned that overall loan-to-values did
not increase significantly and the process was more easily understood
by homebuyers, real estate agents, and lenders. We need the permanent
authority to maintain the simplified process and to continue to offer a
process that is more easily understood than the ``sliding-scale''
mortgage amount calculation previously employed. Reverting to the
previous mortgage amount calculation and losing the ability to continue
with a successful program would be counter to FHA's mission.
______
Questions Submitted by Senator Larry Craig
GUN CONTROL
Question. Please tell the Subcommittee what HUD's intentions are,
and what actions you have taken, with regard to filling a lawsuit
against members of the firearms industry.
Answer. As the Department has stated on previous occasions, HUD has
no intention of filing a lawsuit in its own capacity against the gun
industry. HUD, however, is working with cities and counties that have
filed suit against the gun industry, as well as with responsible
manufacturers, to find a negotiated solution that will facilitate the
industry's role in reducing the tide of gun violence by fostering safer
manufacturing and distribution practices. Should these negotiations
prove unsuccessful, HUD is prepared to work with public housing
authorities, including those under HUD's control, on a possible suit
against the industry.
Question. For example, who authorized the filing of such a lawsuit?
What actions by members of the firearms industry gave rise to that
lawsuit? What actions by members of the firearms industry would prevent
the filing of such a lawsuit against them, and who determined those
parameters for withholding suit?
Answer. No lawsuit on behalf of the Department is contemplated.
Question. What HUD resources--financial or personnel--have been
spent in preparing such a lawsuit or pursuing negotiations with the
firearms industry, and what is the estimated cost to federal taxpayers
of pursuing these activities?
Answer. While HUD has spent no resources preparing to file suit on
the Department's behalf, as noted above, the Department has been
involved in assisting cities and counties that have filed suit against
the gun industry reach common ground with the industry, thereby helping
to bring the litigation to a close. The March 17, 2000 settlement with
Smith & Wesson was the first fruit of that effort. In terms of
resources, HUD has devoted staff time and related expenses (travel,
phone, office supplies, etc.) maintaining contact with both sides and
assisting in negotiations.
Question. What other agency or agencies of the federal government
has HUD consulted with about such a lawsuit or negotiations?
Answer. HUD has consulted with the White House, the Justice
Department, and the Department of Treasury in the course of assisting
with negotiations.
Question. What mission of HUD do these activities serve, and where
is that mission stated in writing?
Answer. In the Department's enabling statute, Congress made clear
that HUD was created in part ``to encourage the solution of problems of
housing, urban development, and mass transportation through State,
county, town, village, or other local and private action.'' 42 U.S.C.
Sec. 3531 (1999). Given the awful toll of gun violence in our nation's
communities, particularly those at the core of HUD's mission, helping
cities and counties seek improved gun safety and more responsible
distribution through negotiations with the gun industry, is a prime
example of such encouragement. Moreover, reducing gun violence is at
the core of HUD's responsibility for promoting national housing policy.
The Housing Act of 1949, for example, declared as national housing
policy ``the realization as soon as feasible of the goal of a decent
home and a suitable living environment for every American family,'' 42
U.S.C. 1441 (1999), and Congress has declared that the ``objective of
national housing policy shall be to reaffirm the long-established
national commitment to decent, safe, and sanitary housing for every
American by strengthening a nationwide partnership of public and
private institutions able . . . to help make neighborhoods safe and
livable.'' 42 U.S.C. Sec. 12701 (1999).
Question. How much has HUD spent on gun turn-in program,
cumulatively and by program?
Answer. Please see attached chart.
GUN BUYBACK PARTICIPANTS
----------------------------------------------------------------------------------------------------------------
HA
Name of applicant City State HA's GBB Eligible allocation
allocation matching + match
----------------------------------------------------------------------------------------------------------------
HA of the City of Foley.......... Foley............... AL.................. $1,000 $430 $1,430
Prichard HA...................... Prichard............ AL.................. 5,245 2,255 7,500
HA of the City of Talladega...... Talladega........... AL.................. 2,000 860 2,860
HA of the City of Camden......... Camden.............. AR.................. 21,000 9,030 30,030
HA of City of Flagstaff.......... Flagstaff........... AZ.................. 3,500 1,505 5,005
San Francisco HA................. San Francisco....... CA.................. 50,000 21,500 71,500
HA of the County of Marin........ San Rafael.......... CA.................. 3,000 1,290 4,290
The New Britain HA............... New Britain......... CT.................. 5,000 2,150 7,150
HA of the City of Stamford....... Stamford............ CT.................. 50,000 21,500 71,500
HA of the City of Meriden........ Meriden............. CT.................. 5,000 2,150 7,150
HA of the City of Norwalk........ S. Norwalk.......... CT.................. 6,993 3,007 10,000
Hartford Housing Authority....... Hartford............ CT.................. 10,000 4,300 14,300
District of Columbia HA.......... Washington.......... DC.................. 70,000 30,100 100,100
Metro Dade Housing Agency........ Miami............... FL.................. 50,000 21,500 71,500
Tampa HA......................... Tampa............... FL.................. 50,000 21,500 71,500
HA of Savannah................... Savannah............ GA.................. 5,000 2,150 7,150
HA of Columbus, Georgia.......... Columbus............ GA.................. 17,500 7,525 25,025
HA of the City of Augusta........ Augusta............. GA.................. 10,000 4,300 14,300
HA of the City of Rome........... Rome................ GA.................. 2,500 1,075 3,575
HA of the City of Cordele........ Cordele............. GA.................. 6,500 2,795 9,295
HA City of Atlanta............... Atlanta............. GA.................. 50,000 21,500 71,500
Hawaii Hsg. & Com. Dev. Corp..... Honolulu............ HW.................. 25,000 10,750 35,750
Davenport HA..................... Davenport........... IA.................. 21,000 ......... 21,000
Rockford HA...................... Rockford............ IL.................. 14,000 6,020 20,020
Randolph County HA............... Chester............. IL.................. 3,000 1,290 4,290
Chicago Housing Authority........ Chicago............. IL.................. 100,000 43,000 143,000
HA of City of Gary, Indiana...... Gary................ IN.................. 5,000 2,150 7,150
HA of City of Hammond............ Hammond............. IN.................. 4,000 1,720 5,720
Jeffersonville HA................ Jeffersonville...... IN.................. 1,400 602 2,002
Kansas City, Kansas HA........... Kansas City......... KS.................. 30,000 12,900 42,900
Lexington-Fayette HA............. Lexington........... KY.................. 100,000 43,000 143,000
HA of Princeton.................. Princeton........... KY.................. 2,000 860 2,860
HA of Columbia................... Columbia............ KY.................. 800 344 1,144
HA of Louisville................. Louisville.......... KY.................. 20,000 8,600 28,600
HA of Frankfort.................. Frankfort........... KY.................. 2,000 860 2,860
Martin Housing Authority......... Martin.............. KY.................. 1,000 430 1,430
Springfield HA................... Springfield......... MA.................. 15,000 6,450 21,450
Malden HA........................ Malden.............. MA.................. 5,070 2,180 7,250
HA of Worcester.................. Worcester........... MA.................. 1,425 613 2,038
HA of Baltimore City............. Baltimore........... MD.................. 200,000 86,000 286,000
HA of the City of Annapolis...... Annapolis........... MD.................. 3,500 1,505 5,005
Inkster Housing Commission....... Inkster............. MI.................. 40,500 17,415 57,915
Saginaw Hsg. Commission.......... Saginaw............. MI.................. 3,000 1,290 4,290
Flint Housing Commission......... Flint............... MI.................. 70,000 30,100 100,100
City of Detroit Housing Detroit............. MI.................. 15,000 6,450 21,450
Department.
River Rouge Housing Commission... River Rouge......... MI.................. 7,500 3,225 10,725
HA of the City of Hannibal....... Hannibal............ MO.................. 7,000 3,010 10,010
Mississippi Regional HA VIII..... Gulfport............ MS.................. 30,000 12,900 42,900
HA of High Point................. High Point.......... NC.................. 3,800 1,634 5,434
HA of City of Wilmington, NC..... Wilmington.......... NC.................. 10,000 4,300 14,300
HA of the City of Durham......... Durham.............. NC.................. 10,000 4,300 14,300
HA of Union City................. Union City.......... NJ.................. 10,000 4,300 14,300
HA City of Bayonne............... Bayonne............. NJ.................. 3,750 1,613 5,363
Paterson HA...................... Paterson............ NJ.................. 6,300 2,709 9,009
Newark HA........................ Newark.............. NJ.................. 500,000 215,000 715,000
HA of the City of Millville...... Millville........... NJ.................. 4,700 2,021 6,721
HA of East Orange................ East Orange......... NJ.................. 5,000 2,150 7,150
HA of the City of Orange......... Orange.............. NJ.................. 7,000 3,010 10,010
HA of Hoboken.................... Hoboken............. NJ.................. 5,000 2,150 7,150
HA of City of Las Cruces......... Las Cruces.......... NM.................. 10,000 4,300 14,300
Plattsburgh HA................... Plattsburgh......... NY.................. 5,000 2,150 7,150
Albany HA........................ Albany.............. NY.................. 5,000 2,150 7,150
Amsterdam HA..................... Amsterdam........... NY.................. 1,000 430 1,430
Schenectady Municipal HA......... Schenectady......... NY.................. 800 344 1,144
The Mun. HA City of Yonkers...... Yonkers............. NY.................. 10,000 4,300 14,300
Catskill HA...................... Catskill............ NY.................. 1,000 430 1,430
Cohoes HA........................ Cohoes.............. NY.................. 2,000 860 2,860
Watervliet HA.................... Watervliet.......... NY.................. 3,000 1,290 4,290
Lucas Metropolitian HA........... Toledo.............. OH.................. 35,000 15,050 50,050
Stark Metropolitian HA........... Canton.............. OH.................. 22,000 9,460 31,460
Easton HA........................ Easton.............. PA.................. 2,000 860 2,860
Woonsocket HA.................... Woonsocket.......... RI.................. 5,000 2,150 7,150
HA of the City of Pawtucket...... Pawtucket........... RI.................. 18,000 7,740 25,740
HA of the City of Fort Mill...... Fort Mill........... SC.................. 5,070 2,180 7,250
Beaufort HA...................... Beaufort............ SC.................. 2,000 860 2,860
Knoxville Com. Dev. Corp......... Knoxville........... TN.................. 12,238 5,262 17,500
Memphis HA....................... Memphis............. TN.................. 50,000 21,500 71,500
Corpus Christi HA................ Corpus Christi...... TX.................. 25,000 10,750 35,750
HA City of San Antonio........... San Antonio......... TX.................. 25,416 10,929 36,345
HA of the City of El Paso........ El Paso............. TX.................. 9,440 4,059 13,499
HA of the City of Monahans....... Monahans............ TX.................. 5,000 2,150 7,150
HA of the City of Laredo......... Laredo.............. TX.................. 5,000 2,150 7,150
HA City of Houston............... Houston............. TX.................. 25,000 10,750 35,750
HA of Provo...................... Provo............... UT.................. 15,148 6,514 21,662
Roanoke Redevelopment HA......... Roanoke............. VA.................. 15,000 6,450 21,450
Norfolk Redevelopment & HA....... Norfolk............. VA.................. 5,000 2,150 7,150
----------------------------------
Totals GBB................. .................... .................... 2,036,095 875,521 2,902,586
----------------------------------------------------------------------------------------------------------------
Question. How does HUD monitor the success of these programs in
reducing crime?
Answer. HUD is currently in the process of establishing an
evaluation mechanism to assess the current buyback initiative.
Question. How much has crime been reduced through these programs?
Answer. Again, HUD is planning an evaluation. It is important to
remember, however, that buybacks by their nature are preventative
measures that reduce the presence of unwanted firearms in a community,
thereby reducing the supply of weapons potentially available to
criminals.
Question. Were any other anti-crime efforts being pursued in the
same areas simultaneously, and if so, what were they?
Answer. HUD's buyback initiative is part of a larger anti-crime and
anti-drug abuse effort funded through the Public Housing Drug
Elimination Program (PHDEP), which is, in turn, part of the
Department's comprehensive public safety agenda. PHDEP was funded at
$310 million in fiscal year 2000, supporting a broad spectrum of
activities, including employment of security personnel, reimbursement
of local police for additional security services, physical improvements
to increase security, training and equipping voluntary tenant patrols,
innovative anti-drug programs, and funding nonprofit resident
management corporations and tenant councils to develop security and
drug-abuse prevention programs.
INTOWN MANAGEMENT GROUP (ITMG)
Question. As mentioned, your agency recently negotiated with the
Department of Justice to acquire funds to pay off liens placed on HUD
owned homes as a result of HUD firing InTowm Management Group and
transferring those accounts to Golden Feather Realty Services. Can you
tell me what actions HUD is taking to insure that payments are received
by all businesses, not just the larger subcontractors that worked with
HUD and HUD's agents on a good faith basis?
Answer. The Department has a procedure in place for satisfying
liens placed on HUD-owned properties by subcontractors who have not
been paid by ITMG. Lien resolution questions may be referred to HUD's
Atlanta Homeownership Center at (888) 696-4687 (this is a toll-free
number). This procedure, along with the Department's replacement of
ITMG, will keep sales of HUD homes moving forward efficiently so that
home buyers may complete the purchase of their homes promptly.
The termination of the Management and Marketing prime contract
under which subcontractors provided services was unavoidable.
Termination of a contract is the most extreme action the Government can
take to remedy a contractor's failure to perform. This was not the
remedy HUD desired. HUD afforded ITMG every opportunity possible to
correct its deficient performance, but in the end, ITMG's failure to
perform acceptably left HUD with no other choice than to terminate
ITMG's contracts. HUD did so in strict accordance with the Federal
contracting rules that govern termination.
In lieu of filing a lien and seeking its satisfaction by HUD, a
subcontractor may file a claim with the Atlanta Division of the
Bankruptcy Court for Northern District of Georgia. ITMG filed a
voluntary petition for a Chapter 11 Bankruptcy, with that court, on
September 22, 1999. All payments will be governed by the regulations
covering bankruptcies under the Federal court system. ITMG's petition
is identified as Case Number 99-74091. For more information pertaining
to the bankruptcy and how to proceed with filing a claim,
subcontractors should call the Atlanta Division of the Bankruptcy Court
at (404) 215-1000.
SOUTHEASTERN IDAHO COMMUNITY ACTION AGENCY
Question. I would also like to ask a few questions concerning
SouthEastern Idaho Community Action Agency (SEICAA). As background,
SEICAA has served its community for 31 years and is a vital link to
providing safe, affordable housing in rural southeast Idaho. One of
SEICAA's largest programs is our HUD Housing Apartment Complexes which
they own, maintain, and rent to low-income individuals, families and
elderly persons. However, their properties are older and are
increasingly difficult to maintain, keep safe and sustain the required
reserve accounts, pay their mortgages, repairs, preventative
maintenance, etc. Because of the nature of their business, they
occasionally turn to HUD for assistance in some of their sponsored
programs, including Subsidy rent increase, Flexible Subsidy loan, and
troubled project funding. However, SEICAA continually receives little
communication, assistance, or direction from HUD as they struggle to
maintain their HUD properties. SEICAA believes, and I am inclined to
agree, that for the benefit of the people that are serving and the
service they provide, they deserve HUD's timely attention and response
to their inquires.
When can SEICAA and other similar struggling properties expect HUD
personnel to respond to requests submitted for assistance and keep in
compliance with HUD's own designated timeframes and regulations?
Answer. Efforts to improve customer service provided by federal
employees has been a major effort for this Administration. HUD has a
staff dedicated to precisely this function--Community Builders. The
Community Builders have dramatically improved HUD's responsiveness. In
fact, Anderson consulting surveyed HUD's customers and found that the
agency was providing customer service at the level of Boldridge Quality
Award winners--perhaps the most prestigious award a private business
can receive. Ongoing outreach and technical assistance to HUD's program
participants, like SEICCA, is a continuing mission through ongoing
industry training sessions, our web sites, and points of contact who
provide one on one technical assistance.
With the recent changes in how Section 8 contracts are renewed,
some owners experienced difficulty providing the necessary information
HUD now requires in order to renew subsidy or increase subsidy levels.
With the last year of implementing new Section 8 renewal policy behind
us, and, the advent of 5-year contract renewals, contract renewals
should run much more smoothly.
In the specific case of problems encountered by SEICCA, they did
experience difficulty and delay in renewing their Section 8 contract
last year; it originally expired in July, 1999. In order to renew a
Section 8 contract, HUD requires the renewal request to be complete and
provided to HUD 120 days in advance of the contract expiration. When
this is not done, as in the case of SEICCA, delays in subsidy renewal
occur. In response to an inquiry from Senator Craig's staff regarding
the delays in processing SEICCA's contract renewal in September of
1999, a letter was sent to SEICCA specifically outlining the
deficiencies in their submission for both a subsidy increase and
renewal, as well as their subsequent request for additional flexible
subsidy to handle additional required repairs. Once the deficiencies in
the submission were corrected, the Section 8 contract was renewed, with
substantially higher rents.
REDUCING INTEREST RATES
Question. Will HUD consider reducing mortgage interest rates or
mortgage elimination on struggling properties in order to increase cash
flow for making emergency repairs, preventative maintenance and upkeep,
retention of qualified employees to maintain the facilities, and to
keep rents at an affordable level to qualified tenants?
Answer. Where HUD is the holder of a mortgage the answer is yes.
HUD has many tools at its disposal that can be used to address such
needs, including those mentioned. However, HUD has a fiduciary
responsibility to the taxpayers to make sure it services each property
in the taxpayers' best interests. Therefore, it is essential that each
project be evaluated separately to determine what, if any, of the tools
can or should be used in a particular case. HUD is not the only answer.
Owners need to seek and maintain professional property management that
select tenants properly, perform preventive maintenance promptly, and
budget wisely but adequately.
Where HUD is mortgage insurer, there is a private lender involved
who makes loans for a profit. We know of no private lender that would
reduce interest rates or eliminate the need to repay the loan.
ONE-TIME GRANTS
Question. Will HUD consider making available sizeable one-time
grants to bring properties up to safe and decent standards?
Answer. HUD has had authority over the years for various grant and
loan programs. Funding for such programs as you describe lapsed several
years ago.
HUD and the Congress saw the continuing need for such programs. The
latest program, which should be available shortly, will provide grants
for some projects using unspent Interest Reduction Payments from the
Section 236 program.
INTERVENTION
Question. HUD has commitments to communities. Will HUD consider the
very real probability that without timely, appropriate intervention,
many of these properties will either be condemned, fall into serious
disrepair, and/or require foreclosure reverting back to HUD?
Answer. HUD shares the Senator's concern for the community and the
effects of maintaining affordable housing. This administration has
taken several steps to do exactly as suggested to provide timely
intervention. For example:
--We established the Real Estate Assessment Center (REAC). One of
REAC's jobs is to implement a system of uniform physical
evaluations of multifamily properties. In fact, we just
completed the first ever evaluation of the physical condition
of the entire multifamily inventory. Through REAC, we also
automated the receipt of Audited Annual Financial Statements.
We now have the best information ever on the financial
condition of this inventory.
--We established the Departmental Enforcement Center (DEC). The DEC
is responsible for enforcing the business documents between HUD
and the worst offenders doing business with the Department.
--We are in the process of awarding contracts for Contract
Administrators who will administer project-based Section 8
contracts.
--We reorganized the Office of Multifamily Housing in the field to
improve servicing. We recently reorganized the Office of the
Deputy Assistant Secretary for Multifamily Housing in
Headquarters to improve overall management.
Also, foreclosure and or HUD ownership does not mean the loss of
affordable housing. When properties are sold at foreclosure or from the
owned inventory, if they need to be preserved as affordable housing, if
feasible, they are sold with requirements that they be repaired, and
operated as affordable housing. These requirements are enforced through
land use restrictions that generally last at least 20 years. In
addition, eligible tenants are provided with Section 8 vouchers, which
they can use to stay at the repaired project, or move to another
project or house.
HUD also uses its ability to provide Up Front Grants for HUD-owned
projects that need to be preserved and preservation is not feasible
without a grant from HUD. We have sold over 60 projects in the last few
years with such grants.
So, while we would hope that no property ever would fall into
disrepair, we are more prepared than ever to address such problems
early on, and where such efforts fail, our foreclosure and disposition
programs can and are used to address the problem.
______
Questions Submitted by Senator Jon Kyl
GUN CONTROL
Question. The Administration has not been successful in securing
the passage of gun-control legislation. However, it has, through HUD,
threatened a massive lawsuit against gun manufacturers (except for
Smith & Wesson, which has now reached a separate agreement with the
Department). Some believe that the Administration is attempting to
achieve through litigation what it cannot achieve through the normal
legislative process. What is the statutory or constitutional authority
on which HUD intends to pursue lawsuits against the gun industry?
Answer. As the Department has stated on previous occasions, HUD has
no intentions of filing a lawsuit in its own capacity against the gun
industry. HUD, however, is working with cities and counties that have
filed suit against the gun industry, as well as with responsible
manufacturers, to find a negotiated solution that will facilitate the
industry's role in reducing the tide of gun violence by fostering safer
manufacturing and distribution practices. Should these negotiations
prove unsuccessful, HUD is prepared to work with public housing
authorities, including those under HUD's control, on a possible suit
against the industry.
HUD has statutory authority, moreover, to provide such assistance,
and to assist the cities and counties that have filed suit against the
gun industry in their negotiations for settlement. In the Department's
enabling statue, Congress made clear that HUD was created in part ``to
encourage the solution of problems of housing, urban development, and
mass transportation through State, county, town, village, or other
local and private action.'' 42 U.S.C. Sec. 3531 (1999). Given the awful
toll of gun violence in our nation's communities, particularly those at
the core of HUD's mission, helping cities and counties seek improved
gun safety and more responsible distribution through negotiations with
the gun industry, is a prime example of such encouragement. Moreover,
reducing gun violence is at the core of HUD's responsibility for
promoting national housing policy. The Housing Act of 1949, for
example, declared as national housing policy ``the realization as soon
as feasible of the goal of a decent home and a suitable living
environment for every American family,'' 42 U.S.C. Sec. 1441 (1999),
and Congress has declared that the ``objective of national housing
policy shall be to reaffirm the long-established national commitment to
decent, safe, and sanitary housing for every American by strengthening
a nationwide partnership of public and private institutions able( to
help make neighborhoods safe and livable.'' 42 U.S.C. Sec. 12701
(1999).
CIVIL RIGHT PROTECTIONS
Question. Every year, local leaders from Arizona express
dissatisfaction with the degree to which HUD's interpretation of fair
housing statutes impedes their ability to protect the quality of life
in their communities. Such questions typically arise in circumstances
where a community seeks to exercise control over the siting of a group
home--perhaps one where all the residents have a history of serious
substance abuse--pursuant to the locality's traditional prerogative to
set occupancy standards. In response to previous inquiries on this
subject, your office has indicated its willingness to seek a more
satisfactory accommodation with local leaders. The mechanism cited for
reaching that accommodation is, I gather from your past responses, a
process of consultation bringing together all those with a stake in the
matter.
I recognize the need to ensure that civil rights protections are
enforced in the housing sphere. But my question to you is: When do you
expect that these discussions will lead to concrete changes that will
make it easier for local leaders to be responsive to the concerns of
families in their communities?
Answer. We believe that our discussions with stakeholders such as
Mayors, the National League of Cities, and disability groups have
served to clarify any misunderstandings about HUD's interpretation of
the Fair Housing Act on the matter of group homes. In some instances,
we have found that the stakeholders' concern rests not with HUD's
interpretation of the law, but with the law itself, or the Supreme
Court's interpretation of the law as in the Edmonds decision. To
clarify where HUD stands on these issues, HUD and the Department of
Justice issued easy-to-understand questions and answers. A copy of that
guidance is attached. The Department welcomes further dialogue on this
subject and believes our recent dialogue with the above interested
parties has done much to resolve areas of disagreement or
misunderstanding.
Attachment
JOINT STATEMENT OF THE DEPARTMENT OF JUSTICE AND THE DEPARTMENT OF
HOUSING AND URBAN DEVELOPMENT
GROUP HOMES, LOCAL LAND USE, AND THE FAIR HOUSING ACT
Since the federal Fair Housing Act (``the Act'') was amended by
Congress in 1988 to add protections for persons with disabilities and
families with children, there has been a great deal of litigation
concerning the Act's effect on the ability of local governments to
exercise control over group living arrangements, particularly for
persons with disabilities. The Department of Justice has taken an
active Part in much of this litigation, often following referral of a
matter by the Department of Housing and Urban Development (``HUD'').
This joint statement provides an overview of the Fair Housing Act's
requirements in this area. Specific topics are addressed in more depth
in the attached Questions and Answers.
The Fair Housing Act prohibits a broad range of practices that
discriminate against individuals on the basis of race, color, religion,
sex, national origin, familial status, and disability.\1\ The Act does
not preempt local zoning laws. However, the Act applies to
municipalities and other local government entities and prohibits them
from making zoning or land use decisions or implementing land use
policies that exclude or otherwise discriminate against protected
persons, including individuals with disabilities.
---------------------------------------------------------------------------
\1\ The Fair Housing Act uses the term ``handicap.'' This document
uses the term `disability' which has exactly the same legal meaning.
---------------------------------------------------------------------------
The Fair Housing Act makes it unlawful--
--To utilize land use policies or actions that treat groups of
persons with disabilities less favorably than groups of non-
disabled persons. An example would be an ordinance prohibiting
housing for persons with disabilities or a specific type of
disability, such as mental illness, from locating in a
particular area, while allowing other groups of unrelated
individuals to live together in that area.
--To take action against, or deny a permit, for a home because of the
disability of individuals who live or would live there. An
example would be denying a building permit for a home because
it was intended to provide housing for persons with mental
retardation.
--To refuse to make reasonable accommodations in land use and zoning
policies and procedures where such accommodations may be
necessary to afford persons or groups of persons with
disabilities an equal opportunity to use and enjoy housing.
--What constitutes a reasonable accommodation is a case-by-case
determination.
--Not all requested modifications of rules or policies are
reasonable. If a requested modification imposes an undue
financial or administrative burden on a local government,
or if a modification creates a fundamental alteration in a
local governments land use and zoning scheme, it is not a
``reasonable'' accommodation.
The disability discrimination provisions of the Fair Housing Act do
not extend to persons who claim to be disabled solely on the basis of
having been adjudicated a juvenile delinquent, having a criminal
record, or being a sex offender. Furthermore, the Fair Housing Act does
not protect persons who currently use illegal drugs, persons who have
been convicted of the manufacture or sale of illegal drugs, or persons
with or without disabilities who present a direct threat to the persons
or property of others.
HUD and the Department of Justice encourage parties to group home
disputes to explore all reasonable dispute resolution procedures, like
mediation, as alternatives to litigation.
DATE: AUGUST 18, 1999.
FAIR HOUSING ACT AND ZONING
Question. Does the Fair Housing Act pre-empt local zoning laws?
Answer. No. ``Pre-emption'' is a legal term meaning that one level
of government has taken over a field and left no room for government at
any other level to pass laws or exercise authority in that area. The
Fair Housing Act is not a land use or zoning statute; it does not pre-
empt local land use and zoning laws. This is an area where state law
typically gives local governments primary power. However, if that power
is exercised in a specific instance in a way that is inconsistent with
a federal law such as the Fair Housing Act, the federal law will
control. Long before the 1988 amendments, the courts had held that the
Fair Housing Act prohibited local governments from exercising their
land use and zoning powers in a discriminatory way.
Question. What is a group home within the meaning of the Fair
Housing Act?
Answer. The term ``group home'' does not have a specific legal
meaning. In this statement, the term ``group home'' refers to housing
occupied by groups of unrelated individuals with disabilities.\2\
Sometimes, but not always, housing is provided by organizations that
also offer various services for individuals with disabilities living in
the group homes. Sometimes it is this group home operator, rather than
the individuals who live in the home, that interacts with local
government in seeking permits and making requests for reasonable
accommodations on behalf of those individuals.
---------------------------------------------------------------------------
\2\ There are groups of unrelated persons with disabilities who
choose to live together who do not consider their living arrangements
``group homes,'' and it is inappropriate to consider them ``group
homes'' as that concept is discussed in this Statement.
---------------------------------------------------------------------------
The term ``group home'' is also sometimes applied to any group of
unrelated persons who live together in a dwelling--such as a group of
students who voluntarily agree to share the rent on a house. The Act
does not generally affect the ability of local governments to regulate
housing of this kind, as long as they do not discriminate against the
residents on the basis of race, color, national origin, religion, sex,
handicap (disability) or familial status (families with minor
children).
Question. Who are persons with disabilities within the meaning of
the Fair Housing Act?
Answer. The Fair Housing Act prohibits discrimination on the basis
of handicap. ``Handicap'' has the same legal meaning as the term
``disability'' which is used in other federal civil rights laws.
Persons with disabilities (handicaps) are individuals with mental or
physical impairments which substantially limit one or more major life
activities. The term mental or physical impairment may include
conditions such as blindness, hearing impairment, mobility impairment,
HIV infection, mental retardation, alcoholism, drug addiction, chronic
fatigue, learning disability, head injury, and mental illness. The term
major life activity may include seeing, hearing, walking, breathing,
performing manual tasks, caring for one's self, learning, speaking, or
working. The Fair Housing Act also protects persons who have a record
of such an impairment, or are regarded as having such an impairment.
Current users of illegal controlled substances, persons convicted
for illegal manufacture or distribution of a controlled substance, sex
offenders, and juvenile offenders, are not considered disabled under
the Fair Housing Act, by virtue of that status.
The Fair Housing Act affords no protections to individuals with or
without disabilities who present a direct threat to the persons or
property of others. Determining whether someone poses such a direct
threat must be made on an individualized basis, however, and cannot be
based on general assumptions or speculation about the nature of a
disability.
Question. What kinds of local zoning and land use laws relating to
group homes violate the Fair Housing Act?
Answer. Local zoning and land use laws that treat groups of
unrelated persons with disabilities less favorably than similar groups
of unrelated persons without disabilities violate the Fair Housing Act.
For example, suppose a city's zoning ordinance defines a ``family'' to
include up to six unrelated persons living together as a household
unit, and gives such a group of unrelated persons the right to live in
any zoning district without special permission. If that ordinance also
disallows a group home for six or fewer people with disabilities in a
certain district or requires this home to seek a use permit, such
requirements would conflict with the Fair Housing Act. The ordinance
treats persons with disabilities worse than persons without
disabilities.
A local government may generally restrict the ability of groups of
unrelated persons to live together as long as the restrictions are
imposed on all such groups. Thus, in the case where a family is defined
to include up to six unrelated people, an ordinance would not, on its
face, violate the Act if a group home for seven people with
disabilities was not allowed to locate in a single family zoned
neighborhood, because a group of seven unrelated people without
disabilities would also be disallowed. However, as discussed below,
because persons with disabilities are also entitled to request
reasonable accommodations in rules and policies, the group home for
seven persons with disabilities would have to be given the opportunity
to seek an exception or waiver. If the criteria for reasonable
accommodation are met, the permit would have to be given in that
instance. but the ordinance would not be invalid in all circumstances.
Question. What is a reasonable accommodation under the Fair Housing
Act?
Answer. As a general rule, the Fair Housing Act makes it unlawful
to refuse to make ``reasonable accommodations'' (modifications or
exceptions) to rules, policies, practices, or services, when such
accommodations may be necessary to afford persons with disabilities an
equal opportunity to use or enjoy a dwelling.
Even though a zoning ordinance imposes on group homes the same
restrictions it imposes on other groups of unrelated people, a local
government may be required, in individual cases and when requested to
do so, to grant a reasonable accommodation to a group home for persons
with disabilities. For example, it may be a reasonable accommodation to
waive a setback requirement so that a paved path of travel can be
provided to residents who have mobility impairments. A similar waiver
might not be required for a different type of group home where
residents do not have difficulty negotiating steps and do not need a
setback in order to have an equal opportunity to use and enjoy a
dwelling.
Not all requested modifications of rules or policies are
reasonable. Whether a particular accommodation is reasonable depends on
the facts, and must be decided on a case-by-case basis. The
determination of what is reasonable depends on the answers to two
questions: First, does the request impose an undue burden or expense on
the local government? Second, does the proposed use create a
fundamental alteration in the zoning scheme? If the answer to either
question is ``yes,'' the requested accommodation is unreasonable.
What is ``reasonable'' in one circumstance may not be
``reasonable'' in another. For example, suppose a local government does
not allow groups of four or more unrelated people to live together in a
single-family neighborhood. A group home for four adults with mental
retardation would very likely be able to show that it will have no more
impact on parking, traffic, noise, utility use, and other typical
concerns of zoning than an ``ordinary family.'' In this circumstance,
there would be no undue burden or expense for the local government nor
would the single-family character of the neighborhood be fundamentally
altered. Granting an exception or waiver to the group home in this
circumstance does not invalidate the ordinance. The local government
would still be able to keep groups of unrelated persons without
disabilities from living in single-family neighborhoods.
By contrast, a fifty-bed nursing home would not ordinarily be
considered an appropriate use in a single-family neighborhood, for
obvious reasons having nothing to do with the disabilities of its
residents. Such a facility might or might not impose significant
burdens and expense on the community, but it would likely create a
fundamental change in the single-family character of the neighborhood.
On the other hand, a nursing home might not create a ``fundamental
change'' in a neighborhood zoned for multi-family housing. The scope
and magnitude of the modification requested, and the features of the
surrounding neighborhood are among the factors that will be taken into
account in determining whether a requested accommodation is reasonable.
Question. What is the procedure for requesting a reasonable
accommodation?
Answer. Where a local zoning scheme specifies procedures for
seeking a departure from the general rule, courts have decided, and the
Department of Justice and HUD agree, that these procedures must
ordinarily be followed. If no procedure is specified, persons with
disabilities may, nevertheless, request a reasonable accommodation in
some other way, and a local government is obligated to grant it if it
meets the criteria discussed above. A local government's failure to
respond to a request for reasonable accommodation or an inordinate
delay in responding could also violate the Act
Whether a procedure for requesting accommodations is provided or
not, if local government officials have previously made statements or
otherwise indicated that an application would not receive fair
consideration, or if the procedure itself is discriminatory, then
individuals with disabilities living in a group home (and/or its
operator) might be able to go directly into court to request an order
for an accommodation.
Local governments are encouraged to provide mechanisms for
requesting reasonable accommodations that operate promptly and
efficiently, without imposing significant costs or delays. The local
government should also make efforts to insure that the availability of
such mechanisms is well known within the community.
Question. When, if ever, can a local government limit the number of
group homes that can locate In a certain area?
Answer. A concern expressed by some local government officials and
neighborhood residents is that certain jurisdictions, governments, or
particular neighborhoods within a jurisdiction, may come to have more
than their ``fair share'' of group homes. There are legal ways to
address this concern. The Fair Housing Act does not prohibit most
governmental programs designed to encourage people of a particular race
to move to neighborhoods occupied predominantly by people of another
race. A local government that believes a particular area within its
boundaries has its ``fair share'' of group homes, could offer
incentives to providers to locate future homes in other neighborhoods.
However, some state and local governments have tried to address
this concern by enacting laws requiring that group homes be at a
certain minimum distance from one another. The Department of Justice
and HUD take the position, and most courts that have addressed the
issue agree, that density restrictions are generally inconsistent with
the Fair Housing Act. We also believe, however. that if a neighborhood
came to be composed largely of group homes, that could adversely affect
individuals with disabilities and would be inconsistent with the
objective of integrating persons with disabilities into the community.
Especially in the licensing and regulatory process, it is appropriate
to be concerned about the setting for a group home. A consideration of
over-concentration could be considered in this context. This objective
does not, however, justify requiring separations which have the effect
of foreclosing group homes from locating in entire neighborhoods.
Question. What kinds of health and safety regulations can be
imposed upon group homes?
Answer. The great majority of group homes for persons with
disabilities are subject to state regulations intended to protect the
health and safety of their residents. The Department of Justice and HUD
believe, as do responsible group home operators, that such licensing
schemes are necessary and legitimate. Neighbors who have concerns that
a particular group home is being operated inappropriately should be
able to bring their concerns to the attention of the responsible
licensing agency. We encourage the States to commit the resources
needed to make these systems responsive to resident and community needs
and concerns.
Regulation and licensing requirements for group homes are
themselves subject to scrutiny under the Fair Housing Act. Such
requirements based on health and safety concerns can be discriminatory
themselves or may be cited sometimes to disguise discriminatory motives
behind attempts to exclude group homes from a community. Regulators
must also recognize that not all individuals with disabilities living
in group home settings desire or need the same level of services or
protection. For example, it may be appropriate to require heightened
fire safety measures in a group home for people who are unable to move
about without assistance. But for another group of persons with
disabilities who do not desire or need such assistance, it would not be
appropriate to require fire safety measures beyond those normally
imposed on the size and type of residential building involved.
Question. Can a local government consider the feelings of neighbors
in making a decision about granting a permit to a group home to locate
in a residential neighborhood?
Answer. In the same way a local government would break the law if
it rejected low-income housing in a community because of neighbors'
fears that such housing would be occupied by racial minorities, a local
government can violate the Fair Housing Act if it blocks a group home
or denies a requested reasonable accommodation in response to
neighbors' stereotypical fears or prejudices about persons with
disabilities. This is so even if the individual government decision-
makers are not themselves personally prejudiced against persons with
disabilities. If the evidence shows that the decision-makers were
responding to the wishes of their constituents, and that the
constituents were motivated in substantial part by discriminatory
concerns, that could be enough to prove a violation.
Of course, a city council or zoning board is not bound by
everything that is said by every person who speaks out at a public
hearing. It is the record as a whole that will be determinative. If the
record shows that there were valid reasons for denying an application
that were not related to the disability of the prospective residents,
the courts will give little weight to isolated discriminatory
statements. If, however, the purportedly legitimate reasons advanced to
support the action are not objectively valid, the courts are likely to
treat them as pretextual, and to find that there has been
discrimination.
For example, neighbors and local government officials may be
legitimately concerned that a group home for adults in certain
circumstances may create more demand for on-street parking than would a
typical family. It is not a violation of the Fair Housing Act for
neighbors or officials to raise this concern and to ask the provider to
respond. A valid unaddressed concern about inadequate parking
facilities could justify denying the application, if another type of
facility would ordinarily be denied a permit for such parking problems.
However, if a group of individuals with disabilities or a group home
operator shows by credible and unrebutted evidence that the home will
not create a need for more parking spaces, or submits a plan to provide
whatever off-street parking may be needed, then parking concerns would
not support a decision to deny the home a permit.
Question. What is the status of group living arrangements for
children under the Fair Housing Act?
Answer. In the course of litigation addressing group homes for
persons with disabilities, the issue has arisen whether the Fair
Housing Act also provides protections for group living arrangements for
children. Such living arrangements are covered by the Fair Housing
Act's provisions prohibiting discrimination against families with
children. For example, a local government may not enforce a zoning
ordinance which treats group living arrangements for children less
favorably than it treats a similar group living arrangement for
unrelated adults. Thus, an ordinance that defined a group of up to six
unrelated adult persons as a family, but specifically disallowed a
group living arrangement for six or fewer children, would, on its face,
discriminate on the basis of familial status. Likewise, a local
government might violate the Act if it denied a permit to such a home
because neighbors did not want to have a group facility for children
next to them.
The law generally recognizes that children require adult
supervision. Imposing a reasonable requirement for adequate supervision
in group living facilities for children would not violate the familial
status provisions of the Fair Housing Act.
Question. How are zoning and land use matters handled by HUD and
the Department of Justice?
Answer. The Fair Housing Act gives the Department of Housing and
Urban Development the power to receive and investigate complaints of
discrimination, including complaints that a local government has
discriminated in exercising its land use and zoning powers. HUD is also
obligated by statute to attempt to conciliate the complaints that it
receives, even before it completes an investigation.
In matters involving zoning and land use, HUD does not issue a
charge of discrimination. Instead, HUD refers matters it believes may
be meritorious to the Department of Justice which, in its discretion,
may decide to bring suit against the respondent in such a case. The
Department of Justice May also bring suit in a case that has not been
the subject of a HUD complaint by exercising its power to initiate
litigation alleging a ``pattern or practice'' of discrimination or a
denial of rights to a group of persons which raises an issue of general
public importance.
The Department of Justice's principal objective in a suit of this
kind is to remove significant barriers to the housing opportunities
available for persons with disabilities. The Department ordinarily will
not participate in litigation to challenge discriminatory ordinances
which are not being enforced, unless there is evidence that the mere
existence of the provisions are preventing or discouraging the
development of needed housing.
If HUD determines that there is no reasonable basis to believe that
there may be a violation, it will close an investigation without
referring the matter to the Department of Justice. Although the
Department of Justice would still have independent ``pattern or
practice'' authority to take enforcement action in the matter that was
the subject of the closed HUD investigation, that would be an unlikely
event. A HUD or Department of Justice decision not to proceed with a
zoning or land use matter does not foreclose private plaintiffs from
pursuing a claim.
Litigation can be an expensive, time-consuming, and uncertain
process for all parties. HUD and the Department of Justice encourage
parties to group home disputes to explore all reasonable alternatives
to litigation, including alternative dispute resolution procedures,
like mediation. HUD attempts to conciliate all Fair Housing Act
complaints that it receives. In addition, it is the Department of
Justice's policy to offer prospective defendants the opportunity to
engage in pre-suit settlement negotiations, except in the most unusual
circumstances.
Letter From John A. Magagna and Kenneth H. Zimmerman
August 13, 1999.
Chai R. Feldblum,
Georgetown University Law Center,
Washington, D.C.
Dear Ms. Feldblum: We are writing to provide you with the Joint
Statement that the Department of Justice and the Department of Housing
and Urban Development have developed concerning Group Homes, Local Land
Use, and the Fair Housing Act.
We are aware of the interest that the United States Conference of
mayors, the National League of Cities, the Coalition to Preserve the
Fair Housing Act, and other interested parties have expressed in such
guidance from the federal agencies with responsibility for enforcing
the Fair Housing Act. We would he happy to meet with you in the near
future to discuss this statement and your own efforts to provide
further information concerning these issues.
Thank you for your ongoing interest in these issues. We look
forward to working with you further.
Sincerely,
John A. Magagna,
Chief, Housing and Civil Enforcement Section, Civil Rights
Division, U.S. Department of Justice.
Kenneth H. Zimmerman,
Deputy Assistant Secretary for Enforcement and Programs, U.S.
Department of Housing and Urban Development.
SHELTER PLUS CARE
Question. Shelter Plus Care is one of the federal Homeless
Assistance Programs authorized under the McKinney Act. Under this
specific program, the federal government funds permanent housing for
some of the most troubled among the homeless population--particularly
individuals with serve mental illnesses--and local governments provide
social services for those residents. Shelter Plus Care projects
initially receive five years of funding. After that, these programs
must compete with other projects that serve the homeless. Local
governments decide which projects will be funded, but the standards
they use are guided by HUD's ``Continuum of Care'' framework.
Last year, expiring Shelter Plus Care projects serving 885 people
went unrenewed. A disproportionate share of these are in Maricopa
County, Arizona. I recognize that HUD has proposed a fix for this
situation in the fiscal year 2001 budget, but the fact is that Congress
has been left to try to address the problem that currently exists. In
light of these circumstances, and in light of the fact that we will
likely see more projects going unrenewed in the next few years, do you
believe that the ``Continuum of Care'' model could be improved to
better address the varied needs of communities working to address the
problems of homeless people?
Answer. In the 1999 competition, 79 percent of all Shelter Plus
Care renewal funding requests were approved for a total of $87.2
million and representing 3,527 funded beds.
Shelter Plus Care renewal requests are not spread proportionately
among jurisdictions but are driven by local needs and timing
considerations which vary considerably from place to place. In the 1999
competition, Maricopa County had three of its four Shelter Plus Care
renewal requests funded, $10,721,760 out of the $13,752,900 requested.
The continuum of care competition provides additional funds to
communities with large renewal burdens and Maricopa benefited from this
adjustment in 1999. Only one other continuum in the country received
more Shelter Plus Care renewal funding--Cuyahoga County, Ohio. Maricopa
assigned its four S+C renewals priority numbers 17 to 20 out of the 23
projects submitted. Maricopa Country had sufficient funds available to
it in the competition, approximately $15 million, to have had all four
of its Shelter Plus Care renewals funded, if they had decided to do so,
by assigning them a higher priority.
With or without a continuum of care system, the only way of
ensuring the continuation of homeless assistance projects deemed
essential to our communities, such as those in Maricopa County, is to
fully fund them through an annual appropriations bill. The Department
has proposed just such a vehicle for the funding of Shelter Plus Care
renewals through the Section 8 Housing Certificate Fund. We strongly
urge that Shelter Plus Care permanent housing project renewals be
funded in this manner going forward. This will strengthen the continuum
of care process and the communities and residents it is intended to
serve.
SHORTAGE OF AFFORDABLE HOUSING
Question. Mr. Secretary, the shortage of affordable housing in this
country is truly a crisis. The tight rental market and the high cost of
housing in Vermont is severely limiting the availability of affordable
housing throughout the state. I am concerned that the high housing
costs and limited availability are not only aggravating the need of low
income families, but putting middle income families out in the streets.
What is your Department's response to the rising housing costs
throughout the country and how does your department intend to spur
production of new housing?
Answer. Senator, I couldn't agree with you more. The need for
increasing the supply of affordable housing has reached crisis
proportions--HUD's recent report on ``worst case'' housing needs found
a record 5.4 million American families are in urgent need of affordable
housing. The Department is moving on a number of fronts to address this
problem. A key program proposal to foster affordable housing production
is the Department's proposal to increase funding for Housing Vouchers
and to earmark 10,000 vouchers for housing production--the first new
affordable housing production program for families since 1996.
HUD's HOME program provides funding to state and local governments
to help them acquire, rehabilitate or build affordable housing and the
Administration has proposed an innovative ``continuum of care'' program
that would ensure that the full range of housing needs of the elderly--
from maintaining their own homes to assisted living--are provided. And
I should emphasize the Department's efforts to provide affordable
housing for people with special needs--especially the homeless and
people with AIDS.
GUN CONTROL
Question. The Administration has not been successful in securing
the passage of gun-control legislation. However, it has, through HUD,
threatened a massive lawsuit against gun manufacturers (except for
Smith & Wesson, which has now reached a separate agreement with the
Department). Some believe that the Administration is attempting to
achieve through litigation what it cannot achieve through the normal
legislative process. What is the statutory or constitutional authority
on which HUD intends to pursue lawsuits against the gun industry?
Answer. As the Department has stated on previous occasions, HUD has
no intentions of filing a lawsuit in its own capacity against the gun
industry. HUD, however, is working with cities and counties that have
filed suit against the gun industry, as well as with responsible
manufacturers, to find a negotiated solution that will facilitate the
industry's role in reducing the tide of gun violence by fostering safer
manufacturing and distribution practices. Should these negotiations
prove unsuccessful, HUD is prepared to work with public housing
authorities, including those under HUD's control, on a possible suit
against the industry.
HUD has statutory authority, moreover, to provide such assistance,
and to assist the cities and counties that have filed suit against the
gun industry in their negotiations for settlement. In the Department's
enabling statue, Congress made clear that HUD was created in part ``to
encourage the solution of problems of housing, urban development, and
mass transportation through State, county, town, village, or other
local and private action.'' 42 U.S.C. 3531 (1999). Given the awful toll
of gun violence in our nation's communities, particularly those at the
core of HUD's mission, helping cities and counties seek improved gun
safety and more responsible distribution through negotiations with the
gun industry, is a prime example of such encouragement. Moreover,
reducing gun violence is at the core of HUD's responsibility for
promoting national housing policy. The Housing Act of 1949, for
example, declared as national housing policy ``the realization as soon
as feasible of the goal of a decent home and a suitable living
environment for every American family,'' 42 U.S.C. Sec. 1441 (1999),
and Congress has declared that the ``objective of national housing
policy shall be to reaffirm the long-established national commitment to
decent, safe, and sanitary housing for every American by strengthening
a nationwide partnership of public and private institutions able . . .
to help make neighborhoods safe and livable.'' 42 U.S.C. Sec. 12701
(1999).
SUBCOMMITTEE RECESS
Senator Mikulski. With that, this hearing now stands
recessed until next Thursday, April 6, at such time as we will
take testimony from Secretary Togo West on the VA budget.
[Whereupon, at 11:56 a.m., Thursday, March 30, 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 2001
----------
THURSDAY, APRIL 6, 2000
U.S. Senate
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:30 a.m., in room SD-136, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Burns, Mikulski, and Leahy.
DEPARTMENT OF VETERANS AFFAIRS
STATEMENT OF HON. TOGO D. WEST, JR., SECRETARY
ACCOMPANIED BY:
THOMAS L. GARTHWAITE, M.D., DEPUTY UNDER SECRETARY FOR HEALTH,
VETERANS HEALTH ADMINISTRATION
JOSEPH THOMPSON, UNDER SECRETARY FOR BENEFITS, VETERANS
BENEFITS ADMINISTRATION
MICHAEL WALKER, ACTING UNDER SECRETARY FOR MEMORIAL AFFAIRS,
NATIONAL CEMETERY ADMINISTRATION
D. MARK CATLETT, DEPUTY ASSISTANT SECRETARY FOR BUDGET,
DEPARTMENTAL ADMINISTRATION
OPENING STATEMENT OF SENATOR CHRISTOPHER S. BOND
Senator Bond. Good morning, ladies and gentlemen. The
Subcommittee will come to order. We meet this morning to review
the fiscal year 2001 budget request of the Department of
Veterans Affairs. We welcome Secretary Togo West and other VA
officials. Senator Mikulski is here but she was called away
temporarily, so she suggested that I go on, because we do have
a couple of votes beginning at 10:30, and with the budget and
vote-arama going on, we don't know if we're going to be able to
give you the full treatment, Mr. Secretary, and I know that
you're going to miss that if we're unable to come back; but we
will keep the record open and have questions for the record.
VA's appropriation request totals about $47 billion of
which $22.4 billion is in the discretionary appropriations
level. The budget would grow by $1.5 billion over the fiscal
year 2000 level under the proposal submitted by the
administration.
A year ago, VA submitted a request to Congress which would
have resulted in 13,000 VA health care workers being laid off,
thousands of veterans being denied medical care, longer waiting
times for appointments, and closures of scores of programs for
such critical activities as substance abuse treatment, cancer
therapy, psychiatric treatment and cardiac surgery.
Despite the fact that the Vice-President announced in July
the administration would request an additional $1 billion for
medical care, we never received a budget amendment or any
request from the administration. Notwithstanding the
administration's failure to be responsive, after a long hot
summer and a lot of hard work we came up with a budget for the
Department which increased medical care by $1.7 billion. I
think everyone in the room will agree it was the right thing to
do to ensure high quality, accessible medical services to all
veterans seeking care at the VA.
VA'S MEDICAL CARE PROGRAM
It seems the administration finally saw the light, as this
year's budget proposal would increase medical care by $1.35
billion for a total of $20.3 billion. I congratulate you, Mr.
Secretary, in getting the White House to come to its senses and
recognize the importance of this vital program for veterans.
We are pleased the budget includes $548 million to
implement the new Millennium Act, increasing by $278 million
the funds for home and community-based care. These programs are
vitally important for our growing aging veteran population. The
new emphasis on home-based services should allow more veterans
to stay in their homes, surrounded by their family members, as
long as possible.
While we're on the issue of long-term care, let me say I
have become increasingly concerned about the quality of care
provided to our nation's elderly and nursing homes. A recent
audit in Missouri and several GAO reports indicate there are
serious and well-documented problems in the nation's nursing
home system, suggesting that inexcusable regulatory lapses have
occurred. VA has established a process to ensure that veterans
it places in community nursing homes are receiving good care,
through regular inspections and evaluations. Yet it is my
understanding that VA is neither systematically maintaining nor
sharing critical information with HCFA and State agencies about
the community homes with which it contracts. We will be
following up with you on this issue because I think this is one
area where VA could make a significant contribution and benefit
from the work done by HCFA and State inspection agencies as
well.
The budget also includes $339 million to continue to treat
veterans who suffer from Hepatitis C. Last year, Dr. Kizer told
us that Hepatitis C was a problem of epidemic proportion among
the veteran population in particular, and we seek to ensure
that the Department is allocating funds appropriately,
screening all at-risk patients and treating all veterans who
can benefit from the new combination therapy.
While Dr. Kizer spoke last year about the need for as much
as $500 million for treating veterans with Hepatitis C, your
budget indicates only $195 million will be spent in fiscal year
2000. More disturbing, recent data from the field indicates far
less than this is being spent this year. We need to understand
why this is happening.
I note there is a new initiative in this year's budget
which you've dubbed 30-30-20--I understand it has nothing to do
with the old 30-20-10 initiative--aimed at improving access to
care and decreasing waiting times. This is an admirable goal;
we all have scores of stories from our constituents about their
having to wait for weeks or even months to get an appointment
and then waiting for hours to see the doctor the day of the
appointment. I look forward to hearing details about how VA
will improve this situation.
Another emphasis in VA's budget is patient safety, with
$137 million in initiatives aimed at patient safety
improvements. This is an extremely important issue, and while
VA has been a leader in certain aspects of ensuring the safety
of its patients, such as the bar coding system for medications
and the patient safety registry, VA, along with all health care
providers, has a long way to go. Anytime there are instances of
patient abuse, neglect or mistakes, there's much work to be
done. VA must ensure that all of its facilities are following
VA's patient safety policies and procedures, and that there is
strong and consistent leadership.
Another area I am interested in is VA's homeless programs.
We increased these programs by $40 million last year, and the
budget proposal would maintain current levels of spending. I'm
concerned that while we're spending a lot of money on these
programs, there seems to be insufficient coordination within VA
and with a myriad of other Federal agency programs serving
homeless. Also, there seems to be a great deal of variation
from one VA hospital to the next in terms of how much priority
is placed on helping homeless veterans.
If helping homeless veterans is a national priority for VA,
and it absolutely should be, we need to be confident that it is
a priority at each of the 22 networks and each of the 172 VA
hospitals. Anecdotal evidence coming to us suggests that it is
not.
Fortunately, VA has efforts underway to identify and link
services between homeless veterans and VA medical and other
supportive services. This is a good thing, but the Department
needs also to recognize the importance of preventing its
patients from becoming homeless. The point is very important in
view of the fact that substantial numbers of homeless vets are
treated in every VA medical center.
CAPITAL ASSET REALIGNMENT PROTOCOL
Moving on, I also have concerns about VA's progress in
developing the capital asset realignment protocol. GAO told us
last year that the VA was wasting $1 million a day on unneeded
buildings, and that only 25 percent of buildings in the VA
medical system are being used for direct patient care. So it is
important that VA move forward with capital asset planning and
market studies, and in a manner which protects veteran's needs
but does not enable stakeholders to hijack the process.
Mr. Secretary, you have to have direct involvement in this
and push this forward; this is not something that is going to
happen. It is pushing a rock up a hill, but that rock has to go
up the hill.
Clearly everyone who has an interest--veterans, employees,
the medical schools--need to be at the table and contributing
to the process. But the stakeholder process that I've witnessed
too often is like trying to load frogs in a wheelbarrow. You
get a couple in, and when you go out to look for the others,
the ones you put in at first jump out. That's what we've seen
in Chicago, and we absolutely cannot repeat this process in
other market studies.
According to GAO testimony, which will be inserted in the
record today, ``VHA's process, as currently designed, raised
concerns about whether the right people are involved at the
right times in the right ways.'' GAO's assessment is that VA
has not learned any lesson from the Chicago capital asset
realignment study and that the process as currently structured
will not lead to timely, appropriate capital investment
decisions that are in the best interests of veterans and
taxpayers.
[The information follows:]
[General Account Office, April 6, 2000]
VA is Struggling to Respond to Asset Realignment Challenges
(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 2001 budget request for the Department
of Veterans Affairs (VA). It discusses the management of VA's health
care assets that are operated by the Veterans Health Administration
(VHA). VHA has primary responsibility for capital asset planning
activities, whereas VA's Capital Investment Board has primary
responsibility for capital budgeting activities, including review of
VHA's capital investment proposals.
Between its establishment in 1946 and 1995, VHA's health care
system grew into our nation's largest direct provider of health care,
serving veterans at over 600 locations nationwide. In October 1995, VHA
began to transform its system from a hospital operator to a health care
provider that relies on community-based, integrated networks of VA and
non-VA providers to meet veterans' needs.
Over the next few years, VHA will spend billions of dollars
operating, maintaining, and improving buildings and land at health care
delivery locations nationwide. Currently, VA's health care capital
assets total over 4,700 buildings and 18,000 acres of land at 181 major
delivery locations.
In March 1999, we reported that VHA could enhance veterans' health
care benefits if it reduced the level of resources spent on underused,
inefficient, or obsolete buildings and reinvested these savings in
providing health care more efficiently in modern facilities at existing
locations or new locations closer to where the veterans live.\1\
---------------------------------------------------------------------------
\1\ VA Health Care: Capital Asset Planning and Budgeting Need
Improvement(GAO/T-HEHS-99-83, Mar. 10, 1999).
---------------------------------------------------------------------------
VHA agreed in general with our evaluation and committed at that
time to taking the steps needed to realign its portfolio of health care
assets. In essence, VHA agreed to implement in a timely manner a
strategic planning process that systematically studies all its medical
care markets in order to develop capital asset realignment plans.\2\
VA's Capital Investment Board will use these plans to determine the
best investment opportunities.
---------------------------------------------------------------------------
\2\ A market, for the purposes of this statement, is defined as a
geographic area generally within 75 miles of an existing VHA major
delivery location.
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Last April we reported to this Subcommittee that VHA's
transformation had made significant progress, although it appeared to
be losing momentum. We concluded that VHA's transformation could not be
successfully completed until VHA had addressed its greatest management
challenge: realigning its massive portfolio of aged capital assets.\3\
---------------------------------------------------------------------------
\3\ Veterans' Affairs: Progress and Challenges in Transforming
Health Care (GAO/T-HEHS-99-109, Apr. 15, 1999).
---------------------------------------------------------------------------
Last July we reported that VHA had made limited progress toward
implementing a realignment process and estimated the opportunity cost
of delay was as high as $1 million a day.\4\ VHA's efforts had focused
primarily on discussions among VHA officials, VA officials, and
stakeholders, such as veterans' service organizations, regarding a
conceptual framework for its asset realignment process. VHA reported at
that time that its realignment process would be operational within 2
months (September 1999).\5\ Our statement today (1) assesses VHA's
progress to date, (2) identifies concerns regarding VHA's realignment
process, and (3) examines the potential effects of VHA's actions on
VA's capital budgeting process.
---------------------------------------------------------------------------
\4\ VA Health Care: Challenges Facing VA in Developing an Asset
Realignment Process(GAO/T-HEHS-99-173, July 22, 1999).
\5\ VA's Capital Assets Realignment Plan for Enhancing Services to
Veterans, hearing before the Subcommittee on Oversight and
Investigations, House Committee on Veterans' Affairs, No. 106-20 (July
22, 1999).
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My comments this morning are based on discussions with officials
responsible for VHA's asset realignment and VA's capital budgeting
processes and reviews of documents, primarily those relating to VHA's
proposed asset realignment procedures and VA's Capital Investment Board
decisions concerning VHA investment proposals considered for funding in
fiscal year 2001.
In summary, VHA has been unsuccessful over the past 13 months in
its efforts to design a capital asset realignment process. VHA's
efforts have focused on discussions of who should lead such a process,
how stakeholders should participate, and how decisions are to be made.
Moreover, VHA estimates, as it did 8 months ago, that it could be
several months before its process is operational.
Our assessment of VHA's process, as currently designed, raises
concerns about whether the right people are involved at the right times
and in the right ways. Specifically, senior managers at headquarters
may not be proactively involved in a leadership role at key decision
points. In addition, stakeholders with vested interests appear to be
involved in decision-making, rather than advisory, roles. And
activities supporting key components, such as options development and
evaluation, are not sufficiently rigorous. As a result, VHA may not be
able to produce within a reasonable time frame capital asset plans that
are in the best interest of veterans.
VHA's slow progress creates dilemmas for VA's capital budgeting
process. In the short term, VHA and VA's Capital Investment Board face
the challenge of maintaining and improving capital assets without
sufficient information about future asset needs to ensure cost-
effective capital investment decisions. By contrast, if funding for
projects is delayed until capital asset plans are completed, the
longer-term challenge will be how to successfully finance and implement
capital realignment investments potentially totaling billions of
dollars. These challenges could be ameliorated, in part, if VA
effectively manages short-term investment risks and the Congress
provides alternative financing arrangements for future investments.
VHA IS STRUGGLING TO DESIGN ASSET REALIGNMENT PROCESS
The goal of an asset realignment process, in our view, is to
produce within a reasonable time frame a capital asset plan that is in
the best interest of veterans namely one that provides better health
care services for currently enrolled veterans while enabling more
veterans to access VA care. The capital asset plan should conform to
Office of Management and Budget guidelines.\6\ If done successfully,
the capital asset plan should provide a road map to guide investment
decisions over the next decade.
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\6\ Capital Programming Guide, Office of Management and Budget
(July 1997).
---------------------------------------------------------------------------
Over the past 13 months, VHA has taken an inordinate amount of time
trying to develop a method to achieve these objectives. In March 1999,
VHA developed a broad conceptual framework to guide its design efforts.
Over the next 3 months (July 1999), VHA developed a draft statement of
work needed to conduct the market studies and an action plan for
completing the studies. Three months later (October 1999), VHA
developed a draft capital asset management policy statement that
outlined a proposed design method as well as a revised statement of
work and action plan. In February (4 months later), VHA provided a
revised draft policy statement to a wide variety of stakeholders for
their review.
These critical documents are currently being revised again. Over
the next several months, VHA expects to (1) continue refining its
capital asset realignment design method on the basis of stakeholder
concerns and suggestions, (2) complete work needed to solicit and award
a consulting contract, and (3) obtain senior management review and
final approval of a method to employ.
During the same period, VHA has also struggled to develop a capital
asset realignment plan for its Chicago market. This initiative,\7\
started in July 1998, produced a draft realignment plan in September
1999. VHA has spent the last 6 months obtaining and evaluating
stakeholders' concerns and advice as well as reevaluating potential
options. VHA expects this experience to help shape the ultimate design
of its systemwide asset realignment process.
---------------------------------------------------------------------------
\7\ VA Health Care: Closing a Chicago Hospital Would Save Millions
and Enhance Access to Services (GAO/HEHS-98-68, Apr. 16, 1998)
recommended that VHA develop and implement a plan that meets veterans'
needs by operating fewer capital assets.
---------------------------------------------------------------------------
VHA'S PROPOSED CAPITAL ASSET REALIGNMENT PROCESS RAISES CONCERNS
We identified three weaknesses in VHA's proposed method. First,
senior managers at headquarters appear to be in reactive, rather than
proactive, leadership roles. Second, stakeholders appear to have
decision-making, rather than advisory, roles. Third, key components,
such as development of evaluation criteria, lack rigor; that is, they
do not appear to be driven by quantifiable, objective data clearly
linked to well-defined measurement standards.
VHA'S SENIOR MANAGERS LACK PROACTIVE ROLE
VHA's senior management should play a critical leadership role in
the development of (1) well-defined evaluation criteria that have the
measurement standards needed to guide the collection of data necessary
to make capital asset realignment decisions, (2) guiding principles
that consultants and others could use when developing asset realignment
options for consideration, and (3) systematic procedures for scoring
options in relation to each evaluation criterion.
However, VHA plans to give a consultant primary responsibility for
developing options and evaluation criteria as well as for conducting
the evaluation of potential options. Senior managers at headquarters
are to be primarily in an oversight role, reacting to the consultant's
proposed evaluation criteria, methods for evaluating potential options,
and choice of the best option.
We are concerned about this arrangement. The capital asset plans
that result from these market studies are expected to guide VHA's
future investment initiatives for the next decade. Without strong
leadership in the development of these plans, VHA risks not being able
to timely implement meaningful capital asset realignments. A case in
point is VHA's Chicago market realignment process. Senior managers at
headquarters were not actively involved until after stakeholders and
others raised significant concerns about the recommended realignment
option. VHA has since convened a special review group that has spent
the last 2 months assessing stakeholders' concerns and deciding how
such concerns could be best resolved. Now, 20 months after the study
was initiated, this review group has decided to set aside the
originally recommended option and consider others, including options
that had not been considered before. If senior managers had been
involved, such options might have been considered earlier. With senior
managers continuing in a reactive role in its proposed systemwide asset
realignment process, VHA risks replicating in other markets its
struggle to make progress realigning assets in Chicago.
VHA'S STAKEHOLDERS HAVE DECISION-MAKING ROLE
Last July we expressed concern that VHA's capital asset realignment
process as then proposed could rely too heavily on local stakeholders
who may have vested interests in maintaining the status quo. Our
assessment of VHA's proposed asset realignment process today suggests
that stakeholders remain heavily involved in a decision-making role.
VHA plans to have national and local committees, which possess
decision-making authority, review the consultant's products, such as
its proposed evaluation criteria and data collection methods. The
committees' members include representatives of veterans' service
organizations, union or labor organizations, medical school affiliates,
research organizations, state veterans and health associations, and
local VHA staff.
We remain concerned that stakeholders' participation as decision-
makers on such committees could bias the market studies and,
ultimately, the capital asset plans. VHA stakeholders are a diverse
group with competing interests, who, quite naturally, could oppose some
changes that they believe are not in their best interests. For example,
medical schools' reluctance to change long-standing business practices
has sometimes been a factor inhibiting VHA's asset management. In
addition, unions sometimes are reluctant to support decisions that
result in a restructuring of services because operating efficiencies
can result in staffing reductions.
We believe it is essential to involve stakeholders in an advisory
role in the capital asset realignment process. This is because they can
provide valuable perspectives on the evaluation criteria for selecting
the best market study option and on procedures for scoring realignment
options in relation to the criteria. Such input could enhance
stakeholder understanding of VHA's capital asset realignment process
and build confidence that realignment decisions are fair and fact-
based.
Realignment Decision Points Lack Rigor
From our perspective, VHA's experience with the Chicago capital
asset realignment study offers three valuable lessons so far that could
improve VHA's systemwide asset realignment process:
--ill-defined capital asset realignment evaluation criteria lead to
unsupportable decisions;
--flawed asset realignment options result in flawed decisions; and
--an unstructured, subjective evaluation process impedes stakeholder
acceptance.
It does not appear, though, that VHA has taken these lessons into
account for its proposed realignment process. First, VHA's systemwide
evaluation criteria, when developed, could be vaguely defined. VHA's
draft statement of work for its systemwide process calls for a
consultant to develop evaluation criteria, but it does not require the
evaluation criteria to be defined in terms of quantifiable measurement
standards that are clearly linked to each criterion. The lack of well-
defined criteria can lead to problems, as it did in the Chicago
realignment process. There, VHA used accessibility of health care
services as a criterion without adequate measurement standards that
could be quantified, such as the potential effect on veterans' travel
time and the number of veterans affected. Moreover, because VHA's draft
statement of work for its systemwide process does not require the
consultant to develop a systematic data collection approach that
directly links data to individual evaluation criteria, the consultant's
data collection could be incomplete. This could significantly reduce
the likelihood that VHA would select the best option available.
Second, we are concerned that VHA's systemwide realignment process
may not consider the best options that are potentially available. For
example, VHA's Chicago process appears to have explored flawed options
because VHA's steering committee and consultant limited the options
evaluated to ones that would generally rearrange services among
existing assets. On the basis of its assessment of stakeholders'
comments pertaining to the Chicago process, we understand that VHA is
reevaluating options, including ones not originally evaluated. VHA's
draft statement of work for its systemwide process calls for a
consultant to develop at least three alternative asset configurations.
VHA plans to rely on the consultant's judgment to develop the best
options for consideration. Unless options other than incremental
reconfiguration of current assets are considered, the realignment
process is likely to take a narrower view than is needed to identify
the most efficient and effective way to meet veterans' health care
needs. For example, building or leasing a replacement facility in a
location closer to where veterans live might not be evaluated.
Third, we are concerned that VHA will use an unstructured process
to decide which of the available capital asset realignment options best
meets the evaluation criteria. For example, in its Chicago process, VHA
did not prioritize its evaluation criteria, nor did it use a systematic
scoring method to reach decisions about how well each option met the
evaluation criteria. Rather, its recommended realignment option was
determined on the basis of the subjective consensus of a steering
committee, but the draft report did not elaborate sufficiently on VHA's
rationale. VHA's draft statement of work for its systemwide process
calls for a consultant to develop a method for evaluating realignment
options. At present, this statement of work has no requirements for the
consultant to develop a systematic way to score how well each option
meets the evaluation criteria, nor has anyone in VA been charged with
doing this. Without a systematic method for reaching a decision about
the best option, VHA's realignment decisions may be difficult to
explain, support, and defend.
While VHA possibly could satisfactorily address our concerns within
the coming months, its progress to date casts doubt on its ability to
do so. This is because, in part, VHA may not possess the requisite
financial planning skills to make the best realignment decisions.
Currently, VHA is using health care professionals to make financial
decisions. While such professionals have the necessary skills to make
decisions about veterans' health care needs, they may not have the
business skills necessary to make the best financial decisions. For
example, financial experts possess knowledge and skills for analyzing
life cycle costs of assets under different scenarios as well as for
determining potential pay-back schedules for initial capital
investments for options and potential long-term returns on those
investments.
Clearly, it seems desirable to bring to bear the combined expertise
of financial experts and health care professionals to evaluate
potential realignment options to identify those that provide the best
investment return for veterans and other taxpayers. There is a unit
within VA that, in our view, has worked to develop financial expertise
regarding capital asset management decision-making, namely, VA's
Capital Investment Board. The Board has (1) experience developing
options evaluation criteria that are more clearly defined than criteria
used in VHA's Chicago realignment process, (2) a systematic data
collection approach that directly links data to each evaluation
criteria, (3) guidance for developing options, and (4) a systematic
options evaluation process. The Board currently uses a capital
budgeting model for major investments that embodies the key attributes
needed to address our concerns about VHA's process. Its model has been
used and refined over the past 3 years, and it gives decisionmakers, in
our view, better information than they had in the past.
New Business Model Could be Considered
There appear to be two alternative business models for completing
the design and implementation of a capital asset realignment process in
a timely manner, besides continuing with VHA's current efforts. First,
leadership of the asset management responsibilities could be
transferred to another unit within VA, but outside of VHA. A second
model could involve the shifting of capital asset decision
responsibility outside VA.
Transferring capital asset management responsibilities to another
unit within VA, such as the Capital Investment Board, could better
combine VHA's health care expertise with VA's financial experts. As
previously discussed, VA's Capital Investment Board appears to have a
business model that could address financial management decisions
involving capital asset realignment options. This approach has appeal
because the Board has a full-time dedicated group that has studied
industry best practices for capital asset management and has used this
knowledge to develop evaluation criteria and procedures to score
capital asset investment options.
Capital asset decision-making could also be moved outside of VA.
This could be accomplished through the establishment of an independent
commission or comparable group to develop and evaluate options for
realigning capital assets. This option could be advisable if it is
determined that VA lacks the desire or wherewithal to realign capital
assets or that the pressures from competing stakeholders inherent in
VA's environment are deemed to be insurmountable.
Regardless, VA needs to finalize its capital asset realignment
process as quickly as possible because its delay is creating dilemmas
for short-term and long-term capital investment decisions, as I will
discuss next.
VHA'S DELAYS CREATE CAPITAL BUDGETING DILEMMAS
VHA's slow progress creates dilemmas for VA's capital budgeting
process. On a short-term basis, VHA, VA's Capital Investment Board, and
the Office of Management and Budget must decide what level of risk they
are willing to tolerate as they continue maintaining or improving
capital assets without sufficient information about VA's future asset
needs to ensure cost-effective investment decisions.
Appropriately, they seem unwilling to accept much risk when making
high-cost capital investment decisions those exceeding $4 million. They
have significantly limited such investments over 4 fiscal years (1998
through 2001) and could continue this de facto moratorium for another 3
years (through 2004), given VHA's struggle to realign its assets. VA's
fiscal year 2001 budget 8 for high-cost capital investments, for
example, requested only $25 million for one new project after VA's
Capital Investment Board considered 14 VHA high-cost investment
proposals totaling $350 million.
By contrast, there appears to be a greater willingness to accept
more risk for less expensive capital investment decisions those below
$4 million. We find this troublesome because there have continued to be
significant investments requested for less expensive capital
improvements about $400 million for each of fiscal years 2000 and 2001.
These involve improvements at many locations, such as ward renovations;
outpatient space reconfigurations; and enhanced heating, ventilation,
and air conditioning systems. To successfully manage investment risks,
VHA needs to carefully consider its less expensive construction
investments at delivery locations that could ultimately be determined
to be unneeded to meet veterans' health care needs once capital asset
plans are completed.
In March 1999 we reported that, until an effective capital asset
planning process is in place, VHA's less expensive investment decisions
should be subjected to tighter scrutiny. Toward that end, we suggested
that VHA ensure that the fundamental principles underlying the Capital
Investment Board's evaluation process for high-cost capital investment
be rigorously implemented when making less expensive capital investment
decisions.\9\
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\9\ VA Health Care: Capital Asset Planning and Budgeting Need
Improvement(GAO/T-HEHS-99-83, Mar. 10, 1999).
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An effective risk assessment process should identify health care
delivery locations where, for example, there are no alternatives for
providing care. This process could involve two key components: (1) risk
measurement factors and (2) data to evaluate investment proposals in
relation to risk factors. Low-risk factors, for example, could include
noncompetitive markets, large veteran population growth, or large
growth in veterans' use of VHA services.
On a longer-term basis, VA faces a different dilemma. Today VHA's
high-cost capital investment needs are not known and will remain so
until its capital asset plans are completed; nonetheless, VHA believes,
and we agree, that they will likely require a significant investment.
VHA's investment needs may not be as daunting as they now seem because,
for example, investments will be spread over the next decade and each
will require many years to implement. VHA's Chicago realignment
process, for example, is expected to take 10 years to be fully
implemented.
Moreover, the magnitude of the new investment resources needed
could be mitigated. First, VHA should realize significant returns on
these capital investments up to 100 percent or more in the form of
annual operational savings. VHA's Chicago realignment option, for
example, was estimated to yield annual operating cost savings of $189
million, compared with one-time capital investment needs of $92
million. In March 1999 we suggested that some or all of these savings
could be used to finance future capital investment decisions.
Legislative action, for example, could authorize VA to accumulate
resources (that is, savings) in a Capital Asset Fund by charging VHA
delivery locations for the capital investment costs used to realign
assets. Locations could return to the fund some or all of the amount
invested over a prescribed number of years.\10\
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\10\ GAO/T-HEHS-99-83, Mar. 10, 1999, p. 23.
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Second, last year VA proposed a new funding source to help finance
high-priority investments faster. In its fiscal year 2000 budget
submission, VA proposed a 5-year demonstration that would allow VHA 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, which we
supported last year, offers a way to help finance capital investments
needed to realign assets for two reasons: VA has significant unused or
underused buildings, and it lacks incentives to dispose of properties
because funds can, by law, be spent only to construct, alter, or
acquire nursing home facilities.\11\
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\11\ GAO/T-HEHS-99-83, Mar. 10, 1999, p. 23.
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In addition to addressing high-priority asset needs faster, such
funding sources could also provide incentives for more effective
capital planning and greater accountability for investment decisions.
To realize such benefits, the Congress would need to expand the types
of deposits that VHA could make into its proposed Capital Asset Fund or
establish a separate revolving fund for this purpose.
CONCLUDING OBSERVATIONS
We are concerned that VHA's slow progress in establishing an asset
realignment process needlessly delays critical decisions and the
opportunity to reinvest resources to enhance veterans' future health
care. Furthermore, the weaknesses we identified in VHA's realignment
process, as currently proposed, undermine our confidence that, once
implemented, it will produce within a reasonable time frame capital
asset plans that are in the best interest of veterans and taxpayers. It
appears that if a capital asset realignment process is patterned after
the Capital Investment Board's decision-making model, the process would
be less likely to replicate VHA's Chicago experience.
Because VHA is struggling to reach a sound realignment decision in
Chicago and complete the design of a systemwide realignment process,
and because VA's Capital Investment Board has a model that could
address many of VHA's weaknesses, it seems appropriate that VA consider
transferring the asset planning responsibility to the Board. The daily
cost of delayed decisions is unacceptably high.
Mr. Chairman, this concludes my prepared statement. I will be happy
to answer any questions that you or Members of the Subcommittee may
have.
GAO CONTACT AND STAFF ACKNOWLEDGMENTS
For future contacts regarding this testimony, please call Stephen
P. Backhus at (202) 512-7101. Individuals who made key contributions to
this testimony include Paul Reynolds and Walter Gembacz.
Senator Bond. Before moving on to other accounts, I have to
tell you I'm very troubled about the accountability in the VA's
medical care budget. We've given the Department tremendous
flexibility in how it allocates its budget, yet we have come to
find huge discrepancies between what we thought we were
spending money on and what is actually happening. We are seeing
this is in Hepatitis C, post traumatic stress disorder,
substance abuse and other areas which are stated as national
priorities for the VA. This is something we absolutely must get
a handle on, or we will begin in the appropriations process to
be far more prescriptive as to how VA is to allocate its
budget.
VETERANS BENEFITS ADMINISTRATION
Moving on to the Veterans Benefits Administration, the
budget also calls for an increase of roughly $100 million for
VBA. There are tremendous needs in VBA to expedite and improve
the quality of veterans' claims for service-connected
disability and pension payments, and it seems additional funds
are needed for more staff and to bring the process into the
21st Century.
I am deeply disappointed that so little progress seems to
have been made in the last year. I recognize that the under
secretary, Joe Thompson, has made many changes including a
reorganization of the field, and a new emphasis on quality, not
just timeliness. When you overhaul a system, obviously it's
going to be disruptive. However, we've been talking about this
problem as long as I've been chairman, and as long as Senator
Mikulski was chair before me.
In fiscal year 1999, the time it took to process an
original disability claim worsened from the year before,
growing from 168 days in 1998--which we said was unacceptable--
to 205 days in 1999. Now let me let you guess on how excited
and enthusiastic we are about those numbers. And, quality
improved only marginally. I certainly hope you are on a
glidepath at this point to your goal of 74 days, and that we
won't see any more upticks. Too many veterans are dying before
their claims are decided, and that is simply unacceptable.
OTHER CONCERNS ON VA'S BUDGET
With respect to other aspects of the administration's
budget request, I'm disappointed with the budget proposal for
research. This critical program will be frozen at current
levels of $321 million, leading to a real reduction in staffing
and a further decline in the number of proposals that get
funded. Certainly based on my experience and visits with the VA
hospitals, I will tell you that we are able to attract and
retain top quality physicians and researchers mainly because
they have the opportunity to combine research with their
service to patients; and I would hope that you would agree that
this program is vitally important in maintaining VA's cadre of
high quality clinicians.
I am also discouraged that VA has chosen, once again, to
cut the budget for the State home construction grant program.
The program is slated to be cut by one-third, down to $60
million, despite the fact there are hundreds of millions of
projects in the pipeline. The program is a very cost-effective
way of caring for our aging veteran population, and we will be
seeking to ensure an appropriate level of funding.
STATEMENT OF SENATOR BARBARA A. MIKULSKI
Senator Bond. That concludes my statement, and I'll be
happy now to turn to Senator Mikulski. Welcome.
Senator Mikulski. Thank you very much, Mr. Chairman. This
morning I would like to welcome the Secretary of VA, Mr. Togo
West, to our hearing to discuss our most crucial and probably
one of the significant parts of our VA-HUD appropriations.
Since the VA was founded, we fought a world war, a cold
war, a Gulf war, and now once again our troops are overseas in
Bosnia, Kosovo and other places around the world, keeping the
peace and enforcing the peace. We're very proud of our
military, and one of the reasons, as they serve we make a
promise to them that when they come home, there will be a
Department of Veterans Affairs to meet their needs. Promises
made must be promises kept. Veterans, both men and women,
really count on the VA for so much of their medical care.
The VA budget contains some good news for our veterans
despite some troubling issues that must be resolved.
VA health care is funded at $20.9 billion, including $608
million in medical collections, the largest increase VA has
received in years. While many groups believe more is necessary,
it is an important first step to ensuring that our veterans get
the health care that they need. We're also very glad that the
proposal in the President's budget for VA medical and
prosthetic research is funded at $321 million; and we all know
the crucial nature of VA medical research. VA medical research
doesn't just help veterans, it helps everyone.
Hepatitis C research is funded at $340 million, an increase
of $145 million over fiscal year 2000. This is especially
important for Vietnam-era vets; a major cause of liver cancer,
Hepatitis could become a major medical expense in future years.
I also believe that the Hepatitis C research will have
tremendous benefits to our civilian community. When we talk to
our firefighters or our first responders to medical emergencies
like our paramedics, one of the greatest fears that they have
is contacting Hepatitis C, though they used universal
precaution; but they still feel very vulnerable; nurses, et
cetera.
So once again, as VA does the research to help veterans it
also helps a larger population, and we're very proud of it.
I'm very proud of the three major facilities in Baltimore
or in Maryland; Baltimore, Fort Howard, and Perry Point, in
addition to our wonderful extended rehab and long-term care
facilities. You should know that we're very pleased with the
community-based outpatient clinics that we have established. I
think it has been a new model for making highest and best use
of staff, taking the services to where the veterans are, and
yet making again highest and best use of the specialty services
we have; we are very, very pleased about that.
There are two issues that I will raise with you in the
course of the hearing, Mr. Secretary. One is the future of Fort
Howard, which served our veterans so ably over many years; but
now the facility is dated, we're talking about a new mission,
but there is a question about both mission and who will be the
leader.
The second will be the yet still-unresolved cases of
discrimination that I brought to your attention; and there are
people in the audience here who have come to hear our
questions, and we will be able to deal with this. I know of
your deep commitment to end discrimination across all lines;
race, ethnicity, gender, and so on. There are still some
troubling things that I would like to share with you; they're
not widespread, they're not systemic, and I'd like to bring it
to your attention for a greater resolution.
So I look forward to hearing your testimony, and once
again, problem-solving with you both on budget and service
delivery and an open door both for veterans for service and for
people to be able to move up the ladder of opportunity within
the veterans organization itself.
Thank you very much.
Senator Bond. Thank you very much, Senator Mikulski, and
now I turn to Senator Burns for his statement.
STATEMENT OF SENATOR CONRAD BURNS
Senator Burns. Thank you, Mr. Chairman. I will just submit
my statement, and I want to thank----
Senator Bond. We will really be pleased to submit the whole
thing in the record.
Senator Burns. Really?
Senator Bond. Yes, sir.
Senator Burns. You're not going to edit it?
Senator Bond. No, sir, you can have the whole----
Senator Burns. I appreciate the Secretary coming in, and we
talked about some things that are pretty parochial as far as
the State of Montana is concerned.
I have a couple of questions, and I'm looking forward to
hearing from the witnesses. Here it is, we've already gone 20
minutes and we haven't learned a dang thing.
Senator Bond. Well, thank you very much, Senator Burns, I'm
sure glad you weren't paying attention, because you would have
heard some really interesting things.
Senator Burns. Apparently, I was----
Senator Bond. Tell you what, I'll submit a copy of my
statement for your review, too.
With that, Mr. Secretary, would you proceed?
STATEMENT OF TOGO D. WEST, JR.
Secretary West. Thank you, Mr. Chairman, Senator Mikulski,
Senator Burns, Members of the Subcommittee. Indeed, we have had
a chance to learn quite a bit over the last few minutes, and
we're grateful to you, Mr. Chairman, and to the Members of the
Subcommittee for this opportunity to present the
administration's fiscal year 2001 budget proposal for the
Department of Veterans Affairs.
I do have a statement.
Senator Bond. We will be happy to have the full statement
submitted in the record, right after Senator Burns' statement.
And we just ask you to summarize the things that you think are
most important, and we will get into probably many of these
areas in the questions.
Secretary West. Thank you, Mr. Chairman. I have a few brief
highlights.
The President's budget for 2001 for the entire Federal
Government uses a fiscally responsible approach to balancing
the budget; it puts our nation on a path to eliminate the
national debt in the year 2013, while strengthening social
security and extending its solvency to the year 2050. The
President's fiscal year 2001 budget request for the Department
of Veterans Affairs recognizes as well another debt--that owed
by this nation to her veterans.
The request reflects, as has been noted, the largest
discretionary dollar increase ever proposed by any president
for veterans programs. It demonstrates his and this nation's
continued commitment to those who have served our country well
and with honor.
It proposes significant increases in each of VA's three
administrations and for all of our staff functions. We expect
these resources will continue to improve our ability to provide
the highest quality service.
The 2001 budget request totals, as has been noted, some $48
billion--$22 billion for discretionary programs, $26 billion
for entitlements--that request is $1.5 billion above last
year's enacted funding level. Let me note at this point that we
in the Department are grateful to this committee especially,
Mr. Chairman, for the work you did in seeing that the budget
that emerged from the Congress and from the joint efforts of
the administration and Congress for fiscal year 2000 was able
to support the things that needed to be done for veterans.
A $1.5 billion increase in the fiscal year 2001
discretionary budget, along with those resources that the
Congress added and that the administration agreed in fiscal
year 2000 provides a 2 year total increase of more than $3.1
billion, or 16.4 percent.
For the Veterans Health Administration, our appropriation
proposal is $20.3 billion to provide health care; this is a
$1,355 million increase over last year's appropriated level,
and added to that is an additional $608 million in anticipated
collections, for a total of $20.9 billion to be spent on health
care.
With these funds, VA will treat in fiscal year 2001, 3.9
million veterans, 100,000 more patients in 2001 than in 2000.
VA will open 63 new outpatient clinics to go with the total
that we are opening in fiscal year 2000 so that by the end of
fiscal year 2001 we should exceed some 650 outpatient clinics
across the nation. We will put 1,500 full time equivalent
employees directly into the effort to increase access to VA
health care, and to improve health care service to veterans.
And as noted, we will increase our spending on Hepatitis C
by $145 million for a total of $340 million, and we will fully
fund the provisions of the Veterans Millennium Health Care and
Benefits Act passed last year by the Congress, in the amount of
$548 million. This allows us to increase our funding on long-
term care initiatives by $350 million, enhancing home and
community-based care programs for older veterans, covering the
implementation of emergency care programs for veterans as well.
As noted, the $321 million which we will set aside again
for VA research, will support more than 1,942 high priority
research programs.
It is true, Mr. Chairman, that over the last several months
in medical journals and in other media, were noted the reports
that as many as 180,000 deaths may be occurring in the United
States each year due to errors in medical care, many of which
are preventable. As you have pointed out, it will take dramatic
action from every health care provider in the nation in
addition to the VA to improve in this area.
We plan to spend $137 million to monitor and oversee safety
issues and recruit and comprehensively train all VA health care
staff on a recurring basis. We not only recognized the problem,
but also recognized that it is a great opportunity, perhaps the
greatest in recent times, for this nation to make very dramatic
improvements in the way health care is provided.
We have insisted that it is impossible to correct medical
errors and to prevent them without first acknowledging that
they do exist. We've launched a National Safety Partnership, an
organization that's brought together Federal and private sector
experts to join forces to address this problem. We have
recognized that change will require team effort, and we will
make that effort.
We have led the nation in identifying problems that result
in medical errors, and this budget will enable us to continue
that leadership. In the coming year, our oversight of patient
safety will be addressed through comprehensive monitoring at
the national and local levels. Significant training,
highlighted by a national center for patient safety, a quality
scholars program, and 20 hours of biannual training for all
full time staff, thus keeping this Department at the forefront
of patient safety management issues.
For benefits programs, we're requesting $22.8 billion to
support compensation payments for 2.3 million veterans, 301,000
survivors of veterans, and 864 children of Vietnam veterans who
were born with spina bifida. These funds will support pension
payments to 363,000 veterans and 253,000 survivors.
We propose a cost of living adjustment, currently estimated
at 2.5 percent to all compensation beneficiaries. We propose
the increase be effective December 1, 2000.
If this committee and the Congress approves, we will pay
full disability compensation to veterans of Filipino forces who
served with U.S. forces in World War II and are now residing in
the United States. They currently receive benefits at half the
level of the U.S. veterans beside whom they fought.
We're requesting $1.6 billion for the readjustments benefit
program to provide education benefits, opportunities for
veterans and eligible dependents, and for special assistance
programs for disabled veterans.
For the Veterans Benefits Administration and benefits
processing, the budget provides $999 million. That's an
increase of $109 million over fiscal year 2000. With that, we
will add 586 FTE into compensation processing to help us
improve quality and the timeliness of disability claims. It
will result in a 14 percent increase in staffing for
adjudication over the past 2 fiscal years when we add in the
440 that were included in the fiscal year 2000 budget.
We will also continue our funding for the pilot project,
Virtual VBA, to get us to the era where veterans claims can be
processed in an entirely electronic environment. Thus
eventually eliminating our paper-intensive and time-consuming
manual claims process.
Let me emphasize, Mr. Chairman and Members of the
Subcommittee, that is very important to us, for that is the
long-range solution we believe to both timeliness and accuracy
in claims processing. But in the interim to have results now,
we have added in the 586 additional FTE to try to make
improvements in the processing right now.
Last year 561,000 veterans died, more than 1,500 a day.
About 1,000 of those each day are World War II veterans. For
the operation of the National Cemetery Administration we are
proposing $110 million for their budget, a $13 million increase
over the 2000 appropriated level.
That budget provides funding and FTE to address an
increasing interment and maintenance workload at our national
cemeteries, due to the high rates of increasing interments
during the first years of operation of new national cemeteries.
In addition, we have four new national cemeteries that are
operational, two that opened in 1999 at Saratoga, New York, and
at the Abraham Lincoln National Cemetery outside Chicago. And
two more that will open this year: the Dallas-Fort Worth
National Cemetery, and the Cleveland, Ohio National Cemetery.
Also, this budget includes master planning funds on sites which
will be used on new national cemeteries in Atlanta, Detroit,
Miami, and Sacramento.
Mr. Chairman and Members of the Subcommittee, our national
cemeteries are and should be shrines dedicated to preserving
our nation's history, nurturing love of country and honoring
the service and sacrifice of our veterans. They should be
places where our honored dead rest, in quiet triumph, yes; but
also where veterans families can, amid peaceful and beautiful
surroundings, resume their closeness, even for a brief moment,
with family members who are buried there. And where visitors
can move in hushed awareness. The grave markers among which
they walk are in truth memorials both to our veterans and to
our nation's eternal virtues of patriotism, honor and fidelity.
To achieve this, we will use $5 million of the $13 million
increase to begin this national shrine commitment, beginning an
extensive and long-deferred renovation of grounds, grave sites,
grave markers and historic structures. This amount, $5 million
in a $48 billion budget, is only a small down payment on years
of work which will commence across the entire cemetery system.
For 224 years, America's veterans and our men and women in
uniform have brought a record of security and peace to our
North American continent, benefiting this nation and our
citizens. With this bill we say to our veterans, ``Well done.
The nation values your gift of service and patriotism and will
honor her commitment to you.''
We're grateful to this committee and to this committee's
staff, to each member, for your support of our veterans and of
this department. We're grateful to the VSOs, the veterans
service organizations, for their advocacy both in our budgeting
cycle and in the appropriations cycle. We look forward to
working with you on these issues in the future.
PREPARED STATEMENT
Seated with me, Mr. Chairman, to my immediate right, the
Acting Deputy Under Secretary and the Under Secretary Designate
for Memorial Affairs, Mike Walker. To my immediate right, the
Under Secretary for Health, Dr. Tom Garthwaite. To my left,
Mark Catlett, who directs our budget, Deputy Assistant
Secretary of the Budget. To the far left, Joe Thompson, Under
Secretary for Benefits.
We are available for your questions.
[The statement follows:]
Prepared Statement of Togo D. West, Jr.
Mr. Chairman and members of the Committee, good morning. I am
pleased to present the President's 2001 budget request for the
Department of Veterans Affairs (VA). The President's budget for 2001
uses a fiscally responsible approach to balancing the budget. Utilizing
realistic and responsible funding levels, it puts our Nation on a path
to eliminate the national debt in the year 2013, making our Nation debt
free for the first time since 1835.
The President's request for VA reflects the largest discretionary
dollar increase ever proposed for veterans' programs. It demonstrates
his continued commitment to those who served our country with honor.
Our budget proposes significant increases for each of VA's three
administrations and all of our staff functions. These resources will
allow us to continue to improve our ability to provide the highest
quality service to our Nation's veterans--service they have earned
through their sacrifices for America.
We are requesting approximately $48 billion, which includes $22
billion for discretionary programs, without collections, and $26
billion for entitlements. Our request for discretionary programs is
$1.5 billion more than last year's enacted funding level. This request,
along with additional resources agreed to by Congress and the
Administration in 2000, reflects a two-year total increase of more than
$3.1 billion, or 16.4 percent.
Our veterans are entitled to the best health care America can
provide. In the past few years, we have transformed the hospitals run
by VA to provide greater access for better care to more veterans. And
with the funding in our fiscal year 2001 budget, we will continue this
improvement.
The budget provides $20.9 billion, including $608 million in
medical collection transfers, to provide medical care to eligible
veterans. This represents a $1.4 billion increase over last year's
level. VA plans to open 63 new outpatient clinics and treat 100,000
more patients in 2001 than in 2000, a 2.6 percent increase. This
patient level is 24 percent above the 1997 baseline, which exceeds our
goal of a 20 percent increase.
We are focusing our resources on improving veterans' access to VA
health care and the services we provide them through newly established
service standards and access goals. These are:
--New patients are to receive an initial or non-urgent appointment
with their primary care or other appropriate provider within 30
days.
--Patients will receive a non-urgent specialty appointment within 30
days when referred by a VA practitioner.
--Patients will be seen within 20 minutes of their scheduled
appointment.
Restructuring efforts made possible through the use of buyout
authority will allow us to redirect an additional 1,500 full time
equivalent (FTE) employees to meeting these goals. Altogether, more
than 2,200 employees will be dedicated to improving access and
services. These FTE, along with planned management savings and an
additional funding request of $77 million, will provide a total
resource commitment of $400 million in this area in 2001.
To enhance VA's leadership role in patient safety management, we
plan to spend $137 million to monitor and oversee safety issues and to
comprehensively train all VA staff on a recurring basis.
We are also requesting an increase of $145 million to treat
veterans with Hepatitis C. In addition, our budget would fully fund the
$548 million needed to implement provisions in the Millennium Act
dealing with specialized mental health services, emergency care, and
extended care services.
Enhancing VA's patient safety management and reporting system will
also improve the quality of care we provide veterans. It has been
reported in medical literature that as many as 180,000 deaths occur in
the United States each year due to errors in medical care, many of
which are preventable. It will take dramatic action from every health
care provider, not only VA, to improve in this area.
VA has not only recognized the problem, but also recognized that it
is the greatest opportunity we have had in a very long time to make
dramatic improvements in the way health care is provided in our
country.
We have acknowledged that it is impossible to correct or prevent
errors without first accepting that they exist.
We are taking a systematic approach to solving the problem of
patient safety, and to the way we deliver health care, to identify
problems and develop solutions.
We have launched the National Patient Safety Partnership, an
organization that has brought together Federal and private sector
experts to join forces to address this problem.
We have recognized that change will require a team effort at every
level of our organization, and we are committed to making that effort.
VA has led the Nation in identifying problems that result in
medical errors. Our budget will enable VA to continue its world
leadership in patient safety initiatives--benefiting not only veterans,
but all Americans.
Our oversight of patient safety will be addressed through
comprehensive monitoring at the national and local levels. We will be
redirecting an additional 190 FTE toward patient safety enhancements,
which means 500 FTE will be dedicated to this effort. Significant
training, highlighted by a national center for patient safety, a
quality scholars program, and 20 hours of biannual training for all
full-time staff, will keep VA at the forefront of this important area.
In addition to basic clinical components funded through medical
care, the 2001 budget request provides considerable support for the
education and training of health professionals, and for VA's research
programs.
In addition, we will increase the number of unique patients treated
to 3.9 million, continue to enhance the quality of our care, and
improve customer satisfaction.
Among our most important new initiatives are those designed to
provide long-term care for veterans. These initiatives are linked to
the provisions of the Millennium Act. The $350 million increase for
these initiatives included in this budget will enhance home and
community-based care programs for older veterans. It will also cover
out-of-system emergency care for certain veterans.
VA is committed to formulating and implementing a well-designed
pilot of VA-Medicare subvention. Currently, the Department of Defense
is operating a three-year subvention demonstration in six sites,
scheduled to end in December 2000, and the demonstration results may
offer a useful lesson for us. We look forward to working with you again
to pass a VA subvention model that does not jeopardize the Medicare
Trust Funds or VA's ability to provide top-quality medical care to high
priority veterans.
We propose a legislative initiative to combine the Health Care
Services Improvement Fund and the Extended Care Revolving Fund with the
Medical Care Collections Fund (MCCF) to improve administrative
efficiencies. This legislative proposal also allows 50 percent of
medical collections to be returned to the Treasury as they are received
until a level of $350 million is achieved. Returning collections in
this amount will recoup Millennium Act funding appropriated in medical
care, while maintaining an incentive to collect all government debt.
To continue VA's identification and treatment of Hepatitis C for
veterans, we request an additional $145 million, which will increase
the total funding level to combat this disease to $340 million. Also
provided is funding to meet anticipated increases for pharmaceutical
and prosthetic costs.
We continue to support a two-year spending availability of $900
million, less than five percent of our resources--excluding those funds
set aside due to the deferred spending of medical equipment funds
required by law. This proposal will provide VA with maximum flexibility
regarding spending decisions and will promote cost-effective decision-
making.
For Medical and Prosthetic Research, a total of $321 million and
2,883 FTE will support more than 1,942 high priority research projects
to enhance the quality of health care our veterans are provided. This
level of funding will allow VA to continue our significant research in
the areas of Gulf War veterans' illnesses, diabetes, Parkinson's
disease, spinal cord injury, cancer, prostate disease, depression,
environmental hazards, and women's issues, as well as rehabilitation
and Health Service Research and Development field programs.
No other federally-supported clinical or research entity has
initiated or completed such critical and ambitious research activities
on behalf of America's veterans as VA. The Department expects the
amount of non-appropriated research funding we receive from the private
and public sectors to total an additional $497 million.
The Balanced Budget Act of 1997 and the Millennium Act allow VA to
retain collections from third parties, copayments, per diems, and
certain other sources. These collections are deposited in the MCCF and
are available for transfer to the Medical Care appropriation. The funds
remain available to VA until they are expended. For 2001, VA estimates
more than $958 million will be collected, of which VA will retain $608
million.
In part, we will be able to do this by implementing reasonable
charges to certain veterans for inpatient and outpatient procedures. In
addition, we are in the process of ensuring that our collection
documentation meets the requirements of the Health Care Financing
Agency. We are also looking to improve our ability to collect funds
from private sector organizations. Additional Tricare payments from the
Department of Defense, and increased copayments by veterans as provided
for in the Millennium Act are assumed in the collection estimate.
For the Medical Administration and Miscellaneous Operating
Expenses, or MAMOE activity, we are requesting $64.8 million in
appropriations and expect $7.2 million in reimbursements to support 584
FTE in 2001. This level of staffing will strengthen the functions,
especially in the areas of quality assurance and performance
management, needed to oversee VA's efforts.
Our veterans are entitled to have their claims for benefits
processed correctly and in a timely manner. This budget will fund
initiatives to process claims and education benefits in an electronic
environment--allowing those who process claims to have complete and
easy access to the information they need.
For benefits administration, the budget provides $999 million. The
request reflects an increase of $109 million over the operating level
enacted in 2000 and a one-time adjustment of $30 million from the
Readjustment Benefit Account to ensure that all Vocational
Rehabilitation and Employment administrative costs are funded from
General Operating Expenses. Excluding this technical adjustment, this
is a 13 percent increase.
These additional resources will ensure that veterans' compensation,
pension, vocational rehabilitation and employment, education, and
housing benefits will continue to be delivered while we move forward
with our reengineering efforts. To help us process disability claims
more efficiently, provide quality-enhancing initiatives, and continue
our succession planning efforts, 586 FTE will be added to compensation
processing.
VA's benefits programs are a tangible expression of the Nation's
obligations to its veterans. For 2001, the Administration is requesting
$22.8 billion to support compensation payments to 2.3 million veterans,
301,000 survivors and 864 children of Vietnam veterans who were born
with spina bifida, and to support pension payments to 363,000 veterans
and 253,000 survivors.
We propose to provide a cost-of-living adjustment (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 2.5 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, 2000, and would
cost an estimated $345 million during 2001.
If Congress approves, VA will pay full disability compensation to
veterans of Filipino forces 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.
The Administration is also proposing repeal of a provision in the
Balanced Budget Act of 1997 which would preclude the Government from
making its October, 2000, VA-benefit payments on Friday, September 29,
2000 and instead require that they be delayed until Monday, October 2
(in fiscal year 2001). Under the law which would otherwise apply, when
the first of the month falls on a weekend, payments are to be made on
the Friday immediately preceding it.
In order to enhance educational opportunities for veterans and
eligible dependents and provide various special assistance programs for
disabled veterans, an appropriation of $1.6 billion is being requested
for the Readjustment Benefits program.
Education benefits will be provided for about 480,000 trainees in
2001, including 309,000 training under the Montgomery GI Bill. This
request includes funds for the annual Consumer Price Index adjustment,
which is estimated to be 2.7 percent effective October 1, 2000, for
education programs.
The heart of the Veterans Benefits Administration's (VBA) strategy
for improved customer service is measurable success. This budget builds
on critical indicators that have been instrumental in past performance.
VBA is positioning itself to improve dramatically the delivery of
benefits and services.
Mr. Chairman, as we all know, VA is not completing work on claims
for compensation and pension benefits in as timely a manner as we would
like. This is a difficult problem not easily or quickly resolved. More
veterans are receiving disability compensation today than at any time
in the history of the United States and, despite a declining veteran
population, VA has an ever-increasing compensation workload.
Veterans are filing claims today for more issues or conditions than
at any time in our history. The complexity of these claims has also
increased dramatically. The level of effort required to evaluate a
claim for benefits today is significantly greater than just eight years
ago. This is because of both the increased complexity of today's claims
and expanded procedural requirements occasioned by judicial review of
our decisions. VA has embarked on an aggressive program to hire
veterans service representatives who, when fully trained in these
intricate procedures, will ensure veterans get the right decision on
their claim the first time.
By the end of 2001, we expect to have 1,000 more employees to work
on adjudicating claims than we had last year. Significant strides have
been made in implementing our case management approach to customer
service and in improving the information technology infrastructure that
supports veterans' claims processing. For example, two years ago, a
veteran would get a busy signal more than half the time he or she
called our nationwide toll-free number; today, the percent of blocked
calls is 5 percent.
The problems facing VA in overcoming its claims processing backlog
were long in making and are systemic in nature. All of us are
dissatisfied with the rate of our progress, but there is no ``quick
fix'' to this problem. To do what is needed will take time, but we have
put in place a foundation for success and are requesting a budget
through which these goals will be achievable.
Our vision for VBA emphasizes accurate and timely claims decisions,
along with a high level of customer service and satisfaction. To reach
those goals, VBA's 2001 budget request is $999 million and 11,824 FTE.
This represents an increase of $109 million and 287 FTE above the 2000
level, plus a one-time adjustment of $30 million from the Readjustment
Benefit Account for Vocational Rehabilitation and Employment
administrative costs.
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 personnel in claims processing and
associated initiatives by 586. This will result in a 20 percent
increase in adjudication staffing since 1999.
This budget continues to include funding for a pilot project,
Virtual VBA, which will allow VA to process veterans' claims in an
electronic environment, eventually eliminating the now paper-intensive
and time-consuming manual claims process. When fully implemented, it
will provide for complete access to information by anyone with access
to the new system.
In addition to the electronic claims processing pilot project and
increased FTE, VBA seeks funding in the amount of $31.1 million for a
number of other C&P initiatives including:
--The expansion of our Systematic Technical Accuracy Review (STAR)
Program in order to obtain current and diagnostic information
about the accuracy of the work being produced at field
stations.
--The Systematic Individual Performance Assessment (SIPA), a new
initiative designed to complement the on-going STAR program,
which will bring performance assessment and accountability to
the journey-level employee. This will help keep fraud from
occurring and will improve oversight of individual decision-
making accountability.
--Training and Performance Support Systems (TPSS), an ongoing multi-
year training initiative for employees working in the area of
compensation and pension. The effectiveness of this training
has been established and it substantially improves the accuracy
of the work of those who complete it.
--Initiatives to assist in replacing our antiquated payment system,
and provide various improvements to existing technology used in
this environment.
Funding is included for the enhancement of education activities
intended to improve stakeholder and customer satisfaction. Building
upon the EDI/EFT initiative, funding is included for The Education
Expert System (TEES), an umbrella project that will expand our
achievements in the area of electronic data exchange and funds
transfer, and will make changes to the application used by schools to
transmit enrollment information to VA.
This budget contains several initiatives designed to provide much
needed improvements in service and accountability to VA's housing
program. Included is funding to redesign our Loan Service and Claims
processes in order to automate routine activities. Funds are also
provided for an ongoing effort to consolidate guaranteed loan servicing
at the nine Regional Loan Centers. Other projects include providing a
redesign of the Construction and Valuation system; continuing the
consolidation of the mortgage loan accounting functions to one
centralized location; and enhancing the Lockbox Funding Fee system and
a system to provide on-line determinations of eligibility for loan
guaranty benefits.
Funding has also been included to support several areas of service
that the Vocational Rehabilitation and Employment program has sought to
strengthen. These initiatives are designed to improve communications,
emphasize outreach, increase access, improve case management, and
emphasize the program's central goal of finding appropriate employment
for our veterans.
Mr. Chairman, issues regarding the Department's responsibility to
procure for claimants the evidence necessary to establish their
eligibility for disability and death benefits are also of concern to
many. What responsibility do claimants, and those advocating on their
behalf, have to first demonstrate their claims are plausible before
significant Government resources are devoted to the claims' further
development? Should the Department's obligation be the same regardless
of a claim's plausibility, or should VA resources be devoted to those
claims most likely to prove meritorious? The answers will directly
affect our ability to award benefits in a timely manner to deserving
claimants.
On December 2, 1999, we published for public comment a notice of
proposed rulemaking concerning well-grounded claims and VA's duty to
assist claimants. Consistent with currently controlling judicial
precedents, the regulations we have proposed would include important
exceptions to a general rule that claimants must present plausible
claims before the Department's duty to assist arises.
First, under the proposed rule, there are certain types of
assistance VA would provide without regard to whether a plausible claim
had been submitted. VA would routinely procure service medical records
in claims for service-connected disability or death benefits, and would
obtain records of any VA medical treatment identified by a claimant.
Further, if VA determines a claim is not ``well grounded,'' which
is the legal term denoting plausibility, a claimant would be notified
of the types of evidence they would need to present to make it so. In
addition, our proposal exempts certain claimants from the well-
grounded-claim requirement: those whose claims are filed within a year
after service separation, and certain specific categories of others,
such as the terminally ill and those unable to afford medical
treatment, for whom the burden of producing evidence may be especially
onerous.
Within the dictates of current law, we have attempted to strike an
appropriate balance between the obligations of claimants for Federal
funds and their claims representatives and those of the Government they
honorably served.
We are hopeful that, with input from veterans and their
representatives, we can develop a final rule that will be both
acceptable to veterans and administratively feasible. Should Congress
judge the outcome of this rulemaking unacceptable and contemplate
shifting more of the evidentiary burden onto the Department, we ask
only that consideration be given to the resource and performance
issues, which would necessarily accompany such a change in law.
Our veterans deserve a dignified and respectful final resting
place. The final resting places we provide for them--our Nation's VA
cemeteries--are national shrines and must be maintained in a way that
does honor to the men and women who are buried there.
The budget requests $110 million, $13 million more than the 2000
enacted level, for the operation of the National Cemetery
Administration (NCA). This 13 percent increase will reinforce our
national shrine commitment by beginning an extensive renovation of the
grounds, gravesites and grave-markers at cemeteries where the most need
exists.
New national cemeteries at Albany, NY; Chicago, IL; Dallas/Ft.
Worth, TX; and Cleveland, OH will be fully operational in 2001. We will
begin master planning on sites in Atlanta, GA; Detroit, MI; Miami, FL;
and Sacramento, CA.
One of VA's strategic goals is to assure that national cemeteries
are shrines dedicated to preserving our Nation's history, nurturing
patriotism, and honoring the service and sacrifice veterans have made.
In order to achieve this objective, it is necessary for NCA to address
some deferred-maintenance needs. Improvements in the appearance of
burial grounds and historic structures will be accomplished with an
additional $5 million requested in this budget.
VA estimates that the annual number of veteran deaths will peak in
the year 2008 before beginning to decrease. Consequently, NCA's
workload is projected to rise during that period. NCA is preparing for
this increase by planning for the construction of new national
cemeteries, extending the service life of existing cemeteries, and
encouraging states to build state veterans cemeteries.
This budget includes funding and FTE to address increasing
interment and maintenance workload at the national cemeteries,
including the high rates of increase in interments during the first
years of operation at the new cemeteries just completed. The budget
also includes planning funds in the Construction, Major Projects
appropriation to continue the development of additional new national
cemeteries.
VA is asking for $226.5 million for the Office of the Secretary,
six Assistant Secretaries, Board of Veterans' Appeals, Board of
Contract Appeals and General Counsel. This request, along with $4.4
million associated with credit reform funding, will provide us a total
resource level of $230.9 million.
Compared to last year's appropriation, the 2001 request is $20.3
million higher. The budget authority, along with $53 million in
anticipated reimbursements, will provide for total obligations of $280
million in 2001. FTE will decrease by 93 in 2001 from the 2000 current
estimate of 2,528.
We are requesting $45.9 million in funding for the Board of
Veterans' Appeals for 2001. The Board's marked improvement in
timeliness in making decisions on veterans claims, its increase in
productivity, and its reduction of the appeals backlog from 1995
through 1999 have exceeded our most optimistic expectations.
The budget request will give us the opportunity to continue to
decrease the amount of time it takes to process veterans' appeals. 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 2001, we project it will take an average of 650 days. In
1999, it took an average of 745 days.
We are requesting $56.6 million for the Office of the General
Counsel. This would include $47.6 million in budget authority, and an
additional $9.0 million funded through reimbursements under the MCCF,
the Credit Reform statute, and other reimbursable authorities. This
level of funding is essential if the office is to continue to meet the
increasing demand for legal services required by VA's three
Administrations, and if it is to keep pace with its representational
responsibilities at the Court of Appeals for Veterans Claims (CAVC).
Increased funding for the Office of the General Counsel will also
permit us to address rising demands for representation of the
Department in workplace disputes.
For the Office of Information and Technology (OI&T), we are
requesting $30.9 million in total obligations and 195 FTE, including
$22.3 million in budget authority (156 FTE) and reimbursements of $8.6
million (39 FTE). These resources would enable OI&T to continue to
support information technology policy, program assistance, VA capital
planning, the nationwide telecommunications network, the VACO campus
office automation platform and local network, and other efforts. The
Austin Automation Center is separately supported by VA's Franchise
Fund.
VA successfully began the Year 2000 without any significant Y2K
incidents. VA benefits were paid on time and our health care facilities
remained open throughout the date rollover. Having met the challenge of
Y2K, our next priority is information security.
In early 1999, VA initiated a Department response to the General
Accounting Office (GAO) and Inspector General recommendations on the
need for a strengthened VA information security program. A Department-
wide working group created a security plan for investment of $83.3
million from 2000-2005 with funding to be redirected from completed
Year 2000 efforts.
The plan, which GAO commended, is a comprehensive approach to
managing risk through continuous risk assessment, incident response
processing, policy development, workforce education, virus protection,
intrusion detection, and strong centralized management and oversight.
Immediate undertakings have resulted in the establishment of a national
Critical Incident Response Capability system, which tracks security
incidents; the initiation of a Department-wide assessment of risk;
piloting of Web-based workforce security awareness training; and the
issuance of strengthened security policies for high-risk areas.
For 2001, the Office of Financial Management (OFM) is requesting
$30.9 million in total obligation authority and an average employment
of 229. Before I discuss the specifics of our request for OFM, I would
like to highlight a recent accomplishment. I am pleased to announce our
success in obtaining an unqualified opinion on the Department's
Consolidated Financial Statements for fiscal year 1999 and 1998. This
represents a major milestone in improving financial management and
reporting in VA and provides sound baseline information to build upon
for the future. It also fulfills my commitment to the President to
obtain a clean audit opinion on our fiscal year 1999 financial
statements in my July 1998 letter. Office of Financial Management staff
and the Chief Financial Officer staffs of the Veterans Health
Administration and the VBA made a significant effort to make this
possible.
The request for OFM includes $29.1 million in budget authority and
$1.8 million in reimbursable authority. These resources will allow us
to continue our current level of operations and sustain efforts on
critical initiatives underway. Reimbursements will fund financial
operation and program reviews, and will allow us to provide assistance
in financial policy development and oversight. The requested budget
authority also includes $2.6 million toward implementation efforts of a
new integrated VA core Financial and Logistics System to replace the
current financial management system and its interfaces. OFM will
coordinate the Department's investment in this area. In 2001, the total
investment of approximately $57 million will fund specific tasks for
the acquisition (Phase III) and the prototyping and implementation
(Phase IV) phases of the project.
We are requesting $13.9 million and 65 FTE to support the
activities of the Office of Planning and Analysis (OP&A). With these
resources, OP&A will continue to facilitate the Department's strategic
planning process; provide actuarial and analytical support to VA
program offices; conduct statutorily required program evaluations;
coordinate corporate management improvement activities; and support the
development, analysis, and review of issues affecting veterans'
programs.
Funding increases for 2001 will support expanded analyses and
reports of data collected in the National Survey of Veterans, which
will be conducted in 2000. Additional funding will be used to enhancing
data development and actuarial services so that VA program offices and
others will have available more sophisticated demographic and socio-
economic information about veterans. This will improve our service-
delivery planning.
Increased funding will also support a continuous environmental scan
process, including stakeholder consultation sessions and focus group
meetings, and an ambitious schedule of program evaluations mandated by
Title 38 and the Government Performance and Results Act.
The Office of Human Resources and Administration (HR&A) is
requesting $82.8 million in total obligation authority and an average
employment of 579 FTE. The requested budget authority for HR&A is $51.4
million.
Included are requests for additional resources to carry out several
initiatives, such as developing and implementing strategies to prevent
discrimination complaints; developing a Departmental workforce
succession planning and decision system; conducting the Department's
next One VA organizational assessment; conducting VA's next Human
Resources conference; and maintaining and testing the Department's
Continuity of Operations Plan for assuring essential emergency
services.
The total figure for HR&A reimbursements is $31.4 million. This
includes $27.8 million and 260 FTE for the Office of Resolution
Management (ORM) and $3 million to complete development of the
department's HR LINK$ personnel payroll system. In 2001, 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 reimbursements from its customers.
In summary, a total appropriation of $1.062 billion is requested
for General Operating Expenses (GOE); $835 million for VBA and $226.5
million for General Administration in 2001. This funding level,
combined with $168 million of administrative costs associated with VA's
credit programs, funded in the loan program accounts under credit
reform provisions; $9.8 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; $36.5 million
from insurance funds' excess revenues; and other reimbursable
authority, will provide $1.359 billion to support operations in the GOE
account.
Our Franchise Fund completed its third year of operations on
September 30, 1999. The six lines of business, our Enterprise Centers,
are proving to be very successful. Sales to federal entities have
dramatically increased since our initial year of operations in 1997,
from $59.1 million to $97.3 million. The 1998 financial statements of
the Fund were audited by a private sector CPA firm. The audit resulted
in an unqualified, or clean, opinion. On October 1, 2000, the Shared
Services Center (SSC), which will support the implementation and
operation of the HR LINK$ personnel payroll system, will join VA's
Enterprise Centers.
The 2001 request for the Office of the Inspector General (OIG)
contains total resources slightly over $49 million. The request
includes direct budget authority of $46.5 million and planned
reimbursements of $2.6 million, which supports average staffing levels
of 369 and 24 positions, respectively.
This funding provides OIG with an increase of $1 million for nine
positions. The request will assist OIG in expanding oversight in the
quality of health care services rendered our veterans, identifying
internal control vulnerabilities in benefit payment processes, and
detecting fraud through extensive review and analysis of VA databases
and matching initiatives.
We are requesting new budget authority of $309 million for the
Department's construction programs. Our request provides funding for
two major construction projects and another $10 million for an effort
to assess our medical infrastructure needs for the future. A 10 percent
increase above last year's requested level is included for minor
construction and the grant programs for state veterans' nursing homes
and cemeteries.
We are requesting new budget authority totaling $62 million for the
major construction program. The major construction request includes
funding for a seismic corrections project at Palo Alto, CA and a
gravesite development project at Ft. Logan National Cemetery in
Colorado. An additional $10 million is requested in planning funds to
continue the Capital Asset Realignment for Enhanced Services (CARES)
studies. Congress initially provided $10 million to begin these market-
based assessments of health care requirements and capital needs in
2000. The 2001 request also includes planning funds to continue the
development of four new national cemeteries, to be located near
Atlanta, GA; Detroit, MI; Miami, FL; and Sacramento, CA.
Additionally, we are requesting new budget authority totaling $162
million for VA's minor construction program. The request will be used
to make improvements throughout the Nation to our medical centers'
ambulatory care settings, patient environment, and aging
infrastructure. Funds have also been requested for nursing home care,
clinical improvements, correction of code deficiencies in existing
facilities, and the elimination of fire and safety deficiencies at our
facilities.
Funds requested in the minor construction budget will also support
VBA and staff office construction requirements, and gravesite
development and improvements at existing national cemeteries. In
addition, as a result of the expanded authority provided by the
Millennium Act, minor construction funds may be used to make capital
contribution payments for enhanced-use lease projects such as the new
regional office building at Milwaukee, Wisconsin.
The 2001 request of $60 million for the Grants for the Construction
of State Extended Care Facilities will provide funding to assist states
in establishing new nursing homes and domiciliaries or renovating
existing facilities. The 2001 request of $25 million for the Grants for
the Construction of State Veterans Cemeteries will provide funding to
assist states in establishing, expanding, or improving state veterans
cemeteries.
Mr. Chairman, for 224 years, America's men and women in uniform
have brought a record of security and peace to the North American
continent that is unmatched in the history of the world.
I believe this budget meets the needs of the Nation's veterans and
lives up to the commitment we have to them.
I want to thank the members and staffs for your continued interest
in our Department's needs. I look forward to continuing to work with
you on behalf of our Nation's veterans and their families.
I also want to thank the Veterans Service Organizations for the
vigorous efforts they have made on behalf of veterans during the
appropriations process, and I look forward to continuing to work with
them on these issues in the future.
Thank you for your time, and your consideration.
ALLOCATION OF MEDICAL CARE FUNDS
Senator Bond. Thank you, Mr. Secretary. We'll try to take
advantage of all these great opportunities.
There are several areas of your budget where VA is spending
far less than what you told us you would in 1999 and the
current year, even while we increased the overall budget by
$1.7 billion. Let me give you a couple examples.
Post-traumatic stress disorder, VA spent $87 million in
1999, when you told us last year the estimate was $109 million.
VA is estimating that it will spend $94 million this year,
while last year VA estimated it would spend $113.5 million in
2000.
In the substance abuse treatment area, last year you told
us VA would spend $411 million in 1999, yet the actual 1999
expenditure was $357 million. The 2000 estimate had been $427
million and currently VA estimates it's going to spend about
$373 million. The homeless compensated work therapy program,
you now estimate you will spend about half of what was
estimated for fiscal year 2000.
These programs are highlighted in the budget because
they're national priorities that you've identified, critical to
veterans. I'd like you to address the following questions:
Why isn't VA allocating its budget consistent with its own
budget justification? How can we be sure that through the VERA
allocation system that VA networks and individual hospitals are
allocating sufficient funds to these national priorities, and
why shouldn't we be funding these national priorities
separately from VERA?
Secretary West. Let me make a preliminary response, Mr.
Chairman. I suspect Dr. Garthwaite, who oversees that
administration, will want to speak more specifically.
The first and easy answer is, we should be spending the
money the way we tell you we're going to spend it when we come
up here to ask for it. It seems to me that's the whole purpose
of this process, and that if you get to a point in this
committee where you cannot trust our best good faith estimates,
and that we will live up to them, then we will be in great
trouble.
I think the first answer is, I believe it is our intention
to do what we say we're going to do with the funds, it is then
our best effort to follow through on it. I think you are going
to want to know more than our best efforts, though; so I will
let Dr. Garthwaite try to address these directly.
Dr. Garthwaite. Thank you. I think there are probably three
or four reasons, perhaps, that contribute to this. I think at
the beginning of last year, many of our FTE hires were delayed
somewhat because of the initially presented budget and the
plans that we had for that.
But I think the two key pieces are (1) our data systems;
and we have been working diligently to put into place a
decision support system. The decision support system is now
fully operational in most VA medical centers. And we're in fact
going to use fiscal year 2000 DSS data as the base for future
allocations so that the intensity and interest by our managers
in getting the data in DSS so that we have a more complete base
for our budget allocation decisions.
The final thing I would mention is that the issues tend to
be quite complex. Our initial runs at trying to understand how
much we were spending on Hepatitis C, for instance, used
diagnostic codes. And when we went back and saw how many people
were identified with primary diagnosis of Hepatitis C under
specific diagnostic codes and compared that to our laboratory
data systems and found out how many people actually had a
positive test, we found a significant discrepancy.
So today we have the list of patients with positive tests
being sent to the financial folks, who work from the diagnostic
codes, so we can begin to compare and understand and correct
the discrepancy.
HEPATITIS C FUNDING
Senator Bond. I was just looking at the Hepatitis C because
in the first quarter, your figures show that the total amount
spent was $8.6 million and for all of 1999, as I said, it was
only $26.8 million, but we had obviously a much greater
indicated need and provided much more money.
Will that solve the problem?
Dr. Garthwaite. I think it will make a significant
difference. Just to give you an example, in fiscal year 1999,
by pulling out diagnostic codes only, we found 25,000 patients
treated for Hepatitis C. We know that the number of unique
patients that we diagnosed was closer to 60,000. So we are only
accounting for about half of them with the diagnostic codes.
If you came in with a primary diagnosis coded as cirrhosis,
and the computer also included Hepatitis C as a diagnosis, and
the major reason you're in there is end stage liver disease
from hepatitis, we have to make sure that when we do the
necessary analysis so that both the clinical people and the
analytical people capture the Hepatitis links. I think that is
what we've accomplished; we have figured that out and we are
hard at work making sure that we capture all the actual
workload.
Senator Bond. This is a concern. Do we have to line item it
to make sure that the networks actually do spend it? How are we
going to make sure that sufficient funds are allocated to a
national priority?
Dr. Garthwaite. I believe that, we've made it exceptionally
clear. We have in place now a registry so we will be able to
track each patient. We'll very shortly be able to marry our
database that identifies who has a positive test with the
database that identifies who got medications. So I think that
we will be in good shape to double-check to make sure that a
patient who has a positive test either gets the drug or we have
a reason for not providing it.
Senator Bond. Thank you very much.
Secretary West. Mr. Chairman, I might just say that when we
have instances like this where the question is: Are we able to
get sufficient and timely data for you that indicates that
we're following through on the spending patterns the way we
said and to give you a sense of what we are seeing? It is not
unusual for us to undertake some sort of a regular report on
workload, and get it to you on some sort of a quarterly basis
so that your people, and you are able to follow with us what
our experience is. It may be more reliable data, it may be
better than trying to seek some other way to put in controls
before we know what we're dealing with.
Senator Bond. It's not just us, I hope you get the
information yourself.
Secretary West. Yes.
Senator Bond. Let me turn now to Senator Mikulski.
MEDICAL CARE COLLECTIONS
Senator Mikulski. Thank you very much, Mr. Chairman.
Mr. Secretary, we presume that, and maybe unfairly, that
this will be your last appearance before--but we do know that a
year from now we will have a new president and so on. But I
would really like to thank both you and your entire team for
their professionalism and their work with my staff in trying to
determine how we can often in tight years really serve our
veterans.
So I would like to thank each and every one of them for
their competency and their professionalism in dealing with
this.
Let me ask a question about medical care and the budget,
and it will go to the collections from third parties. Wherever
we go, the veterans organizations and service organizations and
so on, the word is always ``more.'' What can we do more, what
can we do better, the rising cost of prescription drug benefits
that we are grappling with and maybe we all be grappling with
in Medicare.
There is a limit to our budget, so this then takes me to
``Where can we get our money?'' And takes us to the collection
aspects. Could you tell me what is the current status of VA's
efforts to increase collections, what have we seen from your
plan to increase recoveries, and what can we expect? Is it that
we don't have the right systems from VA to collect the money,
or do we have deadbeat third parties?
Secretary West. I am going to let Dr. Garthwaite speak to
that, but I want to----
Senator Mikulski. He liked that last phrase.
Secretary West. He does. First of all, I think we are
getting to the point where we are better at predicting how much
we will be able to collect, and at making hardheaded, accurate
estimates.
For one thing, we have learned from experience. We have put
in changes so that our billing is done better, more
professionally. Additionally, I will say that we have to remind
ourselves at VA that this is not a core competency of VA or of
VHA; we're learning, but we are also continuing to have to look
at something you just mentioned--the best ways of making these
collections. Do we need to contract it? Do we need to have
other ways of doing it?
I know that our networks have tried both ways; and I'll let
Dr. Garthwaite take it from there.
Dr. Garthwaite. Thank you. I think there are several issues
here. One is that because we for many, many years did not bill,
it has taken us a while to get better at billing. We're still
not all the way there, but I think we've made significant
progress in the last year.
We have gone through the issue of teaching everyone how to
do the proper documentation to support the bill rendered, and
that's a key piece in collection. Second, I think we
implemented reasonable rates which should help significantly
with collection efforts. That also took us some time to get
going, but in January of this year we sent out bills for a 14
percent greater amount than we did in the January of last year,
and for February, 23 percent greater than in February of last
year.
So we think we may have turned the corner. We believe these
are optimistic signs that the compliance efforts and the
reasonable billing rates have both helped.
There are certain parts of the process namely, the end in
the collection area where we don't think we're necessarily the
best at doing that, and we would be willing to look at possibly
contracting it out. There are a lot of human resource and
personnel issues related to that.
Senator Mikulski. Well, thank you very much, Doctor. I
think that this is a big issue, and it's a big issue of how we
can make highest use of professional staff at VA, new
technologies and new infotech technologies in terms of
identifying what needs to be collected and how is the best way
to do this.
I feel very strongly that this should be a very important
revenue stream, and it is essentially VA getting its fair share
from third party contracts.
I know that--I see that flashing yellow light here. One
that I need you to get back to me on, on two issues.
DISCRIMINATION ALLEGATIONS
Mr. Secretary, last year about 20 VA employees, working
under one assistant secretary at VA came to me with allegations
of discrimination at VA. And we wrote you about this, asking
you to review the companies, and let me get to where I want to
make my point.
We received an interim response from Eugene Brickhouse
saying that they were looking into it. Then also this was
assigned to a Miss Gibson, who has sent an interim draft. And
there seem to be some issues resolved and some not.
Mr. Secretary, knowing of your own commitment, your own
memorandum to staff and so on, could you look into this?
Because it seems to come from one place at headquarters. I
don't want to elaborate on it here, we'll be able to talk with
you privately about it--and I would like to have this response
from you: Number one, that you've looked into it; number two,
that corrections are being made about those 20 complaints. That
where it has been directed at one spot and primarily one person
and one culture within that area, that the corrections have
been made, and we'll get you the specifics after the hearing.
FORT HOWARD VA MEDICAL CENTER
The last point I would like to make where we need help
back, and then yield to the next senator--the biggest issue in
Maryland right now is the future of Fort Howard Hospital. We
know that it needs a new mission, a new direction, and so on.
What we are facing, though, is confusion because of VA
organization.
There has been submitted to headquarters a desire for there
to be declared a new mission. There is supposed to be an answer
on that. We really need to have that answer. Number two, VA in
Maryland has yet reorganized itself to delineate activity. We
have no idea who was in charge of the Fort Howard project. It
used to be Mr. Dennis Smith. We are not going to pick your
leadership team for you, but we need a one-stop shop with Fort
Howard and a one-stop shop leader who doesn't say, ``It's all
up to headquarters,'' and then goes out to the veterans and say
``it's up to headquarters and Mikulski.'' It's not up to
Mikulski. But if it's going to be up to Mikulski, the first
thing is we need to know what is the mission, who was your
projects director, and then make highest and best use of this
really grand facility.
Can I have your help on this?
Secretary West. Yes, you can, Senator.
Senator Mikulski. Thank you very much.
Senator Bond. Thank you, Senator Mikulski.
Senator Burns.
Senator Burns. Thank you very much, Mr. Chairman.
FUNDING FOR RURAL HEALTH
Mr. Secretary, last year there was language inserted in the
appropriations bill that directed you to do a study of some of
the problems we face in rural areas where we are a long way
from health care facilities.
That report was due to us about the end of this month, the
21st of April. Could you give me a progress report on that, and
are you going to make the deadline?
Secretary West. Dr. Garthwaite.
Dr. Garthwaite. I believe this is the one related to
funding for rural health?
Senator Burns. Yes.
Dr. Garthwaite. We do have this particular report in
headquarters and we plan to make the deadline.
Senator Burns. Okay, I would be interested in that, because
we have a couple of questions that we talked about the other
day and there are a couple more.
PRESCRIPTION POLICY
We are having a hard time in getting our prescriptions
filled. In other words, prescriptions that are written by a
private doctor under his consultations, and then getting those
filled.
Can we allow these veterans to have their prescriptions
issued by a private doctor and filled at a VA pharmacy?
Dr. Garthwaite. VA has never really believed it should fill
prescriptions other than for patients who are under VA care.
Secretary West. That is probably not Dr. Garthwaite's
fault, it is probably the fault of our general counsel--not
this one.
In the late Eighties, and I will count on her to correct
me, VA's general counsel did an opinion about that practice and
I think the prevailing opinion is that Dr. Garthwaite's doctors
are not a pharmacy; they are part of a continuum of care. They
can write prescriptions for patients for whom they are caring,
who come in, who have enrolled.
Once they've had that first prescription, of course, they
could mail in the refills from all over if they would like. So
what may be the solution for us is to try to get our doctors
even closer to those veterans who are far away from the
hospital where they can be treated.
EMERGENCY CARE
Senator Burns. We know in some States that is going to be
almost impossible to do, so we are going to have to do
something to develop that.
Just to take that one step further, we have an arrangement
now under emergency conditions. If a veteran needs health care
he can go to a local facility and that will be reimbursed by
the VA. If we close up at 5 o'clock and it's on a Saturday
night or whatever, we have people and they're sick, they don't
care whether it's service-connected or not. That would have to
be determined later, but we are having a hard time in making
those connections or working that out.
Do you want to respond to that, how we're taking care of
that?
Dr. Garthwaite. In cases where someone's receiving service
for a service connected condition, we can fee basis out their
care, that means they can see someone in the local community,
we give them a card, and we will fill those prescriptions.
If we become the pharmacy for every veteran, then that will
require significant resources, and some veterans who rely on us
for their care will go by the wayside unless there are
appropriations to compensate for those additional dollars. It's
a very expensive position to put us in. There are 25 million
veterans, all of whom would love to get free prescriptions.
So if the difference between the 25 million who are out
there, who have prescriptions and would like them free, and the
current 4.2 million who are enrolled in our system, that would
be an enormous undertaking to do in any fair fashion.
Secretary West. It seems to me, Senator, that you are
raising a problem, though, that we should be able to try to
look at and work with. It is the question of whether we are
delivering the services to a veterans population that is
disbursed, like Americans, they live where they want to live.
Your State is an example, but we have similar challenges in
other States--whether there is some way to address that.
For example, you have already addressed the emergency care
problem to some extent in the Millennium Act, I think now
emergency care is not just service-connected, it's just whoever
is enrolled according to the Millennium Act that you passed
last fall.
So the real question in emergency care is veterans who are
not yet enrolled. In fact, the problem with pharmacy care is
the same thing, the prescriptions. Veterans who are not yet
enrolled in the system. If we can deal with that part and
somehow make them able to become part of the system, then we
may be able to help out there. I think we need to look at the
particular circumstances.
Senator Burns. Yes. Are you comfortable with the way you
are dealing with emergencies now, that are away from a VA
hospital?
Secretary West. I saw a head shake over there, from Dr.
Garthwaite.
Dr. Garthwaite. Well, no, because until we implement the
Millennium Act later this spring, there is really no way for us
to pay for emergency care for the non-service-connected. We
believe that people shouldn't have to worry about how far
they're going to drive when they are ill, they should go right
to the emergency room, the closest one, if that's the medically
appropriate thing to do.
We believe that the Millennium Act will fix that, and we
think that's an important piece of legislation.
Secretary West. But we have got to get them enrolled.
Senator Burns. Those are areas where we have the most
concern, Mr. Chairman and, of course, we are talking about
distances. We realize that change comes slowly. We understand
that, and any way that we can help facilitate that we sure
would. I think sometimes we lose what our mission is, and our
mission is to provide medical services to our veterans, and how
we get that done is where we run into disagreements.
I thank you for coming today, and I thank you for your
service to your country also, Mr. West, and this may be your
last appearance--it may not be, who knows? We may see you
around a lot.
Secretary West. Anything is possible.
Senator Bond. Thank you very much, Senator Burns. We very
much appreciate your participation.
Senator Leahy.
STATEMENT OF PATRICK LEAHY
Senator Leahy. Thank you, Mr. Chairman. I am glad to see
the panelists here, and Secretary West, I enjoy the fact that I
have always been able to communicate with you and talk about
problems, and while not wanting to sound overly parochial, we
usually talk about the VA hospital in White River Junction,
Vermont. I appreciate you always calling back, and I am glad to
see my friend Mike Walker here, we worked together when one of
my favorite-of-all-time colleagues, Jim Sasscer was here, we
were able to handle all the serious things and Mike, you
recall, we sometimes had a few--especially when Jim was on a
roll--some very funny lines in the back room. And Dr.
Garthwaite, you were willing to come over and meet with me off
the floor on one occasion when it was very important, and I do
appreciate that.
I will continue to say now, I know we are going to be
running out of time so I am going to submit questions for the
record--but I would urge that we continue to look at the
geographical differences in the VA medical system. It really is
not--I realize I preach to the converted with this panel--but
it isn't a one-size-fits-all, sometimes it is a difference of
accessibility, even of climate. The situations and problems you
may have in Florida and the Southwest or anywhere else it may
be a lot different than the Northwest or the Northeast and
colder climates. It doesn't mean that there are not needs in
both places, but they are different needs.
I would look at things like the rural health care
initiative and see the effects of different health care models
based on where the people are. And I look forward to seeing the
results of that kind of study.
PATIENT SAFETY
I also was concerned--Mr. Secretary, I know you were--about
the reports last year of the prevalence of medical errors in
the VA health care system. They put the errors somewhere around
3,000 from June 1997 to December 1998.
Now I'm not suggesting that VA is getting more or less
problems than the civilian sector, but I worry about
misdiagnosis, wrongly filled prescriptions, other types of
mistakes. I know it could have been anything from a hurried
prescription written down to illegible handwriting, whatever it
might be.
We have things like so-called clinical couplers, the
technology that may provide a solution to that. It's the kind
of software that the doctor writes this, the pharmacy--it
couples up the nurse that may actually be delivering it, sees
all of this and suddenly the red light goes on and says ``Wait
a minute, somebody else has also prescribed this, which would
be fatal.'' I mentioned before, my wife is a nurse, she has
found--usually she is grabbing a Merck manual and doing twenty
different steps to see if the medicine is the right thing;
sometimes people don't take that extra step.
Can you give us an idea of how such couplers might help
you?
Secretary West. Oh, yes, and I think Dr. Garthwaite has
some things to say about bar coding as well.
Dr. Garthwaite. We met with Dr. Weed and his staff last
week, and have been working with the Department of Defense to
look at the PKC coupler system. The reports I received have
shown that we are fairly favorably impressed with what it can
bring, and we will have to look at how it might integrate it
into our system. But to the extent that we can find things like
that, it helps us.
In terms of patient safety, I think it is important to
realize that VA leads the way. That the report that showed
3,000 adverse events, not all of those were errors and not all
of those were preventable with today's state of knowledge. So
that has been widely misquoted in the media as all errors, and
reading the report carefully I think you will be able to see
the distinction.
The positive things we are doing are bar coding for
medications, computerized entry of prescriptions and other
data, research on what errors might occur and how to prevent
them, especially the human factors engineering, which has never
really been applied to medicine.
Finally I would say we have in place a fascinating and
important new reporting mechanism. One that teaches people not
just to report but that it's safe to report, and one that
teaches them how to actually look for the root cause.
By history we blamed people and assumed we could train them
to be perfect, and I think today we realize that people will
always make some mistakes and we need to reengineer to provide
the safety nets.
VERA ALLOCATION IN NEW ENGLAND
Senator Leahy. Some of the things you are talking about,
bar coding, color coding, a number of other things can
dramatically reduce the accidents.
The other thing, and I would like more of an answer for the
record, but the medical care funding allocation that VA uses, I
think it really shortchanges New England, and equipment
renovation. It divides funds based on patient volume--well, not
only are our hospitals older, we're an older part of the
country, our hospitals are older. But when it's 25 below zero
and you are moving from A to B, and you have had a foot of snow
the night before--which happens. I was going to my office in
Vermont one time this winter when we had had a foot of snow
within the last 24 hours, it is now 24 below zero--everything
is open, everybody is expected to get to work, but even in
Vermont it takes a little bit of effort.
I would ask you to look at this, because if the allocation
is just on patient volume, then VA medical centers across our
region are going to suffer some very serious budget shortfalls
every year. And I think you have to have more in the allocation
models than just volume. And I'd ask you to respond to that if
you could for the record, because I think it's something we
should look at in this committee.
[The information follows:]
VERA ALLOCATIONS IN NORTHEAST
Energy Costs.--Department of Veterans Affairs (VA) reviewed this
issue on numerous occasions and found that because there is not
significant variation among networks, specific energy allocations would
not change the final outcome. VA does recognize that energy costs have
risen sharply in the last couple of months and are having some affect
on the network costs more heavily in the Northern areas. VA is
monitoring this to see if the costs begin to rise in the Southern areas
as warmer weather sets in. Comparing the last 12 months with the
previous 12 months, the average national energy cost increase was 7.5
percent and the cost increase in Veterans Integrated Service Network
(VISN) 1 was 6.8 percent.
NRM Costs.--Funds are allocated on a basis of patient volume
adjusted for regional costs of construction and renovation. Building
age previously was a factor in this allocation process but was phased
out because it was not making a material difference in the network
allocations.
Equipment Costs.--Funds are allocated on the basis of patient
volume. Equipment needs are directly related to the level of patient
care services.
Veterans Equitable Resource Allocation (VERA) was designed to be a
workload-based allocation system and efforts have been to strive
towards a system where allocations are in line with patient need.
Senator Bond. Thank you very much, Senator Leahy.
Senator Leahy. I have other questions to submit for the
record.
Senator Bond. Please, yes. We will be submitting some for
the record as well.
SCREENING FOR HEPATITIS C
Mr. Secretary, in June 1998, VA issued a mandate that all
veterans seeking care were to be evaluated for HCV risk.
According to the Inspector General, VA hospitals are not
uniformly screening all veterans who seek care.
Why, and again this points to a huge problem. There seems
to be a disconnect between a national priority and what's
really happening where the rubber hits the road.
Dr. Garthwaite. Mr. Chairman, we've undertaken many
initiatives to make sure that every veteran gets screened.
We've had a satellite broadcast to let our staff know what is
expected, we've trained physicians, brought them to Washington.
We trained counselors and pharmacists last week, and we have
primary care M.D.'s coming to a conference on Hepatitis C very
shortly.
By the end of next month, we are introducing a patch to our
electronic data system that whenever a patient's record is
electronically accessed, the provider is automatically reminded
they need to check one of four boxes, two of which are: ``is
going to be screened,'' ``wants to be screened.'' The key
questions will be asked of each clinician interactively at the
time patients are being seen.
So we have screened a significant number of patients. In
fiscal year 1998, we tested approximately 113,000 and detected
27,000 unique veterans with Hepatitis C. In fiscal year 1999,
we tested another 176,000 veterans and found 32,000 unique
veterans with Hepatitis C, and this year we've already tested
37,000 veterans and found an additional 8,000 with Hepatitis C.
We continue to have outreach efforts, both with the
American Liver Foundation and we've received some publicity
help from the current Miss America who is very interested in
veterans issues. We ourselves go out into the community. We are
finding that the community efforts don't yield a large number
of veterans, and a lot of the veterans that do surface are
already in our system. We'll continue our efforts.
Senator Bond. Can you assure me that you will follow up to
make sure that what you say is a national priority and what we
fund as a national priority actually gets done in the field?
Dr. Garthwaite. Absolutely.
Senator Bond. Do we have that commitment?
Dr. Garthwaite. [Affirmative, nonverbal]
Senator Bond. All right, we will remember that. Thank you.
I don't say that you won't, I just want to make sure that we
are clear on that, and that we understand that.
NURSING HOME CARE
Mr. Secretary, as I mentioned in my opening statement, it's
my understanding the VA places veterans in private nursing
homes when they can't be placed in a VA-operated facility. In
doing so, the VA conducts its own evaluations of the homes to
ensure that the nation's elderly veterans receive the quality
of care that they so richly deserve. Furthermore, nursing homes
under contract with the VA are evaluated annually. Follow-up
service is provided by VA staff who visit the veterans homes on
a monthly basis.
As I indicated, I've been concerned with the quality of
care, and the regulatory lapses that have occurred in other
Federal agencies and in State agencies. It seems to me that
VA's evaluation and follow-up services would be helpful to
other elderly residents in problem homes.
Does the VA currently share its evaluations and
observations either with HCFA or with State agencies? Is there
a centralized system in place where the information and data
can be integrated?
Dr. Garthwaite. We have completed a draft directive that
mandates that we share all this information, and it will be
going out as soon as it clears. But we agree with you and think
it's important.
Senator Bond. I thank you for that, because I think it is
very important that the VA, which already uses HCFA and State
agency information, should likewise share their evaluations and
observations. It makes sense, and it would seem that
coordination would encourage rigorous monitoring of problem
nursing homes.
MANAGEMENT EFFICIENCIES
Mr. Secretary, one last major question. You assume in your
budget $360 million in management efficiencies. We've received
no details as to what these efficiencies are. It's tough for us
to assess them. When will we see the specifics? Are you
confident that the budget you proposed is adequate and would
not require inappropriate cutbacks?
Dr. Garthwaite. We believe we can do these efficiencies. We
have a large budget, and health care is not optimized in terms
of all the processes within it.
A part of these are energy savings. We find that we can
sign energy contracts by putting in new electronics and so
forth, controlling lights and other things and can save a fair
amount of money there.
We can have continued integrations and realignments and
other movements for using automation that help us. It is a
little like, I think you said earlier, pushing a rock uphill to
make changes because it does affect employees and other things.
So it is hard work to make a lot of the efficiencies, but we
think there are opportunities and we think what we have on the
table this year is realistic.
Secretary West. In response to the last part of your
question, yes, we believe we can do very well with this budget,
Senator. We don't expect to have panicky moments when we're
looking to cut here in order to fund somewhere else. If there
are changes in the system, in our health care system, they will
be so that we can do our job better.
Senator Bond. And you will implement best practices?
Secretary West. Yes.
Dr. Garthwaite. Yes, sir.
Senator Bond. Senator Mikulski, do you have----
PRESCRIPTION DRUG BENEFIT
Senator Mikulski. One final question, and this goes to a
prescription drug benefit, and maybe it requires a detailed
written answer.
As you know, we're considering adding a voluntary
prescription drug benefit to Medicare. There is no doubt about
the compelling human need, particularly for the management of
chronic conditions--blood pressure, cholesterol, diabetes, et
cetera.
Here's the question: Whatever we embark upon must be
affordable to the taxpayer and affordable to the patient, and
must be sustainable. How has VA been able to control costs in a
way that has kept at least some financial discipline on the
prescription drug benefit for our veterans? And what are the
lessons learned as we embark upon a medicare expansion to date?
Secretary West. I know Dr. Garthwaite wants to answer that,
because VHA is particularly proud of what they've done. I would
say in one word the formulary, but I should let him say it in
greater detail.
Dr. Garthwaite. I think we have used several strategies. We
have clear clinical guidelines and we expect people to adhere
to these guidelines which spell out which drugs are effective,
and which effective drugs to use first.
Second, to not provide every possible drug on our
formulary, but to drive that process with very bright clinical
involvement. So we use some of our best front line clinicians
who are actually prescribing to help select the drugs for the
formulary. The good news about all that is, the recent drug
that was pulled off the market for diabetes, we recognized that
we shouldn't have that on our formulary. We didn't put it on
the formulary, and in fact we were so concerned we put out
guidelines for its use off formulary.
So I think the formulary process worked very well in that
instance. Then I think the third strategy we have used is that
if we can limit our choices and commit to a certain volume, we
can negotiate pretty good prices, and we have done that both
alone and more recently in partnership with the Department of
Defense, to save the taxpayers a lot of money.
Senator Mikulski. Well, thank you, Doctor. If you could,
I'd like to have a paper or something on this, because I think
there are really very important lessons learned, both in the
area of formulary issues which are quite complex and should
never be political. Number two, though, the negotiation of
price without formal price controls, stifling innovation, and
someone--we are going to have a lot of big issues ahead of us,
and we can't just do slogans and bumper stickers and so on. So
we appreciate whatever lessons are learned. Thank you very
much.
Dr. Garthwaite. Thank you.
[The information follows:]
PRESCRIPTION DRUG BENEFIT
VA'S NATIONAL FORMULARY PROCESS: LESSONS LEARNED FOR A SUCCESSFUL
MEDICARE DRUG BENEFIT
The basic premise of department of veterans affairs' (va) approach
to formulary management has been and remains the provision of quality
medical care at an affordable price through the appropriate use of
pharmaceuticals in the veteran population. Formularies are not a new
component of healthcare delivery systems in either the private or
public sector. The Veterans Health Administration (VHA) has employed
drug formularies for over four decades. What has changed over time is
formulary management. In the distant past, the sole function was to
define what drugs could and could not be prescribed. More recently,
formulary management has included clinical protocols to assist
clinicians in using drugs effectively and efficiently and is continuing
to evolve.
One of the many positives to formulary management is solid clinical
evidence demonstrating that a specific drug can provide a cost-
effective benefit to a patient population. The result of this is the
ability to negotiate lower drug acquisition cost. As indicated earlier,
VA's primary motivation is always to improve the quality of care.
Economics, though important, has become a secondary issue. This change
in philosophy is a major reason that VA pharmacy expenditures have
risen over the past few years and, VHA officials believe will continue
to rise during the foreseeable future.
Formulary management today not only includes the functions above,
but also seeks to develop the means to measure and improve disease
outcomes associated with pharmaceutical care. Moreover, formulary
management has become far more dependent on evidenced-based reviews and
practices than ever before. This is part of the overall strategy to
improve healthcare delivery, especially as it pertains to caring for
large populations with specific diseases. No one to date has perfected
such a strategy, but to work toward this goal established the Pharmacy
Benefits Management (PBM) Strategic Healthcare Group (SHG) in September
1995. The PBM is composed of a twelve member Medical Advisory Panel
(MAP) comprised of field-based practicing physicians, including one
member from the Department of Defense, clinical pharmacist specialists,
data based managers and contracting experts.
A fundamental part of the overall strategy in establishing the PBM
was to create a comprehensive pharmaceutical coverage package for the
VA system. The reasons for this are fourfold. First, this ensures that
all veterans, no matter where they are in the United States, will have
the same potential access to important pharmaceuticals, over-the-
counter medications and medical-surgical supplies. This improves
overall equity of care and reduces the likelihood that patients will be
denied drugs or other items because of local economic considerations.
However, the national formulary process is not all-inclusive, but
rather, with few exceptions, allows Veterans Integrated Service
Networks (VISNs) to add pharmaceuticals that may be important to
selected populations within their region. In addition, VA's formulary
management system includes a responsive and locally directed non-
formulary approval process. While VA's goal is to include on its
formulary those medications which best serve the needs of veterans, the
non-formulary process addresses those situations and patients where the
formulary drug does not produce the desire clinical outcome.
Second, our strategy ensures that the VA healthcare system will
have a coordinated approach in determining the optimal use of
pharmaceuticals for patient populations with specific diseases. An
example of this coordinated approach is the PBM/MAP's recommended
protocols for treating diseases commonly found in veteran patients.
These protocols include pharmacologic guidelines on Diabetes,
Hypertension, High Cholesterol, Heart Failure, Prostatic Hypertrophy,
Depression, Ulcer Disease, Gastroesophageal Reflux, and Osteoarthritis
(pending). These evidence-based guidelines, developed in collaboration
with physician experts, are being used by many VISNs to help improve
and measure the quality of care.
Third, a coordinated approach to pharmacy benefits management means
that VA can better organize its purchase and distribution of
pharmaceuticals. The PBM SHG has beneficially utilized the power of the
entire VA healthcare system to assure the best value possible, both
clinically and economically, for selected pharmaceuticals. The
grassroots approach, reliance on sound clinical evidence, and the
ownership of the organization in the process has resulted in dramatic
compliance rates with VA national contracts. This initiative has been a
major success for the Department and has had ancillary benefits for the
Department of Defense and the U.S. Public Health Service. With regard
to distribution, the VHA's leadership and track record in implementing
pharmaceutical prime vendor systems and Consolidated Mail Outpatient
Pharmacies (CMOPs) is exemplary.
Fourth, a comprehensive formulary management program allows for
applied research. Our goals are to continually improve the
pharmaceutical benefits package, clinical guidelines and, ultimately,
patient care. In this area, the PBM has begun to matrix with
established research groups within VA and is also in the process of
developing relational software in order to better assess quality of
care as it relates to pharmacy and to pharmaceuticals. This process is
in its infancy, but we expect VA, as one of the nations largest
integrated healthcare networks, to soon lead and influence policy
decisions on how to deliver high quality pharmaceutical care to all
Americans.
VA's success in formulary management is due to the grassroots
nature of its process, buy-in from front line physicians and a
commitment to using the best drug(s) possible in the veteran
population. As indicated above, the cost of an individual drug is
important but it is outweighed through providing the right drug to the
right patient at the right time. In this context, VA's pharmaceutical
expenditures, as a percentage of its health care dollar, have increased
and VHA officials anticipate they will continue to increase. There are
many lessons learned by VA that could benefit the Medicare program.
First, a Medicare drug benefit that only concerns itself with the
cost of a bottle of pills is doomed for financial and clinical failure.
Second, interdisciplinary and multidisciplinary involvement in
guideline development and care delivery has and can contribute to the
delivery of best value care, including the financial viability of the
Medicare program. Third, VAs accomplishments in contracting for
selected high cost, high volume pharmaceuticals are successes that can
be replicated under Medicare. There is no reason that Medicare cannot
contract in this manner to reduce price without impinging on overall
quality of care as VA as done. These successes have enabled VA to treat
many more veterans, again without compromising patient care.
Standardized contracting could be applied across providers and a
consortium of states without resorting to federal price controls.
Fourth, VA's success in implementing new initiatives for the
distribution of prescriptions to veterans has direct implications for
the Medicare program. For example, through the use of federal
consolidated mail outpatient pharmacies, coupled with the wide-spread
use of strategically placed, federally controlled unit of use
outpatient automated dispensing technology, the federal government
could economically and effectively distribute needed medications to
Medicare beneficiaries. The most important part of this strategy for
the Medicare program is a matrix of contracts with private sector
credentialed clinical pharmacists to work collaboratively with
physicians to manage the appropriate use of medications in the senior
population. This two-fold approach ensures integrity in the
distribution processes (one the pharmaceutical industry would be happy
about and embrace from a diversion perspective) and, equally important,
develops a relationship between the patient, his physician and
pharmacist. If (1) appropriate copayment infrastructure for patients,
(2) appropriate risk incentives for providers (physicians and
pharmacists) and (3) the ability of the states to form consortiums for
price negotiations are a part of the expansion, the potential for a
successful, financially viable response to the medication need of this
Nation's seniors is accomplishable.
Finally, VA's excellence in geriatric medical practice is well
documented. Part of that excellence is the wisdom gained and successful
management of co-morbid older patients taking multiple drug therapies.
VA truly does have much to offer the Medicare program as it considers
expansion to include a drug benefit.
Senator Bond. Thank you, Senator Mikulski.
Mr. Secretary, we are going to have a number of questions
for the record. They've called for a vote.
CORRECTING PROGRAM DEFICIENCIES IN ST. LOUIS
Last October, the combined assessment program review by the
I.G. identified a number of areas in the St. Louis VA hospital
requiring management attention, and I'd like for you to give me
in writing an update on correcting the program deficiencies at
St. Louis. I'd like to know how VA follows up to ensure the
problems are corrected in a timely manner.
I would like your views on the CAP program and whether it's
a useful target.
[The information follows:]
CORRECTING PROGRAM DEFICIENCIES IN ST. LOUIS
SUMMARY OF INSPECTOR GENERAL COMBINED ASSESSMENT PROGRAM (CAP) REVIEW
CONDUCTED AT VETERANS AFFAIRS MEDICAL CENTER, ST. LOUIS, MISSOURI, JUNE
7-11, 1999
Summary of Recommendations and Responses
(1) Take immediate action to ensure that nurse staffing levels in
the Nursing Home Care Unit (NHCU) are always at or above established
minimum safe staffing levels.
Nurse staffing levels are kept at or above minimum safe levels by
reassignment of staff within the Extended Care Service Line wards,
scheduling contract agency staff, and scheduling overtime. Recruitment
and hiring has been an on-going process. Staffing needs are reviewed
daily and recruitment requests sent weekly as vacancies occur. Recently
with the Medical Center's initiative of reorganization, merging and
relocation of wards have occurred. This has allowed for additional
staff to be assigned to the wards as needed. Patient acuity and program
activities are continually monitored to determine staffing needs and
readjustments are made.
Office of Inspector General (OIG) STATUS: Closed
(2) Take immediate action to ensure Domiciliary patient privacy
needs are met when providing urine samples for drug testing.
A Standard Operating Procedure (Domiciliary SOP # 4) has been
written to provide guidance on DOA Collection. Procedures have been
developed to cover situations when there is no same gender staff member
present. For male patients who present concerns regarding specimen
collection by female staff members, the specimen will be obtained at a
later time, usually this occurs on the next shift. All female patients
will have the specimen collected by a female staff person. However,
this policy emphasizes the need for sensitivity for all of our patients
and attempts to ensure patient privacy to the maximum extent possible.
Staff training and orientation has been provided on the procedure. This
process has been in effect since July 27, 1999. No patient or staff
complaints have been identified since the OIG visit or initiation of
the new procedure.
(3) Assess the issues regarding employee safety to determine the
adequacy of shuttle bus services from the employee parking lot to the
medical center.
Every effort has been made to improve parking for our patrons and
staff, particularly during the hours of darkness. The following actions
have been taken by management to insure the safety of the staff during
hours of darkness.
--Employees working irregular tours of duty, particularly at night,
are encouraged to park on VA property and not on the streets or
in private parking lots adjoining VA property.
--Police and Security routinely accomplished street and parking lot
lighting surveys to insure that lights are repaired as quickly
as possible when deficiencies exist as well as to identify
areas that need improved lighting.
--Efforts have been made and will continue to be made to improve
lighting so as all parking areas used by the staff are brightly
illuminated during the hours of darkness.
--Police and Security provides security escorts upon request,
regardless of the time of day or night with only one exception
and that is during peak duty changeover hours (see next item).
Employees arriving for duty during hours of darkness must park
in card access only parking lots. When they arrive at the gates
they may, by using the call boxes, request a police patrol be
dispatched to escort them to the 24-hour entrance by the
Emergency Room (ER). Again, police and security will provide
this service at any time except during peak changeover hours
(see next item).
--During peak changeover hours, police and security post their on
duty officers in the John Cochran (JC) Division parking lots,
one in top half of lot ``E'' (south side of hospital) across
from the ambulance parking area, to monitor the staff as they
enter/exit the 24-hour entrance. The second officer on duty is
posted at the bottom half of lot ``E'' and monitors employees
coming and going from their vehicles in lot ``E'', ``F'' and
``G''.
There have been no incidents where a staff person has been
assaulted, molested, mugged or robbed as they negotiated VA owned
property to go to and from their vehicles.
In addition, there have not been any incidents of assault,
molestings, muggings, or the robbery of anyone who parks on the lots
leased by the VA during daylight hours. Approximately half of the
employees who park on the Grandel and Sun lots ride the shuttle while
the remainder of the staff walks from the lots to work without any
problems. Employees are urged to ride the shuttle bus during the
afternoon hours, particularly in the Fall and Winter months when it
becomes dark earlier in the day.
The facility monitors employee needs regarding the shuttle via
general surveys and verbal comments and complaints. Complaints were
received previously that identified a need for wheelchair accessible
vans. Wheelchair accessible vans are now in use. Comments also
identified a potential need to expand services to the Yeatman lot. The
stop was added to the driver's route for several weeks. Records were
kept on the number of employees being picked up and dropped off at the
stop. There were very few employees that rode the shuttle van to or
from this stop, thus, it was not adopted as a permanent pick-up stop.
A parking garage would be a great improvement in alleviating the
parking situation at John Cochran Division; however, even with a
parking garage, safety will remain an issue and if the staff is not
alert of what is going on around them, incidents may occur.
(4). Revisit the issue of shared use of the dining room and
combined recreational activities for Nursing Home Care Unit patients
and Domiciliary patients to ensure this arrangement is therapeutic for
both groups.
Recreational activities have been consolidated in the Nursing Home
Care Unit (NHCU) for NHCU resident and Mental Health patients.
Domiciliary patients do not use the NHCU dining room for any
activities. The joint recreational programs for NHCU residents and
Mental Health patients was instituted just prior to the site visit.
Enhancements have been implemented with the input of the residents
council.
Residents now have the option of attending combined recreational
activities or program specific recreational activities. The combined
activities are monitored by ward nursing staff, recreational staff and
the nursing supervisor. Improved scheduling and monitoring of the
recreational activities have eliminated this process.
No complaints have been received and no patient incidents have been
reported. Residents Council will continue to monitor this process.
(5). Assure that patients are seen by a clinician within 15 minutes
of their arrival in the Walk-in Clinic to determine urgency of
treatment needs.
We concur that unscheduled patients should be seen by a clinician
in a timely manner. The Department of Veterans Affairs ``Customer
Service Standards'', VHA Directive 10-94-102, dated October 14, 1994,
establishes a standard that patients will be seen within 30 minutes of
their scheduled appointment time. Walk-in patients report to clinics in
two ways: (1) After they have first been seen in the Emergency Room and
referred to a clinic, or (2) After they have been interviewed by the
Operations Center (Patient registration) and then referred to a clinic.
During 1998 and 1999 walk-ins to Emergency Room (ER) were seen by a
physician within 10 minutes of their arrival. The desired outcome is
that patients will be seen by a physician within 20 minutes of their
arrival. Data is not available on walk-in patients who present to the
clinic but have not been seen first in ER.
For those walk-ins that are not seen in ER, a time study will be
conducted to determine waiting time to be seen by a clinician. The
study will examine the delays that would preclude a walk-in patient
from being seen by a clinician within 15 minutes of their arrival.
Also, walk-ins are instructed to report back to the Operations Center
if they were not seen by a clinician within 20 minutes.
Regularly scheduled patients were seen in the seven Primary care
Clinics within an average of 15 minutes of their appointment. This data
is based on the two most recent waiting time studies conducted in each
of the Primary Care clinics. Waiting time studies are conducted usually
in the Primary Care Clinics semi-annually. These studies examine all
aspects of waiting time and care time that are part of the Veteran's
clinic visit.
Further measures have been incorporated into the fiscal year 2000
Performance Improvement Plan to assure continued timeliness.
(6). Examine the system for awards and recognition to ensure
equitability.
VA Handbook 5430.1, dated February 28, 1997, outlines the approved
performance appraisal program for the VA. Paragraph 14, states,
``Performance awards that are solely based on an employee's rating of
record are not authorized in connection with this appraisal program.''
VA Handbook 5451, dated August 18, 1998, outlines the approved
award recognition system for the VA. Part C, paragraph 1a, states,
``General Provisions. Recognition through a cash award, time off award
or other honorary or non-monetary means may be granted to an individual
employee or group or team of employees in recognition of a
contribution, act, service or achievement that benefits VA or beyond,
or for overall sustained performance beyond normal job requirements.''
Currently, award nominations are submitted by the Service Line
Director, through Human Resources (for technical review), to the
Medical Center Director for approval. In accordance with Article 15,
Section 4, of the Master Agreement between the Department of Veterans
Affairs (VA) and American Federation of Government Employees (AFGE),
each facility will establish an awards panel consisting of management
and bargaining unit employees. The Partnership Council at this medical
center submitted a charter and a local awards panel has been
established.
In July 1998, this medical center established a Veterans Service
Excellence (VSE) recognition system to recognize employees who go out
of their way to provide service to veterans seeking health care and
related social services. The program is in addition to the Special
Contribution, Suggestion, and Employee of the Month/Year, Team of the
Quarter and other existing recognition programs. In accordance with
Medical Center Memorandum 00-35, the VSE program was thoroughly audited
by two employees who have a knowledge of the process but are not
involved in the assignment of VSE points. The results of this audit
were provided to the Director. Some of the results included reviewing
VSE Point Earning Categories to ensure that all ``reports of
excellence'' from patients and/or their families be treated in the same
manner; establish a procedure whereby the Canteen will process and
redeem certificates in a timely manner, etc. The Employee Satisfaction
Team and Partnership Council used the audit results to improve the VSE
program.
This medical center is taking the necessary steps to ensure
equitability of award recognition.
(7). Assess employee morale to determine why such a large number of
randomly selected employees do not believe the medical center is an
employer of choice and would not recommend treatment at this facility
to a friend or family member.
An all employee survey has been conducted for the purpose of
determining what areas can be specifically addressed in relation to
making our facility an employer of choice. Subsequently, issues of
concern were categorized and prioritized based upon the employee
responses to this survey. Results were shared with all employees and
workgroups are in various stages of developing and implementing
strategies for improvement. Examples are as follows:
--Job advancement opportunities.--Selection Panels are now utilized
to interview and screen applicants based on the performance
based interview process.
--Job training/proficiency.--All-employee survey conducted to
determine training/educational needs.
--Improve communication/keeping employees better informed.--All-
employee forums are held every other month. Supervisory forums
are held every other month. The employee newsletter was
reinstated. The Medical Center Director continues to send all-
employee E-mail informational bulletins.
--Performance/job-recognition improvement.--Semi-Annual Formal Awards
ceremonies established for more timely recognition. Employee
newsletter issue dedicated to awards recognition.
--Improve employee morale and employee behavior/conduct.--Achieving
Excellence in Service (AES) two day customer service training
being provided to all employees Electronic employee suggestion
program under development Patient Satisfaction and Employee
Satisfaction committees combined
A follow-up all employee survey will be conducted in the future to
measure the results of our actions.
(8). Take immediate action to ensure cleanliness of the public
bathrooms at both divisions.
All public use restroom facilities are now being maintained/cleaned
hourly instead of once in the morning and again in the afternoon. In
concert with the Associate Director, supervisors in Environmental
Management (EMS) have developed a weekly basis ``inspection checklist''
which they use to monitor the cleanliness of their areas. Problem areas
are then graphed and tracked/trended, with employees providing input on
how to improve the results. The supervisors responsible for sanitation
activities at both divisions submit the tracking reports to the EMS
Program Manager. The cleanliness of the public use areas, including
restrooms has improved and is being maintained at satisfactory levels.
(9). Improve the management of the ambulance service contract by:
Establishing local policies that include adequate procedures and
controls regarding authorization, certification, and payment of
transportation services.
Policies have been created and implemented regarding the ambulance/
transportation program. Trip sheets are now required to be provided to
the medical center by the contractor. These sheets are used to verify
services provided.
Reexamining the number of personnel authorized to order ambulances
and determine if the number is appropriate.
A review of staff authorized to order transportation was completed.
It was determined that current staff authorized should continue to do
so. Additional training has been provided to the staff authorized to do
this.
Providing training for all personnel responsible for ordering
ambulances to include identifying the proper mode of transportation of
the patient.
Training has been conducted with all clerical staff and providers.
Reviewing the ambulance service contract provision with the
contractor and ensuring that we pay only the contract rate for
transport of veterans.
The contract rate is being applied for all ambulance trips whether
ordered by the VA or the patient. This was implemented on July 1, 1999.
Upon receipt of the bill, the price is verified. Those that are priced
higher are paid at the contract rate. Any invoice that is not charged
at the contract rate is extensively reviewed and challenged as
appropriate
Ensuring that certification procedures include verifying the rates
charged.
The contract rate is being applied for all ambulance trips whether
ordered by the VA or the patient. This was implemented on July 1, 1999.
Upon receipt of the bill, the price is verified. Those that are priced
higher are paid at the contract rate. Any invoice that is not charged
at the contract rate is extensively reviewed and challenged as
appropriate
Challenging every invoice that is priced higher than the contract
rate.
The contract rate is being applied for all ambulance trips whether
ordered by the VA or the patient. This was implemented on July 1, 1999.
Upon receipt of the bill, the price is verified. Those that are priced
higher are paid at the contract rate. Any invoice that is not charged
at the contract rate is extensively reviewed and challenged as
appropriate
Challenging invoices that do not appear to be proper or may have
received prior payment from other sources.
The contract rate is being applied for all ambulance trips whether
ordered by the VA or the patient. This was implemented on July 1, 1999.
Upon receipt of the bill, the price is verified. Those that are priced
higher are paid at the contract rate. Any invoice that is not charged
at the contract rate is extensively reviewed and challenged as
appropriate.
Proceeding with collection actions if it is verified that duplicate
payments have occurred.
Duplicate billings were corrected by Fiscal Program staff. One
duplicate payment of $562.50 has been recovered by offset from current
payments to the contractor. The other duplicate payment of $9,613.45
will be deducted In May, 2000, from future payments for services
rendered.
Establishing better communication and control over patients
scheduled to ensure that ambulance arrival is coordinated with the
patient's completion of clinic exams or discharge.
A transportation team was appointed to improve the coordination and
communication of patient travel. This included working with clinic
staff to better coordinate ordering of the transportation. The
following were reviewed, and/or implemented:
1. A cost comparison study was performed for contract ambulance
versus VA owned ambulance to determine if owning and operating our own
ambulance would be more cost effective. A two-month study indicated
that owning our ambulance would not result in any cost saving.
2. Psychiatric patients presenting to JC, if stable, are
transported to Jefferson Barracks (JB) by ParaLift (Wheelchair) Van
with an attendant in lieu of ambulance.
3. We have increased communication and coordination of scheduling
appointments and ambulance trips in order to reduce waiting time and
resulting increased costs. There will be final review in May, 2000 to
determine the outcome of these efforts. During December, we did a
specific review of ambulance trips to determine if they were clinically
necessary. This review indicated that 95 percent were clinically
necessary and the other 5 percent may be able to be transported by
alternate modes if we change specific ER practices before transporting
the patient between divisions. The following alternatives are being
actively pursued with providers to help make further reductions:
--Whenever possible, provide appropriate psychiatric medications
before transfer to the mental health unit in order to stabilize
the patient and allow for alternate mode of transportation.
--When appropriate, insert Heplock in patient to remove the necessity
for IV treatment during transport.
Based on the issues identified above, review all other contracts
and contracting procedures to ensure that effective internal controls
are in place and are working.
Thirty-one individuals received Contracting Officer Technical
Representatives (COTR) training on June 14, 1999 and June 15, 1999
concerning their duties and responsibilities as a COTR. This training
was done at the request of VISN 15 at each of the facilities. This
training emphasized to the COTR's their responsibility for ensuring
that the work under the contract must be performed in a complete and
exact compliance with the requirements of the contract including review
of contractors invoices against the contract price and terms.
(10). Establish controls over fee basis payments to ensure: CPT
coding is accurate.
Reviews have been made of bills received to assure the accuracy of
CPT codes provided. If a CPT code is not listed the bill is returned
requesting this information with justification of the amount billed
based on that CPT code. Training has been provided to further educate
staff on what to look for to improve the accuracy of our reviews.
VA's fee schedule is updated properly and used to limit fees paid.
VA's fee schedule is updated at the beginning of each fiscal year.
The recommendation has been implemented and is being used to limit
amounts paid.
Verification that service was provided prior to authorizing
payment.
Test results and progress notes are being requested with each
authorization to verify services were rendered. If the information is
not provided, the invoices are not paid and are returned to the vendor
as incomplete.
(11). Establish procedures to notify the contract credit card
company and cancel the authorized use of purchase credit cards by
employees who either transfer to a position not requiring the purchase
card or leave VA employment.
Effective September 20, 1999, the contract credit card company was
notified to cancel all accounts for employees who either transfer to a
position not requiring the purchase card or leave VA employment. We
continue to monitor purchase credit cards and employee transfers and
separations. The credit card company is being appropriately notified to
cancel cards.
(12). Consult with Regional Counsel to determine the next course of
action for recovering the balance owed VA in the case identified.
Financial Services forwarded the information in question to
Regional Counsel, St. Louis, Missouri, and asked for their advise as to
what course of action can be taken for recovering the balance owed the
VA in the case identified, ``Pre-Trial Diversion Procedures.'' A re-
payment plan was established and signed by the individual in March and
we have received two consecutive payments. Further collection options
are legally available if there is failure to pay.
(13). Require excess government vehicles be turned in as surplus.
Utilization of leased vehicles was reviewed. Five were determined
to be no longer needed. Five vehicles were turned into General Service
Administration (GSA) during the time period of June and July 1999
saving the lease cost of $17,400 annually. The vehicles turned in are
as follows:
2 G92 series............................................ tractor/trailer
1 G82 series............................................ tractor/trailer
2 G32 series............................................ shuttle buses
(14). Ensure the Muse CV File System is recorded on the CMR and a
preventive maintenance schedule is established.
The Muse CV File System was recorded on CMR 20C in June 1999. It is
covered by a one-year warranty which expires in the spring of 2000.
BMET will review the system requirements and determine if preventive
maintenance should be performed by in-house staff or by contract.
(15). Ensure that identified payroll overtime ``Exceptions'' are
reviewed.
The Exceptions Listing is reviewed on a regular basis by payroll,
but, it is the responsibility of the timekeeper and supervisor to
review this menu option on a regular basis (daily, weekly or bi-
weekly), and act on any discrepancies listed. The Exceptions Listing is
available under both the supervisors and timekeepers menus. As part of
payroll's semi-annual timekeeper audits, the Exceptions Listing is
reviewed by payroll and forwarded to the appropriate timekeeper for
action. All discrepancies MUST be resolved by either the timekeeper or
the supervisor. The supervisor must then certify the audit and return
to it to payroll.
During the recent timekeeper and supervisor training, timekeepers
and supervisors were once again reminded to utilize the Exceptions
Listing menu option regularly. Currently, the subject Service does not
have any prior pay period exceptions.
(16). Require Washington University to ensure that transferred
research projects meet the informed consent standards set by VAMC St.
Louis.
Transfer of research studies to the St. Louis VA Medical Center
from the affiliated universities is rare. Research Service Line has,
however, adopted a policy that will require the VA investigator to
develop and submit a VA consent for Human Studies Subcommittee review.
Upon approval of the consent, the investigator will be required to re-
consent all subjects that are continuing in the study. The subjects
will be advised of the reason for the change in venue and need for re-
consent. Thus, the subject, the investigator, and a disinterested
witness will be required to sign the new VA consent form.
(17). Share with other VAMCs the best practice of photocopying
patient insurance cards to improve the identification of third party
obligors.
This was implemented when the VISN 15 MCCF Accounts Manager
reviewed our Category A/MCCF Program. This program was provided to her
and she indicated she would encourage other VISN facilities to
implement this practice.
There were 28 recommendations covering 17 areas. All of these
recommendations have been closed by the OIG with two exceptions (9H and
9I). VA expects that our report to OIG on April 28, 2000 will result in
closure of these final two items. At the St. Louis VAMC, we have
charged the Director of Quality Management to maintain a tracking
mechanism on all recommendations from external review groups, including
the Office of Inspector General. This tracking mechanism is maintained
until recommendations are resolved and closed. This has been a
successful method to assure timely completion.
CAPITAL ASSET REALIGNMENT
Senator Bond. And finally on the capital asset realignment.
As I indicated, GAO has raised serious questions--this is the
rock we have got to push up the hill. Stakeholders seem to be
involved in decision making rather than advisory roles, and the
senior leadership in VHA is not involved until too late in the
process.
I would like to know here, now, on the record, if these
problems can be resolved in the final plan, when the plan will
be finalized, and when will VA begin allocating the $10 million
we gave you for these studies in fiscal year 2000?
Dr. Garthwaite. We will be implementing, and spending the
$10 million for the studies this year. We believe that one of
the key issues is to have criteria-based evaluation. We've
promised draft criteria yesterday in testimony and we'll
provide it here as well--within 30 days and, hopefully, then be
able to have final draft criteria shortly after that.
I think we are open to many different models and how to
govern this in headquarters. I would agree with you, we need
stakeholder involvement, but how that is done, it needs to be
less as a decision-making, more advisory, and we don't disagree
with the GAO at all on that.
Senator Bond. You have got to be directly involved, and we
expect to see some movement on it. It's tough, and this is
going to be the challenge. And we really expect to see the
process underway, because there is so much money we could be
devoting to better patient care if we weren't taking care of
empty, unneeded buildings.
ADDITIONAL COMMITTEE QUESTIONS
Joe Thompson, it seems that we have been neglecting you,
but you should know that you are in our hearts and you are
going to be in our questions for the record. As a matter of
fact, we have just a lot of interesting things we are going to
get into. Unfortunately, I see that we have run out of
committee members because of the vote.
[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 CHRISTOPHER S. BOND
ALLOCATION OF FUNDS
Question. There are several areas of your budget where VA is
spending far less than what it told us it would spend in 1999 and the
current year--even while we increased the overall budget by $1.7
billion. For example:
Post-Traumatic Stress Disorder.--VA spent $87 million in 1999 when
it told us last year the estimate was $109 million. It is estimating it
will spend $94 million this year, while last year VA estimated it would
spend $113.5 million in 2000.
Substance Abuse Treatment.--Last year you told us VA would spend
$411 million in 1999, yet the actual 1999 expenditure was $357 million.
The 2000 estimate had been $427 million, and currently VA estimates
$373 million.
Homeless Compensated Work Therapy Program.--VA now estimates it
will spend about half what it had estimated for fiscal year 2000.
How were these budget estimates developed, and why are there such
inconsistencies between planned and actual expenditures (please provide
specific answers for each of the three examples cited)?
Answer. Budget estimates for 1999 and 2000 in last year's budget
for PTSD and Substance Abuse treatment were based on the 1998 actual
experience plus inflation. The reasons for the decrease in actual
expenditures for PTSD and Substance Abuse Treatment follows:
PTSD.--The decrease reflects the continuing shift in clinical
emphasis from inpatient to outpatient care in VA. There was a 22.1
percent decrease in episodes of care for PTSD, and a decline of 15.1
percent in general psychiatry beds used to treat veterans with a
primary diagnosis of PTSD in fiscal year 1999 compared to fiscal year
1998. During the same time, specialized outpatient episodes increased
3.1 percent. A recent population-based assessment of PTSD treatment
need indicated there are gaps in PTSD care at various places across the
system in inpatient and residential care, as well as potential
outpatient needs. In recognition of this, the Millennium Act directed
increased funding for specialized PTSD (and substance abuse) care
programs for fiscal year 2000.
Substance Abuse Treatment.--A combination of closure of inpatient
beds and increased use of ambulatory care have resulted in an overall
reduction in total program expenditures.
For both of these programs, we believe that the steady outpatient
increases will catch up with the initially quick inpatient reductions,
providing more stability to the funding level of these programs.
Homeless Compensated Work Therapy Program.--The estimates contained
in the fiscal year 2000 budget for this program were built upon a 1998
base that was not an actual at the time of printing. The base estimate
turned out to be double the actual. The estimates included in the
fiscal year 2001 budget (for 2000 and 2001) were based on a 1999 actual
of $4.1 million which reflects the actual allocation of homeless
veterans program funds to specific VA medical centers for use in
implementing CWT and CWT/TR programs.
Question. How does VHA management ensure national priorities are
implemented at the local level?
Answer. One of the primary tools that VHA uses to ensure that
national priorities are implemented at the local level is a system of
performance measures and monitors. The Chief Network Officer (CNO)
holds quarterly conference calls with each of the network directors and
their staffs to review the progress made on performance measures in a
number of areas. Examples of measures tracked are the Chronic Disease
Index, Prevention Index and Clinical Practice Guidelines. National
goals are set for each of these measures, and success on these, as well
as the other measures, is an important factor in the end of year
performance appraisal for each Network Director. In addition, the CNO
monitors many areas that he and other officials in the Office of the
Under Secretary of Health have determined need special attention, such
as implementation of Alternate Dispute Resolution, the High Performance
Development Model, and Patient and Occupational Safety Initiatives. In
addition the Headquarters program officials monitor their specific
field activities and report findings to the field and the Office of the
Under Secretary of Health.
Question. How does VHA management track local expenditures?
Answer. Local expenditures are tracked at each VA facility and
input to a national cost system in Austin, Texas. Costs are accumulated
to specific clinical activity levels on the Cost Distribution Report
(CDR). Costs for each medical center and the Nation are then
consolidated with workload information in the VA's National Patient
Care Database, and costs are computed for specific patient care
activities at the local and national levels. Patient specific cost is
also determined in this process.
Question. Where expenditures are inconsistent with plan, what
actions are taken?
Answer. At the Veterans Integrated Service Network (VISN) level,
Network Directors intervene as necessary to re-focus or re-emphasize
facility direction. If expenditures are deemed reasonable for the
outcome generated, the plan is modified accordingly. At the national
level, the VHA Chief Financial Officer provides information and
recommendations to the network and Administration management. As in the
case with supplemental funding requests from VISNs, a financially-based
site visit to the VISN and respective facilities may be conducted and
recommendations provided. Specific program site visits also may be
initiated.
Question. How can we be sure that through the VERA allocation
system that VA networks and individual hospitals are allocating
sufficient funds to these national priorities? Why shouldn't we be
funding these national priorities separately from VERA?
Answer. VHA believes that the value of its national programs can
best be managed through setting standards and measuring performance,
assigning accountability and monitoring spending and revenues rather
than centrally controlling all program funding. The performance of
national programs are monitored through established VISN measures.
VERA is an effective system for allocating resources to the network
level. It was not designed to allocate to facilities or programs.
Networks have the flexibility to allocate resources to their facilities
using methodologies that they need to meet local needs. However, VHA
Headquarters has provided networks with the ten resource allocation
principles that they are to use in providing allocations below the
network level.
WAITING TIMES
Question. One of your key budget initiatives is ``reducing waiting
times,'' for which you estimate spending $400 million in fiscal year
2001, an increase of $200 million over the current year. How can we be
assured that these additional resources will go to ``reducing waiting
times?''
Answer. The resources for this initiative are tied to the service
and access budget initiative. As a result, performance measures and
monitors also include monitoring waiting times. The Chief Network
Officer reviews VISN performance with the Network Directors quarterly.
VA is developing software to better measure waiting times and
accurately reflect the reporting and progress of this initiative.
Through network financial planning, VISNs will identify planned and
actual expenditures towards reaching their waiting times performance
targets.
Question. Will VISN directors be required to track and report to
headquarters the funds spent on meeting the 30-30-20 timeliness goals?
Answer. To ensure accountability for resources attributed to the
waiting times reduction initiative, VHA is developing a plan to monitor
and track expenditures and evaluate the impact of the resources and
activities in reducing waiting times. Six clinics have been identified
to monitor the waiting times for specialty care. These will be
reflected in the performance goals. This plan will be part of the VISN
financial plan submission to VHA headquarters this summer.
Question. Will all of these funds be allocated through VERA, or
will you be targeting resources to those facilities which have the
worst waiting times?
Answer. The majority of the $400 million will be included in the
$18 billion General Purpose funding distributed by VERA. The exception
may be the Information Technology dollars spent nationally (e.g., the
scheduling package). General Purpose funds constitutes 89 percent of
VA's Medical Care appropriation. The combination of increased funding
and specific monitoring of performance toward the goals is expected to
address the waiting time issue appropriately at all sites.
Question. VA has acknowledged it has a problem with waiting times.
What data did VA use to make that assessment?
Answer. There are several sources that VHA used to make that
assessment. The Institute for Healthcare Improvement (IHI) initiative
findings and an evaluation of the top diagnoses of the veteran
population provided an analysis of potential clinic workload
requirements. VHA also analyzed data extracted from the medical
centers' scheduling packages. These are the main sources for the
initial assessment. Other sources include, patient complaints,
historical problems with hiring specialists in some areas, and
evaluation of the top diagnoses of our veteran population that indicate
potential clinic load.
Question. Did VHA analyze the root causes of its excessive waiting
times?
Answer. The Institute for Healthcare Improvement (IHI) initiative
on Waits and Delays started their improvement effort by having each
facility-based team perform a root cause analysis for the specific
clinic they were trying to improve. This is most appropriate since it
is not possible to identify two or three root causes for waits and
delays at a national or even a VISN level. Root causes are embedded in
clinic processes, which vary from clinic to clinic and site to site.
Question. If not, how did VHA identify the initiatives it plans to
use to help achieve the 30-30-20 goals?
Answer. As noted in the previous response, root causes were
identified. Also, VHA intends to issue planning guidance indicating
that for each service and access goal, sites are to identify their
current level of performance and performance target for that goal. For
each goal they are to identify all planned interventions and the
estimated or actual expenditures for each intervention. The list of
possible interventions was developed from those identified by IHI and
from actions Networks identified as possibilities. VHA believes this
approach allows facilities to individualize their approaches, while
providing for the national development and monitoring of improvement
actions.
Telephone care was chosen as a national initiative based on
numerous published articles that indicate access to telephone care
increases patient satisfaction, provides quick access to the system and
decreases the number of medically unnecessary visits to providers.
Providing alternatives to physician/clinician visits should decrease
the overall demand for visits. That in turn will make more appointment
slots available and help decrease waits. As VHA implements phone care
across the system, it expects to develop measures that assess the
number of avoided visits and the appropriateness of that avoidance.
Question. What problems exist with VHA's current efforts to collect
national waiting time data and how will VA fix these problems?
Answer. The current methodology used to measure clinic appointment
waiting times is to measure the time between the date that a next
available appointment was requested at a clinic and the date for which
the appointment was scheduled to occur. This time actually represents
the waiting time experienced by the patient for the appointment. Next
available appointment types were selected because their waiting time is
dependent on the availability of an opening and is not confounded by
patient date and time preferences.
Problems with existing waiting time data is as follows: Waiting
times derived from using this next available approach suffer two
weaknesses. The first is that if a clinic has zero next available
appointments the waiting time cannot be calculated. The possibility of
a clinic not having a `next available' is that the clinician and/or the
patient have requested a specific time in all cases. If a specific
appointment time is requested it is not placed in the average for next
available as there may be numerous slots available before this
appointment was made. If the longer, requested time is averaged in it
gives a false extended waiting time. The potential for no visits to be
`next available' is small but could happen. In general about 20 percent
of scheduled appointments are comprised of next available appointment
types. There is however a good deal of variation across clinics. The
second problem is the dependence on the scheduling clerk to accurately
categorize an event as a next available appointment request. We are
working to solve this problem through training. Guidance and education
directed at the scheduling clerks on how to respond to the VISTA
scheduling prompts has been provided.
VHA's ability to solve these problems is directly related to
deficiencies in the VISTA scheduling software. This software was built
in the 1970's and needs to be replaced. Deficiencies in the scheduling
software are listed below:
(1) Inability to distinguish between new and follow-up appointments
and the inability to distinguish between urgent and routine
appointments.
(2) Inability to document the patient's or provider's desired date
of the future appointment.
(3) Inability to specify a particular appointment duration when
searching for future availability.
(4) Inability to calculate the total time interval between request
and appointment when the appointment has been rescheduled one or more
times.
(5) Inconsistent use of the scheduling system within and across
facilities due to locally developed ``work-arounds'' devised in
response to deficiencies in the scheduling software.
The current software does not support local business needs and is
viewed as an obstacle rather than an asset. Tasks such as managing
rotating house-staff (with concomitant changing and unpredictable
staffing levels, difficulties in achieving continuity of care and
requirements to transfer appointments from one provider to another),
scheduling visits far into the future, scheduling across facilities,
viewing a patient's appointment schedule from a VISN perspective and
linking appointments together (such as laboratory or radiology visits
preceding a provider encounter) are only marginally supported by the
current Scheduling System. It is believed that a major overhaul of the
Scheduling System is required in order to facilitate these types of
activities.
The VA is considering another software patch that will collect
waiting times for all appointment types by recording the date the
appointment is desired and the date the appointment is scheduled for.
This will produce waiting times that have some elements of patient
preference built into them and will be able to collect waiting times
for all patients. This patch will help produce a more complete view of
waiting times but does not substitute the need to rebuild the existing
software.
Question. What types of ongoing data reliability problems might
persist?
Answer. Waiting times are a new measure. As with all new measures,
data reliability is an issue during the first few early runs. As
concerns arise, they are solved (e.g. the first pilot run of the
measure indicated a problem with the clinic numbers that designate a
primary care clinic). The issue was addressed and resolved. There will
be ongoing evaluations to identify future issues.
Question. What is VHA's basis for selecting the six clinics--
audiology, cardiology, opthalmology, orthopedics, primary care, and
urology--that will be measured?
Answer. Initial entry into the VHA is through the Primary Care
provider or clinic, therefore Primary Care clinics were chosen. The
other clinic choices resulted from historical qualitative information
about diagnoses that lead to high clinic loads and historical problems
with hiring specialists.
Question. How will VHA ensure that improved timeliness for the six
clinics is not achieved at the expense of other clinics?
Answer. Each quarter the Performance Measurement Workgroup reviews
the findings of all measures. The waiting times reviews will include
not only those selected, but all clinics. This evaluation will be used
to determine the performance measure for upcoming years. This baseline
clinic information will be used to track progress and to determine if
any other clinic waiting times are increasing. Selected clinics for
subsequent years will change according to the findings of these
reviews.
RESERVE
Question. Each year VA has a national reserve for ``emergencies.''
What is the process for allocating the reserve?
Answer. The reserve is used as a source of funding for new
activities or to supplement existing activities during the year. VHA's
Screening and Evaluation Committee releases funds from the reserve
after review, recommendations by the Policy Board, and approval by the
Deputy Under Secretary for Health. If there is a current year funding
balance at or shortly after mid-year that is not expected to be needed
for other emergencies, it is distributed to the networks using the VERA
methodology.
Question. How much is left in fiscal year 2000 reserve funds?
Answer. The current balance in the reserve, originally $150
million, is now $42.7 million.
Question. Have any networks requested additional Hepatitis C funds?
Answer. VA has not had any requests from networks for additional
Hepatitis C funding. However, Network 3 requested supplemental funding
for fiscal year 2000 and included Hepatitis C workload as part of its
justification. Its total request was $102 million and $66.2 million was
approved.
TWO-YEAR FUNDS
Question. Last year the Committee agreed to the administration's
proposal to make available for 2 years about 5 percent ($900 million)
of the medical care appropriation. How much do you anticipate you will
carryover, and can you give me assurances these funds aren't being
inappropriately squirreled away when needs exist now?
Answer. VA still embraces the concept of 5 percent of appropriation
as no-year funding to provide maximum beneficial use for veterans
health care of all funds Congress provides. Last year Congress set the
level as an absolute amount at $900 million. That level was close to
the 5 percent amount of the 2000 appropriation level. The $900 million
level provides sufficient flexibility for fiscal year 2001 and we will
adjust it in the fiscal year 2002 budget request.
VHA has no intent to withhold dollars inappropriately or otherwise
to compromise the intent of Congress. Two-year availability provides
flexibility to management in those cases where funding priorities need
to be addressed.
HEPATITIS C
Question. A year ago, we were told that VA spending for hepatitis C
might need to be $500 million or more in fiscal year 2000. At that
time, there was question as to the prevalency rate in the veteran
population, as well as uncertainty about what percent of patients
afflicted with Hepatitis C might be well-suited for the new combination
treatment. Does VA have a better handle on the prevalency rate in the
VA population?
Answer. The prevalence rate from the one day Surveillance sample of
March 17, 1999, was 6.6 percent. Two ongoing clinical trials (one
funded by VHA and one by industry) should provide more precise data
within the next several months.
Question. How many patients are currently receiving the new
combination therapy, and what is your current estimate of the number of
enrolled veterans who would benefit from treatment?
Answer. According to current information approximately 1,200
patients are receiving combination therapy for hepatitis C. The
medication was not approved by the FDA until December 1998 and was
placed on the VA formulary in February 1999. Currently only 20 percent
of our HCV positive patients are believed to be clinically appropriate
for combination therapy. This is based on both expert opinions by VA
hepatologists and early evidence from an ongoing clinical trial where
appropriateness for treatment in clinical study patients ranges from 0
percent to 40 percent. Many patients do not have evidence of cirrhosis
on liver biopsy and, therefore, are not presently believed to require
treatment with interferon and ribavirin. Other patients have cirrhosis
that is too severe to be improved by treatment. All patients who are
not presently being placed on combination therapy are still followed
for any change in their clinical status which might make them eligible
for treatment at another point in time. Also, some patients refuse
treatment after they are informed of the risk and benefits, and many
drop out due to side effects.
Question. According to the budget, VA estimates it will spend $195
million in fiscal year 2000 on Hepatitis C, while the original budget
estimate had been $250 million. Yet for the first quarter of this year,
VA hospitals have reported that they have spent only $9 million.
Whether the field is not coding information properly, or if in fact
they're only spending $9 million, in either case this points to a huge
problem. These numbers give us no confidence in the estimates we see in
the budget justification. Can you explain the numbers? Why is spending
so much less than the $500 million we anticipated last year?
Answer. Last year's (fiscal year 2000) and this year's (fiscal year
2001) budget estimated the following costs for Hepatitis C:
HEPATITIS C COST ESTIMATES
[In millions of dollars]
------------------------------------------------------------------------
Fiscal years--
Budget --------------------------
1999 2000 2001
------------------------------------------------------------------------
Fiscal year 2000 President's Budget.......... 114 250 .......
Fiscal year 2001 President's Budget.......... 46 195 340
------------------------------------------------------------------------
Fiscal Year 2000 and Fiscal Year 2001 Budget Estimates.--Although
the Hepatitis C funding model was used in formulating estimates for
both fiscal year 2000 and fiscal year 2001 budgets, the cost estimate
differences between the two budgets can best be summarized as follows:
The fiscal year 2000 budget model assumed more patients would be
evaluated and treated in fiscal year 1999 and fiscal year 2000 than
that predicted in the fiscal year 2001 budget for the same years. VA
believes that the surge of patient workload is likely to occur in the
fiscal year 2001 due to the increasing veteran awareness, education and
training of staff and to VA's promotional efforts to identify patients
of high risk for this disease.
It is important to note that the unit cost assumptions in the
fiscal year 2001 budget are higher. However, the overall total cost
estimates are lower than that estimated last year due to a more
conservative assessment of screening and patient workload for fiscal
year 2000.
Actual Costs Compared to Estimates.--The original estimates for
Hepatitis C were based on a model developed in VA that included cost
and workload assumptions on screenings, tests, and treatments. With the
availability of hard data (actual costs), a transition will be made
from modeled baseline costs to actual baseline costs. At this time,
some actual information is available for fiscal year 2000, although
somewhat limited. Using available information we have estimated costs
for screenings, tests for patients testing negative, clinic and
counseling staff for patients testing positive, and education costs not
available in actual cost reporting. Projecting actual and estimated
costs for the full year results in a current Hepatitis C estimate of
just under $100 million for fiscal year 2000. In addition, VA will
spend approximately $1.8 million to support the two Centers for
Excellence for Hepatitis C and national training efforts in fiscal year
2000. We are taking steps to capture more complete information on
treatment of patients who are HCV positive and to improve our cost
accounting for these patients. An automated Hepatitis C registry with a
clinical reminder patch is currently being tested and is expected to be
fully operational later this summer. This updated system will permit VA
to better track its Hepatitis C efforts and their associated costs.
Also, we are reviewing our program and its funding to ensure that our
facilities and providers have the proper incentives to aggressively
pursue the goals of this program.
Question. Recognizing that Hepatitis C treatment is very expensive,
and given VHA has apparently limited both the scope of its outreach
efforts and the pace of screenings, can it be concluded that VHA's
hepatitis C spending plan is more budget-driven than needs based?
Answer. The scope of outreach efforts has not been limited and the
pace of screening has significantly increased in a number of Networks.
Recently the local chapters of the Vietnam Veterans of American held
screening efforts in several cities in conjunction with Miss America,
an effort sponsored by Schering-Plough. The turnout was disappointingly
low, but VA Medical Centers across the country provided support to
these efforts. On March 31 and April 1, the American Liver Foundation
also held screening efforts in five cities in cooperation with the
national offices of the major Veteran Service Organizations (VSOs).
Again, the turnout was lower than expected, but the efforts continue.
The Chief Consultant, Acute Care Strategic Healthcare Group also
made a presentation to the Hepatitis Foundation International regarding
VA's efforts. This organization's membership is largely individuals who
have either Hepatitis B or C, and this organization has already been
helpful in providing educational materials for patients.
A presentation about Hepatitis C and liver transplantation was held
May 4, 5, and 6 on the Mall for Public Service Awareness Week. At the
booth VA provided patient information and answered questions from the
public. Outreach efforts are also a part of each network plan. It is
VA's intention that every patient is asked about his/her risk factors
for HCV, and tested if appropriate or if the patient requests a test.
VA has developed a clinical reminder system that is currently in beta
testing. The purpose of this system is remind clinicians to screen all
veteran patients for HCV risk factors. Full implementation of this
system is expected in the near future and should ensure that 100
percent of enrolled veterans are screened for risk factors.
Based on their risk factors, veterans are then referred for HCV
testing. The pace of such screening, testing and treatment is dependent
on having in place the appropriate education, infrastructure, and
resources. Appropriate clinical staff are being recruited and educated
to meet these needs. Programs of this magnitude require time to
develop, implement, and subsequently evaluate.
The Acute Care Strategic Health Care Group program office has
worked with the Centers of Excellence to support the networks' effort
with the appropriate provider education materials and presentations,
and counseling materials and educational sessions. This office has
assisted in outreach through public relations; published articles in
both the lay press and professional journals; and provided network
management with feedback from the HCV Registry in order to assist them
in assessing their needs.
Question. I understand that last year, VA spent $657,000 on six
projects directly related to Hepatitis C, and expects to spend $1.2
million this year. Is this enough, to really get a better handle on
this disease and treatments?
Answer. In fiscal year 1999 the VA expended $5,549,009 on 34
projects related to liver disease; $2,639,091 was expended on 24
projects related to Hepatitis; and $657,031 on six investigator-
initiated projects directly related to Hepatitis C. This was an
increase for Hepatitis C from fiscal year 1998, when $298,433 was
expended on three projects, and reflects the increased interest in
Hepatitis C as an emerging pathogen. Starting July 2000, we anticipate
funding a Cooperative Study, entitled ``Epidemiologic Multi-Site
Hepatitis C Virus (HCV) Study.'' This will cost approximately $500,000
in fiscal year 2000, raising the total VA Research expenditure this
fiscal year to $1.3 million. In fiscal year 2001, the Cooperative Study
will be fully funded for $1 million. This will result in an estimated
expenditure in fiscal year 2001 of $1.9 million on Hepatitis C research
provided the VA Research budget remains level. This represents an
almost 300 percent increase in spending on Hepatitis C research from
fiscal year 1998 to our projection for fiscal year 2001. At present,
$1.3 million is adequate as it represents what VHA can appropriately
spend on scientifically meritorious proposals dealing with Hepatitis C.
As time goes on, we anticipate more meritorious proposals on the topic,
and we will endeavor to fund them as they are approved. Presently, the
number of meritorious proposals, not the amount of money, is the
limiting factor.
MANAGEMENT EFFICIENCIES
Question. Last year, General Accounting Office (GAO) indicated that
approximately $600 million of the ``management efficiencies'' that VA's
22 networks identified as potential cost-savings measures for fiscal
year 2000, could be undertaken without jeopardizing patient care. How
much of the $600 million in initiatives identified by GAO and VA are
being implemented with funds redirected to health care?
Answer. VHA is in the process of implementing approximately $348
million in cost savings measures.
Question. How much is left to make VA health care truly cost-
effective?
Answer. Achieving cost effectiveness is not a one-time effort. It
is an on-going process. There will always be elements within VHA, as
with any public or private business, that can operationally improve.
VHA's task is to continue to monitor and assess its operations to:
identify areas where efficiencies can be implemented; to utilize the
skills of its work force to identify areas available for improvement;
participate with the private sector to determine best management
practices; and, be forward thinking and willing to improve management
practices and provide more appropriate health care. Significant
progress has been made by VHA in the last few years and more is
expected. Since fiscal year 1996, VHA has reduced cost per unique
patient by 8.25 percent (18.25 percent in constant dollars) through
management efficiencies.
Question. Have ``best practices'' been standardized throughout the
system?
For example, the IG recently reported that centralizing food
productions within a network is a best practice that should be adopted
by all networks if feasible.
Another example, the IG did a recent report on management of
prosthetic supply inventories, and found better management could lead
to $31 million in savings.
Answer. Best practices are commonly applied throughout VHA.
Examples include: clinical guidelines implementation, health promotion/
disease prevention, management of chronic disease, patient safety
initiatives, management and care of Human Immunodeficiency Virus (HIV)/
Acquired Immune Deficiency Syndrome (AIDS) patients, homeless--care and
psycho-social intervention, IHI collaborative on waits and delays, and
care and treatment of PTSD. Another example is the standardization of
pharmaceuticals which has resulted in cost savings of approximately
$650 million. Now, VHA is implementing standardization of Medical/
Surgical supplies.
ENROLLMENT
Question. VA is in the second year of open enrollment. What has
been VA's experience to date--has it met or exceeded expectations in
terms of the numbers of veterans who have signed up for care?
Answer. VA is experiencing a slight increase in enrollees from
fiscal year 1999 to fiscal year 2000. This would bring us to
approximately 4.3 million veterans--2.8 percent more than fiscal year
1999. This is consistent with our expectations.
Question. What percentage of veterans who enroll are actually using
VA for health care?
------------------------------------------------------------------------
Patient Total
Fiscal year users enrollees Percentage
------------------------------------------------------------------------
Fiscal year 1999.................. 3,177,216 4,520,012 70.3
Fiscal year 2000 \1\.............. 2,849,189 4,411,859 64.6
------------------------------------------------------------------------
\1\ Fiscal year 2000 data is through March 2000. Additionally, the total
enrollee definition was modified from fiscal year 1999 to fiscal year
2000.
Question. How many people are enrolling and using VA primarily to
``fill in the gaps''--say for inexpensive prescriptions and eyeglasses?
Answer. VA can give an estimate of those types of people by
identifying the ``non-vested'' (those not receiving a full range of
services) priority 7 patients in VERA. Of the approximately 85,000 non-
vested priority 7 veterans, 687 used prosthetic services (which
includes eyeglasses) and 18,000 received pharmacy services.
HOMELESS
Question. How does VA evaluate the effectiveness of its various
homeless initiatives?
Answer. VA's Northeast Program Evaluation Center (NEPEC) has been
monitoring and evaluating VA's homeless veterans programs since the
programs began in 1987. The program monitoring and evaluation system
uses structure, process and outcome measures to evaluate the
effectiveness of the homeless veterans programs. Clinicians assigned to
the homeless veterans programs across the country complete intake forms
when homeless veterans are first enrolled in the program and complete
discharge summary forms when veterans are discharged from the program.
The data gathered on each homeless veteran at admission and discharge
is analyzed and used for program evaluation.
Outcome measures that are used to evaluate the therapeutic
effectiveness of the programs include:
--percentage of homeless veterans who are housed at the time of
discharge;
--percentage of homeless veterans who are employed at discharge; and
--clinical improvement for mental health and substance abuse
problems.
In addition to the ongoing monitoring of the homeless veterans
programs described above, NEPEC conducted an observational outcome
study of the initial Homeless Chronically Mentally III (HCMI) Veterans
Programs at nine pilot sites to assess the long-term effectiveness of
the services offered by these programs. A total of 406 veterans
completed follow up interviews and the average number of months from
time of admission to final follow-up interview was eight months.
Significant findings from this observational outcome study were as
follows:
Greater numbers of contacts between homeless veterans and the
clinical staff of the HCMI Veterans Program was significantly
associated with greater improvement in four outcome measures: (1)
veterans had less psychological distress; (2) veterans had reduced
severity of alcohol problems; (3) veterans had fewer days of substance
used; and, (4) veterans spent fewer days homeless.
The longer duration of homeless veterans' involvement in the HCMI
Veterans Program was related to improvement in the number of days
housed from the time of discharge to the time of the follow-up
interview.
The greater number of days in community-based residential care was
associated with greater improvement in: (1) number of days housed from
the time of discharge to follow-up; (2) number of days employed from
time of discharge to follow-up; and, (3) size of social network at
follow-up.
Although this observational outcome study was conducted several
years ago, the structure of VA's core-homeless veterans programs (i.e.,
outreach, treatment, case management, and contract residential care in
community-based programs) remains essentially the same. The results of
this study are applicable to VA's programs as they exist today.
VA continues to monitor the outcome of residential treatment
through clinician discharge summaries. In addition, at General
Accounting Office's request, we are starting a new series of outcome
studies.
NEPEC is also completing data collection and analysis of a five-
year, long-term follow-up study of homeless veterans who received
standard care in the HCMI Veterans Program and homeless veterans who
received services in the Housing and Urban Development--VA Supported
Housing (HUD-VASH) Program. The HUD-VASH program provides permanent
housing to homeless veterans through dedicated Section 8 housing
vouchers made available by HUD, and VA clinicians provide ongoing case
management services to help these homeless veterans find permanent
housing and remain in it. While the HUD-VASH demonstration program
exists at 35 locations, four pilot sites were selected to participate
in a rigorous experimental design approach. Homeless veterans at these
four pilot sites were randomly assigned to: (1) Section 8 Vouchers plus
Case Management; (2) Case Management Only; or (3) HCMI Veterans Program
Treatment (which includes relatively short-term transitional
residential care in community-based facilities that are under VA
contract).
The purpose of the HCMI Veterans Program/HUD-VASH Program long-term
outcome study is to compare the effectiveness of three types of
services that are being provided to homeless veterans. In this study,
care provided in the HCMI Veterans Program is considered to be standard
care while case management only and case management plus vouchers are
considered to be new models of treatment.
Outcome measures for the HCMI Veterans Program/HUD-VASH Program
Study include housing stability, clinical status and employment status.
Veterans who were assigned to these three models of care have been
followed for several years and have been interviewed on a quarterly
basis. Results of this study will provide important information on the
types of services that are most effective in helping homeless veterans
achieve housing stability, clinical improvements, and meaningful
employment. This study was started five years ago and was designed to
address questions concerning long-term effectiveness of VA's homeless
veterans programs. Results of this study will be available in 2001.
Question. How does VA ensure each VA hospital has effective
programs, particularly in those geographic areas where a large homeless
population exists?
Answer. All VA medical centers with specialized homeless veterans
programs comply with NEPEC's evaluation procedures. Information about
workload for each homeless veterans program is compiled and sent to
each program coordinator and VA medical center director. NEPEC uses 32
key measures to assess therapeutic and cost effectiveness. Any program
that fails one standard deviation from the national average in a
negative direction on a given measure is identified as an outlier.
Program coordinators and VAMC Directors have an opportunity to compare
their programs with others and modify program operations if necessary.
Programs are asked to address the causes of outlier status and identify
plans for remedial action. These changes are reviewed in the subsequent
year's report.
Question. Does VA track staffing and funding levels in each medical
center dedicated to homeless services? If not, why not?
Answer. Yes. Tracking staffing and funding levels is part of the
NEPEC evaluation system.
Question. The CHALENG legislation (Public Law 102-405) required VA
to assess and coordinate the needs of homeless veterans living within
the area served by the medical center or regional office. What progress
has VA made in implementing that legislation?
Answer. VA has been coordinating Project CHALENG (Community
Homelessness Assessment, Local Education and Networking Groups) for the
past five years. Each VA medical center has appointed a CHALENG Point
of Contact to work with representatives from other federal agencies,
state and local governments and nonprofit organizations to identify the
needs of homeless veterans and to develop action plans to meet those
needs. The CHALENG process usually involves one or more meetings per
year and gives both VA and non-VA staff an opportunity to discuss
homeless veterans issues. In 1999, 2,651 people participated in CHALENG
activities across the country. Of the total participants, 15 percent
were VA staff and 85 percent were community participants. Approximately
8 percent of the participants were homeless or formerly homeless
veterans. As in past years, the need for transitional housing,
permanent housing, transportation, day treatment programs, eye care,
dental care, childcare, legal assistance and guardianship were
identified as some of the greatest needs of homeless veterans. VA staff
has also identified plans that have been jointly developed by VA and
community partners to address these unmet needs.
Question. Are all medical centers implementing the law fully?
Answer. In 1999, 92 percent of all VA medical centers participated
in Project CHALENG with 8 percent failing to comply with the
legislation. Those sites have been contacted and we expect 100 percent
compliance next year.
COMMUNITY BASED OUTPATIENT CLINICS (CBOCS)
Question. VA's goal is to have a total of 659 community-based
outpatient clinics by 2003; VA estimates it will reach that goal in
fiscal year 2001. What is the basis for that number?
Answer. CBOCs are defined as all outpatient clinics except;
hospital based, mobile, and independent clinics. The 659 was a
combination of clinics existing prior to the 1995 legislation, opened
between 1995 and 1997 as reported in the 1998 VA Accountability Report,
and projected 1998-2002 by the networks in their 1998-2002 strategic
plans. Each network, as part of the strategic planning process,
evaluates veteran needs and service delivery options which will result
in a full continuum of care. Access to outpatient services is an
integral part of providing a full continuum of care and CBOCs are
identified in the Strategic Plan. When meeting veterans' need for
services is hampered by access, Networks plan new CBOCs.
Question. With 659 CBOCs, will there be adequate access, and equity
of access, throughout the VA system?
Answer. Equity of access is relative and definitional. VHA strives
to assure that all veterans who use VA have access to all needed
service as close to their home as possible. There are challenges in
doing this. More CBOCs continue to be proposed and established which
will increase convenience of access. At this time, 80 to 85 percent of
veterans have access to care within 30 minutes or 30 miles of their
homes.
Question. How many total new users have come to the VA in the last
4 years through CBOCs?
Answer. Using the definition of a new user as someone who has not
received VA health care services during the previous three fiscal
years, during the time period of fiscal year 1996 to fiscal year 1999,
there were 374,127 new users who came to VA through CBOCs. This data
only captures those new patients who had their first encounter at a
CBOC versus at a parent facility.
Number of new users
Fiscal year first seen in CBOC
1996.......................................................... 72,452
1997.......................................................... 70,222
1998.......................................................... 95,720
1999.......................................................... 135,733
Question. Are the CBOCs actually providing care more cost-
effectively? If yes, on what basis can you claim this?
Answer. A CBOC Performance Evaluation study is being conducted and
should be completed by early summer. This study will include
information on cost effectiveness. Preliminary indications, based on a
sample, indicate that primary care costs may be higher but are offset
by lower specialty and inpatient costs resulting from early
intervention.
Question. What is the total fiscal year 2000 and fiscal year 2001
cost of the CBOCs?
Answer. In order to obtain accurate current and projected costs, a
field survey has been conducted and the information is being compiled
and should be available by the end of summer.
BUYOUTS
Question. VA estimates it will buyout 4,400 VHA employees in fiscal
year 2000-2001. What is the basis for predicting the number of
employees who would accept buyouts?
Answer. VHA was provided authority to use up to 4,400 buyouts in
fiscal year 2000 and the first quarter of fiscal year 2001 through the
Veterans Millennium Health Care and Benefits Act, Title XI--Voluntary
Separation Incentive Program. As VHA committed in discussions with
Congressional staff, the positions eliminated as a result of these
buyouts are no longer needed as the result of improvements in
healthcare services delivery or through efficiencies gained through
organizational restructuring and business process re-engineering. In
their place, new or restructured positions will focus on direct health
care delivery, quality and safety improvement and improving access to
care.
VHA's estimates of potential buyouts were based on the Buyout
Operational Planning process we completed in December 1999 to obtain
Office of Management and Budget (OMB) approval to implement our Buyout
program. Through this process, all VHA facilities were surveyed and
asked to estimate the number of potential buyouts they may expect based
on their individual organizational plans. Based on this Buyout
Operational Plan, we anticipate that we will use from 3,000 up to the
4,400 maximum buyouts allowed by December 31, 2000. We expect that the
majority of these buyouts will come from administrative and clinical
positions impacted by reduced inpatient care programs and from
organizational and business process efficiencies.
As noted above, VHA will use the resources freed through this
effort to add new or restructured positions to support achievement of
VA's goals to improve quality and access to care (predominately through
expansion of our outpatient healthcare programs) and to expand our
patient safety program. VHA will establish and fill these new positions
as specific needs are identified and as associated program and
organizational plans are implemented. Based on trends in earlier Buyout
programs and on employee retirement patterns in general, we expect that
large numbers of buyouts will occur around fiscal and calendar year
boundaries. On the other hand, new positions will be continually
established as buyout savings accrue and program and organizational
plans are implemented throughout the fiscal year.
Question. For the projected level of accepted buyouts, how many FTE
can be realized in fiscal year 2000-fiscal year 2001?
Answer. While it is difficult to predict with any great degree of
accuracy this early in the Buyout program, we anticipate that the
number of new positions established in fiscal year 2000 and fiscal year
2001 will approximate the number of buyouts given in each of these
fiscal years. VHA has implemented a monthly reporting process to ensure
effective monitoring of our Buyout program and we are actively managing
the program to ensure that we fully comply with the intent of the law,
especially to not use buyouts to reduce full time equivalent employment
in VHA.
COLLECTIONS
Question. What progress has been made in improving VA's collections
of third- party payments?
Answer. Billing third party carriers using Reasonable Charges is
vastly different from previous billing and includes a significant
increase in the type, amount, and complexity of information required to
prepare the claims for each episode of care, higher standards for the
accuracy and completeness of clinical data and documentation required
to support each claim, and the procedures needed to post reimbursement
to first party copayment and third party accounts. Since the
implementation of Reasonable Charges on September 1, 1999, networks
have provided staff training to address issues of documentation,
coding, and compliance. They are entering into agreements with carriers
for payments. A Reasonable Charges workgroup has been formed to address
the operational issues that the field encounters as we continue billing
under Reasonable Charges. Third party receivables have gone from a low
$63 million in October to a high of $185 million in March. First-party
collections appear to be following this trend as well.
Question. Are you satisfied with the progress that has been made in
the last year, and why does VA continue to fall short of its goals?
Answer. The field is going through a massive training effort and
the results are just now beginning to be seen in increases in
receivables and collections. We are satisfied that progress is being
made and are encouraged by the fact that revenue exceeded prior
collections for the month of March. Collections reached $55.5 million
in March, our highest collection month ever.
Question. What is the status of VA's compliance with HCFA
requirements for billing and coding?
Answer. VHA has taken a position that we will strive to meet HCFA
requirements. Due to the complexity of the issue and the impact that
compliance with HCFA standards may have on medical center operations,
VHA has decided to conduct an Impact Analysis of meeting HCFA
standards. An independent consultant that understands VHA policies and
HCFA requirements will conduct the Impact Analysis. A contract was
awarded in May and we expect to have the analysis completed within 60
to 90 days. VA expects the contractor to conduct a comprehensive
analysis of the circumstances and issues surrounding VHA's ability to
meet Medicare/HCFA standards specifically as it relates to resident
billing and supervision. The recommendations and findings from the
study are expected to provide a more clear understanding of the impact
on VHA operations and quantification relative to resources and effect
on revenue in meeting HCFA standards.
Question. The Independent Budget has as one of their key
recommendations, that VA should have authority to contract out its
medical care collections. Do you agree?
Answer. VA currently is in the process of developing a pilot test
to determine the most feasible way to do medical care collections,
either by internal franchise or by contracting out. VA agrees that it
should have the flexibility to contract out, if it proves to be more
effective than in-house collections.
Question. Is VA confident it will collect the $958 million
estimated in the budget for fiscal year 2001?
Answer. Collection of $958 million is dependent on VHA making
timely policy decisions on how to implement various provisions of the
Millennium Health Care Bill, capturing those decisions into
regulations, issuing draft regulations, receiving comments, and issuing
final regulations. Implementation of the Millennium Health Care bill
will require major software changes to the Veterans Health Information
Systems and Technology (VISTA) system as well as an extensive
educational effort. Reaching $958 million will also depend on VA and
Department of Defense agreeing on how to implement the ``Priority 7
retiree'' provisions, and implementing those provisions nationwide. If
those two processes are completed early in fiscal year 2001, VA
believes the $958 million estimates are obtainable.
Question. If not, what are the consequences, particularly in view
of VA's proposal to return to Treasury 50 percent of the first $700
million in collections?
Answer. VHA has projected that returning $350 million of the $958
million in collections to Treasury is possible without negatively
impacting patient care since the President's Budget includes an
additional $350 million in its estimate to offset new costs imposed by
the Millennium Bill.
COMPUTER SECURITY
Question. According to the Secretary's opening statement, VA is
working to improve its information security program. Have there been
incidences of hackers intruding into VA systems? Please explain. How
much is included in the budget to implement VA's computer security
improvements which are described in today's testimony?
Answer. VA has experienced one known outside attack. An outside
party attacked VA's public website on October 25, 1999. The website's
content was defaced with a hacker's signature message but was restored
to its normal appearance in a few hours. VA operates numerous
connections to the Internet. Tests conducted by VA indicate some of
these connections are vulnerable to attack. Further, some of these
connections are not adequately monitored to recognize attempted or
successful intrusions. VA's national information security plan calls
for a strategic investment of $83.3 million over the six-year period
fiscal year 2000 through fiscal year 2005 to address the Internet
attack vulnerability, as well as other kinds of information security
weaknesses. The annual cost for fiscal years 2000 to 2002 will average
$16 to $17 million. Beyond fiscal year 2002, the program will level to
about $10 million per year. The national plan was approved by the
Capital Investment Board, and is included in VA's fiscal year 2001
submission as a budget neutral item. VA will face difficulties
constituting a national security fund from multiple appropriations
because formal management mechanisms to do so are unavailable.
MILITARY RETIREES
Question. According to VA's budget, VA anticipates receiving $182
million in DOD reimbursements. What is the status of VA's negotiations
with DOD?
Answer. The two Departments and the Office of Management and Budget
(OMB) are working together to resolve some implementation issues in
preparation for the development of the memorandum of understanding
(MOU) that is required by the statute. We remain hopeful that we will
be able to meet the date of August 31 for completion of a MOU.
Question. Are you confident a MOU will be in place prior to the
start of the fiscal year?
Answer. Although there are some difficult legal issues
(reimbursement issues, current status of TRICARE and users of Military
Medical Treatment facilities) to address, all parties concerned are
seeking to have a MOU in place by the deadline.
Question. What is the basis for $182 million in reimbursements, and
how many military retirees do you anticipate serving in fiscal year
2001?
Answer. DOD and VA jointly developed the $182 million estimate that
VA would receive from DOD for providing services to DOD beneficiaries.
This is a ``best guess'' estimate since neither VA or DOD have the
appropriate statistics on the number of military retirees who currently
use or will now use VA health services due to the provision.
Question. What is the current number of military retirees using VA
medical care services?
Answer. Although we do not have this information currently, VA is
in the process of matching patient records against the Defense
Eligibility and Enrollment System and should have better data this
summer.
LONG-TERM CARE
Question. VA's budget includes $548 million to fulfill the
requirements of the Millennium Act, an increase of $350 million over
the current year. According to the veterans service organizations, an
increase of $459 million is needed for the new long-term care
initiatives and $270 million is needed to cover the costs of expanded
emergency care. Have you looked at the VSO's analysis? Why is there
such a large discrepancy between your estimates and theirs?
Answer. VA has not had the opportunity to review the methodology
supporting the veterans service organizations' cost estimates of Public
Law 106-117. VA is seeking that information and will provide a final
response to this question once complete.
Question. Are you confident sufficient funds have been included?
Answer. VA is confidant that funds available in fiscal year 2000
and proposed in fiscal year 2001 are sufficient to meet the
implementation costs of Public Law 106-117.
CAPITAL ASSET REALIGNMENT
Question. Capital asset realignment is the most important next-step
for VA to ensure it expends its medical care dollars effectively for
health care. Only about 25 percent of facilities currently are used for
direct-care. And GAO estimated last year VA is wasting about $1 million
a year on unneeded infrastructure. GAO recommends that VA's Capital
Investment Board--which manages the process of prioritizing
construction projects--be given responsibility for capital asset
realignment. Do you agree? Please explain how VA will be addressing the
concerns and recommendations in GAO's testimony of today.
Answer. GAO concluded that VHA is spending 25 percent of the
medical care appropriation on operating, maintaining, and improving
buildings and land nationwide. Based upon the fiscal year 2000 proposed
medical care appropriation these costs would be approximately $4
billion. These expenditures are based on activities that GAO includes
in asset ownership, such as administration, engineering, environmental,
security, textile services, food services and capital investment. These
expenditures represent the total costs of asset ownership and not the
potential savings. GAO estimated that $365 million of the $4 billion
could potentially be saved if VA stopped operating and maintaining
unneeded buildings. GAO based their savings estimate on their finding
that $20 million could be saved if VA closed one of the four VA
hospitals in the Chicago area. GAO then assumed that approximately 18
locations of VA's 40 multi-facility markets could be removed from
service at savings (generalized from the Chicago estimate) of $20
million each. The GAO estimate of $365 million or $1 million a day
would be a result of these locations being removed from service.
According to GAO, approximately 50 percent of the savings consists of
reductions in personal services and 50 percent would be for all other
costs. GAO is in agreement with VA that $365 million represents a
portion of the $4 billion asset ownership costs that could be
potentially saved by realigning VA's capital assets.
We do not agree with GAO's recommendation that the VACIB be given
operational responsibility for capital asset realignment. The VA
Capital Investment Board has accomplished much over the past three
years in the development of the Capital Investment Methodology and in
improving the Department's capital investment decision making. VHA
needs to take advantage of this experience and the lessons learned by
the Department VACIB. There are many reasons that the responsibility
for capital realignment should reside in VHA. The primary reason is
Capital Assert Realignment for Enhanced Services (CARES) must respond
to patient needs and services and the enhancement of those needs and
services to veterans. VHA is clearly the best organization to focus the
initiative on appropriate patient and clinical issues.
VHA agrees with GAO, in the need to develop objective and
measurable criteria that can be used to evaluate the service delivery
options and the associated capital realignment proposals that will
result from the (CARES) process. VHA is currently developing criteria
in conjunction with Department offices, and GAO staff, that will result
in a decision model that will be similar to that used by the VACIB to
evaluate major capital investments but will focus on patient outcomes
such as quality and access to services in addition to resource
utilization and cost.
As stated at the hearing, VHA will provide a report to the
subcommittee within 30 days that will identify the broad evaluation
criteria that have been agreed to and will outline the process to
involve stakeholders in the development of criteria weights, specific
identification of quantifiable sub-criteria, identification and linkage
of specific data to each of the sub-criteria, development of rating
scales for evaluating the proposed options and incorporation of all of
this into a methodology that will be used to evaluate CARES study
recommendations. In addition, the final report and completed
methodology, including specific criteria and sub-criteria with relative
weights and the rating scales will be provided in 60 days.
VA recognizes the need to raise the importance of asset management
at both the Department and Administrative (VHA, VBA, and NCA) levels.
The Department and Administrations including VHA also need to have
staff dedicated to the improvement of the management of capital assets.
Currently, VA does not have a comprehensive asset management
program. In order to meet this need, VA proposed the establishment of a
Department level office for Capital Asset Management in the fiscal year
2001 Budget Submission. This office would provide corporate policy and
direction to other aspects of asset management including, but not
limited to, asset utilization and disposal. The functions of a capital
asset management program would include policy development, planning,
investment strategies, portfolio management, performance measurement,
and administration. Also, as with the implementation of the VHA Capital
CARES studies, this office would work to ensure a Department-wide
perspective on capital investment decisions made, with respect to the
needs of VBA, NCA, and staff offices.
Question. What is the status of the Chicago realignment, and when
will a final decision be made?
Answer. The VISN 12 Delivery System Options Study was commissioned
by Dr. Kenneth W. Kizer, former Under Secretary for Health, in response
to a GAO report that recommended the closure of a VA hospital in the
Chicago area. In August 1998 the Veterans Health Administration charged
a steering committee to develop a report with recommended options for
restructuring the delivery of health care to veterans in the Chicago
area. The recommended options were to increase the efficiency of the VA
health care system by planning for the best use of capital assets in
the long term while maintaining or improving the quality of care and
ensuring the availability of health care to veterans for many years.
The Veterans Health Administration received in excess of 5,000
comments in response to this VISN 12 Delivery Options Study report. The
comments were categorized into broad topic headings and provided to a
Review Task Group who met at the end of January under the auspices of
the Special Medical Advisory Group (SMAG). The goals of the Review Task
Group were to review and evaluate comments received, consider the
impact of the comments on the original study options and provide a
revised prioritized set of options if indicated.
At an April 5, 2000 House Committee on Veterans' Affairs
Subcommittee on Health hearing, VA received congressional guidance on
capital asset planning which is applicable to the VISN 12 Delivery
System Options Study. The Subcommittee asked VA to develop and adopt
objective, measurable criteria for formulating and evaluating options
for restructuring the delivery of health care. Presently the Veterans
Health Administration is working with VA Office of Financial Management
and the General Accounting Office in the development of this criteria.
Stakeholder comments will be sought, the criteria finalized and then
once developed, will be applied to the various VISN 12 options
identified by the Review Task Group.
The outcome of the application of the criteria to the various
options will be shared with key stakeholders, as was the case for the
first report in September 1999. A second round of comments would extend
any decision on the Options Study into fall 2000. Again the purpose of
this initiative is to assure that the healthcare needs of veterans
residing in the Chicago area are met well into the future.
Question. GAO also recommended that minor construction projects be
subject to the same rigorous scrutiny as major construction projects.
Do you agree?
Answer. VHA concurs with GAO's recommendations to improve the
capital investment decision making process for minor construction
projects. A VHA policy directive is being developed and coordinated
with the CARES process. This policy for network level capital
investment decisions, including those in the minor construction
program, will require a multi-level criteria based review. All minor
construction initiatives will be subjected to a more rigorous review
process at the network level that will include an assessment of minor
investments against accepted decision criteria. Following the criteria
based evaluation of minor projects at the network these applications
will be forwarded to VA Headquarters where a VHA CARES Project Team
will validate the proposal prior to implementation by the network. The
VA Headquarters' review will ensure that network investment decisions
are viable in the context of VHA strategic goals and objectives,
statutory requirements, and VA's overall corporate perspective. VHA
plans to implement this review process for minor construction projects
concurrently with the implementation of the CARES directive in June
2000. Projects in the networks' fiscal year 2001 operating plans will
be included.
Question. Will you begin using the Capital Investment Board process
for minor construction projects this year?
Answer. The Capital Investment Board process has been developed for
reviewing the Department's major capital investment decisions. This
process will not be used to evaluate minor construction projects.
Question. Why isn't VA supporting, as it did last year, a Capital
Asset Fund to expedite the divestiture of underutilized properties?
Answer. VA continues to fully support the creation of this fund,
however, at this time there are a number of intragovernmental issues
that need to be worked out before the fund can be established. One of
the major issues that needs to be resolved is the how the operations of
this fund would relate to the requirements of the McKinney Act that
requires that excess Federal properties be offered to homeless
organizations. The fiscal year 2000 Capital Asset Fund proposal stated
that in order to be exempt from McKinney Act, 10 percent of the net
proceeds would be transferred to the Department of Housing and Urban
Development to assist in funding homeless assistance groups in local
areas. This aspect of the proposal met stiff resistance from some
homeless organizations and from other Federal agencies.
VETERANS BENEFITS ADMINISTRATION
Question. A year ago, VA testified that its average days to process
claims in 1999 were going to be worse than what was in the budget
justification. The budget justification indicated it would take 99 days
to process a rating-related action in 1999. It actually took 166 days.
Are you satisfied with the progress that has been made in the last
year? Why is progress so slow?
Answer. We are not satisfied with the progress that has been made
in the last year to improve claims processing timeliness. However, many
complex factors have had a cumulative effect on our efforts to improve
service. At the same time, we are working to reshape and rebuild the
claims process and make changes in our organizational culture and
structure that are essential to our long-term success. We are making
effort to improve this indicator and we believe have made a good start.
Over the past few years, we have struggled with a number of factors
that directly impact our efforts to progress at a more rapid pace:
Workload Management.--We shifted our focus from working newer cases
and asked employees to process the older claims. This action was taken
to ensure claims continue to move through the system. However, it also
caused average processing time to increase.
Because of concerns about our high error rate, we asked employees
to take a closer look at the way they process claims. We asked them to
write better decisions--decisions which are more easily understood by
our claimants and can be sustained through the appellate process.
Increased Difficulty and Complexity of the Workload.--Our employees
are faced with significant changes in the body of law governing the
compensation and pension programs. Disability decisions must
increasingly be prepared using 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.
VA has made ad hoc changes to the regulations based on the Court's
decisions. The consequence of making changes on an ad hoc basis is
decreased readability of the regulations. In addition, the changes were
written in a bureaucratic and legalistic format which is not easy for
employees to interpret. At this time, we are rewriting regulations so
that they will have a cohesive structure which employees and veterans
can easily understand.
The decisions of the Court have long-ranging effects on our
workloads. Precedent decisions which invalidate previously accepted
adjudicative practices impact cases in the pipeline and remands. We
have also increased the level of resources devoted to training to
better support our employees in implementing important Court decisions.
We have struggled with the issue of service-connection for
undiagnosed illness for Gulf War veterans. The processing of these
claims is contrary to the way we traditionally adjudicate service-
connected disabilities. Decisions on undiagnosed illness claims are
labor intensive and are therefore completed at the expense of other
claims. We have dedicated additional resources to several efforts to
ensure that Gulf War veterans claims are properly evaluated.
Changed Organizational Structure.--The first stage of the
evolutionary process to our reengineered environment required regional
offices to merge Adjudication and Veterans Services Division functions
into Veterans Services Centers. While this merger will ultimately
result in better customer service, it has required stations to
undertake a major cultural and organizational shift. Extensive cross-
training of employees must be accomplished. Decisionmakers in the
Adjudication Divisions must now learn or refine their public contact
skills and gain general knowledge about other VA benefit programs.
Personnel in the Veterans Service Divisions must learn how to
adjudicate compensation and pension claims.
We anticipated some service degradation as employees are pulled
away from claims processing and customer service activities to undergo
training. However, the transition has proven even more labor intensive
than anticipated and performance suffered more than expected. We
underestimated the magnitude of the training hours required to teach
each group of employees the full range of duties and skills needed to
function in a merged environment. While we consider this training a
critical investment for the future, the enormity of this effort has had
an adverse impact on the productivity of the existing workforce. As
cross-training is completed and employees are certified in their
positions, performance will improve.
Loss of Highly Experienced Decision-Makers.--Succession planning
estimates show that about 2,200 decision-makers will be eligible to
retire over the next five years. We project that nearly half of this
pool of potential retirees will actually retire. In order to avoid a
two to three year skill gap, which would exacerbate our service
delivery challenges, we have begun a nationwide recruitment initiative
to stabilize the C&P workforce.
Question. The number of rating cases pending over 6 months is 68
percent at the Washington, DC RO according to a March ``Monday Morning
Report,'' an increase from the July 1999 level of 66.5 percent. This
office appears to be the worst in the nation, and was the topic of
debate in last year's appropriation hearing. Why has progress actually
deteriorated there? What has been done to improve their performance?
What interventions does VBA take to improve the performance of
``problematic'' regional offices?
Answer. Significant progress has been made in resolving the
workload situation at the Washington Regional Office over the past
eight months. The total number of pending claims has been reduced by
over 40 percent (from 12,266 at the end of August to 7,417 as of the
end of April). While the over-six-month cases may represent a slightly
higher percentage of the current pending workload, the actual number of
over-six-month cases has been reduced by nearly 2,400 cases. Since
September, we have transferred over 4,000 ready-to-rate cases to other
Regional Offices for processing. We continue to broker 200 cases per
week to our satellite rating activities in Huntington, West Virginia
and St. Louis, Missouri.
At the same time, we have made a major commitment to building the
technical capabilities of the Washington Regional Office and increasing
the Service Center staffing. Twelve senior level technicians and
managers were recruited from across the nation to enhance the
experience level of the staff and provide a strong base of technical
knowledge and training support. An aggressive training program is in
place for all Service Center employees, with over 2,900 hours of
training completed during the first six months of this fiscal year.
Special training classes for rating specialists have been conducted by
C&P Service staff experts. Master rating specialists have been charged
with reviewing the work of all rating specialists and providing
comprehensive rating board training.
Since September, we have transferred over 4,000 ready-to-rate cases
to other regional offices for processing. We continue to broker 200
cases per week to our satellite rating activities in Huntington, West
Virginia and St. Louis, Missouri.
The Washington Regional Office is concentrating on completing the
development of claims and identifying claims that are ready-to-rate so
that decisions can be rendered as quickly as possible.
The Washington Regional Office is a member of Service Delivery
Network (SDN) 3. The SDN played a key role in identifying and assessing
the workload and performance problems of the Washington office. The SDN
is jointly responsible for the operations of all regional offices
within the SDN, and is therefore working very closely with Washington's
management team to provide assistance and ensure that actions are taken
to resolve the situation as quickly as possible.
The performance of all regional offices is monitored continuously
through our bi-monthly leadership meetings attended by the SDN team
representatives and the headquarters top management staff. At every
Leadership meeting, we make it a practice to analyze VBA performance
across all business lines and in all SDNs. Each team representative is
responsible for identifying significant gaps in performance and
discussing actions the SDN has taken to remedy those gaps. We review
the success of interventions undertaken to improve performance in
offices with more difficult workload situations. This process assures
that we are constantly assessing the level of service delivery in all
program areas and in all regional offices, and that we are sharing best
practices and working together to correct deficiencies and improve
performance.
Question. The Veterans Service Organizations and the National
Academy of Public Administration in their report a few years ago,
recommended giving VA program directors line authority over the 57
regional field office directors. VA has resisted making this
organizational change but without it, it seems VA headquarters has no
real hammer to effectuate the changes which are desperately needed. Why
hasn't VA made this change to ensure standards are enforced and
managers held accountable for performance?
Answer. The restructuring of our field organization into Service
Delivery Networks (SDNs) was designed to increase the responsibility
and accountability of field managers for performance. Through the SDN
structure, decision-making authority is pushed down to lower levels of
the VBA organization, which then allows us to hold managers accountable
for their decisions and their performance--and for identifying and
effectuating the changes needed to improve performance.
The regional offices are organized under nine SDNs. Directors and
program managers in each SDN function as a team, jointly responsible
for the delivery of benefits and services within the SDNs' geographic
boundaries. The SDNs operate with a practical degree of autonomy, but
we have systems in place to ensure their accountability and measures
established that evaluate performance on the basis of improvement and
outcomes. Performance measures are tied to our Balanced Scorecard and
strategic goals.
In restructuring the VBA organization, we recognized the need to
maintain a direct line of authority over the field organization.
Ensuring a direct line of authority is particularly critical during the
initial stages of our evolution to the team-based SDN structure. This
line of authority is provided through the Deputy Under Secretary for
Operations and his two Associate Deputies. The Associate Deputies are
responsible for overseeing the operations of the Service Delivery
Networks, including monitoring performance against goals and standards
and assuring progress in the implementation of national policies and
initiatives. We believe this structure accomplishes the intent of the
recommendation of the National Academy of Public Administration.
Question. VA's budget includes $54 million in various electronic
initiatives to improve the processing system. How much more will be
required in the future to complete these initiatives and have a fully
automated, 21st century system?
Answer. VBA developed a Compensation and Pension information
technology (IT) strategy called Modern Award Processing (MAP) which
examines the claims process from establishment through payment and
accounting. This strategy provides guidance for current and future IT
development efforts.
In 1999, we enhanced our existing technological tools in order to
streamline evidence gathering and tracking processes. The Automated
Medical Information Exchange (AMIE) system, the Personnel Information
Exchange System (PIES), and the Veterans Appeals Control and Locator
System (VACOLS) were successful. In 2000, we expect to have several
more tools. Single Logon, which is access to our different applications
through one password, was available to the field offices on April 17,
2000. Claims Application Processing Systems (CAPS), which is a rules-
based system with case management features, will be available at the
field offices by September 2000. Rating Board Automation (RBA) 2000,
which is an application used by rating specialists to prepare rating
decisions, will be deployed in August 2000. The functional requirements
for Virtual VBA have been completed and we will begin building shortly.
Development and Case Management and Establish Claim & Award Screen/
Design also are expected to be available by the end of this year. In
fiscal year 2001, we will have other tools such as Electronic Burial
Claims and Social Security Administration Data Exchange.
As we become aware of new technology and develop ways to
incorporate that technology into the claims processing environment, we
will keep Congress informed of our efforts.
Question. A recent Court decision requires that a veteran must
submit, without VA's help, enough evidence to prove that his claim is
well-grounded, before the veteran is entitled to government assistance
in obtaining evidence. Up until now, when a veteran filed a claim, VA
assumed the responsibility of obtaining necessary records. I understand
this Court decision is very controversial. How does it affect VBA and
all the problems VBA has before it, and what is the Department's
position on this matter?
Answer. The court decision, Morton v. West, affected VBA by
invalidating certain internal claims development procedures of the
Compensation and Pension Service (C&P Service), which supported full
development of all claims, as inconsistent with Congress' intent. It
led the C&P Service to develop a new policy for claims development
pending the final publication of a revised regulation to liberalize the
effects of the court's decision. Under this policy, we inform a
claimant of the evidence needed to establish a pausible or ``well-
grounded'' claim. While claimants are gathering required evidence, we
request their VA medical records and military records. If, after thirty
days, the evidence of record does not establish a well-grounded claim,
we will deny the claim on that basis. However, we review any evidence
we receive in the subsequent year to determine if the claim has been
well-grounded.
The Department believes it is still possible, under this court
decision, to fashion a fundamentally workable and balanced sharing of
responsibilities between VA and a claimant which will best utilize VA's
available resources. We agree with the Court that the statutory scheme
reflects a policy that implausible claims should not consume the
limited resources of the VA and force into even greater backlog and
delay those claims which are well-grounded. VA has proposed a
regulation which recognizes five exceptions to the well-grounded claim
requirement for persons for whom the burden of producing evidence to
well ground a claim may be especially onerous.
Question. Will the Court's interpretation worsen the current
backlog of claims?
Answer. No, it will improve it. Because a well-grounded claim is
accompanied by evidence sufficient to justify a belief that the claim
is plausible, including medical evidence, less development action is
required to process it. Therefore, we are able to process more claims
more quickly. Implausible claims require the most work on our part
because the evidence to support such claims is often scant if non-
existent, causing multiple requests for this evidence to ensure that we
have exhausted all reasonable attempts to find it. Thus, the least
meritorious of the claims take up the most time and action on the part
of VA. This considerable expenditure of time and effort is
counterproductive and causes an overall degradation in the service
provided to claimants with plausible claims.
Question. Several pieces of legislation have been introduced to
require VA to assist veterans. Does the administration have a position
on the legislation?
Answer. We have recommended to Congress that action on this
legislation be deferred until the ongoing rulemaking concerning VA's
duty to assist claimants has been completed. Our proposed regulation
reflects the conclusion of the Veterans' Claims Adjudication Commission
that a policy of providing unconditional assistance to all claimants is
unneeded and would be a waste of time and resources.
VA NURSING HOME
Question. The VA enters into contracts with private nursing homes
as necessary for patient placement--do most nursing facilities request
to participate in the VA's Community Nursing Home (CNH) program or does
the VA usually seek out nursing homes with whom to contract?
Answer. VA is seeking new Community Nursing Home (CNH) contracts
through a national bidding process. Awards are expected in late May/
early June 2000. At the local level, CNH Programs will seek out nursing
homes to meet a specific care or geographic need. For the most part,
CNH is a mature program with a sufficient inventory of nursing homes
under contract.
Question. How are CNH applications processed, i.e., are they stored
in a centralized and readily accessible record-keeping system? If so,
please provide a list of applicants, broken down by state, for fiscal
years 1998, 1999 and through March 2000.
Answer. CNH applications are handled locally by a manual process.
There is no centralized listing of CNH applications.
Question. Prior to acceptance CNH applicants are evaluated--please
describe in detail the CNH evaluation process.
Answer. Local CNH applications are evaluated in one of two ways.
The CNH Evaluation Team at the VA Medical Center will review either the
latest State Survey Agency (SSA) findings using a hard copy of SSA Form
2567, or the team will review OSCAR (On-Line Survey, Certification and
Retrieval) reports. OSCAR reports contain findings of deficiencies for
the past 5 years, a catalog of substantiated and unsubstantiated
complaints, and patient and staffing profiles. The CNH Evaluation Team
is composed of VA staff from Social Work, Nursing, Medicine, Pharmacy,
Dietetics, Rehabilitation, Fire Safety, Medical Administration and
Contracting. When the team uses the SSA 2567 as their review document,
the team will decide which members of the team, other than nursing and
social work will make an initial on-site evaluation. Social work and
nursing staff will make an initial evaluation in any case. If the team
uses the OSCAR system for their initial review, an evaluation visit is
not required. VA staff are encouraged to make an orientation visit.
Based on the findings of the review and the initial on-site evaluation,
if indicated, the CNH team will make a recommendation to the
Contracting Officer regarding the home's application.
Question. Does the VA use standardized forms/records in the CNH
evaluation process? If so, please describe in detail how the forms/
records are used in the evaluation process and provide copies for
review.
Answer. VA does not use standardized forms/records in the CNH
evaluation process. This was a deliberate decision, following extensive
consultation with VA field staff. No consensus was developed on the
need for or content of such standardized forms. Absence of standardized
forms, however, does not impact the standard approach and process of
the evaluation.
Question. Does the VA conduct on-site evaluations of all CNH
applications?
Answer. At this time, VA conducts on-site evaluations of almost all
CNH applications. VA is moving away from this approach, finding it of
marginal use. VA believes that full implementation of OSCAR-based
reviews will provide a better assessment of the CNHs.
Question. What percentage of CNH applicants receive an on-site
evaluation?
Answer. This information is not readily available and will require
a field survey. The information will be provided in a month's time.
Question. What percentage of CNH applicants are rejected? Please
provide a list of rejected nursing homes, broken down by state, for
each of the following:
--Rejected after an initial CNH evaluation.
--Rejected after on on-site evaluation.
Answer. This information is not readily available and will require
a field survey. The information will be provided.
Question. If the CNH evaluation determines that problems exist, are
the CNH applicants notified and given an opportunity to make
corrections?
Answer. Continued negotiations with a CNH which has not corrected
State-found deficiencies will depend on the scope and severity of those
deficiencies and the level of interest/need VA has in/for that
particular CNH.
Question. How are rejected CNH applicants notified and are
explanations provided for the rejections? Describe in detail whether
standardized forms/records are used and provide copies for review.
Answer. Rejected CNH applicants are notified by letter of that
rejection and the reasons for it. Standardized forms/records are not
used in this process.
Question. Does the VA maintain CNH applicant rejection notification
and/or explanation forms/records? If so, are rejection notifications
and/or explanations integrated into a centralized and readily
accessible record-keeping system?
Answer. VA does not maintain centralized files for local CNH
applicant rejections. For the national contracts, VA does maintain
files on rejected CNHs.
Question. Are rejection notification and/or explanation forms/
records shared with HCFA and state regulatory agencies?
Answer. When VA staff conducts a full or partial on-site team
evaluation of a CNH and uncovers new deficiencies of a serious nature,
HCFA and/or the SSA are notified. When VA staff conducts an OSCAR-based
review without an on-site visit and chooses not to contract with the
CNH as a result of that review, then HCFA and the SSA will not be
contacted. In the latter case VA is directly basing its decision on
state-provided information.
Question. Provide a list of CNH participants, broken down by state,
for fiscal years 1998, 1999, and through March 2000, that:
--Were suspended from accepting new veterans.
--The VA removed or transferred veterans.
--Were terminated from the CNH program.
--The VA did not renew contract with the CNH participant.
Answer. This information is not readily available and will require
a field survey. The information will be provided.
Question. When the VA suspends placement of veterans in CNH
facilities, removes or transfers veterans, or terminates nursing home
facilities from the CNH program, are HCFA and state regulatory agencies
notified?
Answer. HCFA and/or the SSA are notified when any of the events
listed in the question occur and are related to poor care delivered in
the CNH.
Question. When CNH participants' contracts are not renewed are they
provided with an explanation?
Answer. CNHs are notified in writing when the CNH is not renewed
for cause. An explanation is provided.
Question. Describe in detail the CNH quality assurance plan?
Answer. Listed below is the text from VHA's proposed directive on
quality assurance in the CNH Program. This directive is in the final
stages of concurrence within the VHA. Access to HCFA's Quality
Indicators is expected to be available in the next six months. Current
practice, based on re-hospitalizations, is described in Item number 6b,
below.
Quality Assurance in the CNH Program
(a) The VA center will integrate the CNH Program in its Quality
Assessment and Improvement Program. Quality indicators may be
identified through review of the HCFA Facility Quality Indicator
Profiles.
(b) CNH clinical indicators may include, but are not limited to,
patient deaths at the Nursing Facility, multiple medication usage,
psychotropic drug use, skin care, accidents and patients or family
complaints about the CNH. Information on these indicators is available
through the HCFA Facility Quality Indicator Profile. For patients
readmitted to the medical center from CNHs, clinical indicators may
encompass, but are not limited to the following areas: CNH-acquired
pressure ulcers; falls with injury; medication errors with adverse
effects; other issues as determined by the medical center.
(c) Patients readmitted to the VA medical center from CNHs will be
evaluated for incidents in accordance with M-2, Part I, Chapter 35.
(d) The VA to improve care and make decisions about renewing
contracts will use results of quality assessment and improvement
activities.
Question. Does the VA maintain forms/records of evaluations and/or
observations in the CNH quality assurance plan? If so, please describe
in detail how the records/forms are used and provide copies for review.
Answer. VA does not maintain such records at the national level.
This information is not readily available and will require a field
survey. The information will be provided.
Question. How are CNH quality assurance forms/records processed,
i.e., are they stored in a centralized and readily accessible record-
keeping system?
Answer. Quality assurance forms are maintained at the Veterans
Affairs Medical Center (VAMC) level. There is no centralized record
keeping.
Question. Describe in detail the CNH follow-up service plan?
Answer. CNH follow-up services are provided every 30 days by VAMC
staff. The health care record is reviewed, and VA staff discusses the
care plan with the CNH staff and the patient. Any problems with the
care or with the veteran's adjustment to the CNH are also discussed.
The need for additional VA services are discussed, e.g., visit to
specialty clinics.
Question. Does the VA maintain forms or records of evaluations and/
or observations in the CNH follow-up service plan? If so, please
describe in detail how the records/forms are used and provide copies
for review.
Answer. Documentation of CNH follow-up services are contained in
the VA health care record. These notes, along with SSA 2567 or OSCAR
information and the review of re-hospitalizations, are used as part of
the annual review process of the CNH. Attached is a sample OSCAR
Report. Form SSA 2567 consists of multiple pages and not readily
available at VA Central Office. We will provide a copy as soon as we
receive it.
[GRAPHIC] [TIFF OMITTED] T05AP06.001
[GRAPHIC] [TIFF OMITTED] T05AP06.002
Question. How are CNH follow-up service forms/records processed,
i.e., are they stored in a centralized and readily accessible record-
keeping system?
Answer. Documentation of CNH follow-up services is contained in the
VA health care record. There is no centralized record keeping of this
information.
Question. Are CNH participants provided with follow-up service
forms/records of evaluations and/or observations?
Answer. CNH participants are generally not provided with
information on a specific follow-up visit or evaluation.
Question. If problems are identified during CNH follow-up service
are HCFA and state survey agencies notified?
Answer. HCFA and/or the SSA is notified when serious problems are
uncovered by a VA follow-up visit.
______
QUESTIONS SUBMITTED BY SENATOR LARRY CRAIG
TRICARE
Question. What is the status of the Memorandum of Understanding
between the Veterans Administration and the Department of Defense for
the procedures for providing medical services to TRICARE-dependent
military retirees in the Veterans Medical Centers?
Answer. Section 113 of the Veterans' Millennium Health Care and
Benefits Act, Public Law 106-117, provides for reimbursement to the
Department of Veterans Affairs (VA) for medical care provided to
certain eligible military retirees. The law states that the Secretary
of Defense and the Secretary of Veterans Affairs shall enter an
interagency agreement not later than nine months (August 31, 2000)
after the law's enactment to implement this section.
The law states that implementation would be phased in across the
country. The first contract award for TRICARE 3.0 is scheduled for the
summer of 2001. Thus, a minimal amount of revenue will be obtained in
fiscal year 2001.
The two Departments and the Office of Management and Budget (OMB)
are working together to resolve some implementation issues in
preparation for the development of the memorandum of understanding
(MOU) that is required by the statute. The Department of Defense and
Department of Veterans Affairs have interpreted the previsions in this
section differently and we are working to achieve a common
understanding. We remain hopeful that we will be able to meet the date
of August 31 for completion of a MOU. From VA's perspective, requiring
TRICARE beneficiary cost sharing would be a major disincentive for
retirees to use this program. VA remains hopeful of meeting the
agreement date of August 31, 2000.
TRAVEL REIMBURSEMENT RATES
Question. Considering the rising gas prices, what flexibility does
the Veterans Administration have in adjusting the travel reimbursement
rates?
Answer. Each time there is an increase in travel allowances for
Federal employees, Section 111 of Title 38 U.S.C. requires VA to
conduct an analysis of the adequacy of mileage rates for travel by VA
beneficiaries.
Mileage rates for Federal employees were increased on January 14,
2000. As a result of that increase, VA has began the required analysis
of beneficiary travel mileage rates.
CLAIMS AND APPEAL PROCESS
Question. What are the short-term and long-term procedures and
policy changes which can be used to expedite the claims and appeal
processes?
Answer. VBA continues to merge veterans services functions with
adjudication functions into Veterans Services Centers where veterans
service representatives use a case manager approach to complete claims
for veterans benefits. Although this merging of functions initially
adversely affects our ability to complete claims, the long term effect
will be the ability to provide more timely and accurate service to our
veteran customers.
VBA is committed to improve performance in claims processing, and
the revised process which is demonstrated in the number and type of
initiatives which are currently dedicated to achieving our performance
improvements.
One critical area to be addressed in which to expedite the claims
and appeal processes is the performance of claims development,
disability examinations, and the preparation of rating decision for
service persons awaiting discharge from active duty. Currently we have
a physical presence in several military separation points in the United
States, and ultimately it is our intention to provide every separating
service person, regardless of point of separation, with a physical
examination adequate for rating purposes according to VA protocols.
Another important initiative for VBA is Virtual VBA (VVBA), a
project that will launch VA into the 21st Century by allowing VA to
process veterans' claims in an electronic environment. This will
eliminate the now paper intensive and time consuming manual claims
process.
The Personnel Information Exchange System (PIES) component for
requesting service medical records and service verification from
National Personnel Records Center (NPRC) to VA Regional Offices has
been implemented since December 1998. During this initial development,
additional requirements were identified. The PIES application will
electronically submit information requests to all military records
centers. These electronic linkages will eliminate the current
cumbersome paper process. In addition, the Department of Defense (DOD)
is engaged in the design and development of two initiatives which will
have a direct bearing on our ability to acquire claims information. The
first will attempt to create an on-line common pay and personnel system
for all the military services, which will provide VBA with the ability
to acquire the requisite service date, including data previously
contained on the DD 214. Currently, all military services have optical
digital imaging systems which are utilized for storing documents from
the Office Military File. The second initiative will allow us to have
access to all these optical digital-imaging systems from individual
workstations. This will give the ability to select documents pertaining
to claims development and further eliminate paper processing.
For a period of one-year we tested the viability of the Decision
Review Officer (DRO) position as an enhancement to the appeal process.
The results of the test indicated significant improvements in the
appellate process. Timeliness of the decisions, from the date of the
formal appeal to the date of the final decision, was reduced from an
average of 421 days to 316 days. The DRO program will be implemented
nationwide by September 2000.
CROHN'S DISEASE
Question. Is Crohn's disease being considered as a presumed
disability under Agent Orange?
Answer. In establishing presumption of service connection for
specific diseases and exposure to Agent Orange by United States
veterans of the Vietnam War, the Department of Veterans Affairs relies
extensively upon the periodic reviews of the scientific and medical
literature conducted by the National Academy of Sciences Institute of
Medicine (IOM). The IOM has published three major reviews on this topic
(in 1994, 1996, and 1998), and a fourth review is due by the end of
this calendar year. Crohn's disease has not been linked to Agent Orange
exposure in previous IOM reviews on this topic. The IOM would consider
this possibility in its future reviews of veterans and Agent Orange
only if there is available scientific or medical literature that makes
this association that it could review.
COMMUNITY BASED OUTPATIENT CLINICS
Question. To provide better and more local medical care, what are
the plans to provide more services to veterans at the outpatient
clinics?
Answer. The major goals of Community Based Outpatient Clinics
(CBOCs) include the following:
--Improving geographic access
--Disease prevention/wellness approach
--One provider coordinating care for patients
--Quicker access to care and reduce need for service at parent
facilities
--Increasing convenience
--Increasing pre-admission work-up and post discharge follow up to
shorten hospital length of stay
The CBOCs have always been intended to provide primary care
services. Veterans Health Administration (VHA) also now requests that
facilities examine the need for mental health services. Although some
CBOCs do provide some specialty services such as podiatry or
ophthalmology on a limited basis, VA does not anticipate that these
clinics will expand beyond the basic services they were initially
intended to provide. VA does not anticipate a proliferation of expanded
service outpatient clinics, rather it will continue to expand access to
primary care services and, as the veteran need dictates, expand beyond
primary care selectively.
______
QUESTIONS SUBMITTED BY SENATOR PATRICK J. LEAHY
CLAIMS PROCESSING
Mr. Secretary, I continue to receive mail from Vermont veterans
about problems they are having with their claims. Some tell me that it
takes on excessive amount of time, sometimes over six months, for the
Veterans Benefits Administration to respond to their claims
applications. Others have complained about the accuracy of the
administration's response, saying that VBA has simply responded wrongly
to their claims.
I understand that VBA is undertaking several initiatives to
increase the speed and efficiency of the claims calculation process,
but I am concerned that the administration is not taking advantages of
new technologies that will assist in claims calculation. For instance,
I understand that VBA is considering a new technology called clinical
couplers which is an advanced decision-making software that can
automate claims processing and improve the accuracy of reviews.
Question. Does VBA plan to implement these new advanced
technologies to the claims calculation process? Are there funds in the
fiscal year 2001 budget request to support such an initiative?
Answer. VBA has made improvement in technical accuracy its first
priority. In 1997, we developed the Systematic Technical Accuracy
Review (STAR) program, to replace the C&P's Quality Assurance (QA)
program. STAR will be fully implemented this year. Complimenting the
STAR program is Systematic Individual Performance Assessment (SIPA),
which brings performance assessment and accountability to the journey-
level individual. This is a system that will enable local management to
consistently monitor individual performance.
In addition, our commitment to improved performance in claims
processing is demonstrated in the number and type of initiatives
dedicated to achieving our performance improvements. These initiatives
have been designed to streamline or enhance the claims process while
providing employees better tools with which to serve veterans.
We have developed a Compensation and Pension information technology
(IT) strategy called Modern Award Processing (MAP) which examines the
claims process from establishment through payment and accounting. Our
Training and Performance Support Systems (TPSS) contains comprehensive
training and performance support systems for the core service delivery
positions of the reengineered environment. Rating Redesign, along with
the Rating Board Automation 2000 tool, will help to restore an
analytical approach to the rating decision.
We recently became aware of the knowledge coupler technology. This
technology does not recommend a decision, but gives options for a
decision and the factors in the unique claim fact pattern that support
or fail to support each possible decision.
Question. Are there funds in the fiscal year 2001 budget request to
support such an initiative?
Answer. No funds were requested in the fiscal year 2001 budget,
however, we have just contracted out for the development of a prototype
in the area of psychiatry.
______
QUESTIONS SUBMITTED BY SENATOR BARBARA A. MIKULSKI
FORT HOWARD
Question. Theme.--Enhancing the quality of life for our aging
veterans in Maryland and across the country.
Point.--VA must stand sentry on the Fort Howard transition plan,
and there must be a single point of contact regarding Fort Howard.
Because the inclusion of a new State Veterans Home at Fort Howard is
now unlikely, we need clear answers on how this development will affect
VA's plan and the timeline for Fort Howard.
Who is the point person at VA who is in charge of Fort Howard?
Answer. Mr. Dennis Smith, Director of the VA Maryland Health Care
System (VAMHCS), Phone Number (410) 605-7016, is in charge of Fort
Howard. Mr. Alan Hackman, Executive Officer, Phone Number (410) 605-
7000, has the daily duty of operational oversight for Fort Howard, and
is in charge of the Fort Howard Mission Review and Campus
Revitalization project.
Question. What is the current status of the Fort Howard mission
change proposal?
Answer. The proposed Fort Howard Mission Change and Campus
Revitalization project with stakeholder comments is currently being
analyzed in Headquarters for the Secretary of the Department of
Veterans Affairs' review and decision.
Question. When can we expect a final decision on this?
Answer. VA anticipates a decision within two months.
Question. It appears that the state will not authorize construction
of a State Veterans Home at Fort Howard. If the state does not build a
Veterans Home at Fort Howard, what impact will this have on the overall
plan for Fort Howard?
Answer. No effect. The State Veterans Home is a nice complement to
the proposed continuum of care housing proposed, but neither the
mission change nor the Enhanced-Use project, depend on that presence.
Current plans will set aside property for the potential State Veterans
Home and the VA welcomes a presence now or in the future.
Question. What is the current status of the Fort Howard facility?
Answer. Fort Howard continues to operate ``status quo'' pending
final approval of the mission change by the Secretary of the Department
of Veterans Affairs.
Question. What changes can veterans served at Fort Howard, their
families, and VA employees expect in the coming months?
Answer. Upon approval by the Secretary of the Department of
Veterans Affairs, the mission change will begin being implemented.
There are several construction projects that will need to be
accomplished before large-scale relocations can be accomplished. In
anticipation of the approval, these projects are currently being
designed. The complete relocation of all inpatient functions from Fort
Howard is estimated to take 18 to 24 months to complete.
Question. What are the plans for the enhancement/expansion of the
outpatient clinic at Fort Howard?
Answer. The primary care clinic will continue to operate without
interruption. Current plans are to relocate this function temporarily
to a one level building (building 249) behind the main hospital
building. If the plan is approved by the Secretary of the Department of
Veterans Affairs, under the proposed Enhanced-Use development of the
campus, a new primary care building will be constructed.
Question. How is the VA working with the community and VA patients
to ensure that patient care at Fort Howard is maintained and improved
during the transition process?
Answer. The VAMHCS has given over 30 presentations to the numerous
stakeholders including the Veteran Service Organizations, the VA
employees, unions, local county and government officials, local
community interest groups, and the local community at large. During
these presentations it has been stressed that all current inpatient
programs will continue, but will move to another VAMHCS site. The
relocations are expected to enhance patient access to follow-up care at
the downtown facility and increase hospice and respite bed access.
Question. What specific steps have been taken to ensure that this
occurs?
Answer. During the presentations given, the VAMHCS has been
responsive to concerns raised over some of the consultant's original
recommendations. For example, the original plans to relocate the
dementia unit at the Baltimore Rehabilitation and Extended Care Center
(BRECC) to the Perry Point facility has been revised due to concerns
over the adaptability of those patients to such a move. In its place, a
more general nursing home population will now be relocated.
ALLEGATIONS
Question. Secretary West, are you personally aware of the
allegations raised by these employees and Maryland residents?
Answer. I have been briefed on the nature of the allegations.
Question. I sent a letter and supporting material regarding these
allegations on February 4, 2000, asking you to review these complaints
and to report back to me as soon as possible. To date, I have only
received an interim response from Eugene Brickhouse, your Assistant
Secretary for Human Resources and Administration. A final report was
promised within 30 days (March 30).
Answer. I directed the Assistant Secretary for Human Resources and
Administration to provide an interim and final response to you since
the matters brought to my attention fall under the Assistant Secretary
for Human Resources and Administration's responsibilities. The
Honorable Eugene A. Brickhouse was appointed by the President and
confirmed by the Senate to occupy this most critical position. Mr.
Brickhouse provided you with a final response on April 7, 2000. On
March 30, a member of your staff, Mr. Sean Smith, met with Ms. Ventris
Gibson, Deputy Assistant Secretary for Resolution Management, to
discuss the allegations and provide you with information that would be
in the final response. Following the hearing, Mr. Brickhouse and Ms.
Gibson spoke with Mr. Smith to further provide assurance that we would
maintain contact with your office.
Question. Why have I not heard from you personally on this most
important matter?
Answer. On matters involving discrimination complaints processing
or allegations of discrimination, I endeavor to be fair and impartial,
affording all parties due process and maintaining a posture of
independence. Since the allegations involved discrimination complaints
pending within the Department or before the EEOC, my neutrality must be
unwavering and unquestionable. This does not, however, inhibit my
ability to exercise leadership over diversity management issues. For
this reason, I have taken steps to see that the appropriate leaders
within the Department and addressing these matters.
Question. Why has this deadline come and gone without a complete
final report from anyone at VA?
Answer. On April 7, 2000, Mr. Brickhouse provided your office with
a final report.
Question. Are you personally involved in this matter?
Answer. To the extent appropriate, I have provided executive
direction to the responsible senior leaders and required their
involvement, consistent with the employees' rights and the integrity of
the process.
Question. Your issued a memorandum to VA employees on September 22,
1999 on harassment and discrimination at VA. However, is this policy
being implemented and carried out at VA?
Answer. The policy was fully implemented on September 22, 1999, and
is in effect Department-wide.
Question. Specifically how?
Answer. The September 22 letter to all VA employees provides for
appropriate disciplinary and adverse action to be taken against those
individuals who engage in harassing behavior or other discriminatory
conduct should an investigation reveal that such misconduct occurred.
Allegations, even multiple allegations, of discriminatory acts are an
inadequate basis upon which to find discrimination or to impose
discipline. VA would violate the rights of those alleged to have
committed discriminatory acts when the case has not been fully
adjudicated. When a finding of international discrimination or
retaliation occurs, the respective VA organization takes appropriate
personnel action affording due process as required by Federal
regulations.
Question. Upon review of these complaints, it is clear that the
majority come from one area of VA--the Office of the Assistant
Secretary for Information and Technology and the Washington Regional
Office. In addition, there are now complaints against the Office of
Resolution Management, who is charged with the authority to thoroughly
investigate allegations like these. What action is being taken to look
into these areas of VA?
Answer. On March 29 and April 6, the Department advised each
concerned employee, in writing, to contact a designated official within
the office where he or she worked to discuss his or her concerns and
attempt resolution, where possible. Senior leaders in the Veterans
Benefits Administration and the Office of Information and Technology
have initiated steps to meet with these employees. In ORM, the employee
who wrote to you filed several complaints; all but one of these
complaints was against the employee's former employing office, not ORM.
The Office of Employment Discrimination Complaint Adjudication (OEDCA)
dismissed the complaint the employee filed against ORM because the
employee failed to provide requested information relative to the
specific nature of his allegations. The Deputy Assistant Secretary for
Resolution Management met with the employee within her organization to
determine the specific nature of the employee's complaint. ORM also
employs an Employee Executive Ombudsman for ORM employees who wish to
discuss workplace or personal issues, or to mediate disputes. The
establishment of this position is consistent with EEOC's guidance to
ORM on addressing internal concerns, should they arise.
Question. VA's own statistics appear to confirm that there are few
promotions of minorities in VA. In addition, they show that the
majority of minorities at VA are within the lowest payscales. What is
being done to address this discrepancy?
Answer. We believe that we can do more, as there is room for
improvement. For example, VA is developing a plan in support of our
diversity efforts to ensure that African Americans and other minorities
benefit from all employment, advancement, and training opportunities
available in the Department. The plan includes a focused effort on
increasing the representation of African Americans in grades GS-7
through GS-12, and in grades GS-13 through GS-15, the primary feeder
group from which we can develop a representative pool of candidates for
the Senior Executive Service. We will continue our plans to provide
additional developmental opportunities, mentoring assignments, and
ensure recognition and awards for outstanding contributions toward this
effort.
Question. What specific plans are in place to help move minorities
up the ranks at VA?
Answer. VA conducts On-Site Equal Employment Opportunity Technical
Assistance Reviews at field facilities around the country. Local and
national union representatives are consulted during these reviews and
have, at times, served on the review team. These reviews address the
employment concerns of all employees, minorities, and non-minorities.
The team provides the facility Director with recommendations to correct
deficiencies noted during the review. Other initiatives include:
--African Americans are included in external training programs such
as the Women's Executive Leadership Program, the Federal
Executive Institute, Aspiring Leaders Program, and the
Management Development Centers.
--VA revised the Performance Appraisal process for senior executives
to include a section on equal opportunity and diversity. The
new requirement is that senior executives must show measurable
progress in improving employment opportunities for women and
minorities and increasing the diversity of organizations under
their control.
--Prior to any senior executive being considered for a bonus or pay
adjustment, the respective Under Secretary or Assistant
Secretary must provide specific written examples of how the
executive has contributed, by his or her actions, to a diverse
workforce ensuring equal opportunity to all.
--ORM conducts trend analysis of discrimination complaints. Part of
the trend analysis focuses on the underlying causes of
allegations of discrimination when such allegations do not rise
to the level of discrimination, for example, common workplace
disputes. Since employees utilize the EEO complaint process to
air common workplace disputes because they believe
VA RESEARCH PROGRAM
Question. VA is not requesting an increase in fiscal year 2001 for
its research program. Please comment on the reason for this decision.
Answer. The request for fiscal year 2001 assures that all of our
resources available to VA Research will be used with maximum
efficiency.
VA currently funds approximately two thirds of the research program
using non-VA research appropriations. It is anticipated that VA will
increase funding from these sources so the research program will
continue to grow and remain a national resource.
Question. I understand that VA has implemented a new policy
intended to help solve the problem physician-investigators have in
finding time to conduct research. What is the current status of this
policy?
Answer. The ``policy'' referred to above was an interim
arrangement, functional only for the fiscal year 2000 allocation
period, pending development of a more comprehensive allocation solution
that would assure dependable resource support to the Veterans Health
Administration's (VHA) research program. Basically this interim policy
calls for a ``pass through'' of prior local reported costs to support
research activities.
Based on guidance from the Acting Under Secretary for Health, VHA's
Chief Financial Officer appointed a VHA panel of research and financial
specialists to examine and improve the current system of accounting for
costs of the Medical Care appropriation that are applied to support VHA
research at the facility level (including direct salary costs of
clinician-investigators, facilities and administrative costs). This
panel completed its analysis and submitted a report to the VHA Acting
Chief Financial Officer on April 1, 2000.
The report recommends VHA take four actions:
--Adopt an interim manual spreadsheet accounting system, focused at
the VA medical center level of research activity, but with
capabilities of ``rolling up'' research support costs to higher
levels.
--Field-test the manual system in a new group of VA medical Centers
(it had been tested in ten centers at the writing of the
report).
--Reprogram the new automated Decision Support System (DSS)
accounting system to carry forward the intent of the manual
spreadsheet.
--Pending full national implementation of the new method of
accounting for Medical Care expenditures in support of
research, extend for fiscal year 2001 the current ``pass
through'' system of local research support, which characterizes
VHA allocation policy for the fiscal year 2000 period.
The accounting team report is currently being reviewed by VHA. VHA
anticipates presenting the report to the Acting Under Secretary for
Health soon for consideration. Assuming approval of the proposal,
field-testing of the improved accounting system will require several
months. In the interim, a recommendation has been made to the Acting
Under Secretary for Health to extend the ``pass-through'' policy of
support to research in the fiscal year 2001 allocation.
Question. When does it expire?
Answer. As noted earlier, the expiration date is September 30,
2000.
Question. Are there plans to extend this policy?
Answer. A decision by the Acting Under Secretary for Health is
pending.
Question. Last year, the Under Secretary for Health announced two
new oversight mechanisms for VA research involving humans--one external
and one internal. Could you please detail the progress that has been
made towards the implementation of each?
Answer. The Office of Research and Compliance (ORCA) is the primary
component responsible for assuring compliance with the rules, policies,
and procedures to protect human subjects in VA-conducted research. ORCA
reports to the Under Secretary for Health. ORCA's responsibilities
include compliance through training, education, and development
activities, negotiation of VA assurance documents with sites conducting
research, and site visits (routine and for cause) to research sites.
This office, announced in April 1999, currently has five employees in
headquarters and has additional recruitment actions underway.
Currently, there are plans for four Regional Offices in ORCA, that will
include four employees in each office to help ensure compliance
oversight in the 22 Veterans' Integrated Service Networks (VISNs) and
approximately 120 Veterans Affairs Medical Centers (VAMCs) that conduct
research involving human subjects. The Regional Offices will be in
Washington, DC; Atlanta, Georgia; Chicago, Illinois; and Los Angeles,
California. Recruitment for their Directors is ongoing. ORCA is
completing the final stages of its budget estimates for fiscal year
2000 and fiscal year 2001.
The external mechanism of oversight is based on a contract with the
National Committee for Quality Assurance, which is managed by the
Office of Research and Development, with participation from ORCA. After
open competition, NCQA was selected to review each of VA's sites
conducting research and to evaluate them for accreditation for
compliance with all VA and applicable Federal requirements for
protection of human subjects in research. VA and the contractor will
develop standards and pilot testing, and visits will begin later this
year. ORCA staff will participate in site visits in conjunction with
the accreditation process. In addition, ORCA will receive reports on
each site to help assure education and training, and other actions that
help promote compliance.
Question. How does VA plan to meet the needs of VA research
facilities that need upgrades, renovations, or expansions?
Answer. Our programs in VHA health care facilities engaged in bio-
medical research have identified twenty-five sites with high-priority
needs for infrastructure improvements, primarily in direct research
laboratories (so-called ``wet'' laboratories). The VA research program
is given an annual opportunity, both locally and here in headquarters,
to identify capital facilities projects for consideration in the
overall VA budget formulation and capital investment review process.
The Department's priority-setting process correctly favors patient care
and life-safety facilities projects at the highest level of priority.
The Chief Research and Development Officer and the Chief Facilities
Management Officer will continue to work together to carefully consider
research--supportive capital projects during the budgetary process.
Question. In last year's appropriations bill, the Committee
supported expanding the number of community-based outpatient clinics
which promote Mental Health Intensive Psychiatric Case Management.
Research shows economic and health benefits from such clinics and its
model, Assertive Community Treatment. Two Public Laws 104-262 and 106-
74 charge the Veterans Health Administration (VHA) to maintain capacity
by providing for the specialized treatment needs of disabled veterans.
What has been done to make certain that money cut from inpatient
psychiatric facilities is being used for Mental Health Intensive
Psychiatric Care Management programs?
Answer. VHA surveyed each of the 22 VISNs to determine to what
extent the savings in costs of inpatient psychiatric care were
reinvested in outpatient mental health services. VISNs were asked to
compare total costs in fiscal year 1996 for both inpatient and
outpatient mental health care to the same costs in fiscal year 1999.
That study, which is about to be released to Congress, suggests
considerable reinvestment in outpatient mental health services and
increases in the number of veterans served.
Various groups in VHA are collaborating to prepare a Directive that
will encourage new initiatives in Mental Health Intensive Case
Management (MHICM) programs. The directive asserts a policy to:
--Establish new MHICM programs where the need is demonstrated.
--Defines the target population within each VISN.
--Describes what is required to have an effective MHICM program.
--Mentions the monitoring procedures required to determine outcomes.
--Provides VISN-level responsibilities and national oversight.
Question. What is being done to ensure that quality psychiatric
care is being offered within the community-based care facilities?
Answer. From fiscal year 1998 to fiscal year 1999, the total number
of veterans served by mental health programs increased by 3.3 percent.
Over the period of fiscal year 1996 to fiscal year 1999, a 9 percent
increase was observed. This has been associated with a decrease in
inpatient care, and an increase in outpatient services. Health services
research has indicated that nearly half of the new Community Based
Outpatient Clinics (CBOCs) offer basic mental health services. VHA
believes that access to mental health services in general is
increasing.
Although the inpatient workload and dollars have decreased from
fiscal year 1996 to fiscal year 1999, outpatient workload and dollars
have increased resulting in the total number of veterans served by VA's
special emphasis programs increasing from 269,000 to 293,473. The
increase in services is accounted for by improvements in access to and
utilization of outpatient programs. VHA is a leader in mental health
care and is one of the few health systems that support equal access to
medical care and mental health care. VA will continue to monitor needs
for mental health capability for new, as well as existing CBOCs.
Performance Measures for Mental Health Programs.--The Management
Decision and Research Center (MDRC), a part of VHA's Health Services
Research and Development Service recommended three performance measures
addressing mental health in the community clinics: 1. the number of
patients assigned a mental health diagnosis; 2. the average weighted
outpatient workload per clinical mental health FTE; and, 3. the
percentage of patients seen within 30 days after hospitalization for a
mental health disorder.
All measures are compared to the parent VAMCs and are expected to
be statistically identical or higher.
In May 1999, in response to the Under Secretary for Health's
comments to a recommendation by the Committee on Care of Severely
Chronically Mentally Ill Veterans, the Chief Consultant, Mental Heath
Strategic Healthcare Group, published criteria for VISN Directors and
Clinical Managers for including mental health services in CBOCs. As a
benchmark, ``if the total number of veterans service-connected for
mental health conditions in the 1-15 mile(s) CBOC catchment area
exceeds 150, or the number of Priority 1 through 7 veterans exceeds
3,000, then it is strongly recommended that an existing or proposed
CBOC would provide (or contract for) general mental health services.''
As with all other mental health patients, those seen by a mental
health professional in CBOCs, will be assessed using the Global
Assessment of Functioning (GAF) scale to help determine whether their
overall functioning improves following professional treatment. Used as
an outcome measure, the quality of care for each patient or for all
patients in each CBOC can be estimated. For fiscal year 2000, the
percentage of mental health patients who receive a GAF rating is
reported monthly to VISN Directors.
Question. How does VA intend to care for the ever-increasing demand
for psychiatric care among veterans?
Answer. VA has increased the number of patients treated by its
mental health services nationally. A recent survey shows that six
Networks increased the number of patients seen in outpatient mental
health facilities by greater than 25 percent from fiscal year 1996-
fiscal year 1999. (VISNs 4, 8,10,15, 16 and 19). In fiscal year 1999
Network 10 for example, cared for 34 percent more Post-Traumatic Stress
Disorder (PTSD) patients, and 24.2 percent more patients needing
substance abuse treatment. VA has developed the largest integrated
service delivery system for the homeless in the nation. These changes
have been associated with a decrease in inpatient care, and increase in
access to and utilization of outpatient programs including treatment at
Community Based Outpatient Clinics (CBOCs). Half of all CBOCs currently
offer basic mental health services.
Mental health services are addressed by providing a full continuum
of care and access to needed medical/geriatric care. VA is working
toward better integration of medical care with mental health care for
veterans. Ongoing activities in the integration of mental health and
medical and geriatric primary care programs and the development of
mental health primary care teams demonstrate this.
An acknowledged leader in developing outcome measures of quality of
care, VA is focusing its efforts on performance measures for all
special disability programs including mental health to ensure that
quality, access and service are maintained or improved.
In summary, VA is seeing more patients who suffer from mental
disorders more efficiently and with no loss in quality. In fact,
patient satisfaction with mental health services has increased from
1995 to 1999. VA has been able to do this by increasing its use of
residential care and outpatient services including CBOCs. VA has also
increased its contracting capabilities with non-VA service providers as
evidenced by the programs for homeless veterans. VA is using innovative
approaches in telemental health to increase access to specialty mental
health services in VA community-based sites such as CBOCs and Veterans
Outreach Centers. VA will continue using these clearly efficient and
effective approaches to maintain capacity and quality of care for
veterans with mental disorders.
Question. What is being done to ensure the VA National and Veterans
Integrated Service Network Formularies are becoming less restrictive?
Answer. The Congressionally mandated Institute of Medicine (IOM)
study of the VA's formulary concludes that VA's National Formulary is
not overly restrictive, and that its effects on quality are likely
comparable to those of formularies in private and other public sector
programs. The IOM report found no reason to abandon the National
Formulary yet recommended improvements in the management of the VA
formulary system. VA plans to respond constructively to all the
recommendations in the report.
Question. What is the status of phasing out a typical medications
that could be less expensive but have damaging side effects?
Answer. VA's national formulary process is designed to provide the
most efficacious, safe and cost effective medications for use in the
veteran population. VHA uses many factors to determine a product's
suitability for use in the VA population, including patient compliance,
relevance to the veteran population, pharmacy factors, adverse event
profile and clinical outcomes. Management of VA's formulary process is
a very dynamic activity that is clinically driven by the VA Medical
Advisory Panel, a group of field-based practicing physicians; the VISN
Formulary Leaders Committee, a group of clinical representatives from
each of the 22 VISNs; and various VHA Technical Advisory Panels, which
are comprised of senior VHA subspecialty clinicians. Safety and
efficacy receive the highest priority in their deliberations.
SUBCOMMITTEE RECESS
Senator Bond. So with that I thank you, Mr. Secretary. I
appreciate working with you. If this is our last time, it's
always a pleasure to work with you in various generations and
different decades. We wish you well and we thank you very much.
Hearing is adjourned.
[Whereupon, at 10:40 a.m., Thursday, April 5, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENT OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2001
----------
WEDNESDAY, APRIL 12, 2000
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:36 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Mikulski, and Lautenberg.
CORPORATION FOR NATIONAL AND COMMUNITY SERVICE
STATEMENT OF HARRIS WOFFORD, CHIEF EXECUTIVE OFFICER
ACCOMPANIED BY:
WENDY ZENKER, CHIEF OPERATING OFFICER
TONY MUSICK, CHIEF FINANCIAL OFFICER
LUISE S. JORDAN, INSPECTOR GENERAL
KARYN L. MOLNAR, PARTNER, KPMG
OPENING STATEMENT OF SENATOR CHRISTOPHER S. BOND
Senator Bond. The subcommittee will come to order.
This morning the VA-HUD Subcommittee will hear testimony on
the President's fiscal year 2001 budget request for the
Corporation for National and Community Service, the Chemical
Safety Board, and the Department of Treasury's Community
Development Financial Institutions Fund.
First we will 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,
and Ms. Karyn Molnar from KPMG.
The subcommittee will then hear from the Chemical Safety
Board. Finally, we will have officials testifying from the CDFI
Fund.
The Appropriations Committee and the VA-HUD Subcommittee
will face another year of very difficult budget decisions due
to needs for VA medical care, significant increases in needed
budget authority for Section 8 housing assistance contract
renewals, and FEMA disaster assistance.
For the Corporation for National and Community Service, the
President has requested a significant spending increase.
Specifically, $538.7 million has been requested, an increase of
$101.6 million over the $437.1 million provided in fiscal year
2000.
Under the President's budget request, the Corporation would
expand the AmeriCorps service from its current membership of
50,000 participants to 62,000 by fiscal year 2001, with a goal
of 100,000 in fiscal year 2004. In addition, the President is
proposing a number of new initiatives such as creating a new
AmeriCorps Reserve program and two new youth programs under its
Learn and Serve account.
While the Corporation has a number of laudable goals, such
as improving child literacy--that is obviously one of my very
strong concerns--there remain many significant issues
concerning the management and implementation of its programs.
First, providing an increase in funds to an agency that has
been fraught with significant management problems is troubling
at best. While I applaud the progress the Corporation has
achieved over the past year, there continues to be serious
problems.
The Corporation has again received a ``clean'' opinion on
its balance sheet, but a ``disclaimer'' on its statements of
operations and cash flows. The number of material weaknesses
has been reduced from eight to five, but a number of reportable
conditions and failures to comply with various Federal laws and
regulations remain.
We will later hear more from the CNCS's IG and KPMG
auditors on these matters, but I must emphasize that I remain
concerned about these issues.
Second, there continues to be a question of accountability
within the Corporation and the grantees who administer many of
its programs.
Last year, the auditors were unable to determine the nature
of $31 million in unidentifiable expenditures in the
Corporation's financial statements. It was only after this
Subcommittee raised concerns about it, that the Corporation's
management took action to address this matter.
Unfortunately, the Corporation's contractors were
unsuccessful in determining the nature of this $31 million, and
to this date, the Corporation still has no documentation or
proof on whether those funds were misspent or whether this was
simply a series of bookkeeping errors or a combination of both.
It is my understanding that this contractor was also
responsible for preparing the Corporation's financial
statements. I hope this contractor was not actually paid on its
work to identify the $31 million in unidentifiable amounts that
it was responsible for creating.
Another major concern is the Corporation's oversight of its
grantees. The IG has found numerous problems in this area and
continues to cite this as a major internal control weakness.
In this year's budget request, the Corporation has
requested the legal authority to provide additional
administrative funds to troubled State grantees. Currently,
each State commission must provide a 50-percent match for any
administrative funds received from the Corporation.
Nevertheless, the Corporation seeks to waive this matching
requirement for troubled grantees. More puzzling is the
Corporation's request for an additional $3.6 million for this
effort. Frankly, this could be characterized as ``throwing good
money after bad,'' or rewarding non-performance or poor
performance.
Instead of throwing good money after bad, I wonder: Has the
Corporation considered other ideas that would address the
problems with its troubled grantees? How about using
enforcement actions against troubled grantees? If the
Corporation lacks the legislative tools to do this, I would be
more than happy to entertain your requests for legislative
solutions.
I am also curious to know if the Corporation allows its
grantees to take on additional programmatic responsibilities
when they have been found to be troubled.
The Corporation admits in its budget justifications that
these ``oversight problems are occurring at a time when the
AmeriCorps grants program is growing significantly.'' Well, if
this is the case, why not reduce the programmatic burdens of
these troubled grantees?
Finally, I emphasize the need for the Corporation to
resolve fully its long-standing management and financial
operations problems. The Corporation has made some real
progress over the last year. For that, it deserves recognition
and commendation. We are happy to do that.
Moreover, the Corporation has assembled a management team,
which is beginning to lay the foundation for sound management.
In your testimony, Senator Wofford, you state that the
Corporation's ``programs will depend upon the effective
management of the resources dedicated to these purposes.''
While I agree completely with that statement, it seems
questionable to me that the Corporation would increase its
program workload when it still has not cleaned up its
management problems.
It seems like the Corporation is trying to fix a bike while
riding it at the same time. I would hope that the Corporation
will seriously consider my suggestion that you need to slow
down and maybe take a minute to get off the bike before you
start riding it again. In this city, I have seen a lot of
potholes, and I think that would be good advice whether you are
riding a bike or running a troubled agency.
I will now turn to my ranking member, Senator Mikulski for
her statement and comments.
STATEMENT OF SENATOR BARBARA A. MIKULSKI
Senator Mikulski. Thank you very much, Mr. Chairman.
And I want to welcome the National Service Chief Executive,
Senator Harris Wofford and, of course, the Inspector General,
Ms. Luise Jordan, to our first panel.
I am very proud of the role that I played in helping to
create National Service, the original authorizing framework.
And I would hope in the next session of Congress, we could
review the authorizing framework and really bring it in
alignment with really the evolution and lessons learned from
the more, now, than 6 years of the existence of National
Service, because I think we all agree on both sides of the
aisle that volunteerism is one of the best aspects of the
United States of America.
And volunteerism is the backbone of our communities,
working from seniors to community cleanups to helping your
children get ready to learn.
The whole idea behind National Service was to link our
values to public policy and to provide young Americans with an
opportunity of doing community service and earning a voucher to
reduce their student debt.
In my own home town of Baltimore, college tuition is
escalating, where at Johns Hopkins the tuition next year will
be $33,000. Not everybody can get into Hopkins either because
of SAT scores, or finances. But I would hope getting into the
college of your choice would be based on your SAT scores and
your dream, and not on your family's wallet. And this is a tool
that we hope would be able to help with student debt.
We also wanted to link responsibility to opportunity. I am
a firm believer that for every opportunity, there should be an
obligation. And this is what we were going to promote.
So we look forward to hearing the results of now more than
5 years of the existence of the Corporation for National
Service, on what it has meant to communities and what it meant
to the volunteers who participated and the way they have either
utilized the student voucher to go on, if they are the first
one in their family to go to college; or to reduce student debt
so they could either go on to volunteerism, or even careerism,
non-profit organizations.
We also want to look at kind of the new innovations that
have developed with the new economy. I want to be hearing from
the--from Senator Wofford really about his relationships with
the private sector, not only the wonderful things I know about
the cooperation with General Colin Powell, but also the private
sector in terms of the high-tech crowd, what--Steve Case's
Power Up and other things that you have been doing, and then to
discuss with him the idea of an E-Corps that I am advocating to
help boys and girls cross the digital divide.
I am not talking about E-Corps volunteers being a
substitute for teachers or a substitute for paid local
government staff and programs. But one of the things that we
have heard about, and clear, is that--two things: One, there is
a work force shortage in America, but there is really a skill
shortage. We have zip codes of prosperity, and yet high zip
codes of unemployment.
If we could help our boys and girls learn the tools of the
new economy and learn--and have their parents learn the tools
of the new economy, they could literally be able to leapfrog
out of poverty.
My E-Corps idea would be for the AmeriCorps volunteers to
teach the teachers. Very often, our teachers have not had the
technological training in order for them to make highest and
best use of the technology we want to bring to the classroom.
So after the volunteers leave, we want to have in place
teachers who have benefitted from their youth, their enthusiasm
and their technical know-how, so they can keep it going in the
classroom long after the volunteers leave. It is the old thing
about let us--if we teach the teachers, then we have taught the
children forever.
We will also be talking today about the issues around
financial management; and we will be happy to hear from Anthony
Musick, who was confirmed in November, what he found and some
of the management issues, many of which have been raised by
Senator Bond.
I will talk about the Chemical Safety Board and CDFI when
those very able people come to the table. But for now, I am
ready to listen to Senator Wofford, to move the hearing on.
Senator Bond. Thank you very much, Senator Mikulski. I am
most interested in your E-Corps idea. Sometime when we have
more time and are not on the record, I will tell you about the
problems I have confronted as an old dog trying to learn the
new tricks of computers and E-commerce, but not where it is
going to be on the public record. [Laughter.]
Senator Mikulski. Well, getting booted has a whole new
meaning, does it not?
Senator Bond. I do not even understand that. Senator
Wofford.
Senator Wofford. Me, too, Mr. Chairman, with my problems on
the computer. I need some of those teachers to help me. Thank
you very much, Mr. Chairman and Senator Mikulski.
Mr. Chairman, if my remarks do not respond to all of your
suggestions, we--and we do not have time today, but we want to
respond to your----
STATEMENT OF HARRIS WOFFORD
Senator Bond. We will have--we will raise some of the
issues in questions and answers and also give you an
opportunity to respond in writing. We will keep the record
open, making your full statement a part of the record, and
asking you to summarize.
Senator Wofford. Thank you.
I would like to introduce Wendy Zenker, the Corporation's
Chief Operating Officer and Tony Musick, our Chief Financial
Officer.
Let me start by thanking the committee for your support
over the past years. The National Service would not be where it
is today without your help.
Four and a half years ago when the President asked me to
head the Corporation, he gave me a very specific charge: To
make National Service a non-partisan enterprise in which all
Americans take pride, like the Peace Corps and the Armed
Forces. Even before I was confirmed, I was confronted with the
second challenge, to strengthen management practices at the
Corporation. These two imperatives have been my focus, and I
will report briefly on both.
Under the guidance of your committee, the Corporation
developed a detailed action plan to set our course on
management improvements. We report regularly to the committee
on this plan, so you have seen the progress we have made.
We now have a strong financial management team that has
brought rigor and discipline to our business operations. Since
our meeting last year, we have added an exceptionally gifted
chief financial officer, Tony Musick, as well as a deputy CFO
and a chief information officer.
Mr. Chairman, I want to thank you especially for your help
in securing Tony's confirmation last fall. It was down to the
wire, and you made sure that Tony was confirmed before Congress
recessed, and it has made a great difference for us.
FINANCIAL MANAGEMENT
We have also made great improvements in our systems,
including bringing critical new systems online. We have
installed and are using a new core financial management system
that dramatically improves the Corporation's financial
accountability.
All documents in the National Service Trust have been
digitally imaged and filed, making it easy, fast and accurate
to retrieve records.
AmeriCorps grantees are now submitting information on
enrollment, service hours and term completion through a secure
web-based system. We have worked extremely hard, taken on big
challenges and made major progress.
FISCAL YEAR 1999 AUDIT
The Inspector General's recently released audit report for
fiscal year 1999 reflects some of this progress. The number of
material weaknesses, as you pointed out, is reduced from eight
to five. And the auditor issued a clean opinion on the
Corporation's statement of financial position. And we still
have much to do.
As this is the last annual audit during my tenure at the
Corporation, I wish we had made it the final mile to full
auditability. The Inspector General wrote that reducing the
number of material weaknesses and implementing the new
accounting system indicate that the Corporation continues to
make progress toward producing auditable financial reports.
So while the outcome of the audit is not all that we had
worked to achieve, it is now apparent that our goal of full
auditability is within sight.
We will continue to focus our attention, resources and
energy to complete this job. And we are requesting an increase
in program administration funds to support that effort.
On the program front, National Service is stronger, more
vital and more effective. That is why I am pleased to present
the President's request to expand the opportunities for
Americans to engage in service because it works, is working,
and is recognized around the country as meeting critical needs
of our communities and of our young people.
LEARN AND SERVE AMERICA
Through Learn and Serve America, young people in school are
being challenged to take personal responsibility for the needs
of their communities. Service-Learning is taking root in
schools throughout the country. The evaluation shows that
students who participate in Service-Learning improve their
academic performance, develop problem-solving skills, and learn
the habits of good citizenship.
AMERICORPS
In AmeriCorps over the past 5 years, communities across the
country have experienced the power and the value of more than
150,000 AmeriCorps members getting things done, important
things that the communities need.
The 5-year evaluation of AmeriCorps conducted by Aguirre
International concluded that AmeriCorps prepares young
Americans for the future, strengthens communities and helps
build the civic sector by providing people-power to non-profit
organizations.
We have worked to focus AmeriCorps and all of National
Service on tackling big problems and achieving important goals.
Three years ago, the Congress and the President agreed that the
country should make literacy a top priority, which I know is a
special interest of yours, Mr. Chairman.
AmeriCorps and our other service programs have taken this
charge to heart. In fiscal year 2000, we will meet and exceed
the committee's direction to devote at least $40 million to
literacy projects.
DIGITAL DIVIDE
Similarly, taking Senator Mikulski's lead, AmeriCorps
members will be on the front lines of closing the digital
divide. New technologies have brought our country to a critical
juncture. Either computers and the Internet will be a great
instrument of new opportunity, or they will create an even
great chasm between the haves and have-nots in our society.
AmeriCorps and National Service will be powerful tools to
help transform the digital divide we see today into the digital
empowerment we seek.
AmeriCorps has supported several successful technology
projects in the past with private sector partners, and now
Senator Mikulski has proposed this new E-Corps within
AmeriCorps. The President and Senator Mikulski announced just
last week that AmeriCorps will make a start on E-Corps right
away, and we look forward to working with the committee to make
E-Corps a powerful reality.
CLOSING STATEMENT
Senator Bond and Senator Mikulski, this is the fifth and
the last time that I will appear before this committee. I want
to express my special thanks to you. The health of the
Corporation and the strength of National Service have been
greatly improved by the personal interest you and your staff
have taken.
National Service is challenging citizens, especially young
people, to take responsibility for something greater than their
own self-interest, to become new patriots of the home front.
I believe more than ever today that National Service is at
the vital center, not on any ideological spectrum, but at the
core of what we need to do to make the promise of America a
reality for all Americans.
Thank you.
[The statement follows:]
PREPARED STATEMENT OF HARRIS WOFFORD
INTRODUCTION
Mr. Chairman, Ranking Member Mikulski, and members of the
Subcommittee, I appreciate this opportunity to present to you the
Administration's fiscal year 2001 budget request for the Corporation
for National Service and the national service programs that you fund:
AmeriCorps, including the National Civilian Community Corps, and the
service-learning program for students--Learn and Serve America. These
programs have helped to reinvigorate the long American tradition of
service to community.
AmeriCorps members continue to provide valuable and important
service to our country. This past year we celebrated those
accomplishments on the occasion of AmeriCorps' Fifth Anniversary. One
way we marked the Anniversary was to select 21 All AmeriCorps Award
winners--AmeriCorps members whose exemplary service received special
recognition at a White House ceremony. They were introduced and saluted
by Sargent Shriver, General Colin Powell, Governor Michael Leavitt,
Coretta Scott King, and President Clinton.
In at least 44 states and the District of Columbia, AmeriCorps
members, state and local officials, and friends marked the Fifth
Anniversary with Kick-Off and Swearing-In ceremonies. The Anniversary
was planned in conjunction with Make A Difference Day, the nation's
largest service day, in which thousands of AmeriCorps members and
students in service-learning projects participated.
Mr. Chairman, five years ago when the legislation establishing the
Corporation was passed, there were many questions: Would the
combination of eight different federally-supported service programs
work? The new Corporation for National Service, as you know, combined
three long-serving senior service programs--Foster Grandparents, Senior
Corps, and the Retired and Senior Volunteer program (RSVP)--with the
Volunteers in Service to America (VISTA), the first domestic Peace
Corps, now 35 years old; the service-learning program and the grant
programs for youth service of the Commission on National Service,
authorized by the National Service Act of 1990; the National Civilian
Community Corps which was established by Congress in 1992; and on top
of this Congress added the larger new national service program to be
called AmeriCorps. The question was whether this combination would work
to the benefit of American communities--and to the benefit of young and
older Americans who want opportunities to serve their country.
As to the new venture--AmeriCorps--the questions were also
numerous: Would it be effective in getting important things done? Would
AmeriCorps support--and not in any way undermine--the large and small
non-profit institutions of the service sector and the volunteer spirit
in our country? Would AmeriCorps' decentralized system, designed to
rely on newly-created, governor-appointed state commissions to deliver
service opportunities, work? And would the experience of giving back
through service to their communities prove beneficial to young people
in AmeriCorps, giving them marketable skills, assisting them with
paying for college, and making them better citizens?
Mr. Chairman, the work of the Corporation, and the work of now more
than 150,000 AmeriCorps members, half a million senior citizens, and
more than a million students in service-learning programs assisted by
the Corporation has answered each of these questions with a strong Yes.
I am attaching the statement of sixty nonprofit organizations
comprising the National & Community Service Coalition, including the
American Red Cross, Big Brothers/Big Sisters of America, the Catholic
Network of Volunteer Service, the Girl Scouts of the USA, and the YMCA
of the USA. This is what they say about the Corporation's service
programs:
``[W]e have seen firsthand how the federal investment has spurred
the growth of service opportunities and mobilized hundreds of thousands
of school-aged children, young adults and senior citizens to tackle an
array of our nation's educational, social and environmental needs. They
have contributed to the safety and well being of our must vulnerable
citizens, the improvement of reading skills among young children, the
protection of our endangered natural resources, the construction and
renovation of homes for low-income families, and the restoration of
individual neighborhoods and communities across the country.
``Federal funds constitute a small, but strategic, portion of the
total resources which support national service. Moreover, the vast
majority of federal funds pass straight through to State Commissions
which, in turn, award grants to locally-controlled programs on a
competitive basis that emphasize both quality and cost effectiveness.
Finally, the federal government's involvement in national service
builds on the nation's well-established tradition of volunteerism and
on decades of painstaking development by grass-roots service programs--
both of which have long enjoyed nonpartisan support from elected
officials at every level of government.
``It is important to note that the sheer reality of federal
legislation and leadership has brought heightened visibility, as well
as new state, local and private resources to the service movement.''
[emphasis in original]
These are not just generalities. The results, for example, in terms
of the construction and renovation of homes for low-income families
have been extraordinary. Habitat for Humanity reports that it has built
1,372 Habitat houses as the result of AmeriCorps and counts over
177,000 Habitat volunteers who have been supervised by AmeriCorps
members. I attach the statement of Tom Jones of Habitat for Humanity
given recently at a congressional briefing. I also attach the summary
of an independent study by Aguirre International on the cost
effectiveness of AmeriCorps service, its benefits to communities, and
the personal gains for members resulting from AmeriCorps service.
Mr. Chairman, AmeriCorps has affirmed what we already knew--that
the answer to America's biggest problems lies in the energy, idealism,
and personal responsibility of Americans.
BUDGET REQUEST SUMMARY
The total fiscal year 2001 budget request for the Corporation's
programs in this Subcommittee's jurisdiction is $533.7 million, an
increase of $100.6 million above fiscal year 2000. This increase will
continue the Corporation's progress toward reaching the President's
goal of having 100,000 new AmeriCorps members by the year 2004. This
budget request will support 62,000 AmeriCorps members in fiscal year
2001, including 1,100 National Civilian Community Corps (NCCC) members.
The request includes a $79.6 million contribution to the National
Service Trust to provide for the educational awards to AmeriCorps
members upon completion of their service. The Office of the Inspector
General is requesting a separate appropriation of $5 million to support
the functions of that organization, a $1 million increase over fiscal
year 2000.
The request also includes $5 million to establish an important new
effort--the AmeriCorps Reserves program. This pilot program will be
modeled on the military reserves: former AmeriCorps members would serve
in the Reserve Corps on weekends and/or after work or on vacations, and
would work on critical national problems such as the need for rapid
response to natural disasters. The Reserves program will enable former
AmeriCorps members to re-engage in continuing special service to their
communities, particularly in times of crisis. The Reserves will build
on the AmeriCorps Continuing Service initiative, which connects
AmeriCorps alumni to community service projects through a partnership
with national non-profit organizations such as the American Red Cross,
the Boys and Girls Club, Big Brothers/Big Sisters, Habitat for
Humanity, the National Mentoring Partnership, and the YMCA.
The budget request also provides an $8 million increase for the
Learn and Serve America program. The total request for that program is
$51 million. This funding will continue the growth of service-learning
for students at all grade levels and those in college. The $8 million
increase will support two new service-learning initiatives: $5 million
in grants for a new Community Coaches program and $3 million for Youth
Empowerment Grants.
The budget request would increase funding for Innovation,
Demonstration and Assistance activities by $14 million to $42.5
million. The Corporation uses these funds to provide technical
assistance to grantees and service programs, to assist programs in
enrolling participants with disabilities and accommodating their
participation, and to support innovative demonstration service programs
that may not be eligible under other Corporation programs. This funding
supports a significant portion of the Corporation's literacy
activities, including a major literacy initiative in the District of
Columbia and a part of America Reads funding designated by Congress, as
well as the AmeriCorps Promise Fellows program.
As the members of the Subcommittee know, the Corporation for
National Service has forged a very successful relationship with the
Points of Light Foundation, an initiative established by President
George Bush. The fiscal year 2001 budget request contains $7.5 million
for the Points of Light Foundation to continue support at last year's
level.
The fiscal year 2001 budget request also contains an additional
$7.5 million to support America's Promise: The Alliance for Youth, led
by General Colin Powell. That effort was launched by Presidents
Clinton, Bush, Carter, Ford, and Mrs. Reagan representing her husband,
at the Presidents' Summit for America's Future in Philadelphia. This
new funding will enable America's Promise to continue and expand the
work for children and youth started by all the living Presidents at
Philadelphia, along with 38 Governors, more than a hundred mayors, and
several thousand national and community civic leaders and
organizations.
Like the Points of Light Foundation, America's Promise is a special
agency for mobilizing community volunteering with the collaboration of
the great organizations of the non-profit sector, large and small, of
the business sector, and of government at all levels. Together, they
are key parts of the system of community and national service.
The Corporation is seeking $35.6 million for program
administration. This includes $3.6 million in additional funding for
the state commissions and $4.1 million in program administration
funding to continue the high priority management information that are
needed at the Corporation. The commissions are largely responsible for
the selection and oversight of AmeriCorps programs and members. In
addition, we are requesting $5 million for program evaluation.
MANAGEMENT SYSTEMS IMPROVEMENT AND THE FISCAL YEAR 1999 AUDIT
Mr. Chairman, the future success of national service, the
Corporation, and its programs will depend upon the effective management
of the resources dedicated to these purposes. Since my last appearance
before this Subcommittee the Corporation has taken aggressive action to
improve its overall management.
We have given particular focus in the last year to remedying the
material weaknesses in our financial management systems, as identified
by the fiscal year 1998 audit. The Corporation developed an Action Plan
not only to correct these weaknesses, but also to strengthen
Corporation management generally, increase the use of technology, and
improve our stewardship over Federal funds. The Action Plan is an
effective tool for correcting problems and resolving issues, and
reflects the Corporation's much improved general control environment.
When first developed for fiscal year 1999, the Action Plan had 8
Goals, 37 Objectives and 165 tasks. As the year progressed, we added
additional tasks. As of March 21, 2000, we have completed 268 of 329
planned tasks, or over 80 percent.
The Corporation has made very substantial progress in critical
management areas over the past 18 months. We have implemented new
systems, successfully transitioned to the Year 2000 and brought on
exceptionally talented people in key leadership positions at the
Corporation. Specifically, the Corporation has--
--implemented a new financial management system that offers on-line,
real-time data for management of the Corporation's resources;
--selected and confirmed an exceptionally well-qualified Chief
Financial Officer, selected a Deputy Chief Financial Officer
and a Chief Information Officer;
--hired new staff with strong financial management qualifications;
--within the National Service Trust, installed a new imaging system
to electronically capture all of the historical Trust records
and to digitally scan all new forms submitted to the Trust.
This system has improved data reliability, addressed past audit
issues, and reduced the labor needed for the management of the
Trust;
--implemented a new Web Based Reporting System for AmeriCorps
grantees to enroll, monitor and certify AmeriCorps member
service;
--transitioned to the Year 2000 without mishap;
--issued seventeen new policies that provide clear management
guidance in areas such as procurement, audit resolution, debt
collection, and network and computer security;
--provided extensive training to staff to improve their skills and
knowledge in areas such as procurement, grants management,
grant monitoring, EEO compliance, finance, and appropriations
law;
--established and staffed Executive Offices in the program areas to
improve administrative controls;
--implemented a management control program;
--strengthened the performance management system; and
--increased oversight of grantees.
These are considerable accomplishments the results of which are
reflected in the recently released fiscal year 1999 audit. Mr.
Chairman, as you know last year auditors from KPMG, under contract to
the Corporation's Inspector General, gave an unqualified opinion on the
Corporation's balance sheet, or statement of financial position for
fiscal year 1998, with disclaimers on the statements of operations and
cash flow. They also identified eight material weaknesses in the
Corporation's financial and other management systems.
This year, the audit found that the material weaknesses had been
reduced from eight to five and again, the Corporation received an
unqualified opinion on its balance sheet, and disclaimers on the other
two related statements. In submitting the new audit the Inspector
General stated that, ``These improvements, and the Corporation's new
accounting system implemented during the final months of fiscal year
1999, indicate that the Corporation continues to make progress toward
producing auditable financial reports.'' The Inspector General also
pointed out that ``the Corporation has yet to fully correct all its
financial management deficiencies.''
We had hoped to receive unqualified opinions on all or our
statements. However, the transition to the brand new financial
management system, as the auditors noted, was arduous. We succeeded,
before the end of the fiscal year, in making the new system fully
operational, but for most of the year we had to draw information from
the long-established, but very inadequate former system. We will reap
the great benefits of the new system in fiscal year 2000 and beyond.
Meanwhile, the decrease in material weaknesses shows that our
management improvements are working. We maintained the same opinion on
our statements in a year when we implemented a brand new financial
management system. This was a major effort for the Corporation and one
that will reap benefits in fiscal year 2000 and beyond.
The major initiatives that have brought about this improvement are
described below.
Implementation of the New Financial Management System
The Corporation implemented the new financial management system in
September of 1999. The ``Momentum'' system is Year 2000 compliant,
conforms to Federal system standards, and uses the federal government's
standard general ledger. The system provides real-time, on-line access
to data and it has front-end edit checks. Funds control is an integral
part of the new system. Data integrity is much improved, and
Corporation staff has access to critical management and reporting
information.
The system implementation was difficult for us, as it has been for
other federal agencies. The Corporation was moving from a non-standard
to a standard system. Configuring the new system and converting data
from the old system to the new system was a significant effort. We
recruited new staff in Accounting with the skills needed to accomplish
this goal, who worked long and hard hours to successfully implement the
system without any break in meeting our financial obligations to
grantees or participants.
Management Team in Place
The Corporation has taken its management responsibilities
seriously. Wendy Zenker, our Chief Operating Officer, and the rest of
the management team have worked diligently to improve the Corporation's
operations.
The President nominated Anthony Musick as Chief Financial Officer
in July and the Senate confirmed him in November of last year. His
expertise and experience have provided important leadership in our
determined efforts to improve financial management systems.
In addition, we recently named William Anderson as Deputy Chief
Financial Officer. Mr. Anderson served in the Corporation's Inspector
General's Office as the Assistant Inspector General for auditing. His
experience will be a great asset to the Corporation. We have also hired
additional staff in accounting, including an individual responsible for
producing the Corporation's financial statements who reports directly
to the CFO and Deputy CFO.
We also recently appointed David Spevacek as the Corporation's
Chief Information Officer, another key position in our management team.
He had previously served as our Director of Budget and the National
Service Trust and has wide knowledge of the Corporation.
Management Controls
We have issued a number of new policies and procedures to make the
Corporation operate more effectively in areas ranging from procurement,
debt collection, audit resolution, property management, computer
security, to Internet use. Seventeen policies have been issued. These
administrative policies complement the programmatic policies that are
already in place.
As we have developed our policies and procedures we have paid
particular attention to our audit resolution processes. The Corporation
maintains detailed reports on open and closed audit recommendations. As
of March 31, 2000, the Corporation had completed final action on 181 of
the 212 financial audit recommendations made by the Inspector General.
The Corporation has developed State Administrative Standards to
guide state commissions in the administration of their grants. The
Standards will enable the Corporation to apply consistent criteria to
the assessment of state commission operations and to make well-informed
decisions about funding. The Standards will enable commissions to
pinpoint and diagnose their technical assistance needs. Once needs are
clearly defined, commissions will improve their foundational systems,
creating reliable infrastructure for the future of national service.
Technology
We have made improvements to the National Service Trust and have
provided Internet access to each employee's desktop. Our transition to
the year 2000 occurred smoothly for our widely dispersed field and
headquarters staff.
Significant technology initiatives that were accomplished in fiscal
year 1999 include the installation of an imaging system in the National
Service Trust and the implementation of a web-based reporting system to
record AmeriCorps member service. All existing Trust file documents
have been captured electronically, and all official forms (enrollment,
end-of-term, and other forms) are being imaged and retrieved
electronically. This greatly improves the Corporation's ability to get
access to historical records and speeds up the processing of newly
received documentation. The system allows for the electronic storage
and retrieval of almost one million pieces of paper filed with the
Trust since the beginning of AmeriCorps.
The Web-Based Reporting System (WBRS) for AmeriCorps member service
was pilot tested in 10 states in 1999 and is now being implemented in
all 50 States, 32 National Direct grantees, and 15 Education Awards
programs. State Commissions and National Direct grantees are using this
secure Internet server to record enrollments, member hours served, and
education awards earned. WBRS is greatly improving the quality of the
data received by the Corporation and the speed at which the Corporation
can process that data.
Mr. Chairman, these changes did not happen overnight. There were no
quick fixes to longstanding problems, many going back to the systems
used for years by the Corporation predecessor agencies before the
Corporation was created. We have been working to develop lasting
solutions to the financial and management problems the Corporation has
faced. Our efforts to implement systemic improvements are recognized by
the fact that the auditors' financial statement report reduced the
number of material weaknesses from eight to five.
The Corporation is committed to continuing these improvements. The
President's Budget requests $35.6 million for the Corporation's program
administration in fiscal year 2001, an additional $7.7 million over
fiscal year 2000. Of this increase, $4.1 million will go to the
Corporation's management. These funds will continue the critical
financial management and other management improvements needed to make
the Corporation operate in a more efficient and effective manner. The
additional funds will support system development projects, such as the
grants system; other technology improvements, such as increased use of
the web; and critical staff needs to support the growing Corporation
workload.
The increase includes $3.6 million for State Commission
administrative requirements. Reviews and other reports, such as pre-
audit surveys now being performed by the Corporation's Inspector
General, indicate that State Commissions require additional support to
fully perform the responsibilities entrusted to them under the National
and Community Service Act.
Cutting Per Member Costs
In addition to the management improvements, the General Accounting
Office has found that pursuant to a 1996 agreement with Congress, the
Corporation has reduced its average budgeted cost per member to no more
than $15,000 in the AmeriCorps*State/National program. We set ceilings
on average budgeted costs for grants to state commissions and national
non-profits, as well as implemented other cost cutting measures such as
raising the program matching fund requirements for grantees. In
addition, we expanded the Education Awards program under which the
Corporation provides only the AmeriCorps education award and a minimal
amount (less than $500) of program support. The local nonprofits cover
any other costs including living allowances. The Education Awards
program is a major way of reducing the Corporation's costs while
increasing support from the private and independent sectors.
AMERICORPS PROGRAMS FISCAL YEAR 2001 BUDGET REQUESTS
AmeriCorps*State/National
Last October, AmeriCorps celebrated its Fifth Anniversary. Since
the beginning of the program, more than 150,000 people have joined
AmeriCorps. For fiscal year 2001, the Administration is requesting a
total of $284 million for AmeriCorps grants. Of this total, $233
million will fund grants to state commissions under the
AmeriCorps*State program and $51 million will go to our National Direct
grantees. The overall request will support a total of 62,000 AmeriCorps
members, 12,000 more than in fiscal year 2000, and will keep AmeriCorps
on track to reach 100,000 members annually by the year 2004.
Under the AmeriCorps*State grant program, AmeriCorps members
participate in local service programs operated by nonprofit agencies,
local and state government entities, Indian tribes, institutions of
higher education, local school and police districts, and partnerships
among any of the above. Member recruitment, selection, and placement
are the responsibility of the grantees. Members serving with these
grantees must help communities meet their educational, public safety,
environmental, and other human needs. Governor-appointed state
commissions select the local non-profits and community organizations
that will provide service to communities with the AmeriCorps members.
The $233 million request is a $44 million increase over fiscal year
2000.
AmeriCorps*National Direct program grantees are national nonprofit
service organizations that operate in a number of states such as
Habitat for Humanity, the American Red Cross, and the Boys and Girls
Clubs. The Corporation has 39 National Direct grantees.
The National Direct program is an efficient and effective use of
Corporation funding. These national and multi-state organizations have
expertise and successful track records in administering service
initiatives. They also have great success in meeting one of the goals
of national service--increasing the spirit of volunteering in America.
For example, AmeriCorps members with Habitat for Humanity supervised
over 177,000 volunteers. We attach a 1999 article by Habitat's founder,
Millard Fuller, ``Habitat, AmeriCorps good partners,'' in which he
states:
``This year, more than 500 AmeriCorps members are wielding hammers
and recruiting more volunteers for Habitat for Humanity. . .
``That's where AmeriCorps has played such a vital role. AmeriCorps
members help train local people in basic construction skills. They are
there, day in and day out, supervising and directing the part-time
efforts of others.
``The continuity, leadership and knowledge that AmeriCorps members
provide allow us to increase both the number of volunteers we are able
to mobilize effectively and the overall productivity of our efforts.''
Despite the service opportunities these national and multi-state
grantees provide, their expertise in managing large-scale service
projects, and the advantages of using such non-profit organizations to
fulfill the goals of AmeriCorps, Congress has capped the National
Direct program at $40 million for several years. In fiscal year 2000,
Congress appropriated $45 million for the National Direct program of
which $5 million was intended to support a teen anti-violence
initiative of the Girl Scouts of America.
For fiscal year 2001 we are requesting $51 million for the National
Direct program. The modest increase in funding for this element of
AmeriCorps will produce real benefits by increasing the service
opportunities these national non-profits will create. We hope the
Subcommittee will agree to lift the cap on the National Direct program.
AmeriCorps*Education Awards Program
In accordance with an agreement with Members of Congress to reduce
the Corporation's average budgeted cost-per-member, and to increase the
number of AmeriCorps members, the Corporation established the Education
Awards Program three years ago. This initiative provides education
awards to national, state, and local community service organizations
that can support most or all of the costs associated with AmeriCorps
members from sources other than the Corporation. AmeriCorps members
serving in these projects are eligible to receive education awards, but
do not receive federally-supported living allowances paid by the
Corporation. In fiscal year 2000, the Corporation anticipates
allocating approximately 13,000 education awards under this program.
Under the President's budget proposal, this allocation will be expanded
in fiscal year 2001 to about 15,000.
The Education Awards program has proven to be attractive to
grantees and relatively uncomplicated to administer. During the first
three years of the Education Awards program, AmeriCorps approved more
than 175 new grants, creating opportunities for approximately 35,000
new AmeriCorps members. The program has been one of the Corporation's
most successful innovations, extending the number of organizations
participating in AmeriCorps and increasing the number of AmeriCorps
members, while at the same time lowering the Corporation's per member
costs.
AmeriCorps*NCCC
The National Civilian Community Corps (NCCC) is unique among the
various streams of AmeriCorps service. It is a 10-month residential
program run directly by the Corporation. Unlike the State and National
Direct grant programs, the Corporation administers all aspects of NCCC.
NCCC members receive a $4,000 annual living allowance, room and board,
and they receive an education award upon the successful completion of
their service.
The NCCC was approved by Congress and President Bush in 1992,
before AmeriCorps. The key sponsors included Senators Boren, Dole,
Warner, McCain, Mikulski, Spector, Seymour, Simon, Nunn, and Wofford.
The following year, the National and Community Service Act of 1993
placed the administration of the NCCC in the Corporation for National
Service.
NCCC members are housed at five campuses serving regions across the
United States. In three locations, the campuses occupy closed or
downsized military bases: the Southeast Region at the Charleston Naval
Training Center, Charleston, South Carolina; the Central Region at
Lowry Airforce Base, Denver; and the Western Region at the San Diego
Naval Training Center. The campus in the Northeast Region is located at
a medical facility for veterans in Perry Point, Maryland, and the
Capital Region campus is at a municipal facility in Southeast
Washington, D.C.
AmeriCorps*NCCC members serve in local communities and, in the
tradition of the Civilian Conservation Corps of the 1930s, are
frequently deployed on ``spikes'' to perform critical service projects.
They tutor children, rehabilitate public schools and public housing in
urban areas, help Habitat for Humanity organize ``blitz builds,'' and
provide assistance in daily living activities to low-income residents
at nursing homes.
All NCCC members receive special training in disaster relief and
are rapidly deployed to assist the Federal Emergency Management Agency
and the Red Cross in national disasters. Members have served in 45
disasters since 1994, giving direct help to victims and organizing
community volunteers to help. In the 1998-1999 program year, NCCC
members assisted 83,000 people in disaster areas; served 40,500 meals
to disaster victims; and distributed 780,000 pounds of clothing to
disaster victims. They played a crucial role in providing relief to the
flood victims in North Carolina.
Funding for 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. This funding cap has limited the number of people who can
join NCCC. Positions in the NCCC are in high demand, but the
opportunities are restricted by this out-of-date ceiling. Last year,
the NCCC received 3,430 applications for some 850 slots.
Further, because of the limit on funding, the NCCC will only be
able to provide approximately one half of the teams sought by the Boys
& Girls Clubs for major club renovation efforts this year. FEMA and the
Red Cross sought four teams for every one that could be provided for
the relief of flood victims in North Carolina. Similar requests have
been made for other natural disasters. Our campuses also report that
they have had to curtail projects requested by local educational
institutions, food banks, environmental organizations, state and local
parks, and other non-profit organizations. As a result of the $18
million cap, fewer young people have the chance to serve in NCCC and
fewer communities are being served.
To allow NCCC to meet the demand for its teams, the fiscal year
2001 budget requests $3 million in additional funding for this program.
That will support 1,100 members, an increase of 230 NCCC members
nationwide.
Special AmeriCorps Initiatives
AmeriCorps Promise Fellows.--This is our major joint initiative
with General Colin Powell's America's Promise--the Alliance for Youth,
the national mobilization for youth launched by Presidents Clinton,
Bush, Carter, Ford, and Mrs. Reagan representing her husband, at the
Presidents' Summit for America's Future. It is led by General Colin
Powell and supported by Governors, Mayors, and coalitions of non-
profits and civic leaders across the country. The five promises for
youth declared at the Presidents' summit are: (1) an ongoing
relationship with a caring adult--parent, mentor, tutor or coach; (2) a
safe place with structured activities during non-school hours; (3) a
healthy start; (4) an effective education that yields marketable
skills; and (5) an opportunity to give back to their communities
through service.
AmeriCorps Promise Fellows are a special leadership cadre of
talented AmeriCorps members dedicated to helping communities fulfill
these five promises. They do not serve with the national America's
Promise organization, but serve with and are selected and administered
by national, state, and local non-profit organizations that are
developing and coordinating large-scale activities intended to support
children and youth. There will be more than 500 Promise Fellows
nationwide in the 1999-2000 program year. In an August 9, 1999 op-ed
piece in the Jackson, Miss. Clarion-Ledger, General Powell said that
AmeriCorps Promise Fellows ``are an investment in young people, for the
purpose of helping other young people, that promises to pay unlimited
returns to our nation in the century ahead.''
Indian Country Initiative.--In fiscal year 2001, the Corporation
will replicate successful residential service program models in Indian
Country by establishing up to three residential service corps on Indian
reservations. Designed and operated by Indian tribes, these programs
will provide up to 150 Native youth ages 18-25 with the opportunity to
serve each year.
LEARN AND SERVE AMERICA
Learn and Serve America supports service-learning programs in
schools and community organizations that engage youth in meeting
education, public safety, environmental, and other human needs. The
goal of Learn and Serve America is to make service an integral part of
the education and life experiences of young people, thereby building a
lifelong ethic of responsibility and service. Learn and Serve America
programs integrate community service with academic curriculum or with
out-of-school time and extracurricular learning opportunities.
Learn and Serve America makes grants to state government entities,
Indian tribes, U.S. territories, and national nonprofit organizations.
They in turn make subgrants for local service-learning projects. In
addition, Learn and Serve America provides grants directly to
institutions of higher education. State education agencies receive
funds from Learn and Serve through a population-based formula.
Nonprofit organizations, State Commissions, Indian tribes, U.S.
territories, and institutions of higher education receive funds through
a national competitive process, which includes set-aside funding for
Indian tribes. All school and community-based grantees must demonstrate
an increasing level of matching funds to qualify for continued federal
support. Higher education grantees must provide a dollar-for-dollar
match from the first day of the grant.
Funding for Learn and Serve has been held steady at $43 million
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 demonstrated positive impact
on academic achievement, school engagement, civic responsibility, and
understanding of racial diversity. I attach a summary of the findings
of numerous studies that show that service-learning has a positive
affect on students' engagement in school and helps students acquire
academic skills and knowledge. The research finds that students who
participate in service-learning are less likely to engage in risk
behaviors and that service-learning benefits communities.
Community Coaches and Youth Empowerment Grants
For fiscal year 2001 the Corporation is requesting an $8 million
increase over the fiscal year 2000 funding level for the Learn and
Serve America program. This modest increase will fund two new
investments in community youth service: $5 million for the Community
Coaches program and $3 million for Youth Empowerment grants.
The funds sought in this budget request are to enable a Community
Coach to serve in and estimated 1,000 schools across the country.
Community Coaches will be teachers, counselors, and others, including
in some cases AmeriCorps members, who can help students make the most
of their service to the community and can act as a vital link between
the school, the business sector, and the local community. These
Community Coaches will help teachers and other school personnel to
identify and to use the resources of their surrounding community to
engage children in community service connected to their schoolwork.
They will also work with individuals, organizations, and businesses in
the community to encourage them to offer resources to the schools and
to see the schools and students themselves as community resources. The
Community Coaches initiative is based upon model programs pioneered by
Do Something, a national non-profit organization for youth leadership.
The Youth Empowerment Grants will be competitive fellowships that
reward young social entrepreneurs dedicated to solving problems in
their communities. The Corporation for National Service will make grant
funds available to community-based organizations that sponsor young
people who have designed and developed their own projects. These will
include efforts to prevent youth violence, programs to improve civic
participation, and initiatives that engage older students in tutoring
and mentoring.
The President's Student Service Scholarships
The President's Student Service Scholarships for high school
students who have given outstanding community service are now in their
third year. Scholarships have been awarded to over 7,000 young people
to date, but many more students are eligible and deserving. In fiscal
year 2000, each high school in the country is being offered an
opportunity to select a junior and a senior to receive the $1,000
scholarships. Through the National Service Trust, the Corporation for
National Service provides $500, which is matched with $500 from local
scholarship sponsors such as civic organizations. Sponsoring
organizations include Boys and Girl Clubs, Rotary, Kiwanis, local
PTA's, faith-based organizations, and local businesses. For fiscal year
2001, we propose using $7.5 million for up to 15,000 scholarships.
SPECIAL INITIATIVES AND PROGRAMS
Literacy Programs
We are grateful to you, Mr. Chairman, for your support of the
Corporation's literacy efforts and your leadership in Congress on this
issue. In its Report on the fiscal year 2000 budget, the Senate asked
the Corporation to provide $40 million in assistance to literacy
initiatives. The Corporation is currently in the process of awarding
grants with fiscal year 2000 appropriations for the 2000-2001 program
year. We will report on the use of these funds when the grant award
process has been completed.
While the grant award process for the 2000-2001 program year has
not been completed, based on our prior experience I fully expect the
Corporation to exceed $40 million in literacy assistance. In November
1999, Abt Associates, under contract to the Corporation, completed an
independent descriptive study of AmeriCorps Literacy Programs: State
and National. The objectives of the study were to: describe
AmeriCorps*State/National programs that conduct educational activities
in terms of their programmatic structures and the literacy and tutoring
activities they have implemented; identify programs using effective
reading/literacy instructional models likely to improve children's
reading abilities; and describe the target population receiving
services.
The study documented a substantial level of literacy activity. In
1998-99, AmeriCorps*State/National programs engaged more than 10,000
members, involving 40,000 volunteers, to provide literacy services to
over 260,000 individuals, 90 percent of whom are children. The
following details were noted concerning AmeriCorps*State/National
programs:
--Slightly more than half of all programs (54 percent) are involved
in education.
--Thirty-seven percent of all programs provide direct tutoring in
reading.
--Forty-two percent of all programs provide literacy services.
--Most AmeriCorps*State/National literacy programs are sponsored by
community-based organizations (61 percent) or educational
institutions (29 percent).
--Almost three-quarters of AmeriCorps*State/National literacy
programs have been operating for two or more years. Almost half
have received State/National grants since AmeriCorps' first
year of implementation, 1994-95.
By extrapolation from these data, programs providing literacy
services received more than $97 million from the AmeriCorps State/
National program in 1998-99, although some of these projects provided
more than literacy services. This level of support far exceeds the
requested level sought in the Senate Report.
The Abt Associates Study also contained findings relevant to best
practices in literacy programs:
--Almost all literacy programs provide some training to members and
volunteers in literacy instruction and in working with
children. Typically, about 16 hours of training are provided
before and 20 hours are provided during the delivery of
literacy services. Training is provided by a combination of
staff from the sponsoring agency, the AmeriCorps program, the
school district, and/or outside experts.
--Three-quarters of the programs conduct formal evaluations to assess
the effectiveness of their literacy activities.
--Over half of the tutoring programs report that tutors conduct
decoding activities with students (i.e., activities that help
beginning readers develop sound-symbol correspondences).
--Most of the tutoring programs incorporate some of the structural
and instructional features perceived by educators and
researchers as important for positive reading outcomes. The
features reported most frequently include:
--Coordination of tutoring activities with the classroom
curriculum;
--Adequate intensity of tutoring activities-meeting at least twice
weekly for at least 1.5 hours/week; and
--Provision of training to members and volunteer tutors before and
during service delivery in two important content areas: (1)
reading and tutoring children; and (2) child development.
--Almost half of the tutoring programs use well-known, widely-used
instructional models (e.g., Reading Recovery, Reading One-to-
One, Success for All).
Abt Associates is also conducting a study to measure the outcomes
of these literacy and reading efforts. That survey should be completed
in the fall. We have conducted studies of other education and literacy
programs. First, a study of tutoring in 16 District of Columbia schools
concluded that tutored students made significant gains on a number of
measures in reading performance and demonstrated greater gains on
standardized achievement tests than did non-tutored students. A second
study of the Corporation's senior demonstration programs, which are not
funded by this Subcommittee, found similar positive results in reading
scores, with many students showing dramatic improvements.
In addition, we have data on some successful outcomes in individual
programs:
--Washington Reading Corps.--In the first year of operation of this
State of Washington initiative launched by Governor Locke, some
20,000 students at 196 elementary schools statewide received
425,000 hours of tutoring help from AmeriCorps members. The
number of fourth-graders who met the state reading standard
rose 11 percent at the schools with AmeriCorps tutors, compared
to 6 percent statewide.
--Greensboro Elementary School, Gadsden Co., Florida.--As part of the
Gadsden Reads program, AmeriCorps members have worked with
students identified as being behind their grade levels in
reading by 1\1/2\ grade levels or more. Since the Spring of
1997, 198 elementary students who have participated in the
program on average are barely half a grade level behind norms.
Students who have been with the program for its full two years
have improved their reading an average of nearly four grade
levels.
In addition to these impressive findings, we have previously
testified about the successes for the Reading One-to-One program
participants in Texas. Researchers have found documented gains 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.
Mr. Chairman, we will continue to work with you on emphasizing the
importance of literacy in America through our service programs.
Digital Divide
Another special initiative in which many Members of Congress have
shown a keen interest is closing the digital divide. Senator Mikulski
is our special mentor in this area. She is a leader in recognizing that
like literacy, the digital divide between the haves and have-nots in
technology means that many Americans are unable to use the nation's
abundant information resources. We are delighted by Senator Mikulski's
proposal for an ``E-Corps,'' an effort to bring the needed ``people-
power'' of AmeriCorps members to close the digital divide.
President Clinton recently announced a special ``down payment'' on
the E-Corps that has two parts. AmeriCorps will hold a special
competition for $10 million in grants for projects specifically
designed to help spread technology access and skills to those who might
not otherwise have opportunities. Learn and Serve America is also
making $2.5 million in grant funds available for service-learning
projects devoted to bridging the digital divide. This investment of
existing resources is a step toward making Senator Mikulski's vision of
an E-Corps a powerful reality.
The private sector is also engaged in supporting the E-Corps
initiative. The President also announced that the Yahoo!, the Internet
portal, has pledged up to $1 million in on-line public service
announcements concerning our efforts to bridge the digital divide and
to help recruit AmeriCorps members to serve in technology-related
projects.
Several AmeriCorps programs are already directly involved in
efforts to close the digital divide at the national and local levels.
AmeriCorps members are wiring schools to the Internet, training
teachers on how to use technology in the classroom, and providing one-
on-one instruction to children and adult learners. Here are a few
examples receiving funding through this Subcommittee:
--Project FIRST.--Under this initiative of the Public Education
Network, one of our National Direct Grantees, AmeriCorps
members are refurbishing and installing computers and other
components in schools. They are assisting educators, students
and adult learners in using the technology. Project FIRST
achieves its objectives through a partnership with IBM.
--A STAR.--This program, located in Western Maryland, is using the
world-wide-web to enhance after-school programming.
--Lyndon State College, Vt..--AmeriCorps members operate resource
centers that provide residents of rural Vermont with computer
resources, educational material, and courses on adult literacy
and parenting skills.
--City Year, Cleveland.--In partnership with the West Side Community
Computer Center and the Salvation Army Computer Center,
AmeriCorps members are developing and implementing an out of
school computer program curriculum for children in Kindergarten
through Grade 5.
The NCCC is working in schools, YMCAs, and Boys & Girls Clubs
across the country performing a number of tasks in support of bridging
the digital divide, and complimenting the PowerUp program. This
includes assisting in the wiring and setup of sites for computer use,
installing computer labs, teaching students and low income adults how
to use computers, introducing computers into schools, familiarizing
teachers with computers, and tutoring students in other subjects with
computers.
Most of the Corporation's streams of service are involved in
efforts to bridge the digital divide. Outside of this Subcommittee,
AmeriCorps*VISTA also has an outstanding group of national and local
projects focusing on this issue including PowerUP. PowerUP is a
partnership with America's Promise, AOL, the YMCA, Boys and Girls
Clubs, and other organizations, that will deploy up to 400
AmeriCorps*VISTA members in community technology centers around the
country. AOL, Gateway, Sun Microsystems and other corporate partners
have pledged more than $10 million in support to this effort.
AmeriCorps*VISTA is funded through the Labor-HHS Subcommittee.
Service for America's Veterans
Many AmeriCorps members practice their patriotism on the home front
by serving those men and women whose patriotism was demonstrated
through service in the armed forces. Mr. Chairman, you have been
recognized for your leadership on Veterans issues, particularly the
needs of homeless veterans.
One of the most important initiatives that the Corporation funds
through our National Direct grant program is the U.S. Veterans program,
formerly the Los Angeles Veterans Initiative. U.S. Vets has a $1.1
million grant supporting the service of more than 100 AmeriCorps
members, many of them formerly homeless veterans themselves, in three
cities: Los Angeles, Houston, and Washington, D.C. U.S. Vets works in
partnership with property developers and managers, and human service
agencies assisting homeless veterans to become self-sufficient. The
program has reached more than 10,400 homeless veterans and provided
more than half of those with referrals to shelters, treatment centers,
transitional housing, as well as other necessary services.
In addition to U.S. Vets, the Navajo Nation Department of Navajo
Veterans Affairs has 30 AmeriCorps members helping veterans and their
families get access to quality care services. The members serve in five
Veterans' Affairs offices across the Navajo nation, the largest
reservation with territory in Utah, Arizona, and New Mexico.
As you know Mr. Chairman, many of our veterans are homeless. U.S.
Vets have found that more than half of the homeless people they serve
are veterans. The Corporation has numerous programs that assist
homeless people. Programs such as the Catholic Network of Volunteer
Service, an Education Awards program with over 1,000 AmeriCorps
members, serves tens of thousands of homeless people, along with the
other service of the AmeriCorps members.
Many local AmeriCorps programs and their members serve veterans in
a wide range of ways, from more institutional settings such as working
in VA hospitals or Veterans retirement homes, or in more informal ways
such as serving senior citizens who are veterans. Many of the
participants in our Senior Companion program, Foster Grandparents, and
the Retired Seniors in Volunteer Program are veterans. The Corporation
is currently reviewing grant applications for the 2000--2001 program
year. We will report on the grants awarded to veterans programs for the
coming year.
SUCCESSFUL COLLABORATIONS: THE POINTS OF LIGHT FOUNDATION AND AMERICA'S
PROMISE
The Points of Light Foundation
In fiscal year 2001, the Corporation will continue its successful
collaboration with the Points of Light Foundation. The budget request
for the Foundation is sustained at last year's level of $7.5 million.
The funding will be used by the Points of Light Foundation to carry out
its fundamental purposes, as established by President Bush, endorsed by
Congress, and continued with the support of President Clinton:
--Encouraging every American and every American institution to help
solve the nation's most critical social problems by
volunteering their time, energies, and services through
community service projects and initiatives.
--Identifying successful and promising community service projects and
initiatives with nonprofit organizations, corporations,
families, and youth, and disseminating information concerning
such projects and initiatives to other communities in order to
promote their adoption nationwide.
--Building the capacity of institutions to support volunteer service,
and developing individuals as leaders to serve as strong
examples of a commitment to serving others and to convince all
Americans that a successful life includes serving others.
The Points of Light Foundation supports a network of hundreds of
Volunteer Centers nationwide. An increasing number of AmeriCorps
members and AmeriCorps*VISTA members are working directly with, and
under the leadership of, these centers for volunteer service. In fiscal
year 2001, the Foundation will expand its efforts to build the
capacity, visibility and sustainability of a unified nationwide network
of local Volunteer Centers. The Points of Light Foundation is committed
to working in close partnership with these local organizations in the
implementation of its overall strategic plans. The result will be to
build a strong, dependable ``delivery system'' that mobilizes
volunteers and other resources to address local needs. Last year, with
President Clinton's support, the award of daily Points of Light has
resumed. These awards of recognition are made by the Foundation in
cooperation with the Corporation for National Service and the Knights
of Columbus.
America's Promise--the Alliance for Youth
The Corporation also works closely with America's Promise--the
Alliance for Youth. This national mobilization for youth was
established at the Presidents' Summit for America's Future convened by
President Clinton and President Bush at Philadelphia in 1997, and
chaired by General Colin Powell. The Corporation for National Service
and the Points of Light Foundation were the two initiating and
sponsoring organizations, joined by the United Way of America and other
major service organizations. I attach the Declaration of Philadelphia
with the five promises--or goals--for children and youth. Hundreds of
organizations from all sectors of American life--nonprofit, volunteer,
religious, business, and government--have made major commitments to the
goals of America's Promise.
The fiscal year 2001 budget proposes a $7.5 million grant to
America's Promise to help fulfill its mission. The grant will support
operational costs of the national organization, as well as activities
consistent with the mission described above. It is anticipated that
that these funds will supplement other ongoing activities and
contributions toward the goals and objectives of America's Promise.
EVALUATION
The budget requests $5 million for evaluation, continuing the
fiscal year 2000 level. Evaluation remains a high priority for the
Corporation, as we continue to measure the impact our programs are
having across the country and identifying areas that require
improvement. Since 1994, the emphasis of the evaluation effort has been
to determine the impact of Corporation programs in achieving the goals
set for the Corporation in the National and Community Service Act. A
priority in fiscal years 2000 and 2001 is to support studies identified
in our performance plan, as required by the Government Performance and
Results Act.
We have completed a number of evaluations that show the value of
national service to communities and to AmeriCorps members. An
independent study by Aguirre International found that AmeriCorps
service strengthens communities and nonprofit organizations,
effectively prepares Americans for the future by improving job
readiness skills, and that AmeriCorps provides $1.66 in benefits to
communities for every dollar spent (See Attachment).
the martin luther king, jr. day of service
This year, Americans across the country celebrated the King
Holiday, honoring the life and work of Martin Luther King, Jr. For the
past five years, the Corporation has sponsored the King Holiday day of
service, pursuant to the mandate to the Corporation in the King Holiday
and Service Act of 1994. The King Center for Nonviolent Social Change,
the Points of Light Foundation, the United Way of America, Habitat for
Humanity, Youth Service America, Best Buy Company, Do Something, and
First Book were partners in the successful effort to make January 17,
2000 ``a day on and not a day off.'' In consultation with the King
Center, the Corporation provided grants to 137 public and non-profit
organizations to assist in more than 300 service activities nationwide.
Each year, the idea of service as the focus of the King holiday has
been spreading; the community collaboration in doing this will grow
further in 2001.
CONCLUSION
Mr. Chairman, this will probably be the last time in my current
role that I appear before you. I have had the honor and privilege of
working with the members of this Subcommittee. And it has been a
privilege and honor to work with some of the finest professionals I
have ever known on the Corporation staff, on our Board of Directors, at
the Points of Light Foundation, at America's Promise, in state and
local governments, and in America's great nonprofit organizations. I
have also had the special opportunity to meet countless AmeriCorps
members, students in service-learning, and seniors in service to their
communities across the country. They are the new patriots on the home
front that our country needs.
Mr. Chairman, Americans can be proud of what national service has
accomplished. They can also be proud of the dedicated, non-partisan
organization that we have worked steadily, day-by-day to build. America
is now positioned to make service to community a common expectation of
all Americans. It has been a tremendous experience for me to serve in
this enterprise. I look forward in the remaining months of this session
to continuing our work together.
______
Attachment A
National & Community Service Coalition
SUPPORT FOR REAUTHORIZATION OF NATIONAL SERVICE LEGISLATION
The undersigned members of the National and Community Service
Coalition (Coalition) voice their strong support for reauthorization of
the National and Community Service Act of 1990 and the Domestic
Volunteer Service Act of 1973.
Established in 1994, the Coalition is a network of 80 national,
state and local organization which share a commitment to ensuring that
Americans of all ages and backgrounds can contribute their time and
talent to the public good. The Coalition represents the breadth and
diversity of an evolving service movement and included representatives
from:
--Long-established voluntary organizations, such as Big Brothers/Big
Sisters of America and Youth Service America;
--The growing network of K-12 school-based and community-based
service learning programs, such as the National Youth
Leadership Council;
--College and university-based service programs, such as Campus
Compact;
--Senior volunteer programs, such as the National Association of
Retired Senior Volunteer Program Directors and the National
Association of Foster Grandparent Program Directors;
--Faith-based service organization, such as the Catholic Network of
Volunteer Service; and
--An array of national, state and local organizations which engage
AmeriCorps member, VISTA Volunteers and thousands of other
citizens in full-time service programs, such as City Year,
Service and Conservation Corps, and YouthBuild USA.
In recent years, we have seen firsthand how the federal investment
has spurred the growth of service opportunities and mobilized hundreds
of thousands of school-aged children, young adults and senior citizens
to tackle an array of our nation's educational, social and
environmental needs. They have contributed to the safety and well being
of our most vulnerable citizens, the improvement of reading skills
among young children, the protection of our endangered natural
resources, the construction and renovation of homes for low-income
families, and the restoration of individual neighborhoods and
communities across the country.
Federal funds constitute a small, but strategic, portion of the
total resources which support national service. Moreover, the vast
majority of federal funds pass straight through to State Commissions
which, in turn, award grants to locally-controlled programs on a
competitive basis that emphasizes both quality and cost effectiveness.
Finally, the federal government's involvement in national service
builds on the nation's well established tradition of volunteerism and
on decades of painstaking development by grass-roots service programs--
both of which have long enjoyed nonpartisan support from elected
officials at every level of government.
It is important to note that the sheer reality of federal
legislation and leadership has brought heightened visibility, as well
as a new state, local and private resources to the service movement.
The Federal investment is reaping handsome dividends and should be
continued.
Alliance for Catholic Education
American Association of Community Colleges
American Association of Retired Persons
American Red Cross
American Youth Foundation
American Youth Policy Forum
AmeriCorps Alums
Arkansas Commission on National Service
ASPIRA Association, Inc.
Association of Farmworker Opportunity Programs
Big Brothers/Big Sisters of America
California Commission on Improving Life through Service
California Department of Education
Campus Compact
Catholic Network of Volunteer Service
City Year
Connecticut Commission on National and Community Service
Constitutional Rights Foundation
Earth Force
East Coast Migrant Head Start Project
Florida's Office of Collegiate Volunteerism
Georgetown University--Volunteer & Public Service Center
Girl Scouts of the USA
Kentucky Department of Education
Literacy Volunteers of America
Louisville Youth Alliance
Maine Commission on Community Service
Maryland Governor's Commission on Service
Maryland Student Service Alliance
Massachusetts Campus Compact
Mid-Atlantic Network of Youth and Family Services
Minnesota Commission on National and Community Service
National Association on Foster Grandparent Program Director
National Association of Independent Colleges and Universities
National Association for Public Interest Law
National Association of RSVP Directors
National Association of Senior Companion Directors
National Association of Service and Conservation Corps
National Crime Prevention Council
National School & Community Corps
National Society for Experimental Education
National Youth Leadership Council
Notre Dame Mission Volunteers, Inc.
Pennsylvania Institute for Service Learning
Points of Light Foundation
Project Service Leadership
Rhode Island Commission on National and Community Service
Summerbridge National
Teach for America
United Cerebral Palsy Associations
University of Pittsburgh--MARS Program
Utah Commission on Volunteers
West Virginia Commission for National and Community Service
YMCA of the USA
Youth Volunteer Corps of America
YouthBuild USA
Youth Service America
Youth Service Coalition
______
Statement of Tom Jones, Director, Washington Office, Habitat for
Humanity
Thank you members, colleagues, and friends. It really is a
privilege and joy to be here to officially express the appreciation of
Habitat for Humanity International for all of the programs of the
Corporation for National Service, and for all that has gone before and
for the huge expectations of what has yet to be as the result of this
reauthorization.
As Congressman Shays just said, all of our leaders at Habitat have
not always been for AmeriCorps and the Corporation. But Millard Fuller,
to his credit, has had a complete 180 degree turn, and he has said that
publicly and literally today there is no one in this country that's
more committed--not even Harris Wofford--to the Corporation for
National Service.
The frustration of this moment is there aren't enough minutes to
tell all the facts about the difference the programs of the Corporation
for National Service are making in the mission of Habitat for Humanity
across this whole country. Just in terms of AmeriCorps National
program, we now, I think, have about 775 service corps members
involved. We are now heading towards 2 million service hours. We can
now count 1,372 Habitat houses that have been built as the direct
result just of national AmeriCorps. We know and can count over 177,000
Habitat volunteers who have been supervised by AmeriCorps volunteers--
the skills that are learned and all that is taught. And this doesn't
begin to say all that has been involved with. Habitat is involved with
VISTA and with state AmeriCorps and with NCCC. And now, as was
indicated, Senior Corps, we have a wonderful model being developed in
the Midwest of Senior Corps and Habitat for Humanity. And on and on it
goes.
The only criticism that we in Habitat, if you want to call it that,
hear about AmeriCorps, about the other programs of the Corporation for
National Service is, we need more. The problem it has created for us is
we have 1530 affiliates across the United States each with its own
local board, and each one of these is now clamoring, how can we get
involved, how can we have AmeriCorps, and Senior Corps and VISTA
workers doing it with us. The potential is unlimited.
You know, even as we sit here right now, there are boys and girls
and young people coming home from school, entering their own home that
their families own--proud of this--to go to their own kitchens and have
their after-school snacks, to head to their own bedrooms to do their
homework, to sleep tonight in a decent home and to get up tomorrow
refreshed and to head to school again. This and so much more of that is
happening because of what all of us together in this great program
called the Corporation for National Service are doing together.
We are here to say thank you, we are here to say, let's take our
hats off to the past, let's now take our coats off to the future
together to make it even more and more significant in these years
ahead. Thank you.
BUILDING SKILLS AND COMMUNITIES: KEY FINDINGS ON THE IMPACT OF
AMERICORPS
An independent study performed by Aguirre International shows that
AmeriCorps members are significantly improving communities in a cost-
effective way. The main findings of the evaluation include the
following:
AmeriCorps Effectively Prepares Americans for the Future
--AmeriCorps improves participants' job readiness skills in
communications, interpersonal relations, analytic problem
solving, understanding of organizational systems, and
technology.
--Members with low skills and little employment experience developed
new skills and enhanced existing skills.
--Members indicated that AmeriCorps had instilled in them a
commitment to the ethic of service--99 per cent of members
reported plans to continue some form of community service in
the future, including careers in public service and community-
oriented work.
AmeriCorps Strengthens Communities
--Regardless of specific assignment-tutoring children, running after-
school programs, helping communities recover after natural
disasters, improving health care services, or making
neighborhoods safer-AmeriCorps members help bring communities
together by providing needed services, strengthening nonprofit
organizations, and getting children, families, and others more
involved in solving local problems.
The Benefits of AmeriCorps Outweigh the Costs
--Direct benefits to communities and AmeriCorps members are at least
$1.66 per dollar spent, showing that the program was ``a
successful investment of federal and community funds.''
The study by Aguirre International, Making a Difference: Impact of
AmeriCorps*State/National Direct on Members and Communities 1994-95 and
1995-96, was compiled from information from a survey of program
accomplishments, interviews at 60 randomly selected programs, and case
studies of eight sites. The report is available from the Corporation
for National Service at (202) 606-5000 ext. 437.
______
[From the Albany Herald Opinion, Mar. 8, 1999]
Habitat, AmeriCorps Good Partners
(By Millard Fuller)
I admit I was skeptical a few years back when a partnership between
Habitat for Humanity and AmeriCorps was proposed. How could a
nonprofit, nonpartisan organization such as ours, with faith in God at
our core, work in tandem with a federally sponsored bureaucratic
program?
The whole notion struck me as a sure-fire recipe for inaction and
red tape. Now, four years later, my concerns have vanished, replaced by
the reality of a successful partnership between AmeriCorps and Habitat
for Humanity affiliates across out nation.
Since 1994, more than 50 Habitat affiliates have worked with more
than 2,000 AmeriCorps members and participants in other national
service programs sponsored by AmeriCorps' parent, the Corporation for
National Service. This year, more than 500 AmeriCorps members are
wielding hammers and recruiting more volunteers for Habitat for
Humanity.
This spring, AmeriCorps members are playing an exciting role in
Habitat's Collegiate Challenge: Spring Break 1999. During Collegiate
Challenge, more than 7,500 college students are dedicating their
vacation time to building houses in partnership with God's people in
need.
Hundreds of college students are expected to arrive in Albany ready
to put their muscle behind the efforts to house people in need.
Projects are urban, as in Miami, and rural, as in Belen, N.M. At sites
like these, AmeriCorps members provide helping hands and supervisory
skills needed to get the job done.
Helping people is what Habitat for Humanity is all about. Since
1976, Habitat--now at work in 61 countries--has been helping people in
need of shelter build or renovate simple, decent, affordable houses.
Investing their ``sweat equity'' in the building process, then
buying the houses through zero-interest loans, Habitat homeowners build
not only homes, but also new lives for themselves and new hope for
their communities.
To date, more than 350,000 people are living in Habitat houses. But
this is just a start. Habitat for Humanity, by working in partnership
with future homeowner families and with other organizations that share
our vision, is working toward a world free of poverty housing and
homelessness.
AmeriCorps has proven to be a good, reliable partner in many areas
of the United States.
By offering local nonprofit groups a network of full-time trained
people available for one-or-two-year stint, AmeriCorps helps maximize
local resources. That's important to volunteer organizations like
Habitat for Humanity. Our affiliates find hundreds of good people who
want to help build houses in their off-hours, but few know much about
construction.
That's where AmeriCorps has played such a vital role, AmeriCorps
members help train local people in basic construction skills. They are
there day in and day out, supervising and directing the part-time
efforts of others.
The continuity, leadership and knowledge that AmeriCorps members
provide allow us to increase both the number of volunteers we are able
to mobilize effectively and the overall productivity of our efforts.
Habitat for Humanity and AmeriCorps have much in common. We share a
goal of community-building. We share a belief in self-help and service,
I no longer think of AmeriCorps as a bureaucratic program. AmeriCorps
is a partner in the movement to eliminate poverty housing.
Millard Fuller of Americus is founder and president of Habitat for
Humanity International.
______
The Impact of Service-Learning on Students and Communities
A number of studies have examined the impact of service-learning
programs across all levels of education, and Learn and Serve America
programs in particular. The findings of these studies are positive and
outcomes are quite consistent.
Studies show that service-learning activities that are well-
designed, linked to intentional learning outcomes, and engage students
in significant amounts of service have strong benefits to student
participants and to the communities they serve. The information
provided below highlights only a few of the many positive outcomes of
service-learning.
In addition to having positive outcomes for students and
communities, Lear and Serve America programs have been shown to be a
good investment. For every federal dollar spent, $5.60 worth of
services were provided to the community (Melchior, 1999).
Service-Learning has a positive effect on students' engagement in
school
Students engaged in service-learning have higher attendance rates
than their peers who are not (Shaffer 1993; Supik 1996; Shumer 1994).
Students at all levels feel they learn more in service-learning
classes than other classes (Weiler, LaGoy, Crane, and Rovner 1998;
Berkas 1997)
Students engaged in service-learning are more likely to graduate
(Astin and Sax 1998; Roose, Daphne, Miller, Norris, Peacock, White and
White 1997).
Educators and students in schools with strong service-learning
programs report a more positive school climate through a greater
feeling of connectedness to the school (Billig and Conrad 1997; Wieler,
et al 1999) and through decreased teacher turnover and increased
teacher collegiality (Weiler, et al 1999)
Service-Learning helps students acquire academic skills and knowledge
Service-learning participation is associated with higher scores on
the state test of basic skills (Anderson, Kinsley, Negroni, and Price
1991) and higher grades (Shumer 1994; Shaffer 1993; Dean and Murdock
1992; O'Bannon 1999).
Students who participate in high quality service-learning programs
show greater school engagement and achievement in mathematics than
control groups (Melchior 1999).
Middle and high school students who participate in service-learning
tutoring programs increase their grade point averages and test scores
in reading/language arts and math, and are less likely to drop out of
school (Supik 1996; Rolzinski 1990)
Students or faculty report that service-learning improves students'
ability to apply what they have learned in the real world (Eyler and
Giles 1999; Gray, Ondaatje, Zakaras 1998; Oliver 1997; Nigro and
Wortham 1998).
Students who participate in service-learning are less likely to engage
in risk behaviors
High school and middle school students engaged in service-learning
are less likely to engage in behaviors that lead to pregnancy or arrest
(Melchior 1999; Allen, Kuperminc, Philliber, and Herre 1994; Shaffer
1993).
Students who engage in service-learning are less likely to be
referred to the office for disciplinary measures (Follman 1997; 1998).
Service-learning has a positive impact on students' social and civic
development
Students who engage in service-learning programs report a greater
acceptance of cultural diversity (Melchior 1999; Berkas 1997).
High school students who participate in service-learning programs
are more likely to develop bonds with more adults and agree that they
could learn from and work with the elderly and disabled (Morgan and
Streb 1999).
Students who engage in service-learning increase their
understanding of how government works (Berkas 1997).
High school students who participate in service-learning are more
likely to be engaged in a community organization and are more likely to
vote fifteen years after their participation in a program than those
who did not participate (Youniss, McClellan, and Yates 1997; Yates and
Youniss 1998).
Service-Learning benefits communities
Community members who participate in service-learning as partners
with the school see youth as valued resources and positive contributors
to community (Billig and Conrad 1997; 1999; Weiler, et al 1999;
Melchior 1999; Kinsley 1997).
90 percent of agencies indicated that Learn and Serve America
participants helped the agency improve their services to clients and
the community (Melchior 1999).
______
Summit Declaration
Two centuries ago, America was founded on the proposition that just
as all people are endowed by their Creator with inalienable rights,
citizenship entails undeniable responsibilities. As each of us has the
right to Life, Liberty, and the Pursuit of Happiness, each of us has an
obligation to give something back to country and community a duty to
take responsibility not just for ourselves and our families, but for
one another. We owe a debt of service to fulfill the God-given promise
of America, and our children.
In this time of opportunity at the dawn of a new century and a new
millennium the need for shared responsibility is self-evident.
The challenges of today, especially those that confront our
children, require a special commitment of us all. People of all ages
and from all walks of life must claim society's problems as their own,
pulling together, leading by example, and lifting American lives.
Our obligation, distinct and unmistakable, is to assure that all
young Americans have
--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 healthy future
--An effective education that equips them with marketable skills
An opportunity to give back to their communities through their own
service
As Americans and Presidents, we ask every caring citizen to pledge
individual commitments of citizen service, voluntary action, the
efforts of their organizations, or commitments to individual children
in need. By doing so, this nation pledges the fulfillment of America's
promise for every American child.
Gerald R. Ford,
James Earl Carter,
Ronald W. Reagan/by Mrs. Nancy
Reagan,
George H.W. Bush,
William Jefferson Clinton,
The Presidents of the United States.
Senator Bond. Thank you very much, Senator Wofford. And I
would be remiss if I did not say that it has been a real
pleasure to work with you during the period that you have
served as head of the Corporation, and I certainly commend you.
No one could have provided greater spirit, enthusiasm and
commitment to the program than you have. And it has been a
pleasure to work with you.
Now, having said that, I move on to the questions.
FINANCIAL MANAGEMENT
In your 21 pages of testimony and 9 pages of statements of
support, you outline on the basis of the work of the
Corporation, and the work of the participants, that the
Corporation is able definitively to say that it has been able
to achieve all of the goals of its programs.
The testimony provides statistics on a number of State and
national direct programs, and you cite articles from Habitat
for Humanity in support of the Corps. For all of these reasons,
the Corporation believes that its appropriated funds are being
well spent and justifies a significant increase.
While I appreciate the letters of support and the news
articles, I am curious to know how the Corporation can
definitively know how its programs are working when, one, the
Corporation does not have a reliable cost accounting system in
place, and your financial systems cannot effectively and
efficiently provide reliable and timely information; two, your
performance report seems to emphasize outputs rather than real
outcomes; and, three, the OIG continues to identify a number of
problems with your grantees.
Senator Wofford. The grantees that you were referring to
earlier, Mr. Chairman, are the governor-appointed State
commissions, which is the essential structure that Congress set
up. So each of those State commissions is the first body that
makes the decisions, appraises, monitors and--it is not that
they are troubled, but that they have major responsibilities
under this structure that Congress set up.
They are increasingly producing the evaluations themselves.
Second, the devolution in the Corporation is to the non-profit
sector; so the organizations that, in fact, select the
AmeriCorps members, run the programs, themselves are developing
an increasing record of evaluations on outcomes, not just
input.
We want to summarize for you and make sure that you have
looked at the number of evaluations that are focused on
outcomes such as the evaluation that was given on the District
of Columbia literacy efforts, which is focused on outcomes. I
think if we can put together the record of those evaluations
this year, they will in many ways answer the question of the
achievements of the AmeriCorps members and the other parts of
National Service.
We have, with the help of the State commissions, operated a
program that has made the decisions on grants that have been
made successfully in these last years. The outcome record is
being developed, and I think we have to solve our management
problems here. And we are on the road to doing so.
But the programs themselves are extraordinarily successful,
as recognized by the tremendous demand from the non-profit
sector and from the governors of this State--of this country
for more AmeriCorps members.
[Clerk's note.--The program evaluations submitted by the
Corporation can be found in the Subcommittee files.]
COST ACCOUNTING
Senator Bond. OIG and KPMG auditors have recommended the
Corporation install a cost accounting system. Would you agree
with that recommendation?
Senator Wofford. Well, I would like Tony Musick to speak to
that. We are moving in that direction, but it has questions
about it.
Mr. Musick. Right. We would have no disagreement about
installing a cost accounting system. Our issue has always been
as to the timing. This past year, we just implemented a new
finance system. We needed to get the core system in place.
We are already in a position where there is new releases of
this package by the--the vendor, because it is an off-the-shelf
package. So we have to implement that. And then the other
higher priority seemed to be a grant system.
Cost accounting, it has been on our plate but, again, there
is only so much that we can get done with the resources and the
people. And we have tried to focus on what we think are the
higher priority issues. But cost accounting would be on the
list, but just at a later date.
PROGRAM ADMINISTRATION
Senator Bond. For the past 2 years, the administration has
requested additional administrative funds to address urgent
program administration needs. And we have provided $3 million
in fiscal year 1999 and $1.5 million last year. And the
Corporation is still requesting another budget increase. I am
concerned about how the Corporation can account for these funds
in the absence of a cost accounting system.
And second, in terms of the almost $8 million requested in
additional funds for program administration, what workload
analysis is this based on? In other words, does this amount
take into account the administration's plan to increase the
AmeriCorps membership by 12,000 in fiscal year 2001 and
initiating new proposed programs?
And I also would like you to address in terms of the budget
submission, why 52 staff members in public liaison recruit and
other programs? That is about 15 percent of the workforce, and
I would like to know what the responsibilities of these staff
members would be, and how much the positions pay. And is this a
wise allocation when you still have management problems in the
program?
Senator Wofford. I would like Wendy Zenker to comment on
that. But I will just make the point that much of the staff you
are just pointing to is focused on developing the private
sector partnerships and support from the private sector which
has been so important to this success of ours.
Ms. Zenker. There were several points that you made. I
think some we can answer right now. Others, we might like to
get back to you for the record.
Senator Bond. Please, if you would.
Ms. Zenker. With respect to the $3 million extra money that
you gave us in 1999, we have been able to give expenditures
reports to the Congress that have also been looked at by the
Inspector General through an audit that KPMG did of the action
plan, so that we generally think we have given you good
information on how we spent that $3 million.
When you look at our 2001 request, we are asking for more
money for program administration. We have needs for both new
systems to bring on line to continue the improvements that you
have seen in 1999 and that we are working on now in 2000, as
well as additional people.
We are seeing the money you gave us in 1999 helped us to
hire the people that made a difference in terms of reducing the
material weaknesses and bringing new systems up. We would like
to continue those improvements. We are doing it this year. We
would like to continue it in 2001. But we can provide
additional information for you.
[The information follows:]
The Corporation is requesting an additional $7.7 million for
program administration in fiscal year 2001. This request is based on
our analysis of current needs irrespective of any increase in
AmeriCorps membership or new program initiatives. Of this, $4.1 million
is requested to support additional management systems improvements and
additional staff resources for the Corporation; and $3.6 million is for
State Commissions.
Corporation Program Administration Requirements.--The management
system improvements that the Corporation is planning for 2001 include
the implementation of additional modules to the financial management
system. These include an accounts receivable subsystem, a travel
management system, and an inter-agency electronic transfer interface.
Our most important system initiative for 2000-2002 will be the
design and implementation of an integrated grants management system. We
have started work on a new grants management system. We are conducting
the requirements analysis for the new system with funds made available
in fiscal year 1999 and plan to contract for system design work in
fiscal year 2000. Our plan is to build the system following a modular
approach, designing and implementing the core modules first. Additional
modules will be built with funds requested in the 2001 budget. In the
fiscal year 1999 financial statement audit, the Inspector General noted
the critical need for the Corporation to build the grants system.
The Corporation also needs to meet the increased demand for
information on our programs and service opportunities through the web.
We are starting work on a web-based recruitment system that will allow
individuals to express their interest in serving and be matched with
service opportunities in all of AmeriCorps, including AmeriCorps*VISTA
and AmeriCorps*NCCC. Corporation application forms and other documents
will be available to grantees and the public through the web. We will
also provide a repository of Corporation policies and procedures on the
web for Corporation grantees. Funds requested in fiscal year 2001 will
support these activities.
Finally, of the funds requested for the Corporation, some
additional resources will be directed towards hiring staff. The areas
for increased attention include AmeriCorps program officers to support
their efforts to better manage and monitor grantees; additional staff
in the National Service Trust for customer service, data quality and
payment processing; staff for the Grants Office, especially to work on
grants closeout; and staff to support increased technology initiatives.
State Commissions.--The remainder of the program administration
increase ($3.6 million) is requested for grants to State Commissions
for administration. The budget request states that these increased
monies would not be subject to a match by State Commissions. (The
fiscal year 2000 baseline of State Commission administrative funds will
continue to be matched at 50 percent.) The Corporation believes that
there have been increased responsibilities placed on State Commissions
over the past several years. More authority has devolved to State
Commissions including an education award-only portfolio; more inclusion
of people with disabilities; more responsibility for member training;
and more responsibility to act as the main state organizer/catalyst for
volunteer activities, including the statewide America's Promise work.
Starting this year, we are also requiring that States participate in
the Administrative Standards review assessment, and they are responding
to the pre-audit surveys and subsequent audits that will be performed
by the Inspector General in the coming years. The State Commissions
have been required to match their administrative grant at an increasing
level--initially the match was 15 percent and has grown to the current
50 percent match.
For these reasons, we believe that increased program administration
funds should be made available to State Commissions in fiscal year
2001.
______
OIG CLARIFICATION
OIG and KPMG did not audit the Action Plan. Instead we reviewed the
plan and issued OIG report 00-13 on December 1, 1999. In that report,
we clearly stated that the Corporation's reported expenditures were
budget estimates and that the Corporation lacks a cost accounting
system to track actual expenditures against the funds allocated to
Action Plan activities in accordance with the Corporation's fiscal year
1999 appropriation requirements.
Senator Bond. Thank you, the 52 staff and public liaison?
Ms. Zenker. The 52 staff and public liaison, if I can talk
about the two functions that they perform: One, we have our
recruitment function as part of that 52. And between the NCSA
program and the DVSA recruitment actions, people work to find
both VISTA members as well as to advertise AmeriCorps and try
to bring in more AmeriCorps members.
The public liaison function actually does good work for us
in forming partnerships with private sector corporations. We
are pleased to report, for example, that Best Buy contributed
$100,000 this past year to the Martin Luther King grant
program. So we were able to make more grants to local
communities because we reached out to Best Buy and they wanted
to partner with us.
Likewise, we are building partnerships in the digital area
with Yahoo, AOL, Microsoft, IBM. Our public liaison group
reaches out to the private sector to form those partnerships.
Senator Wofford. There are only six actually in what we
call public liaison. There is the press information office, and
then there is recruitment, and others that must be in that
number that you gave, which we will look at it and we will
respond on it.
Senator Bond. Thank you very much.
[The information follows:]
Attached is a list of the 52 positions, including the office,
position title and salary for each FTE. The staff are located in the
Offices of Public Liaison; Leadership Development and Training;
Recruitment; and AmeriCorps Leaders. Briefly, these offices are
involved in the following activities:
--The AmeriCorps Leaders program enables talented alumnae of
AmeriCorps to serve as front-line leaders in programs enrolling
AmeriCorps members.
--The Leadership Development and Training office provides training
and technical assistance for Corporation-funded programs and
works with state and regional program staff to incorporate
specific nationally developed curricula into locally sponsored
training events.
--The Recruitment Office of AmeriCorps attains a sufficient pool of
applicants for the targeted number of members requested by
AmeriCorps grantees, and processes and places national
applicants for AmeriCorps*VISTA and AmeriCorps*National
Civilian Community Corps.
--The Office of Public Liaison does outreach to key partners in the
private and non-profit sectors.
These offices are integral to the entire operations of the
Corporation. They represent about eight percent of our total staff
complement.
The following list provides the title and salary for each position
within these offices:
Office of Public Liaison:
Director.................................................. 100,000
Associate Director........................................ 79,721
Associate Director........................................ 63,188
Associate Director........................................ 63,188
Special Assistant......................................... 36,640
Public Liaison Associate.................................. 32,614
National Service Development Officer vacant............... ( \1\ )
Assistant Director........................................ ( \1\ )
Office of Leadership, Development and Training:
Director of Training and Technical Assistance............. 110,026
Director, Leadership and Training......................... 96,186
Assistant to the Director................................. 92,809
Training Administrator.................................... 89,948
Program Officer........................................... 88,180
Program Officer........................................... 85,624
Director, National Service Leadership Institute........... 82,588
Program Officer........................................... 80,011
Training and Technical Assistance Specialist.............. 75,794
Senior Training Specialist................................ 68,000
Senior Training Specialist................................ 67,879
Training and Technical Assistance Specialist.............. 63,535
Training and Technical Assistance Specialist.............. 63,381
Senior Training Specialist................................ 65,000
Logistics Manager......................................... 50,905
Administrative Officer.................................... 47,515
Training Logistics Assistant.............................. 39,913
Training Administrative Specialist........................ 30,621
Administrative Assistant.................................. 28,298
Program Officer........................................... ( \1\ )
Office of AmeriCorps Leaders:
Director.................................................. 76,211
Deputy Director........................................... 61,425
Associate Program Officer................................. 40,530
Office of Recruitment:
Director.................................................. 95,587
Senior Marketing Specialist............................... 80,736
Recruitment and Placement Manager......................... 76,809
Recruitment Coordinator................................... 48,505
Recruitment Coordinator................................... 45,257
Recruitment Coordinator................................... 43,864
Outreach Coordinator...................................... 40,304
Recruitment Coordinator................................... 38,978
Marketing Specialist...................................... 35,678
Marketing Specialist...................................... 34,349
Recruitment Coordinator................................... 33,330
Recruitment Coordinator................................... 34,569
Recruitment Coordinator................................... 32,856
Recruitment Coordinator................................... 32,856
Recruitment Coordinator................................... 31,561
Recruitment Coordinator................................... 32,180
Recruitment Coordinator................................... 31,290
Marketing Assistant....................................... 22,639
Recruitment Coordinator................................... ( \1\ )
Diversity Recruitment Specialist.......................... ( \1\ )
Administrative Assistant.................................. ( \1\ )
\1\ Vacant.
---------------------------------------------------------------------------
NATIONAL SERVICE DEMOGRAPHICS
Senator Bond. Senator Mikulski.
Senator Mikulski. Thank you, Chairman Bond.
And, of course, Senator Wofford, we also want to offer our
very sincere congratulations for your service. We know that
throughout your entire life, you have been devoted to community
service, whether it was your work in the Peace Corps, and the
leadership that you brought to the Corporation for National
Service. So we really want to thank you for all that you have
done.
And I would like to actually go over some of the questions
about what we have done and then talk about digital. But there
were two goals when we established National Service. And one
was to really re-instill the habits of the heart in young
people.
There was an erosion of the ethic around really the
volunteering in one's community. And in many instances, there
were very serious shortfalls in the volunteer community. And
then the other was the skyrocketing student debt that so many
children--young people had. So it was how to bring those two--
to instill an ethic of habits of the heart, and yet these
tools.
That is--you talked about some of the results, but let us
go to the students themselves. Could you tell me how many
students have actually utilized the paydown on their student
debt and what that meant? And if you cannot answer it, anyone
on your team, and any observations the IG might have.
Senator Wofford. About 105,000 awards of the education
trust have been made, have been earned by the AmeriCorps
members in these last 5 years. So far, 61,000 have been drawn
down in whole or in part. And the--it appears that since the
people have 7 years to use their vouchers----
Senator Mikulski. There is--there are two things: One, the
drawing down of the student debt; and then the other is the
voucher for many who will be, like, out of the Conservation
Corps and so on, that--the ability to go on to school which
they would have never had. So they learn skills. They learned a
work ethic, as well as a volunteer ethic.
Senator Wofford. Of the 78 percent who are using their
education awards in the--so far, in the estimate we have, 56
percent use their awards to go to school.
Senator Mikulski. 56 percent to go.
Senator Wofford. 56 percent use the awards to pay college
costs. 33 percent are using their awards to pay student loans.
And 9 percent use their awards both to pay student loans off
and to pay for more education.
Senator Mikulski. Well, that is totally different than what
we thought originally would happen.
Senator Wofford. In what way, Senator?
Senator Mikulski. Oh, no, that is not a criticism. I mean,
this is why the observation is so important, that really the
recruitment would be from college graduates who would then give
the two years in their community, somewhat along the Peace
Corps model, or that part-time model for those who could not go
away, but that it would be college graduates to reduce student
debt.
Now, what you are saying though is the people who are
volunteering have not finished college, or may have--maybe have
not started college.
AMERICORPS EDUCATION AWARD
Senator Wofford. We have the figures here. Approximately a
third have already earned college degrees and have loans. About
a third--or if you get the actual figures, it is in three
parts--have had some college, and take a year in AmeriCorps or
part-time AmeriCorps during their college years. And about a
third have not yet gone to college.
Senator Mikulski. Well, I see that my time is up. But from
the perspective of--do you think that without the--without
either the student reduction, the loan reduction, or the
voucher to be able to pursue higher ed, do you think you could
recruit people to AmeriCorps?
Senator Wofford. Could we recruit people for AmeriCorps?
Senator Mikulski. Yes.
Senator Wofford. It has a tremendous value in recruiting.
Senator Mikulski. I am not for eliminating that.
Please do not misunderstand me.
Senator Wofford. Could we--could we recruit people? People
are responding to AmeriCorps as patriots. And I think that the
answer is: You could recruit without the education award.
The education award is tremendously important to them,
however, and makes the recruiting much easier and, secondly, is
of tremendous benefit to those who have given service to get
that kind of investment in their education.
AMERICORPS DEMOGRAPHICS
Senator Mikulski. Well, I think what would be useful for me
to see and for the record to show, who comes to AmeriCorps. And
I know you have several different programs, like, essentially
the Civilian Conservation Corps, AmeriCorps. But really a
breakdown on gender, income, education, so that we get a
profile of who comes, knowing that there is no typical
volunteer.
But it sounds like that there are about three to five
different profiles of who volunteers. And then therefore, based
on that, what were the elements of the program that attracted
them, but then what are the tools?
So if we are essentially attracting somebody who finished a
community college as the first in their family ever to have
gone, but they do not have the bucks to go on and would like to
also do something with their life, come to AmeriCorps and then
they get the voucher, then to go on to the University of
Maryland, or other schools and so on.
So am I on the right track here or----
Senator Wofford. Yes, you are. And we will send you the--we
will get to you the breakdown, remembering that the 900
AmeriCorps programs using AmeriCorps members range from
University of Notre Dame or Teach for America, where they get
outstanding college graduates to teach for a year or two in
hard-pressed school, to Youth Build which is designed for high
school dropouts to both learn a skill and, in many cases, to go
on to community college or to college. And in between are the
bulk of the programs.
So we will try to show you the different profiles that
are--that when you look at the 900 programs using the 40,000--
[The information follows:]
[GRAPHIC] [TIFF OMITTED] T05AP12.001
[GRAPHIC] [TIFF OMITTED] T05AP12.002
Senator Mikulski. But I do not need to have all 900
programs. What I am really looking at is: Of the 61,000 people
who--first of all, 100,000 people have earned a voucher.
Senator Wofford. We----
Senator Mikulski. You have had 100,000 people----
Senator Wofford. Yes.
Senator Mikulski. 78,000 have already utilized----
Senator Wofford. Not already, but that is what we estimate
it will be. 60,000-some have already drawn down the voucher or
paid off their college loan. But it looks like it will be 78
percent by the end of 7 years. We have not had the full 7 years
yet to know whether in the last year or two of--of the first
AmeriCorps members, the numbers will go up. But it looks like
it will be 78 percent, yes.
Senator Mikulski. Okay.
Thank you.
Senator Bond. Do you have further questions, Senator
Mikulski?
Senator Mikulski. Yes, I do, if I could.
Senator Bond. Go ahead.
Senator Mikulski. Okay. Oh, okay.
DIGITAL DIVIDE
Then let me move quickly to the digital divide issues. And
to be clear, when we hear about the 52 people in public
affairs, not all are writing press releases. Some are doing
recruitment, and then some, six, are actually liaisoning with
the private sector.
And that could be everything from the traditional United
Way private sector agencies to the new high-tech crowd.
Senator Wofford. Yes.
Senator Mikulski. This then takes me to the digital issues.
Could you just quickly list what liaisons AmeriCorps is already
doing with the digital community, with the high-tech community?
And what does that actually mean to the empowerment of children
or adults?
Senator Wofford. Yes. I think the first partnership was
with IBM on the tech team. They have now renewed with the
second major successful project in the digital and high-tech
field.
We then in the last year have developed with General Powell
and America's Promise, partnerships with YMCA and the Boys and
Girls Clubs, backed by AOL, Microsoft, Sun Systems. Just now
Yahoo has----
Senator Mikulski. Now, is that PowerUp?
Senator Wofford. That is PowerUp, that particular program.
We have--in our written testimony there that you have, we have
on page 16, a listing of a number of the original projects that
we have had, including STAR in Maryland in the field of digital
divide. And we are ready, we are positioned, and we have had
experience to move into the--in the directions we hope you will
help shape for the E-Corps.
Senator Mikulski. Now, are you finding requests from local
school systems and non-profits like Boys and Girls Clubs, which
I think all of us are just devoted to, that there is a real
request for AmeriCorps volunteers with digital skills to come
to communities?
Senator Wofford. Yes. There is----
Senator Mikulski. Is this----
Senator Wofford [continuing]. A very large demand from both
school systems and the--the two biggest organizations on the
digital divide front are Boys and Girls Clubs and the YMCAs.
And both of them already have some AmeriCorps members in their
programs for computer teaching and computer access for those
that do not have them for after school and on weekends and
evenings. And the demand is tremendous to us. Hundreds and
hundreds have been asked for.
Senator Mikulski. Well, as you know, my idea for E-Corps is
not to work directly with the children. It is to work side by
side, but to train the people who will work with the children,
teachers, teachers' assistants, many of whom cannot even afford
to buy computers themselves.
And often, though they take teacher training, it is kind of
that one-shot deal like what you were talking about. You know,
they can set us down, but unless it is repetition, repetition,
repetition, we do not learn it. And so I am thinking about the
40-year-old elementary school teacher who really might take the
course and be eager, but needs help.
Is--this is the way I envision it. So it is that when the
volunteers leave, there is not a gap in who is going to teach
the kids technology. We have then done the training even in
often the volunteer communities.
Senator Wofford. That makes a lot of sense, Senator. We
want your help in shaping this. Some of the programs are doing
something very close to that. The other thing that they are
doing is not directly working with the students, but organizing
the centers, the YMCAs and the Boys and Girls Clubs. We can
show the local sites where that is----
Senator Mikulski. Well, I do not----
Senator Wofford [continuing]. Going on right now.
Senator Mikulski [continuing]. Want to create something
that duplicates what is already in existence.
Senator Wofford. This is----
Senator Mikulski. And I certainly do not want to duplicate
what the private sector has shown a willingness to do, like the
PowerUps and the IBMs and the Steve Cases and the AOLs.
So we really do need advice about whether--I happen to
think it is a good idea. You are not going to tell me it is a
bad idea.
Senator Wofford. It is a very good idea. You know I think
it is a very good idea.
Senator Bond. You came from the Senate, not from the turnip
truck.
Senator Wofford. Right.
Senator Mikulski. So--but really, with all--I do--if we--I
really do have a passion about helping cross this digital
divide, but really in teaching the teachers. Do you----
Senator Wofford. Yes.
Senator Mikulski [continuing]. Think we are duplicating, or
do you--please, I invite you to be candid.
Senator Wofford. Yes. No, I just was trying to say that
there are two fronts, one in the schools and in the school
systems and, two, in the great community centers and community
organizations like Boys and Girls Clubs and YMCAs.
And in both cases, they need the E-Corps that you are
talking about to help them get it started, to help train the
people that will do it.
Senator Mikulski. Thank you. I think that covers it.
Thank you.
Senator Bond. Thank you very much, Senator Mikulski.
And we do appreciate your testimony and answers, Senator
Wofford. And we look forward to continuing dialogue with your
staff in addressing both this exciting new idea and the
management issues.
OFFICE OF INSPECTOR GENERAL
Now that we have heard from the Corporation on the issues
and their efforts to correct management deficiencies, I now
invite Ms. Luise Jordan, and Ms. Karyn Molnar to present their
views in response to the testimony.
Before I begin, I would recognize you, Ms. Jordan and Ms.
Molnar, for the very hard work and time and effort that you
have dedicated to overseeing the Corporation. Your independent
and objective views are critically important to this
subcommittee, and I trust also to the Corporation.
Ms. Jordan, I understand that you have written testimony
which will be made a part of the record, without objection. And
we would like to invite you and then Ms. Molnar to use 5
minutes each to summarize any oral remarks you wish to make.
Ms. Jordan.
STATEMENT OF LUISE S. JORDAN
Ms. Jordan. Mr. Chairman, Senator Mikulski, I appreciate
the opportunity to testify again on the results of the audit of
the Corporation's financial statements and other financial
management issues.
CORPORATION AUDIT
As you have heard, the opinion on the financial statements
is similar to last year's, although improvements in management
controls and the Corporation's new accounting system indicate
progress.
The Corporation is somewhat unhappy that it did not receive
a clean opinion. Although a clean opinion is an important goal,
it is only one of several goals that need to be achieved.
Modern systems and good management controls are essential to
reach the end goal of reliable, useful, timely financial
information and to support ongoing management and
accountability.
Although--excuse me. Although implementation of its new
accounting system indicates progress, the new system is a
general ledger system, not a fully integrated management
system.
As you have heard, the Corporation's present systems cannot
effectively and efficiently provide reliable and timely
information to manage day-to-day operations.
The Corporation lacks both a cost accounting system and an
effective integrated grants management system. The Corporation
still needs to correct problems in areas that are critical to a
well-managed organization.
The five areas cited as material weaknesses in 1999 were
first reported as material weaknesses in 1996. The
Corporation's guide for improvement is its Action Plan. Some of
the plan's major tasks have been achieved. None of the goals
have been attained.
We are not sure that the plan is an effective road map for
proactive improvement or for the optimum use of the
Corporation's resources. We have recommended that the
Corporation establish objective standards and measures for its
corrective actions and its financial improvements. We have also
recommended that the Corporation establish a process to
determine that the Action Plan and other corrective actions are
working as intended, rather than waiting for an external event
or the next audit report to advise them of their next problem.
If the Corporation wants assurance that it is going to work
its way out of the maze of issues that confront it and
effectively carry out its programs, it is time that management
views this maze from the top down, rather than feeling their
way through it and reacting to problems.
Let me conclude by reiterating my statement that the
Corporation has made progress. Now that the Corporation has its
new accounting system and additional financial management
staff, I want to also say that continued improvement is
probable. It is OIG's hope that future audits will reveal the
effectiveness of the new resources, the effectiveness of the
corrective actions, as well as the Corporation's continued
progress.
PREPARED STATEMENT
I have one statement, however, from a personal point of
view. Senator Mikulski, as the first person in my family to go
to college, after being a community volunteer and graduating
from Anne Arundel Community College, I did not have an
education benefit. I ``clerked'' my way through Dart Drug in
Laurel. It would have been very nice to have had an education
benefit.
Senator Bond. Thank you, Ms. Jordan.
[The statement follows:]
Prepared Statement of Luise S. Jordan
Mr. Chairman and Members of the Subcommittee, I appreciate this
opportunity to testify on the results of the audit of the Corporation
for National and Community Service's fiscal year 1999 financial
statements \1\ and other financial management issues.
---------------------------------------------------------------------------
\1\ OIG Audit Report 00-01: ``Audit of the Corporation for National
and Community Service's Fiscal Year 1999 Financial Statements.
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The Corporation for National and Community Service is required by
the Government Corporation Control Act (31 U.S.C. 9101 et seq.) to
produce annual financial statements. The Act requires that the Office
of Inspector General audit, or engage the services of an independent
auditing firm to audit, the statements. CNS OIG engaged KPMG LLP to
audit the fiscal year 1999 financial statements. Ms. Karyn Molnar, the
KPMG engagement partner for the audit is also here today to testify.
The audit was conducted in accordance with government auditing
standards. Because of our knowledge of the Corporation and its
operations, the audit included extensive audit procedures to overcome
known material weaknesses and included tests of all three financial
statements. As a result, KPMG was able to issue an unqualified opinion
on the Corporation's Statement of Financial Position at September 30,
1999. However, KPMG was unable to render an opinion on the Statement of
Operations and Changes in Net Position, and the Statement of Cash Flows
for the fiscal year.
Although the opinion on the fiscal year 1999 statements is similar
to that on the fiscal year 1998 statements, the Corporation has
achieved improvements in the controls over its financial activities. As
discussed in the Independent Auditors' Report and illustrated in
Exhibit I, material weaknesses related to internal controls over
financial reporting \2\ have been reduced from eight in fiscal year
1998 to five; two of the eight are now classified as reportable
conditions; and one has been corrected to the extent that we will
provide recommendations for further improvement in our final report on
this audit, the ``management letter'' (OIG Report 00-38 \3\). These
improvements, and the Corporation's new accounting system implemented
in September 1999, indicate continued progress toward producing
auditable financial reports.
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\2\ The Corporation's procurement and contracting operations were
found to be materially weak and vulnerable to fraud and abuse in OIG
Audit Report 98-24: ``Audit of the Corporation's Procurement and
Contracting Processes and Procedures,'' August 1998 and in several
audits of Corporation contracts issued during fiscal year 1999. OIG has
begun a follow-up study to determine the extent of the Corporation's
corrective actions in this area.
\3\ OIG Audit Report 00-38: ``Recommended Improvements to the
Corporation's Internal Controls--Fiscal Year 1999 Financial Audit
Management Letter'' is currently being prepared by KPMG and is expected
to be issued within the third quarter of fiscal year 2000.
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However, the Corporation has yet to fully correct all of its
financial management deficiencies. The five areas cited as material
weaknesses in fiscal year 1999 were first reported as material
weaknesses in 1996. They include: financial management and reporting,
the Corporation's general control environment,\4\ grants management,
net position reporting, and fund balance with Treasury. The integrity
of data in the National Service Trust and matters related to the
Corporation's new accounting system's controls and reports are cited as
reportable conditions.
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\4\ 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 Report on Compliance with Laws and Regulations also repeats two
areas of non-compliance with laws and regulations: the Corporation's
substantial non-compliance with Federal financial systems requirements
during the majority of fiscal year 1999, and the Corporation's practice
to carry over grant funds when renewing grants that is not always in
compliance with appropriation laws related to the use of National and
Community Service Act funds.
As is our responsibility under the Government Corporation Control
Act, CNS OIG participated in the planning of the auditors' work and
evaluated the nature, timing and extent of the procedures performed,
monitored progress throughout the audit, and reviewed the auditors'
report and the work papers supporting its conclusions, with which we
concur.
The Corporation is unhappy that it did not receive a ``clean''
opinion on its financial statements. However, the auditors' opinion is
a matter of professional judgement and objectively considers all
aspects of the work performed. The auditors test and consider the
amounts and disclosures in the financial statements and the overall
financial statement presentation. KPMG performed the audit, evaluated
the results, and concluded that the conversion of data to a new
accounting system and the lack of an audit trail to explain adjustments
to certain accounting balances made it impossible to obtain
satisfactory evidence to support $10.5 million reported as an increase
in unexpended appropriations. KPMG concluded that they could not issue
an opinion on the two financial statements that included this
unexplained balance.\5\ OIG concurs.
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\5\ The $10.5 million impacts both the Statement of Operations and
Changes in Net Position and the Statement of Cash Flows. On the
Statement of Operations and Changes in Net Position, it is included in
the $81.7 million reported as ``Increase in Unexpended Appropriations,
Net.'' (Note 14 to the financial statements lists it as a $10.5 million
``other adjustment''). It is part of the $9.7 million balance described
as ``Other Adjustments'' on the Statement of Cash Flows.
---------------------------------------------------------------------------
Both the Corporation and KPMG believe the unknown amount results
from a bookkeeping error that involves data converted from the
Corporation's old system to the new. The Corporation does not know what
comprises the $10.5 million. While the audit resulted in numerous
adjustments to correct the financial statements, neither the
Corporation nor KPMG was able to resolve this difference. We do not
know what accounts are impacted, and absent evidence or an audit trail,
there is no way to adjust and correct for it.
A ``clean'' audit opinion is an important goal for the Corporation.
However, it is only one of several goals that need to be achieved. As
the Comptroller General recently testified, modern systems and good
controls are essential to reach the end goal of reliable, useful, and
timely financial information to support ongoing management and
accountability.
Although implementation of its new accounting system indicates
progress, the new system is a general ledger system--not a fully
integrated financial management system. The Corporation needs modern
integrated financial systems that support financial and programmatic
operations. As the audit report indicates, the Corporation admits to
problems in obtaining mandatory reports from the new system.
The Corporation still needs to acquire basic financial systems that
are critical to its operations and accountability. The Corporation
lacks a cost accounting system. In December 1999, OIG reported that the
Corporation lacked a cost accounting system to account for the $3
million in administrative funding earmarked for financial improvements,
project or program costs.\6\ Even more fundamentally, the Corporation
which relies on grants to carry out its major programs, lacks an
effective, integrated grants management system.
---------------------------------------------------------------------------
\6\ In OIG Audit Report 00-13: ``Review of the Corporation for
National and Community Service Action Plan'' we reported that the
amounts reported by the Corporation were based on initial budget
estimates.
---------------------------------------------------------------------------
Presently, the Corporation's financial systems cannot effectively
and efficiently provide reliable and timely information to manage day
to day operations. The current financial statements also need
improvement if they are to provide meaningful information to Congress
and other users. In the Independent Auditors' Report, KPMG states,
``The Corporation's financial statements do not currently provide
information related to its many service programs, the administrative
costs of those programs, or the separate operations of the National
Service Trust.'' \7\
---------------------------------------------------------------------------
\7\ OIG Audit Report 00-01, page 5.
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The audit results also indicate that the Corporation's management
controls require additional improvement. The Corporation has corrected
three of the eight material weaknesses disclosed by the audit of the
Corporation's fiscal year 1998 financial statements. However, those
that remain uncorrected are controls that are critical to a well-
managed organization.
The Corporation's primary guide for corrective action has been its
Action Plan. Some major tasks under the plan have been achieved; for
example, installation of the new accounting system, selection and
hiring of a new CFO and new financial management staff, installation of
the National Service Trust's imaging system, and the development of a
management control plan. However, none of the Plan's goals has been
attained.\8\
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\8\ Most recently, in its March 21, 2000 Action Plan report to
Congress, the Corporation reported that none of the major financial
management goals had been attained.
---------------------------------------------------------------------------
OIG is also not sure that the Corporation's Action Plan is an
effective ``road map'' that will result in proactive improvements or
the optimum use of the Corporation's resources. In our Action Plan
reports, in the current financial statement audit report and in
previous ones, as well as in discussions with management, we have
recommended that the Corporation establish objective standards and
measures for corrective actions and financial improvements. We have
also recommended that the Corporation establish a process to determine
that the Action Plan and other corrective actions are working as
intended--rather than waiting for an external event or an audit report
to advise them of their next problem. Such a process should also be
designed to result in reliable evidence that measures and documents
progress toward its goals and that management controls assessments have
been appropriately carried out. It should establish clear
accountability. Finally, the plan and the process should assess
resources and resource allocation including staffing and related
issues. If the Corporation wants assurance that it is going to work its
way out of the maze of issues that confront it, and effectively carry
out its programs, it is time that management views the maze from the
top down rather than feeling their way through it and reacting to
problems as they occur or are brought to management's attention.
For perspective, it is important to recall the extent of the
problems that the Corporation has had to correct. Over the past several
years, OIG's audit reports have classified numerous deficiencies into
broad areas of material weaknesses that encompassed the most critical
aspects of the Corporation's financial management. We also reported
that the Corporation's legacy system could not produce reliable
financial information. Given the pervasiveness of these deficiencies,
it is not surprising that, although the Corporation has made progress,
we are reporting that not all of the material weaknesses have been
corrected.
Let me conclude by reiterating my statement that the Corporation
has made progress. Now that the Corporation has a new accounting system
and additional financial management staff, I want to also say that
continued improvement is probable. It is OIG's hope that future audits
will reveal the effectiveness of these new resources, the achievements
made in recent months, the effectiveness of the corrective actions put
into place to respond to our findings and recommendations, as well as
the Corporation's continued progress.
Statement of karyn l. Molnar
Senator Bond. Ms. Molnar
Ms. Molnar. Thank you, Mr. Chairman and Senator Mikulski.
I am pleased to be here today to testify regarding KPMG's
audit of the 1999 financial statements of the Corporation for
National and Community Service. My comments will be brief since
the overall results of the audit have already been presented
during this hearing.
Corporation audit
However, it is important to note that our audit of the
Corporation's 1999 financial statements was conducted in
accordance with generally accepted government auditing
standards.
Also, the nature, timing and extent of the audit procedures
we performed was based on our assessment of the effectiveness
of the Corporation's internal control environment which was in
place during fiscal year 1999.
Based on the results of prior year audits and our general
knowledge of the Corporation, we determined we could not rely
on internal controls to reduce the extent of audit tests for
the 1999 audit. Therefore, we performed very extensive detailed
tests of the 1999 financial statement account balances.
General ledger system
Also during 1999, as you have heard, the Corporation
implemented a new general ledger system. The conversion of
financial data from the old to the new accounting system, and
the training of Corporation personnel in the use of the new
system, required a significant commitment of time and
resources. The conversion was not completed until near the
Corporation's fiscal year end.
Attention focused on implementing the new system within a
limited time frame also resulted in a shift of attention away
from supervisory review of ongoing financial accounting
activity.
Our detailed audit procedures identified certain accounting
errors. The Corporation did record all material adjustments
that we proposed.
And after all the adjustments were made to the 1999
financial statements, we were able to satisfy ourselves that
the statement of financial position was materially correct.
However, the Corporation was unable to explain and we were
unable to determine the financial statement effect of a $10.5
million unidentified amount reported as an increase in
unexpended appropriations. We and the Corporation both believe
this is a result of difficulties encountered in the conversion
to the new general ledger system.
As a result, our independent auditor's report, which was
dated March 3 of this year, included an unqualified opinion on
the statement of financial position, and a disclaimer on the
other financial statements. As you know, this is a similar
result to last year's report.
Internal controls
Our review of the Corporation's internal controls over
financial reporting revealed that significant progress had been
made in addressing the prior year reportable conditions. Our
evaluation of internal controls considered the extent of those
improvements which had a direct and material effect on the
Corporation's financial operations during 1999.
However, the new general ledger system, as I said, was in
use for less than 1 month in 1999. A new Chief Financial
Officer, and other new financial management personnel, did not
assume their duties until after September 30, 1999. And other
improvements in policies and procedures which were in the
development or ``pilot-testing'' stage during 1999 did not
become fully operational until fiscal year 2000.
The scope of our 1999 audit procedures did not include
tests of the effectiveness of these enhancements to the
internal control environment. As a consequence, our report on
internal controls included seven reportable conditions, five of
which we considered to be material weaknesses. This is three
less material weaknesses than reported in 1998.
All of the reportable conditions are discussed in detail in
our report, along with our recommendations for improvement.
PREPARED STATEMENT
In conclusion, we do believe the Corporation has made
notable progress in achieving its goals of improved financial
management. Although much is left to be done, with the
concerted effort of the new financial management team, and the
successful operation of the new financial accounting system for
a full year in fiscal year 2000, we believe the Corporation
should be well positioned to demonstrate continued progress in
the future.
Thank you.
Senator Bond. Thank you.
[The statement follows:]
Prepared Statement of Karyn L. Molnar
Mr. Chairman and Members of the Subcommittee: I am pleased to be
here today to testify regarding KPMG's audit of the 1999 financial
statements of the Corporation for National and Community Service.
REPORT ON FINANCIAL STATEMENTS
Our audit of the Corporation's 1999 financial statements was
conducted in accordance with generally accepted government auditing
standards. Those standards require that the audit be planned and
performed to provide reasonable assurance that the financial statements
are free of material misstatement. Audit procedures are performed on a
test basis to obtain evidence to support the amounts and disclosures in
the financial statements. They are also performed to determine whether
the accounting principles used are proper, and significant estimates
made by management are reasonable in the circumstances. An audit must
also determine if the information in the financial statements is
presented in a meaningful manner for the intended users.
The nature, timing and extent of audit tests to be performed
depends on how much reliance an auditor can place on the internal
controls established by management. Internal controls are designed to
provide reasonable assurance that transactions are executed in
accordance with laws and regulations; that assets are safeguarded
against loss from unauthorized acquisition, use or disposition; and
that transactions are properly recorded, processed, and summarized to
permit the preparation of financial statements in accordance with
generally accepted accounting principles. If internal controls are
effective, the amount of detail testing can be reduced. If they are not
effective, extensive detail testing is required to become satisfied as
to the fair presentation of the financial statement amounts.
Our initial assessment of the Corporation's internal control
environment in place during fiscal year 1999 was based on the results
of our 1997 and 1998 audit procedures. That assessment indicated that
we could not rely on internal controls to reduce the extent of audit
tests for the 1999 audit. Therefore, we again planned and performed
very extensive detailed tests of the 1999 financial statement account
balances in order to support our conclusion on the fair presentation of
the 1999 financial statements.
Additionally, during 1999, the Corporation converted its legacy
financial accounting system to a new general ledger system. The
conversion of financial data from the old to the new accounting system,
and the training of Corporation personnel in the use of the new system,
required a significant commitment of time and resources. The conversion
was not completed until near the Corporation's fiscal year end. We
believe the attention focused by the Corporation on implementing the
new financial accounting system within a limited timeframe, also
resulted in a shift of priorities away from supervisory review of
ongoing financial accounting activity. Our audit procedures included a
review of the conversion process.
Our detailed audit procedures identified certain accounting errors.
The Corporation recorded all material adjustments that we proposed. The
Corporation also identified, and corrected other accounting errors it
noted as a result of the general ledger conversion and the financial
statement preparation processes. After all adjustments were made to the
1999 financial statements, we were able to satisfy ourselves that the
statement of financial position as of September 30, 1999 was materially
correct. However, due to the complexity of the general ledger
conversion process, and the lack of an adequate audit trail to support
certain adjustments, we were unable to satisfy ourselves as to the
propriety of $10.5 million reported as an increase in unexpended
appropriations for the year ended September 30, 1999. This unlocated
difference is a net amount. The ultimate effect on various line items
included on the statement of operations and changes in net position and
statement of cash flows, could not be determined.
As a result, our independent auditors' report, dated March 3, 2000,
included an unqualified opinion on the statement of financial position,
and a disclaimer of opinion on the related statements of operations and
changes in net position and cash flows. This is a similar result to
that reported in our prior year report on the Corporation's fiscal year
1998 financial statements.
REPORT ON INTERNAL CONTROLS
Our review of the Corporation's internal controls over financial
reporting for the fiscal year ended September 30, 1999 revealed that
significant progress had been made in addressing the reportable
conditions that had been reported in prior years. The most significant
progress was noted in the areas of financial systems, with the
conversion to a new general ledger system which complies with both Year
2000 and OMB requirements related to federal financial systems, and
improvements in the control environment surrounding the National
Service Trust. Both of these areas were described as material
weaknesses in 1998 and were downgraded to non-material reportable
conditions in 1999. Significant progress was also made in the areas of
financial management and reporting and in the general control
environment with the addition of personnel with strong financial
management backgrounds and the implementation of a process for self-
assessment of management controls. Corporation management also
developed an Action Plan for improvements in financial management, and
is currently reporting on a regular basis to Congress on the status of
the Plan's implementation.
Our independent auditors' report on internal controls over
financial reporting considered the extent of improvements made which
directly impacted the Corporation's financial operations during 1999.
As I mentioned earlier, the general ledger conversion was not completed
until near the Corporation's fiscal year end; a new Chief Financial
Officer, and other new financial management personnel, did not assume
their duties until after September 30, 1999; and other improvements in
policies and procedures which were in the development or ``pilot-
testing'' stage during 1999 did not become fully operational until
fiscal year 2000. The scope of our 1999 audit procedures did not
include tests of the effectiveness of these enhancements to the
internal control environment.
As a consequence, our report on internal controls over financial
reporting for the fiscal year ended September 30, 1999 included the
following seven reportable conditions, five of which we considered to
be material weaknesses. Reportable conditions are significant
deficiencies in the design or operation of internal controls that could
adversely affect the Corporation's ability to record, process,
summarize, and report financial data consistent with the assertions of
management in the financial statements. Material weaknesses are
reportable conditions in which the design or operation of one or more
of the internal control components does not reduce, to a relatively low
level, the risk that material misstatements may occur and not be
detected within a timely period by employees in the normal course of
performing their assigned functions.
--Financial Management and Reporting
--General Control Environment
--Grants Management
--Fund Balance with Treasury
--Net Position
--National Service Trust
--Financial Systems
These matters are discussed in detail in our report, which also
includes our recommendations for improvement. All of these matters
deserve management's attention. However, in addition to the comments I
have already made regarding financial reporting problems encountered
during the 1999 audit, I would like to emphasize the following matters:
First, we recognize that the Corporation has begun to take a more
proactive approach to ensuring that an effective system of internal
control is in place. The Corporation took steps in fiscal year 1999 to
survey selected members of management to obtain relevant information to
prepare the annual statement on internal accounting and administrative
control systems, and plans to expand the survey process in fiscal year
2000. However, it continues to rely heavily on issues being brought to
its attention through audits conducted by the Office of the Inspector
General and independent auditors. While this practice does provide
independent insight into the effectiveness of internal controls at
specific points in time, reliance on the work of the OIG and
independent auditors to identify and report internal control risks for
management's attention does not prevent or routinely detect matters
during the year which could result in material misstatements of
accounting and budgetary reports or instances of material noncompliance
with laws and regulations.
Second, the most significant expenditure of Corporation funding is
for grant awards. Grantees are required to expend funds for allowable
costs and provide periodic reports to the Corporation to demonstrate
programmatic and financial compliance with the terms of the respective
grant agreements. The Corporation's ability to effectively monitor
grantee financial activity is hampered by the limitations of the
current system used to track grant awards because it is not integrated
with the new general ledger system. The current grants management
system also can not produce reports which would be useful in assisting
program managers in monitoring grantee performance. Additionally, our
audit procedures revealed that a comprehensive, risk-based internal
grants management program for performing grantee site visits to ensure
financial and programmatic compliance was not in place during fiscal
year 1999. Considering the size of grants awarded to state commissions
and certain not-for-profit organizations, we believe implementing such
a program should be a high priority for the Corporation.
CONCLUSION
We believe the Corporation has made notable progress in achieving
its goals of improved financial management. Although much is left to be
done, with the concerted effort of the new financial management team,
and the successful operation of the new financial accounting system for
a full year in fiscal year 2000, the Corporation should be well
positioned to demonstrate continued progress in the future.
I appreciate the opportunity to be here today and would be happy to
answer any questions you may have.
Senator Bond. Thank you for your comments, and particularly
for your encouraging words about what is going to happen.
I am a little rusty on my auditing, but it sounds to me
like you raised some real flags there. And when you say you are
looking forward to them doing better in the future, it is kind
of like introducing a Senator for brief remarks. It is kind of
the triumph of hope over experience.
INTERNAL CONTROLS
But on the red flags, I mean, you could not rely on their
internal controls. And you had to--you had to build the
statement that you--you had to construct the statement that you
said that you audited? Did you all have to put it together?
Ms. Molnar. No, sir. We did not put it together. But as the
Corporation prepared their financial statements, they had an
unidentified amount that was reported as an increase in their
unexpended appropriations. But it could not be identified as to
what it represented. That is not a usual kind of an activity to
be showing there.
Senator Bond. Well, there were raised a number of questions
about it. And I thought, Senator Wofford, we would give you or
Mr. Musick an opportunity to respond, any comments you wanted
to make about the comments of the OIG or the KPMG.
Senator Wofford. My colleagues might like to do that.
Ms. Zenker. We have looked at the audit report very closely
for the last several weeks, as you can imagine. We think that
we have made some good progress this past year in putting in
our new financial management system. That was our major goal.
We accomplished it. It took a lot of work, a lot of effort on
our part.
We did it in, what we think, is a record amount of time for
a Federal agency. We are very hopeful I think, as are the
auditors, that that new system is well positioning us for the
changes and being able to produce good auditable statements for
2000.
There are other material weaknesses that we still need to
correct. And those continue to be our highest priority in 2000.
We provide a monthly report to the Congress on our progress. We
would be happy to speak with your staff at any time to give
additional information on what we are doing.
Senator Bond. Mr. Musick.
GENERAL LEDGER SYSTEM
Mr. Musick. If I might just add, I think one of the
comments that was made earlier, we have a new system in place.
It takes people time to learn this and to understand it. It
might be a general ledger system, but it is what the government
requirements are because we purchased it off the shelf that
way.
So what we are trying to do right now is to build
interfaces of data that we can get in, because we have
different people. We have--HHS makes our grant payments. The
Agriculture Department makes our salary payments. So we have to
bring that data into the system.
And once that is populated, then it is a matter of teaching
people how to use reports to get the information they need out
of it to manage it. But that is just the learning curve that is
going to take a little time.
Senator Wofford. Could I make one comment, Mr. Chairman?
Senator Bond. Please.
Senator Wofford. If I understand what Ms. Molnar has
testified, and has also said to me, the crux as to the clean
opinion on the other two statements was this $10.5 million
matter and what was behind it, the extra money that they could
not solve.
I heard her say that they and we believe it is a
bookkeeping error in the transferring of information, or for
whatever reason, from the old system to the new.
Am I right in understanding that if that had been able to
be solved, which we hope it will not be a problem again under
the new system, there would have been a clean opinion on the
other two statements?
Senator Bond. Ms. Molnar.
Ms. Molnar. I believe that that is correct. I mean, as a
matter of fact, in starting their audit this year, I was very
hopeful that we would get to that position, and I was
disappointed that we did find an amount that could not be
explained. But I do think that the new system should take care
of that in the future.
Senator Bond. Senator Mikulski.
Senator Mikulski. Thank you.
ORIGIN OF CORPORATION OF NATIONAL SERVICE
You know, some of these issues have been ongoing for some
time. And let me go to my questions. When National Service was
created--when the Corporation was created, essentially, it had
a new Corporation for National Service and it also combined
three long service--long-term programs.
Now, I will tell you my--let me tell you my question,
because, you see, it--are some of the problems we still have
still the lingering effects of trying to merge programs in the
past? When we put grand--Foster Grandparents, the Senior Corps,
and then that chunk of VISTA in there, that really created an
initial hybrid with different accounting systems, et cetera.
In your professional opinion, do you think that like that
$10 million, or whatever we keep talking about, is a vestige of
that, and we should just take it as a charge, if you will, or
something and just get on with it?
Ms. Molnar. It is really very difficult to say what that
$10 million is. It could relate to the old programs. The
Corporation has been working over the last 2 to 3 years to
clean up the old programs. And of course, as time passes, a lot
of the members that were working under those programs, really
it is all--it is going away slowly.
So, yes, it could have something to do with that. It may
not. That was the whole problem. If I had known what it was,
and if the Corporation had known what it was, then you can
correct it and you can have a clean opinion. So----
Senator Mikulski. But we might not ever find this out. Do
you think we will ever find this out?
Ms. Molnar. Well, it was a--the $10 million this year, and
we mentioned, you know, an amount last year--and it was not the
same amount and probably is not the same problem. Those are
current period amounts that are causing the problem. If the
system works well for the whole year next year, since both of
the financial statements--of the statements of financial
position received an unqualified opinion, then the activity for
the year really should fall out and be okay.
This was an amount that just did not fall out between the 2
years. And I would hope that, going forward, that will not
happen again.
State Commission Program Administration
Senator Mikulski. Well, I have both a question of you and--
again, Ms. Jordan, you would have made a great National Service
volunteer. Both of you would have.
This is a really complicated program. As Senator Wofford
has said, it is, what, 900 different programs and the States.
And so much of what you rely upon is the relationship with the
States.
But here is my question: Are you satisfied with the way
we--this goes to the States. Are you satisfied that the
financial controls and management mechanisms are in place for
our relationship with the States and these 900 programs; or is
the weakness also--or is there a weakness in our relationship--
the Corporation's relationship with States?
Ms. Jordan. My office has begun an initiative to review and
audit the State commissions. We began that initiative because
what we had seen with the National Direct grants indicated that
there were problems in more than 50 percent of the National
Direct grants.
We have surveyed so far 24 State commissions. We have
issued 7 final reports. The conditions that we are finding most
often (each commission is different, and the findings vary).
But the conditions that we are finding the most often are in
fiscal management, fiscal administration of the Federal funds,
and monitoring of sub-grantees and AmeriCorps member service
hours.
We will report back to you periodically on the results of
what we are learning about how the State commissions are using
the Federal funding. The mechanism that we have established
requires and will result in reports each time. We will submit a
summary report to Congress and CNS after we review 18 of the
commissions. We have also begun audits of the state
commissions, based on risk. Those assessments are coming out of
the pre-audit surveys we are doing.
So at this time, I do not have a lot of information, but I
do know that there are some conditions that we are finding when
we see--when we go out and look at the State commissions.
STATE COMMISSION GUIDELINES
Senator Mikulski. Well, I honestly believe that all States
wish to comply but, again, States are uneven in their own
fiscal management and technology.
And also one of things I would like you to consider as you
uncover these issues, really what kind of technical assistance
and guiding principles national needs to give the States so
that they can comply. I have to believe that all 50 governors
want to comply and be spit-and-polish in terms of their records
and so on.
But I think we also need to be very clear about what are
the expectations, and what are the requirements and, therefore,
what technical assistance national needs to provide the States,
particularly some that might be at risk.
Ms. Jordan. We are doing that. Each of our reports includes
recommendations to the Corporation, particularly where we find
that the guidance is not clear, as well as recommendations to
the commission.
So each pre-audit survey results in a report. Each report
has recommendations for the Corporation as well as the State
commission.
Senator Wofford. Wendy Zenker would like to make a brief
comment to your question, Senator.
Senator Mikulski. Sure.
Ms. Zenker. And I know we are underscoring ``brief.'' I
just wanted to let you know that we have developed State
commission administrative standards which we will be happy to
share with you, that set forth what the guidelines are, what
the criteria are, what State commissions should be doing to
manage their funds.
We are going out and reviewing each State commission, using
independent reviewers, as well as our own staff. State
commissions are participating. They are actively engaged in
this. When we produce a report of strength and weaknesses, we
provide technical assistance to deal with the weaknesses.
Senator Bond. Thank you.
[Clerk's note.--The State Administrative Standards
submitted by the Agency can be found in the Subcommittee
files.]
ADDITIONAL COMMITTEE QUESTIONS
Senator Mikulski. Well, I think--I think, then you are on
the right track, really, you know.
So that concludes my questions.
Senator Bond. Thank you very much, Senator Mikulski.
Thank you, Senator Wofford, and the other witnesses.
Senator Wofford. Thank you.
[The following questions were not asked at the hearing, but
were submitted to the Corporation for response subsequent to
the hearing:]
Questions Submitted to the Office of the Inspector General
Questions Submitted by Senator Christopher S. Bond
OIG FUNDING
Question. At my request, an additional $2 million in funds were
provided in the Senate's VA/HUD bill for your office to review and
audit state commissions. Unfortunately, only half of that increase
survived conference. Nevertheless, I am interested to hear how these
additional funds have been spent and if you have any preliminary
findings you can share with us.
Answer. The table below provides information on funding for OIG's
state commission reviews and audits. A discussion of preliminary
findings follows.
----------------------------------------------------------------------------------------------------------------
Total funding
for St.
Description Planned Committed Obligated/ commission
expended surveys and
audits
----------------------------------------------------------------------------------------------------------------
State Commission Pre-Audit Survey Methodology............... .......... .......... $12,474 $12,474
Pre-Audit Surveys of 24 State Commissions................... .......... .......... 548,571 548,571
---------------------------------------------------
Total Funding from Fiscal Year 1999 Appropriation..... .......... .......... 561,045 561,045
===================================================
State Commission Audit Methodology.......................... .......... .......... 7,400 7,400
Pre-Audit Survey & Audit of Oregon State Commission......... .......... $200,000 34,986 234,986
Audit of the Delaware State Commission...................... .......... .......... 82,926 82,926
Pre-Audit Surveys of 12 State Commissions................... .......... 300,000 .......... 300,000
Audits of 4 State Commissions............................... $750,000 .......... .......... 750,000
---------------------------------------------------
Total Funding from Fiscal Year 2000 Appropriation..... 750,000 500,000 117,912 1,367,912
===================================================
Total Funding for State Commission Pre-Audit Surveys & .......... .......... .......... 1,928, 957
Audits...............................................
----------------------------------------------------------------------------------------------------------------
BACKGROUND
State commissions play an important role in the oversight of
AmeriCorps programs and expenditures. The Corporation has indicated
that it intends to give them greater responsibility. However, the
Corporation lacks a management information system that maintains
comprehensive information on its grants, including those to state
commissions and subgrantees. Moreover, although the Corporation began
state commission administrative reviews in 1999, the Corporation,
historically, has not carried out a comprehensive, risk-based program
for grantee financial and programmatic oversight and monitoring. It is
also unlikely that AmeriCorps programs are subject to compliance
testing as part of state-wide audits under the Single Audit Act due to
their size relative to other state programs.
CNS OIG has initiated a series of pre-audit surveys intended to
provide basic information on the state commissions' operations and
funding. The surveys are designed to provide a preliminary assessment
of the commissions' pre-award and grant selection procedures, fiscal
administration, monitoring of subgrantees (including AmeriCorps Member
activities and service hour reporting), and the use of training and
technical assistance funds. The surveys are also intended to provide
information on other audit coverage that may be afforded by the Single
Audit Act requirements. Using this information OIG produces an initial
risk assessment. Generally, further OIG audit work and the timing
thereof, will be based on the information gathered during the surveys
and the risk assessments.
We are issuing a report to the state commission and to the
Corporation communicating the results and making recommendations for
improvement, as appropriate, for each pre-audit survey as well as each
audit that we perform.
STATUS
As of May 31, 2000, we have developed the pre-audit survey
methodology and completed field work for all 24 of the state commission
in our first round of surveys. We have issued final reports for 12 and
draft reports for nine. We plan to issue reports for all 24 by the end
of this quarter. We will also perform a cross sectional analysis of the
information we have gathered and the related findings and
recommendations and then issue a ``capping'' report summarizing what we
have learned.
We have issued a statement of work for pre-audit surveys of 12
additional state commissions and anticipate that these pre-audit
surveys will begin in August.
We have developed the methodology for the audits of state
commissions and have begun full-scope audits of two state commissions.
We plan to initiate the audits of another four state commissions during
the final quarter of this fiscal year.
PRELIMINARY RESULTS
We selected the first 24 commissions for survey work intending to
cover large and small commissions and commissions that were considered
by the Corporation to be well-run and those reputed to be in other
categories. Review of the first twelve reports indicates that we
achieved the cross section that we were seeking.
Considering the results of the first twelve reviews, we found that
three of the 12 commissions have established systems that provide
reasonable assurance that pre-award and grant selection procedures,
fiscal administration, monitoring of subgrantees (including AmeriCorps
Member activities and service hour reporting), and the use of training
and technical assistance funds are adequate. Our limited survey
procedures also revealed that most of the commissions administered an
open, competitive process to select national service subgrantees.
However, for several state commissions, we identified areas for
improvement related to the assessment of applicants' financial systems
during the selection process as well as issues related to retention of
documentation to support the grant making process. All twelve state
commissions had established systems to provide reasonable assurance
that training and technical assistance is made available and provided
to subgrantees.
On the other hand, we found that fiscal administration and
subgrantee monitoring needed improvement at the majority of 12 state
commissions. We made recommendations for improvement of policies and
procedures for grant and subgranteee fiscal administration in nine of
the 12 reports.
Likewise, we recommended improvements in the monitoring processes
and procedures at 11 of 12 state commissions. Most often, we were
unable to determine the extent and effectiveness of commission
monitoring efforts due to lack of adequate documentation. In addition
to the specific recommendations addressed to each state commission, we
have recommended that the Corporation revise its guidance to state
commissions to specify minimum monitoring procedures to be performed,
as well as minimum documentation requirements. We also found that eight
of the 12 commissions did not routinely obtain and review, or document
the review of, subgrantee audit reports--although the audits are
required by Federal law and regulations.
Finally, we confirmed our premise that, due to the size of CNS
funding compared to that of other Federal agencies, the Single Audit
Act audits at the state level are providing little audit coverage of
CNS funding. Only two of the 12 commissions had been tested as major
programs as defined by OMB Circular A-133, ``Audit of States, Local
Governments, and Non-Profit Organizations.''
RESPONSES BY STATE COMMISSIONS AND THE CORPORATION
We provide drafts reports to the state commission and to the
Corporation and consider their responses when finalizing the reports.
Each final report includes the responses received. In some cases, the
state commissions have disagreed with our reports, but six of the 12
indicated that they have initiated corrective actions in response to
our findings and recommendations.
Because we are scheduling commissions for audit based on risk and
are somewhat constrained by resources, each of our reports recommends
that the Corporation follow-up to see that our recommendations have
been appropriately implemented. The Corporation has responded to six of
the 12 reports. The Corporation has indicated that they will consider
the reports during their administrative monitoring and oversight
reviews which are performed on three year cycle. The Corporation's
response also indicates that it will request the Commissions to report
corrective actions to them on a semiannual basis.
Question. In the Corporation's fiscal year 2001 budget submission,
the Corporation states that it has conducted compliance monitoring and
oversight visits to six state commission in fiscal year 1999. Do you
have an opinion on this?
Answer. In my view, six in fiscal year 1999 is not enough. The
Corporation has had a responsibility to monitor its grantees since it
was established. Numerous OIG audit reports over the past five years
have cited the Corporation's grant oversight as materially weak.
The Corporation initiated its state commission administrative
reviews in fiscal year 1999. It plans to perform such reviews on a
three year cycle. My office has not routinely been provided with copies
of the reports that result from the administrative reviews, nor have we
received a schedule that indicates how the Corporation plans to
complete the reviews of all state commissions within the three year
cycle.
ROLE OF AUDITORS
Question. Ms. Molnar, in response to a question I submitted to you
last year, you indicated that KPMG has indicated to the Corporation
that you were ``available to answer questions and provide technical
advice, within reason, on a year-round basis, free of additional
charge.'' You further stated that you would be ``willing to work with
the Corporation on special projects to assist them in designing and/or
implementing corrective actions to the extent such assistance would not
impair'' your independence. However, last year, you noted that your
advice had been sought only on a very limited basis.
Has the Corporation taken you up on your offer more seriously since
last year?
What has been your experience with other agencies in this area?
Answer. The Corporation has, from time to time, asked for our
advice on certain technical issues. However, requests for such advice
during fiscal year 1999 remained relatively limited. Requests for
technical advice or assistance were made primarily related to the year-
end general ledger closing process and financial reporting matters. For
example, we were asked to make an independent review of the process
used to prepare the statement of cash flows. We did so and provided our
comments to the Corporation regarding the report format and content.
Additionally, the Corporation asked for our concurrence with procedures
they were planning to use in preparing accounts payable and grant
accruals.
KPMG's experience in this area with other agencies varies widely.
The level of assistance requested by other agencies depends
significantly on the level of accounting expertise contained within the
respective agency itself and on the degree to which the agency relies
on its own Office of Inspector General (OIG) to provide this assistance
internally. In general, agencies try to address routine technical
issues on their own, in collaboration with internal OIG personnel, and
consult with KPMG on matters only during the regular audit period. In
this way, resources for outside contracting can be reserved for any
unusual or nonroutine matters that might arise.
CHEMICAL SAFETY AND HAZARD INVESTIGATION BOARD
STATEMENT OF DR. ANDREA KIDD TAYLOR, DR.P.H., MEMBER
ACCOMPANIED BY:
DR. PAUL L. HILL, JR., BOARD MEMBER
DR. GERALD V. POJE, BOARD MEMBER
DR. ISADORE ROSENTHAL, BOARD MEMBER
Senator Bond. We would now invite the Chemical Safety Board
representatives to come forward.
If you will take your seats, we will now move to the
Chemical Safety Board, its first appearance before this
subcommittee. We welcome Dr. Andrea Kidd Taylor, who will be
presenting testimony on behalf of the board, Dr. Paul Hill, Dr.
Gerald Poje, and Dr. Irv Rosenthal.
It will come as no surprise, I trust, that I am very, very
troubled by the lack of results from this agency in the past
two-and-a-half years and the seemingly chaotic environment that
apparently has existed for some time. We did not know about it
until we read about the problems in the paper.
Starting up a new agency is a tough task, but to have
produced only three reports and not initiate any new
investigations in the past year is below the level of
acceptable. The board members implemented a new management
structure a few months ago and are attempting to make this
arrangement functional. We have testimony from GAO today, and
which will be made a part of the record, in which they observed
that the task the board has identified for this year ``are
critical ones that the board must accomplish to demonstrate
that it is a viable agency.''
Frankly, it remains to be seen whether the board, working
in the absence of the chairman and using interim operating
procedures, can actually accomplish these tasks. At this point,
I am not at all convinced that the agency is on a glide path to
improved performance. I must tell you that the board members
need to demonstrate that they can put their differences aside
and bring about cooperation that is essential to the board's
future.
To obtain my support for any future appropriations, I need
to see improvements in this agency's operations in a timely
manner. If this does not happen, I may advocate defunding and
disbanding this agency.
With that, I would call on Senator Mikulski for her
statement.
[The information follows:]
[General Accounting Office, April 12, 2000]
Chemical Safety Board Realigned Management Faces Serious Challenges
(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 2001 budget request for the
Chemical Safety and Hazard Investigation Board (the Board), an
independent agency. Currently in its third year of operation, the
Board's mission is to enhance the health and safety of the public,
workers, and the environment by determining the causes of accidental
chemical releases and using these findings to promote preventive
actions by the private and public sectors. The authorizing statute
provides for five Board members, including a chairperson, all appointed
by the President. The staff includes investigators, attorneys, and
program analysts. The Board is required to submit its budget request to
the Congress and the Office of Management and Budget concurrently. For
fiscal year 2001, the Board has requested $9 million, an increase of $1
million over the prior year's funding. However, the President's Budget
requests $8 million for the Board.
Mr. Chairman, our statement is based on ongoing work for you and
Senator Lautenberg. As agreed with your offices, this work is focused
on determining the status of the Board's (1) organization; (2)
operations; and (3) efforts to update and develop plans, policies, and
procedures for accomplishing the Board's mission. Our statement today
reflects our work to date and includes information supplementing our
recent testimony for the House Appropriations Committee.\1\ We expect
to complete our work and issue a final report in June 2000.
---------------------------------------------------------------------------
\1\ Chemical Safety Board: Recent Organizational Changes and Status
of Operations (GAO/T-RCED-00-101, Mar. 2, 2000).
---------------------------------------------------------------------------
In summary, to date we have found the following:
The Board is currently operating under a significantly different
organizational structure than was in effect during most of its first 2
years of operation. This new structure requires a majority vote of the
Board members for substantive management decisions and delegates some
specific responsibilities, such as personnel matters, to individual
Board members. The current structure represents an interim solution to
address two governance issues: the lack of an appointed chairperson
since January 2000 and disagreements concerning the roles of the
chairperson and Board members. During the first 2 years of operation,
the Chairman had individually made substantive management decisions. In
addition, the Board has implemented an organizational realignment that
dedicates an increased proportion of the Board's staffing resources to
its investigations and safety programs, rather than supporting
activities. However, only 7 of the 17 investigative and safety
positions are currently filled because of, among other things,
difficulties in recruiting qualified staff.
In terms of operations, the Board has made minimal progress in
addressing the backlog of incomplete investigations that existed as of
April 1999, when we last reported on the Board to this Subcommittee.\2\
Specifically, since then, only one of nine outstanding investigations
has been completed, and no new investigations were initiated. Most of
the Board's current operations and plans are directed at completing its
backlog of investigations and the related policies and procedures that
support investigations. The Board also plans to initiate two new
investigations and one as yet undefined safety study in fiscal year
2000.
---------------------------------------------------------------------------
\2\ Chemical Safety Board: Status of Implementation Efforts (GAO/T-
RCED-99-167, Apr. 29, 1999).
---------------------------------------------------------------------------
The Board has made some progress in developing needed plans,
policies, and procedures, such as those for awarding and managing
contracts. However, all of the Board's larger contracts ($100,000 or
more) were executed before the current contracting policies and
procedures were established. According to Board officials, the agency
has received limited benefit from some of these contracts. For example,
the Board is not currently using--and may never use--an information
system that cost about $636,000 to develop. Also, the interim criteria
for selecting incidents to investigate are not yet ready for use, and
the Board plans to continue to work with external stakeholders
representing companies, employees, and the public to refine the process
for selecting incidents to investigate. We believe that the Board's
initial steps since the management realignment appear to be
appropriately targeted to addressing the Board's key problems. However,
the success of these steps continues to be hampered by difficulties in
hiring and retaining investigators.
BACKGROUND
Chemical incidents--the accidental release of toxic and hazardous
chemicals--occur frequently and often have serious consequences.
However, according to Board officials, reliable national statistics on
the number of accidents, injuries, and deaths do not exist.\3\ The
Board is an independent agency created under the Clean Air Act
Amendments of 1990.\4\ The act directs the Board to (1) investigate and
report on the circumstances and the probable causes of chemical
incidents resulting in a fatality, serious injury, or substantial
property damages; (2) recommend measures to reduce the likelihood or
the consequences of such accidents and to propose corrective measures;
and (3) establish regulations for reporting accidental releases.
---------------------------------------------------------------------------
\3\ In 1999, the Board compiled statistics from five federal
databases, which indicated that about 60,000 chemical incidents occur
each year, resulting in about 2,300 injuries and more than 100 deaths.
However, the Board recognizes there are serious limitations with these
statistics and is developing a plan to determine a more reliable
estimate.
\4\ The Board did not become operational until 1998 because of
funding constraints.
---------------------------------------------------------------------------
The Board has no enforcement authority and a very limited
regulatory role. According to a relevant legislative committee report,
the Board is modeled after the National Transportation Safety Board,
which retained the lead role in investigating transportation-related
chemical incidents.
The Board is to consist of five members, including a chairperson,
appointed by the President and confirmed by the Senate. The chairperson
is the Chief Executive Officer (CEO) of the Board. As of April 2000,
the Board has four members but does not have an appointed chairperson.
To accomplish its primary mission, the Board has conducted both
full-scale investigations of chemical accidents as well as limited
investigations, called reviews. In our April 1999 statement for the
record before this Subcommittee, we identified a backlog of incomplete
investigations. Furthermore, we determined that significant portions of
the Board's actual and planned resources were dedicated to activities,
such as external relations, that did not directly support the conduct
of its investigations.
STATUS OF THE BOARD'S ORGANIZATION
Recently, the Board changed its management responsibilities and
functional alignment to address, among other things, conflicts that had
arisen over the roles and responsibilities of the Board members.
Specifically, in December 1999 and January 2000, the Board developed
interim solutions to important organizational issues regarding the
roles and the management responsibilities of the Board members. In
addition, changes in functional alignment made in 1999 and early 2000
increased the proportion of staffing resources to be allocated to the
Board's primary mission of conducting investigations and reduced
staffing allocated for other activities, such as external relations and
information technology.
Conflicts Arose Over the Roles and the Responsibilities of Board
Members
In 1999, the Chairman and the other members of the Board disagreed
over their respective roles and responsibilities for managing the
agency. In essence, the Chairman asserted that he had sole control over
many significant agency decisions, while the other Board members
believed that making these decisions was the collective responsibility
of the Board. Consequently, the Board members did not necessarily
support the actions taken by the Chairman. For example, they were
concerned about the initial fiscal year 2001 budget request the
Chairman had sent to the appropriations committees in October 1999 that
would have doubled the Board's funding to $16 million.\5\ In addition,
according to a Board directive, the Chairman and the Chief Operating
Officer did not comply with requests from the other Board members for
contracting documents that they wanted to review in order to identify
the goods and services that had been provided under the contracts.\6\
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\5\ On November 16, 1999, the Board members sent a letter to the
appropriations committees to state their reservations about the budget
request and ask that the Chairman's request be disregarded.
\6\ The former Chairman told us that he did not agree with the
Board members' assertion that they were denied access to contracting
files.
---------------------------------------------------------------------------
The Board members asked the agency's General Counsel to provide a
legal opinion on the roles and the responsibilities of Board members.
In an August 1999 memorandum, the agency's Office of General Counsel
concluded that, for a number of important agency functions, there
should be at least some amount of shared responsibility between the
Chairman and the other Board members. For example, the memorandum
concluded that while the Chairman and his staff were responsible for
preparing the agency's budget request, it must be approved by the full
Board before being transmitted to the Congress and OMB. Similarly, the
memorandum stated that while the use and the distribution of the
agency's funds for contracting purposes falls within the scope of the
Chairman's administrative functions, the exercise of this authority is
subject to the oversight of the other Board members.
In October 1999, the Board members accepted the General Counsel's
opinion, but the Chairman requested further legal clarification before
implementing the opinion. The Chairman interpreted the Board's
authorizing statute as giving him authority, as CEO, over a number of
agency functions, including all budget and contracting issues, subject
to review only by the President and the Congress. In November 1999, the
Board members requested an opinion from the Department of Justice's
Office of Legal Counsel on the legal accuracy of the General Counsel's
memorandum and agreed to be bound by the opinion.\7\ In addition, on
December 1, 1999, the Chairman also requested that the Office of Legal
Counsel review the Board's authorizing statute to determine the precise
roles and responsibilities of the chairperson and the Board, and he
agreed to be bound by the Office's conclusion. On the same day, the
Chairman and the Board members developed an agreement specifying the
interim measures to be taken until the Department of Justice provided
its legal opinion. This agreement expanded the roles and the
responsibilities of the Board members.\8\
---------------------------------------------------------------------------
\7\ The former Chairman told us that prior to the November 1999
letter, he sought assistance from White House officials to help resolve
the matter. The officials referred him to Justice's Office of Legal
Counsel.
\8\ On December 1, 1999, Senator Lautenberg sent a letter to the
Board stating that his understanding of the statute creating the Board
was that it intended the Board as a whole to direct and approve the
executive and administrative functions performed by the chairperson.
---------------------------------------------------------------------------
The Board's disagreement about its governance became a matter of
public record, reported in newspapers and periodicals. In January 2000,
the Chairman submitted his resignation as Chairman and CEO, effective
January 12, 2000, but retained his position as a Board member. The
President has not appointed a new chairperson, and the Board is
currently operating without a chairperson and CEO.
On January 14, 2000, the Board members established and implemented
interim operating procedures that delineate their roles and
responsibilities whenever the position of chairperson is vacant. The
procedures delegate specific responsibilities, such as personnel
matters and allocating resources, to individual Board members. In
addition, the procedures identify the specific responsibilities,
including developing budgets and awarding contracts exceeding $10,000,
that require a majority vote of the Board members for approval.
Current Functional Alignment Emphasizes Investigations, but Many
Positions Are Vacant
During fiscal year 1999 and the early part of fiscal year 2000, the
Board made organizational changes to better carry out its mission.
Among other things, the Board increased the proportion of staffing
resources to be allocated to its investigative function. However,
because of difficulties in recruiting qualified staff, many vacancies
exist in the Office of Investigations and Safety Programs. The Board
also shifted several key personnel. The former Chief Operating Officer
has been assigned to an interim position of special assistant to a
Board member, and the General Counsel is assuming the position of Chief
Operating Officer in addition to his legal responsibilities. Also, on
February 2, 2000, the Board named a staff member to the position of
Director of the Office of Investigations and Safety Programs.
Increased Resources Allocated for Investigations and Safety
Currently, the Board has 24 staff, including the 4 Board members
and a special assistant to the Board. The Board expects to grow to a
staff of 40 by the end of fiscal year 2000, with almost all of the
growth in the areas of investigations and safety. Table 1 identifies
the Board's offices and staffing allocations, both current and planned.
TABLE 1.--THE BOARD'S CURRENT AND PROJECTED STAFFING LEVELS, BY
FUNCTIONAL OFFICE, AS OF APRIL 7, 2000
------------------------------------------------------------------------
Projected
staffing
Office Current by the end
staffing of fiscal
year 2000
------------------------------------------------------------------------
Board members and staff........................... 5 \1\ 7
Chief Operating Officer........................... \2\ 1 2
Investigations and Safety Programs................ 7 17
General Counsel................................... \2\ 3 3
External Relations................................ 2 2
Information Technology Services................... 2 4
Administration.................................... 4 5
---------------------
Total....................................... 24 40
------------------------------------------------------------------------
\1\ Currently, the Board has four members and one special assistant.
Projected staffing includes the fifth Board member as provided by the
Board's authorizing statute.
\2\ The head of the Office of General Counsel also serves as the Chief
Operating Officer. This individual is included only in the staffing
allocated to the Office of General Counsel.
The projected staffing differs markedly from the staffing
associated with the Board's budget request for fiscal year 2000.
Specifically, in February 1999, the Board expected to grow to a staff
level of 60 by the end of fiscal year 2000, compared with current plans
to grow to 40 staff.\9\ In addition, last year a greater proportion of
staff was planned for organizational units that did not directly
support the Board's investigative mission. For example, last year, 33
percent of the Board's projected staffing resources at the end of
fiscal year 2000 was allocated to investigations and safety programs,
compared with the current projections of 43 percent. Currently, the
Board plans to allocate two staff to the Office of External Relations
compared with the planned allocation of nine staff a year ago.
---------------------------------------------------------------------------
\9\ The Board's budget request for fiscal year 2000 was $12.5
million. However, the Congress provided $8 million for fiscal year
2000. This amount does not support the planned staffing growth to 60
staff.
---------------------------------------------------------------------------
Vacancies Exist in the Investigations Area
As shown in table 1, 10 of the 17 positions planned for the Office
of Investigations and Safety Programs are vacant. Six of the positions
are for investigators, and the other vacancies are for two program
analysts, one library/researcher, and one administrative assistant.
Board officials told us that the vacancies exist because of recruitment
difficulties and the loss of two investigators. According to the Board,
potential recruits with the requisite chemical safety skills--primarily
from the oil and chemical process industries--are highly paid and
typically located in areas far from Washington, D.C. Board officials
said that it has been difficult to get prospective staff to relocate.
In addition, the Board has found that it takes 6 months or longer to
recruit and hire staff. This time frame for hiring staff is longer than
the Board anticipated. Moreover, according to Board officials, one
investigator resigned and another was terminated.
The newly constituted Board has stated its intent to focus on
personnel management issues in fiscal year 2000. The Board will
concentrate on retaining and retraining current staff and on hiring and
training qualified professional staff. Specifically, the Board has
identified development of hiring and training plans as priorities for
fiscal year 2000.\10\ The Office of Personnel Management (OPM) approved
the Board's March 17, 2000, request to reinstate through December 2000
special hiring authority (termed Schedule A) that the Board had been
granted previously. According to Board officials, this special hiring
authority, which it had until December 31, is typically granted to new
federal agencies for a limited time period and expedites the hiring
process.
---------------------------------------------------------------------------
\10\ As of March 2000, the Board has identified eight priorities
for fiscal year 2000. The other six priorities--completing three
investigative reports, revising its investigation protocol and incident
selection criteria, and initiating new investigations--are discussed in
the following sections.
---------------------------------------------------------------------------
In its letter to OPM requesting special hiring authority, the Board
stated that it had an urgent need to expedite the hiring of
investigative and safety personnel to complete its work backlog. The
Board's letter stated that with some of its investigations more than 2
years old, it is under pressure from the Congress, stakeholders, and
the public to complete the eight outstanding investigations as soon as
possible. The letter acknowledged that the Board could face serious
consequences, including the possible loss of funding, if it does not
hire the additional staff needed to make substantive progress on its
investigative backlog.
In its fiscal year 2001 budget request, the Board acknowledged that
it may not be able to achieve its fiscal year 2000 hiring goals. The
Board has also acknowledged that the governance problems and the
management difficulties stemming from them contributed to staff
turnover.\11\ In addition, the Board believes that more initiatives
than the agency could effectively handle were undertaken hastily in its
first year of operation in an effort to quickly demonstrate that the
Board was meeting its congressional mandate.
---------------------------------------------------------------------------
\11\ In addition to the loss of two investigators, Board officials
said that five staff from other offices have resigned from the Board.
---------------------------------------------------------------------------
STATUS OF THE BOARD'S OPERATIONS
The Board has not made progress in addressing its investigations
backlog this past year and has not initiated a new investigation since
March 1999. In addition, the more limited review program was terminated
because of problems encountered in performing these reviews. The Board
plans to initiate two investigations in fiscal year 2000 and four or
five investigations each year beginning in fiscal year 2001. Similarly,
in fiscal year 2000 the Board plans to initiate a safety study to
better understand the nature and causes of specific safety problems
that are beyond the scope of any one particular incident under review
and another safety study next year. Also, contracting activities have
primarily supported information technology and investigations, but
according to Board officials, the agency has received limited benefits
for some of its contracts. To avoid contracting for work of limited
utility, the Board decided to require a majority vote of the Board
members to execute small as well as large contracts that is, approval
is required for contracts exceeding $10,000.
Progress Has Been Slow in Initiating and Completing Investigations
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. The Board started five full-scale
investigations in 1998 and six in 1999, although none have been
initiated since March 1999. Of the 11 investigations, 3 from 1998 have
been completed. One report has been completed since March 1999.
Draft reports are in process for three investigations that were
started in March 1998, April 1998, and March 1999. Completion of these
reports by September 30, 2000, represents three of the Board's eight
priorities for fiscal year 2000. The Board has not determined what
decisions it will make concerning the other five outstanding
investigations. Alternatives include developing investigative reports,
issuing summary reports, or concluding the investigations without
reports. In addition to the personnel issues discussed above, the Board
believes one of the causes of the investigations backlog was an over
reliance on contractors to investigate accidents. According to the
Board, this over reliance on contractors resulted in some poor
investigations and reports because of insufficient Board staff or
inadequate procedures to monitor the contractors' personnel to ensure
their activities met the Board's investigative needs.
In terms of future investigations, the Board plans to initiate two
investigations during fiscal year 2000 and four or five investigations
each year beginning in fiscal year 2001.
Review Program Has Been Terminated
The more limited review program was developed to provide
information to prevent future incidents by using an approach that was
less resource-intensive than full investigations. The protocol for
these reviews provided for a limited, office-based review of
investigative reports prepared by the organizations that responded to
the incident. The Board initiated a total of 23 reviews in 1998 and
1999. However, Board officials told us that they effectively terminated
this program in July 1999 when they decided to add the factual data
about these reviews to an existing incidents database maintained by the
Board and that the program was officially terminated in September 1999.
This decision was made because of problems encountered in performing
these reviews, including the longer-than-anticipated time spent in
collecting the information and drafting the reports as well as the
possibility of duplicating work done by other government agencies.
Safety Studies Planned
Although they are not among the Board's eight identified priorities
for fiscal year 2000, 6 percent of its fiscal year 2000 funding
$488,000 and seven percent of the Board's budget request for fiscal
year 2001 $670,000 are allocated for special safety studies and
technical guidance. The Board plans to use safety studies to better
understand the nature and causes of specific safety problems that are
beyond the scope of any one incident under investigation. The Board
plans to initiate one safety study in fiscal year 2000 and another in
fiscal year 2001. As of March 2000, the Board had not selected the
study to be initiated this fiscal year, but officials said it would
likely evolve from one of the three investigations to be completed in
fiscal year 2000. Board officials said that safety studies selected
would likely stem from research needs identified in recommendations
developed by the Board in its investigative reports. They indicated
they would receive, at a minimum, input from other parties to ensure
the studies are useful.
Limited Benefits for Some Contracting Activities
Since it began operations in January 1998, the Board has obligated
about $4.7 million to 16 contracts of $100,000 or more.\12\ A
significant portion--$2.4 million--of these contracting obligations
have supported information technology, such as the creation of data
systems and databases, compared with $1.4 million for investigative
support (see app. I). These activities were contracted before the
management alignments in December 1999 and January 2000 and the
establishment of contracting policies and procedures in December 1999.
Prior to the management alignment, contracting actions were the
responsibility of the former Chairman and the former Chief Operating
Officer, and the other Board members did not have a role in reviewing
or approving contracts. In addition, these contracts were made prior to
being directed--in the House conference committee report accompanying
the Board's fiscal year 2000 appropriations bill--to spend the
preponderance of its resources, including contract resources, on
investigations and safety instead of on information technology or
external affairs.
---------------------------------------------------------------------------
\12\ Contracts for office space or telephone charges are not
included.
---------------------------------------------------------------------------
According to Board officials, the agency has received limited
benefits for some of its contracting activities. For example, the Board
is not currently using--and may never use--the $636,000 Incident and
Investigation Information System developed by Oak Ridge National
Laboratory in 1999 that would catalog information from the Board's
accident investigations. The officials said that the investigators and
safety program staff who would use this system had limited input into
its design. According to Board officials, the system is overly complex
and an off-the-shelf database may better meet the Board's needs. While
the Board plans to formally evaluate the system to determine its value
to the Board, this evaluation is on indefinite hold because of higher
priority work for fiscal year 2000.
In addition, Board officials acknowledged that other contracting
activities may be of limited value to the Board, such as:
Baseline of Chemical Accidents.--The Board spent more than $450,000
under two contracts to develop a 10-year baseline of chemical
accidents. However, the Board believes these statistics have serious
data quality limitations and is developing a plan to determine a more
reliable estimate of the universe of chemical accidents.
Pressure Relief Systems.--The Board paid about $326,000 for
information on pressure relief systems that are used in chemical
processing operations. Board officials said that the information from
the study appears to be of limited use to them. A Board member stated
that while the contract was designed to assist the Board's
investigators and safety staff in their work, the contract proposal was
not reviewed by the Board members or the safety and investigations
staff for design, purpose, and outcomes. As a result, the product is of
lesser value than could have been attained if input from the users and
the Board members had been obtained. The Board member said that the
other pressing priorities have precluded them from completing their
review of the information provided under the contract. He said,
however, that the agency needs to develop procedures for the internal
technical review of goods and services provided to the Board under
contracts.
As discussed earlier, Board officials also believe that the agency
relied too heavily on contractors to investigate accidents, resulting
in some poor investigations and reports. They attribute this primarily
to insufficient Board staff or inadequate procedures to monitor the
contractors' personnel to ensure their activities met the Board's
investigative needs.
In addition, given its limited productivity and workload
challenges, we have questions about the Board's use of funds to develop
an informational video demonstrating the Board's purpose and
activities. To date, the Board has paid $80,000 of the $160,000
obligated in 1998 for the video. One Board member told us that he did
not believe it was appropriate to develop a video at this time. In
response to our questions about the views.14 of the Board members on
the need for a video, he said he would raise this issue at the next
meeting of the Board.
In January 2000, to ensure that future contracting activities
contribute to their overall goals, the Board approved interim operating
procedures that require contracts exceeding $10,000 be approved by a
majority vote of the Board members. In addition, one Board member is
assigned the responsibility for supervising the use and expenditure of
funds, including authorizing contracts between $2,500 and $10,000. A
Board member said that this new policy will provide greater
transparency of proposed contracting actions and avoid contracting for
work of limited utility to the Board. In addition, the Board is
changing the way it uses contracting support for its investigations.
Rather than retaining contractors to perform the investigations, the
Board is contracting for specific expertise or tests needed for
investigations that are led by Board investigators.
STATUS OF THE BOARD'S EFFORTS TO UPDATE AND DEVELOP PLANS, POLICIES,
AND PROCEDURES
In our April 1999 statement for this Subcommittee, we identified
two concerns about the Board's actions.\13\ One concern related to the
backlog of investigations and the fact that the Board had not updated
its initial business plan to reflect the backlog and examine how to
address this problem, for example, by reallocating existing and planned
resources. The second concern stemmed from the problems with
contracting that developed shortly after the Board began operations. We
indicated the need for formal procedures for its staff to follow in
awarding and managing contracts. As discussed earlier, the House
conference committee report accompanying the Board's fiscal year 2000
appropriations act directed the Board to spend the preponderance of its
resources, including contract resources, on investigations and safety
instead of on external affairs or information technology. This report
also directed the Board to complete, by December 31, 1999, an updated
business plan, formal policies and procedures for awarding and managing
contracts, and formal procedures for selecting and performing
investigations. The Board has made some progress in complying with
these directives. Specifically,
---------------------------------------------------------------------------
\13\ See footnote 2.
---------------------------------------------------------------------------
On December 27, 1999, the Board issued formal written procedures
for awarding and managing contracts. Also, as discussed above, in
January 2000, the Board approved procedures that include requiring
contracts exceeding $10,000 be approved by a majority vote of the Board
members.
On December 27, 1999, the Board issued interim procedures for
selecting incidents to investigate and an interim investigative
protocol for conducting accident investigations. As of March 2000, the
interim selection criteria are being reviewed and thus are not ready
for use in selecting incidents to investigate. The Board plans to
revise the process for selecting incidents to investigate, continuing
to work with stakeholders from industry, public interest groups,
government agencies, and labor unions. Similarly, the Board plans to
revise its investigation protocol through reviews with stakeholders and
external experts on investigative practices. These efforts are among
the Board's eight priorities for fiscal year 2000.
The Board requested an extension of time in developing an update to
its business plan because of the former Chairman's announced
resignation from that position and the related governance issues. This
update will be accomplished by the development of strategic and
performance plans required by the Government Performance and Results
Act. On February 7, 2000, the Board provided a performance plan for
fiscal year 2001 along with its budget request for fiscal year 2001.
The Board plans to develop a strategic plan by September 2000.
OBSERVATIONS
The governance issues that arose in 1999 limited the Board's
ability to effectively address the problems that we identified almost a
year ago--the backlog of investigations and the lack of key plans,
policies, and procedures to guide this new agency. The Board's initial
steps since the management realignments in December 1999 and January
2000 appear to.16 be appropriately targeted to addressing these issues.
The priorities the Board has established for (1) hiring and training
staff and (2) completing investigations and key policies and procedures
to support the selection and conduct of investigations are critical
ones that the Board must accomplish to demonstrate that it is a viable
agency capable of accomplishing its important safety mission in an
efficient and effective manner. Along these lines, the Board's decision
to review and approve contracts appears prudent given the amount of
money that has been spent on contracting activities without apparent
direct or immediate benefit to the Board.
The Board is facing many challenges as it seeks to accomplish a
number of important tasks with a limited number of personnel to conduct
them. While the Board plans to provide more resources to its
investigations and safety programs, it is not clear how the backlog
will be addressed or when the agency will be in a position to
realistically initiate any new investigations. The Board's progress in
these areas is limited by difficulties in hiring and retaining
investigators and the need to dedicate some of these resources to other
priorities, such as revising accident selection criteria and the
investigation protocol and developing its strategic plan. Finally, in
our view, initiating a safety study this year does not appear essential
to the operations of the Board in the short run--as it seeks to
establish its credibility--and will divert resources from its
priorities.
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
organization, planning, budgeting, and programs; personnel data; and
contract files. We also interviewed Board employees, including Board
members, attorneys, and investigators. We discussed the contents of
this statement with Board members, the Chief Operating Officer, and
other Board staff, who generally agreed with the facts presented. Based
on our discussions, we made revisions as appropriate to reflect the
clarifications the Board requested. We conducted our work between
January and April 2000 in accordance with generally accepted government
auditing standards.
CONTACT AND ACKNOWLEDGEMENTS
For additional information, please contact David G. Wood at (202)
512-6111. Individuals making key contributions to this statement
included Gregory Carroll, Harriet Drummings, and Christine Fishkin.
______
Appendix I
Chemical Safety Board Contracts
The Chemical Safety and Hazard Investigation Board has contracted
with a number of vendors since it became operational in fiscal year
1998 using contracts, purchases orders, and agreements. The contracts,
purchase orders, and agreements of $100,000 or more (excluding those
for office space and telephone charges) are identified in table 2. The
Board obligated about $4.7 million under these contracts in fiscal
years 1998, 1999, and 2000 (up to March 1, 2000). Only one contract
over $100,000 has been executed in fiscal year 2000. As of March 1,
2000, total expenditures under these contracts were about $3.5 million.
The contracts in table 2 are categorized according to (1) information
technology, database, and network support; (2) investigative support;
and (3) other activities.
TABLE 2.--TOTAL OBLIGATIONS AND EXPENDITURES FROM JANUARY 1998 THROUGH MARCH 1, 2000, FOR CONTRACTS, PURCHASE
ORDERS, AND AGREEMENTS OF $100,000 OR MORE
----------------------------------------------------------------------------------------------------------------
Total Total
Vendor Description \1\ obligations expenditures
----------------------------------------------------------------------------------------------------------------
Information technology, database, and network
Oak Ridge National Laboratory (ORNL) \1\ \2\.. Information Technology $658,000 $636,000
Infrastructure. Identify
functional requirements and
develop the Investigation and
Incident Notification System to
capture information developed and
collected from investigations.
Tri-Data...................................... Establishment of chemical incident 350,000 350,000
baseline and database. Analyze and
prepare a summary report on 10
years of data from five federal
agencies' databases to establish a
chemical incident baseline.
ORNL \1\ \2\.................................. Technical support. Assist the Board 332,000 60,000
with library and research work,
and regulatory analyses. Strategic
Plan. Assist in the development of
a 5-year information technology
plan.
AAC Associates................................ Network/Helpdesk Support. Provide a 308,000 39,000
senior engineer and support
specialist to cover helpdesk
support and local area network
support.
Bell Atlantic................................. Internet and Intranet web site. 231,000 223,000
Provide one dedicated staff to
develop, manage, and administer
the web database.
Federal Emergency Management Agency........... Internet service. Host, update, and 137,000 137,000
administer the Board's web site
and e-mail. Provide a 24-hour, 7
days-a-week communications center.
Bell Atlantic................................. Helpdesk support. Provide helpdesk 130,000 116,000
support and local area network
support.
General Service............................... Administration Database support. 120,000 51,000
Provide one dedicated database
administrator/developer to
develop, manage and administer
database requirements, including
technical support.
Dun & Bradstreet.............................. Baseline study support. Assist the 108,000 108,000
Board in improving the data
quality of the five databases used
to develop a universe of chemical
incidents for 1987 to 1996.
----------------------------
Subtotal................................ ................................... 2,374,000 1,720,000
============================
Investigative support
ORNL \1\ \2\.................................. Investigative support. Assist the 1,006,000 799,000
Board in conducting several
investigation.
Battelle...................................... Investigative support. Assist the 410,000 385,000
Board in conducting the Sierra
Chemical investigation in Nevada.
----------------------------
Subtotal................................ ................................... 1,416,000 1,184,000
============================
Other activities
ORNL \1\ \2\.................................. Study. Develop training program and 300,000 326,000
reference materials on process
pressure relief systems since many
incidents that occur are due to
inadequate assessment, design, and
installation of these systems.
Bureau of Public Debt......................... Furniture, equipment and support. 255,000 33,000
Provide furniture and equipment in
addition to technical support
services and organizational
development.
Rowland Productions........................... Informational video. Provide a 160,000 80,000
video to publicize the Board's
purpose and activities.
National Ground Intelligence Center........... Software development. Develop a 100,000 100,000
civilian version of military
intelligence software to help
facilities determine where safety
systems were prone to failure and
how to best address the problems.
Initially planned as a multi-year
effort, this contract has been
suspended.
FPMI Communications, Inc...................... Resources support. Provide a full 100,000 19,000
spectrum of personnel management
services, including but not
limited to, writing position
descriptions and preparing
recruiting analyses and
recommendations.
----------------------------
Subtotal................................ ................................... 915,000 558,000
============================
Total................................... ................................... 4,705,000 3,462,000
----------------------------------------------------------------------------------------------------------------
Note: Dollar amounts rounded to the nearest thousand. Obligations over $100,000 for office space and telephone
charges are not included.
\1\ ORNL conducts work for the Board under one agreement with specific tasks. The Board has been unable to
confirm the costs associated with some of the tasks listed in the table. The Board has found discrepancies
between the monthly cost reports received from ORNL for work performed on specific tasks and the monthly
billing amounts. It is currently attempting to reconcile these differences. For example, expenditures appear
to exceed obligations for the task relating to the study on pressure relief systems, but actual expenditures
have not yet been confirmed. Because of these problems, on February 15, 2000, the Chief Operating Officer
instructed ORNL to stop all work under the agreement temporarily.
\2\ All expenditures are as of March 1, 2000, except for Oak Ridge National Laboratory, which is as of March 7,
2000.
Senator Mikulski. Well, thank you very much, Mr. Chairman.
I know we have a lot of ground to cover with this panel.
I would like to bring to your attention that Dr. Andrea
Kidd Taylor is a Marylander and a graduate of our great School
of Public Health at Hopkins. And I know she and the others will
bring their views on really how to improve the Chemical Safety
and Hazard Board.
I agree the mission of the board is important. And we have
to then see really how we are going to implement this mission
and how we are going to be able to move forward. So rather than
us talking, I think we should move right to the testimony.
Senator Bond. Thank you, Senator Mikulski.
Dr. Taylor.
STATEMENT OF ANDREA KIDD TAYLOR
Dr. Taylor. Thank you. Mr. Chairman, Senator Mikulski, I am
honored to come before you today representing my fellow board
members in support of the U.S. Chemical Safety and Hazard
Investigation Board's fiscal year 2001 appropriations request.
Seated at the table with me are my colleagues on the Board. To
my immediate left and your immediate right is Dr. Paul Hill. To
my right, immediate right, Dr. Gerald Poje. And to my far
right, Dr. Isadore Rosenthal. My comments are those of the full
board.
Mr. Chairman, as I begin my abbreviated remarks on behalf
of my colleagues, I ask that the board's previously submitted
and more detailed written testimony be entered into the record.
Senator Bond. Without objection, it will be. Thank you.
FISCAL YEAR 2001 REQUEST
Dr. Taylor. In fiscal year 2001, the CSB is seeking an
appropriation of $9 million, which represents an increase of $1
million over our fiscal year 2000 appropriation. This amount
represents the funding necessary for the board to maintain a
stable operating program and perform a modest number of
incident investigations. It will also allow the board to
evaluate and revise its incident selection criteria,
investigation protocol, and procedures for tracking
recommendations.
In addition, the board will be able to initiate one safety
study to complement its investigation and related activities
Finally, the increase will permit the board to conduct monthly
public meetings and hire two additional staff members in its
Office of Investigations and Safety Programs.
The mission of the board is no less critical now than it
was in 1990, when it was first created in legislation. Chemical
incidents are costly, both in economic and human terms.
According to a recent study of more than 14,000 facilities that
filed risk management plans under the EPA's new risk management
program, less than 10 percent of these facilities reported
1,900 major chemical release accidents over the 5-year period.
CHEMICAL INCIDENT'S COSTS
Nearly 1,900 injuries and 33 deaths to workers resulted
from these incidents. Members of the insurance industry have
recently estimated direct losses from chemical releases within
the purview of the CSB as being about $1 billion per year.
Just 3 months ago, the chairman and chief executive officer
of the board resigned his position. This change in management
represented an opportunity for the board to refine its vision,
structure and mode of operation to achieve its mission. As a
part of the effort, the board is reassessing the manner in
which it both defines and performs its mission and concurrently
is implementing changes derived from such evaluations.
The mission of the U.S. Chemical Safety and Hazard
Investigation Board is to enhance the health and safety of
workers and the public and to protect the environment by
uncovering the underlying causes of accidental chemical
releases and using these findings and supporting research to
promote preventive actions by both the private and public
sectors.
The mission is accomplished by conducting state-of-the-art
investigations, producing high-quality investigation reports,
conducting hazard safety and data studies, issuing targeted
recommendations, and advocating effectively for these
recommendations.
EMPHASIS ON INVESTIGATIONS
As you review the fiscal year 2001 budget request, you will
see that it precisely tracks our stated objectives and
priorities. The emphasis is on funds and personnel necessary
for the conduct of investigations and safety program
activities. This emphasis began this year and is carried
forward in our fiscal year 2001 budget request.
Specifically in fiscal year 2001, we propose devoting 19.2
work years and just under $4.2 million for incident
investigation and related activities. This compares with 10.7
work years and just under $2.5 million in fiscal year 1999. A
similar increase in special safety studies and technical
guidance is proposed in fiscal year 2001, where 4.1 work years
and $670,000 is proposed compared to 1 work year and $284,000
in fiscal year 1999.
We have also decreased the resources devoted to areas not
directly supporting the conduct of investigations in the area
of technical information and assistance from 4.1 work years and
slightly over $1 million in fiscal year 1999 to 2.7 work years
and $730,000 in fiscal year 2001.
STRATEGIC PLAN
The CSB is in the process of developing a strategic plan
that will describe in detail the goals, objectives and
performance measures that will help it attain this goal. In the
interim, CSB's annual performance plan sets forth two strategic
goals. First, to reduce the reoccurrence of chemical incidents
addressed by the board and minimize the adverse effects on
life, health and property. Second, to be a progressive 21st
century Federal agency, which facilitates the accomplishment of
the board's mission.
The specific performance goals associated with these two
strategic goals are detailed both in our written testimony and
the fiscal year 2001 performance plan, both of which have been
previously submitted to the subcommittee.
Following the leadership changes in January of this year,
the board restated the board's mission as a basis for
restructuring its priorities, this year establishing a better
foundation for its activities in fiscal year 2001 and beyond.
In directing more focused activities in fiscal year 2000,
the board has adopted eight critical objectives in order to
achieve its mission this fiscal year. They are detailed in our
written testimony. Our struggles have been offset by
significant successes and, of course, lessons learned.
REACTION TO REPORTS
Our completed incident investigation reports and safety
study have been widely applauded for their scientific
correctness, their readability and usability and applicability
and practicality of their safety recommendations.
Significantly, we can point to acceptance and use of the safety
recommendations by State governors, legislators, trade
associations, companies and emergency responders.
For example, on January 7, 1998, two explosions in rapid
succession destroyed the Sierra Chemical Company Kean Canyon
plant near Mustang, Nevada, killing four workers and injuring
six others.
Based on the board's findings, Nevada's occupational safety
and health enforcement section, which enforces Federal safety
regulations, increased the frequency of safety inspections at
explosives facilities. The governor's executive order mandated
safety inspections of explosives manufacturing facilities at
least twice a year. Furthermore, in May 1999, the governor
signed four additional measures aimed at improving safety of
facilities where hazardous substances are produced.
On March 27, 1998, one Union Carbide worker was killed, an
independent contractor was seriously injured, due to nitrogen
asphyxiation. The Hazardous Materials Training Department of
the International Association of Fire Fighters, a labor union
representing more than 225,000 professional career fire
fighters and emergency medical personnel, used the board's
report as an interactive case study on its distance learning
website.
On April 9, 1998, at the Herrig Brothers Farm in Albert
City, Iowa, two volunteer firefighters were killed and seven
other emergency response personnel were injured. In response to
a CSB recommendation, the National Propane Gas Association
improved their emergency response training materials to better
address the hazards of BLEVEs, an especially dangerous type of
explosion.
In addition, the Fire Service Institute of Iowa State
University revised their training program to provide better
guidance for responding to BLEVEs. At the request of Congress,
the board led a multi-stakeholder special safety study
initiative to build awareness of Y2K chemical safety problems.
We collaborated with the chemical industry, particularly
small-and medium-sized enterprises, warning them of the
potential for Y2K-related computer problems that might lead to
an accidental chemical release. The board also testified before
Congress.
PREPARED STATEMENT
Mr. Chairman, Senator Mikulski, and members of the
subcommittee, this morning and through our written testimony,
we have shared with you an assessment of both the board's
accomplishments, problems to date. We have charted a new
course, guided by all of the members of the board and supported
by professional staff. We have obtained the support of key
stakeholders and request the continued support of this
subcommittee.
Thank you.
[The statement follows:]
Prepared Statement of Andrea Kidd Taylor
Mister Chairman, Senator Mikulski and other Distinguished Members
of the Subcommittee: I am honored to come before you today representing
my fellow board members in support of the U.S. Chemical Safety and
Hazard Investigation Board's (CSB, or the Board) fiscal year 2001
appropriations request. Seated at the table with me are my colleagues
on the Board, Dr. Paul L. Hill, Jr., Dr. Gerald V. Poje, and Dr.
Isadore Rosenthal. My comments are those of the full Board.
In fiscal year 2001, the CSB is seeking an appropriation of $9
million, which represents an increase of one million dollars over our
fiscal year 2000 appropriation.\1\ This amount represents the funding
necessary for the Board to maintain a stable operating program and
perform a modest number of incident investigations. It will also allow
the Board to evaluate and revise its incident selection criteria,
investigation protocol, and procedures for tracking recommendations. In
addition, the Board will be able to initiate one safety study to
complement its investigation and related activities. Finally, the
increase will permit the Board to conduct monthly public meetings and
hire two additional staff members in its Office of Investigations and
Safety Programs.
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\1\ As stated in its enabling statute, the Board, as an independent
agency, is authorized to submit its own budget request directly to the
Congress, simultaneously transmitting a copy to the Executive Branch.
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In this testimony, the CSB will present how it plans to responsibly
move forward to provide value to the public in contributing to the
prevention of chemical incidents and minimization of their effects, and
how it has worked towards fulfilling its mission, including its
successes and struggles in this regard.
HUMAN AND FINANCIAL COSTS OF INCIDENTS
The mission of the Board is no less critical now than it was in
1990 when it was first created in legislation. Chemical incidents are
costly both in economic and human terms. According to a recent study by
the Wharton Center for Risk Management and Decision Processes,\2\ of
14,500 facilities that filed risk management plans in 1999 under the
EPA's new Risk Management Program (RMP) rule 1,145 of these facilities
(7.9 percent) reported 1,913 major chemical release accidents over the
five-year period from June 21, 1994 through June 20, 1999.\3\ A total
of 1,897 injuries and 33 deaths to workers/employees resulted from
these incidents.
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\2\ P. Kleindorfer, H. Feldman, and R. Lowe. Accident Epidemiology
and the U.S. Chemical Industry. Preliminary Results from RMP*Info.
Working Paper 00-01-15. Center for Risk Management and Decision
Processes. The Wharton School, University of Pennsylvania.
Philadelphia, Pennsylvania. 1999.
\3\ The RMP rule covers a wide range of industries including
chemical manufacturing, petroleum, refining and processing industries,
agriculture, pulp and paper mills, food processors, warehouses, and
water treatment plants. Facilities are required to submit a risk
management plan for processes that fall in one of the covered SIC codes
and if the process contains a threshold quantity of one of the
regulated toxic or flammable chemicals listed in 40 CFR Sec. 68.130,
Regulated Substances for Accidental Release Prevention.
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Members of the insurance industry have recently estimated direct
losses from chemical releases within the purview of the CSB as being
about $1 billion per year.
This information was presented at a Roundtable meeting sponsored by
the National Safety Council on October 6, 1999. Discussion by business
members after this presentation noted that neither retained company
losses (deductibles), losses by companies that were self-insured, or
indirect losses were included in this total. If such losses were taken
into account the number would be conservatively estimated at least
three to four times larger or three to four billion dollars annually.
Independent analysis by another insurance company after the October 6th
meeting confirmed these loss estimates.\4\
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\4\ A paper on this work will be presented publicly at an
international conference sponsored by the Center for Chemical Process
Safety (CCPS) meeting in October of this year.
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REFINING THE BOARD'S MISSION
Just under two months ago the Chairman and Chief Executive Officer
of the Board resigned his position. This change in management
represented an opportunity for the Board to refine its vision,
structure, and mode of operation to achieve its mission. As part of the
effort, the Board is reassessing the manner in which it both defines
and performs its mission, and concurrently is implementing changes
derived from such evaluations.
As one of the first steps towards evaluation and improvement, the
Board reviewed the mission statement that was created when we began
operations in January 1998. The Board considered this evaluation a
priority since this statement drives the strategic planning and
functional structure of the Board. In revising the mission statement,
the Board strove for greater precision in describing its purpose and
authority.
The new statement, based on our statutory mandate, is:
Mission statement
The mission of the U.S. Chemical Safety and Hazard Investigation
Board is to enhance the health and safety of workers and the public and
to protect the environment by uncovering the underlying causes of
accidental chemical releases and using these findings and supporting
research to promote preventive actions by both the private and public
sectors.
How the mission is accomplished
Conduct state-of-the art investigations of carefully selected major
incidents involving the accidental release of hazardous chemicals.
Produce high quality, easy-to-read, and timely investigation
reports that identify the root and contributing causes of these
incidents.
Conduct hazard, safety and data studies designed to complement CSB
investigation report and recommendation activities.
Issue well-reasoned and precisely targeted recommendations.
Conduct effective advocacy activity for these recommendations.\5\
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\5\ Mission statement adopted by notation vote of the Board on
February 4, 2000.
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BOARD'S MISSION SUPPORTED
We are pleased to report that key stakeholder representatives have
issued public statements of support at Board public meetings in
December and January. Among those speaking in support of the CSB
mission were the American Petroleum Institute, the Chemical
Manufacturers Association, the National Association of Chemical
Distributors, The Chlorine Institute, the International Union of
Operating Engineers, Environmental Defense (formerly the Environmental
Defense Fund), and the Working Group on Community Right-to-Know.
We heard and appreciate these expressions of support, but we also
took seriously the accompanying statements urging the Board to move
beyond its governance dispute to refocus its energies on its mission.
PREVENTING INCIDENTS THROUGH SCIENTIFIC WORK
The purpose of the CSB's investigation of incidents is to prevent
future similar events. We do this by focusing scientific scrutiny on
the incidents and all of the circumstances preceding them, not merely
on laws that may have been broken. We must be familiar not only with
the technologies and human factors that apply today, but those that are
just emerging or that may be on the horizon. Because the CSB has no
enforcement powers, it must conduct an effective advocacy program to
generate support for its recommendations and in so doing enhance
chemical safety. Prevention of chemical accidents, then, requires the
careful application of resources to the conduct of quality scientific
investigations, formulation of sound safety recommendations, and
effective advocacy in support of them.
FISCAL YEAR 2001 APPROPRIATIONS REQUEST PROPOSES SLIGHT INCREASE
The Board's budget request for fiscal year 2001 is $9,000,000. This
represents a 12.9 percent increase over its fiscal year 2000
appropriation of $7,969,600. This amount represents the funding
necessary for the Board to maintain a stable operating program and
perform a modest number of incident investigations. It will also allow
the Board to evaluate and revise its incident selection criteria,
investigation protocol, and procedures for tracking recommendations. In
addition, the Board will be able to initiate one safety study to
complement its investigation and related activities. Finally, the
increase will permit the Board to conduct monthly public meetings and
hire two additional staff members in its investigation and safety
office.
[GRAPHIC] [TIFF OMITTED] T05AP12.003
The requested fiscal year 2001 budget represents a forward-looking
vision that recognizes the Board's responsibility to create and
demonstrate its value to the public consistent with its mission of
enhancing chemical safety. The fiscal year 2001 Budget Justification
that was submitted to this Subcommittee last month includes a frank
assessment of the CSB's performance to date and the lessons that have
been learned from our successes and failures. It also discusses how the
CSB plans to implement those lessons and meet current challenges to
ready itself for taking on the important tasks identified for fiscal
year 2001.
As you examine our fiscal year 2001 budget request you will see
that it precisely tracks our restated objectives and priorities. The
emphasis is on funds and personnel necessary for the conduct of
investigations and safety program activities. This emphasis began this
year, and is carried forward in our fiscal year 2001 budget request.
Specifically, in fiscal year 2001 we propose devoting 19.2
workyears and just under $4.2 million for incident investigation and
related activities. This compares with 10.7 workyears and just under
$2.5 million in fiscal year 1999.
A similar increase in Special Safety Studies and Technical Guidance
is proposed in fiscal year 2001, where 4.1 workyears and $670,000 is
proposed, compared to one workyear and $284,000 in fiscal year 1999.
[GRAPHIC] [TIFF OMITTED] T05AP12.004
We have also decreased the resources devoted to areas not directly
supporting the conduct of investigations in the area of technical
information and assistance from 4.1 workyears and slightly over $1
million in fiscal year 1999 to 2.7 workyears and $730,000 in fiscal
year 2001.
FISCAL YEAR 2001 ANNUAL PERFORMANCE PLAN
The CSB is in the process of developing a strategic plan that will
describe in detail the goals, objectives and performance measures that
will help it attain this goal. In the interim, the CSB released an
Annual Performance Plan that describes how the CSB will make progress
toward its long-term goals in fiscal year 2001. The plan sets forth two
strategic goals as follows:
Strategic goal 1.--To reduce the reoccurrence of chemical incidents
addressed by the Board and minimize the adverse effects on life,
health, and property.
Accomplishing the Board's mission depends on the development and
application of state-of-the art investigative procedures, well-reasoned
and precisely targeted recommendations, production of timely
investigation reports, design and completion of complementary safety
studies, and interaction with the professional and technical
organizations involved in the prevention of accidental chemical
releases. Investigative and research efforts need to be focused on
those opportunities that will provide the greatest benefit to chemical
incident prevention strategies across the broad spectrum of chemical
users. As a new investigative agency, development and implementation of
our processes and procedures will require ongoing evaluation and
improvement to ensure that the resources provided are justified and
give value to the public.
Performance goals under this strategic goal include the initiation
of four major chemical incident investigations, issuance of two final
investigative reports, completion of one safety study, and delivery of
at least two technical papers at scientific meetings and/or symposiums
involving the leading organizations in the chemical accident prevention
arena. In addition, the Board will participate on at least two
technical committees involved in the continuous improvement of chemical
accident prevention in areas such as incident investigation techniques,
chemical process safety, human factors of accident causation, and
inherently safer technology.
Strategic goal 2.--To be a progressive 21st century federal agency,
which facilitates the accomplishment of the Board's mission.
The Board believes that, if best management practices are
emphasized every day throughout every activity, then a professional,
efficient, and effective atmosphere will exist where our other program
goals can be accomplished. Good management practices dictate that the
organization be well run, competent, technically accurate, flexible,
and timely, to ultimately benefit both the employees and the taxpayers.
Performance goals under this strategic goal include attracting and
keeping the best and brightest employees, and reducing the time it
takes to hire staff and maintain a professional workforce, and
promulgating federally required administrative regulations and
complying with other legal obligations in administrative areas.
POTENTIAL CONSTRAINTS ON ACHIEVING CERTAIN FISCAL YEAR 2001 GOALS
Infrastructure.--The Board began operations in fiscal year 1998 and
anticipated a three-year start-up period. However, limited resources
were available for establishing the infrastructure. As a result, the
Board projects that at current levels of funding it will not be fully
operational for a number of years. Board staff will have to promulgate
proposed final regulations, finalize interagency coordination memoranda
of understanding (MOU) with other government agencies, evaluate and
finalize internal operating procedures, and conduct strategic planning
for future program emphasis and resource requirements.
Personnel.--Although the Board will focus on personnel management
efforts in fiscal year 2000, the Board may not be able to hire and
train all the investigation and safety program staff as planned for
fiscal year 2000. Some of the hiring and training activities may
continue into fiscal year 2001, and may affect the expected workload in
the investigation and related activities function.
Recruiting and hiring qualified investigations and safety programs
staff remains one of the Board's most difficult challenges. The small
talent pool available for the Board's recruitment needs is primarily
found in the oil and chemical-process industries. These potential
recruits are highly paid and typically live in areas located far from
Washington, DC. The Board, therefore, must now devote extensive time
and resources to recruit in order to hire and retain staff with
chemical-process safety expertise.
Capacity to conduct investigations of catastrophic incidents.--
Because of the difficulty in hiring adequate numbers of qualified
technical personnel this fiscal year, the Board likely will not possess
adequate resources to launch a new investigation of a major
catastrophic chemical incident. Examples of catastrophic chemical
incidents are the 1984 chemical release in Bhopal, India, that killed
4,000 within days, and killed or injured thousands of others in
subsequent years, or the 1989 petrochemical explosion in Pasadena,
Texas that killed 22 and injured more than 80 persons. The total
commitment of existing resources, and the acquisition of significant
external resources, would be required to undertake such an
investigation. Completion of fiscal year 2000 and fiscal year 2001
hiring plans and implementation of training plans will greatly bolster
the Board's ability to meet this challenge.
WHAT THE RESOURCES WILL ACHIEVE THIS FISCAL YEAR
In fiscal year 2000 we are concentrating our resources on building
our safety and investigations staffs, refining our investigation
process and procedures, formalizing training, aggressively recruiting
qualified investigators, and limiting the number of new investigations
undertaken to a more modest, realistic number. We will not ask for
significantly expanded fiscal resources until we can demonstrate the
results that you, and we, are both seeking.
Following the leadership changes in January of this year the Board
restated the Board's mission as a basis for restructuring its
priorities this year and establishing a better foundation for its
activities in fiscal year 2001 and beyond. In directing more focused
activities in fiscal year 2000, the Board has adopted the following
critical objectives in order to achieve its mission this fiscal year:
--Complete two investigation reports.
--Build capacity to launch two new investigations late in the fiscal
year.
--Refine the incident investigation protocol and selection criteria
for CSB investigations.
--Develop and implement a strategic hiring plan and recruit
additional investigations and safety staff to ensure adequate
resources to support its investigative work.
--Complete a staff-training plan.
--Initiate one new safety study.
--Complete the Board's Strategic Plan.
CAREFUL SELECTION OF INVESTIGATION PRIORITIES
Investigative and research efforts need to be focused on those
opportunities that will provide the greatest benefit to chemical
incident prevention strategies across the broad spectrum of chemical
users. As a new investigative agency, development and implementation of
our processes and procedures will require ongoing evaluation and
improvement to ensure that the resources provided are justified and
give value to the public.
In selecting the first two investigation reports to be completed
this fiscal year, the Board has chosen those with the most significant
safety lessons with wide future applicability. The incidents at Morton
International Specialty Chemicals, Paterson, New Jersey, and Tosco
Refinery, Martinez, California fit these criteria. The two
investigations below allow the Board to pursue this strategy.
Morton International, Paterson, New Jersey.--On April 8, 1998, an
explosion and fire occurred at the Morton International, Inc. plant in
Paterson, New Jersey. The explosion and fire were the consequence of a
runaway chemical reaction that over-pressurized a 2000-gallon reactor
and released flammable material, which ignited as a result. Nine
employees were injured, two seriously, and the plant sustained
considerable damage. Chemicals from the reactor were released into the
neighborhood.
The Morton incident involved reactive chemicals. Reactive chemicals
may be innocuous individually or at room temperature, but may react
violently when combined with other chemicals or when heated. Improper
handling of reactive chemicals has been the cause of many chemical
accidents. Two of the more significant incidents involving reactive
chemical explosions in recent years include: the Napp Technologies,
Inc. incident in Lodi, New Jersey, that killed five people and injured
many others in 1995, and the Georgia-Pacific Resins, Inc. incident in
Columbus, Ohio, that killed one worker and injured four others in 1997.
The CSB is examining the following safety issues in the Morton
case:
--practices used by the chemical processing industry to evaluate the
chemical reactivity of the materials it uses and produces
--design of industrial process equipment for the safe handling of
chemical reactivity hazards
--process safety management tools used by industry to address the
hazards of reactive chemicals
The CSB is currently finishing chemical testing which will complete
its investigative effort. The draft Morton report will then be reviewed
by other organizations that participated in investigations of the
Morton incident. The CSB anticipates releasing the Morton investigation
report by the early summer.
Tosco Refinery Fire, Martinez, California.--On February 23, 1999, a
fire occurred at the Tosco Avon Refinery in Martinez, California.
Workers were attempting to replace piping attached to a 150-foot tall
tower while the process unit was in operation. Process equipment had
not been shut down to perform the repair. During the removal of the
piping, naphtha was released onto the hot fractionator tower where it
ignited. The flames engulfed five workers located at different heights
on the tower. Four were killed and one sustained serious injuries.
The piping contained flammable naphtha liquid that was not drained
and purged before the work began. Piping was still connected to the
system and under process pressure because a closed valve was leaking
significantly.
The CSB is examining the following safety issues in the Tosco case:
--formal management decision protocol to assess when maintenance
activities can be safely conducted without the shutting down of
process equipment
--effective implementation of management oversight of process
operations and maintenance activities involving hazardous
chemicals
--effective implementation of process safety procedures for
maintenance and operations
--consistent implementation of Management of Change procedures in
mechanical corrosion control programs
The CSB is currently reviewing Tosco documentation, oil industry
good practices and industry regulatory coverage to complete its
investigative effort. When the draft Tosco report is completed, it will
then be reviewed for factual accuracy by other organizations that
investigated the incident. The CSB anticipates releasing the Tosco
investigation report by late summer.
NEW INVESTIGATION PROTOCOL AND SELECTION CRITERIA
As the Board builds the new foundation upon which to base its
current and future activities, the full and open conduct of its
business is one of its core strategies. Frequent public meetings will
be an important part of the Board's operations. The first public
meeting was held in December 1999, and subsequent meetings were held in
January and February 2000.
An important part of maintaining public confidence in CSB
investigations is the use of best practice methods in our Investigation
Protocol and Incident Selection Criteria that are open to public review
and scrutiny by all potential stakeholders.
In December 1999, the CSB completed the development of protocol
documents that will be used to organize and direct investigation
activities in the future. In our early investigative work, the CSB
relied on a Department of Energy protocol that did not provide the
focus on root cause analysis that is central to the CSB's mission. We
will refine the protocol during fiscal year 2000 through reviews with
CSB stakeholders and external experts on investigative practices
The CSB also worked with stakeholders in developing a process that,
given the CSB's limited investigative resources, would identify
incidents whose investigation would have the greatest potential
prevention value. To stimulate stakeholder inputs, the CSB engaged the
American Institute of Chemical Engineers' Center for Chemical Process
Safety (CCPS) to develop and conduct a survey of industry stakeholders.
The CSB also conducted an all-day Roundtable on this subject on
November 9, 1999, attended by a wide range of stakeholders from labor
unions, public interest groups, and government agencies. The CSB issued
criteria for selecting incidents and plans to bring additional
stakeholders into public discussion on the key issues to further refine
the selection process.
FIRST TWO YEARS OF OPERATION
The CSB was created by the Clean Air Act Amendments of 1990.
However, the Board was not funded, and did not begin operations, until
January 1998. As the legislative history states: ``The principle role
of the new chemical safety board is to investigate accidents to
determine the conditions and circumstances which led up to the event
and to identify the underlying cause or causes so that similar events
might be prevented.'' \6\
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\6\ Senate Report No. 101-228 (page 3615).
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Significantly, when operations began in 1998 no personnel or other
resources were inherited from other agencies. So, the first two years
of the CSB's existence have been characterized by the significant
challenges of initiating the operations of a federal agency where none
previously existed. There have been notable successes, and, it must be
admitted, time-consuming problems, associated with our early
development. But our focus has been, and will remain, on the prevention
of serious chemical incidents through investigation, scientific study,
and effective advocacy of prevention measures.
In an effort to quickly demonstrate that the Board was implementing
its Congressional mandate, more investigations, incident reviews, and
studies were initiated than could be effectively managed or brought to
a timely conclusion. For example, in two years 11 major investigations
were authorized, but to date reports have been issued for only three of
these investigations. In addition, very substantial Board resources
were initially devoted to activities that did not directly support the
conduct and completion of investigations.
Under such circumstances and pressures, problems emerged. As a
result, in its first two years the Board lost seven senior personnel.
BOARD GROWTH AND DEVELOPMENT
The Board's enabling legislation authorizes five Board Members
appointed by the President, by and with the advice and consent of the
Senate. One of the Board Members also serves as a Chairperson and Chief
Executive Officer. For the first eleven months of operations, the Board
only had two Members--a Chairperson and one other Board Member. During
this first year, the Chairperson exercised unilateral control over all
aspects of the Board's operations. At the beginning of the second year,
two additional Board Members joined the Board.\7\ However, all
substantive Board decisions (except for voting on investigation
reports) were still made solely by the Chairperson.
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\7\ The Clean Air Act provides for a Board of five Board Members,
one of whom is the Chairperson. At this time only four of the five
Members are appointed. A fifth Board Member is needed to assist in the
development of the Board.
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Several Board Members questioned this allocation of decision-making
power, and the General Counsel was asked to render an opinion about the
proper roles and responsibilities of the Board Members. In August 1999,
the General Counsel issued a comprehensive memorandum explaining that,
legally, the Board as a whole was to make most substantive decisions,
while the Chairperson was responsible for day-to-day management and
work assignments and implementing Board policy. In October 1999, three
of the Board Members accepted the General Counsel's opinion, but the
Chairperson requested further legal clarification before implementing
the opinion. Over the next three months, a conflict with the other
Board Members ensued on this issue. Ultimately, the Chairperson
resigned his position, and the full Board has requested that the
Department of Justice review the General Counsel's opinion. The full
Board awaits that opinion. In the meantime, the full Board voted in
January 2000 to allocate governing responsibilities among the four
Board Members until a new Chairperson is appointed by the President, by
and with the advice and consent of the Senate. Thus, all substantive
decisions are now made by the full Board.
DISPOSITION OF OPEN INVESTIGATIONS
In addition, in the last year the previous management encountered a
series of problems that hindered the Board from developing the
institutional framework and processes necessary to ensure efficient and
timely production of quality reports and other information. In
particular, it encountered difficulties in obtaining an appropriate
focus consistent with its limited resources. The Board started fiscal
year 1999 with three investigators, all hired at the end of fiscal year
1998, and four major investigations \8\ and 14 reviews \9\ to complete.
In the months leading up to March 1999, the Board proceeded to take on
an additional six investigations and nine reviews. In March 1999 the
Congress was notified that the CSB was unable to initiate any new
investigations. The original vision of the Board had been to utilize
contractors to help augment the Board's ability to complete
investigation reports; however, difficulties in managing contractors
undermined implementation of this concept.
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\8\ The Board launched two additional major investigations during
the month of October, 1998 making a total of six major investigations
remaining to be completed as of the end of the month.
\9\ The Board initiated one additional incident review during the
month of October, 1998 making a total of 15 incident reviews remaining
to be completed as of the end of the month.
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Having over-committed its resources, the Board failed to meet
commitments on a number of fronts, in particular in the completion of
reports, in launching new investigations, and in establishing
appropriate processes and policies for running an efficient and
effective government agency. As a result, the Board started fiscal year
2000 with eight on-going investigations.
In July 1999, the Board voted to reallocate investigative resources
away from review cases to focus on the eight full CSB investigations.
The review case concept was for the CSB to assess the results of
investigations conducted by other organizations and publicize the
safety lessons learned. The CSB believes that recommendations are
better received and produce greater results when backed by the fully
researched, full investigation findings in CSB major investigation
reports.
BOARD'S CHEMICAL SAFETY ACHIEVEMENTS
Our struggles have been offset by significant successes and, of
course, lessons learned. Our three completed incident investigation
reports have been widely applauded for their scientific correctness,
their readability and usability, and the applicability and practicality
of their safety recommendations. Significantly, we can point to
acceptance and use of the safety recommendations by state governors,
legislators, trade associations, companies, and emergency responders,
to name a few. So while we share the concern of others with the
quantity of investigation reports, we also share the pride expressed in
their quality. That quality is contributing to the enhancement of
chemical safety, the prevention of chemical accidents and the
fulfillment of our mission.
We have issued three investigation reports and each report has had
a tangible impact, in some cases, because one or more recommendations
in the report have been accepted and implemented. In many other cases,
the reports have spawned educational efforts by other organizations to
enhance the safety awareness of specific audiences.
CSB Report 98-001-I-NV, Sierra Chemical Company, Mustang, Nevada.
On January 7, 1998, two explosions in rapid succession destroyed the
Sierra Chemical Company Kean Canyon plant near Mustang, Nevada, killing
four workers and injuring six others.
--Based on the Board's preliminary findings released at its Board of
Inquiry, Nevada's Occupational Safety and Health Enforcement
Section, which enforces federal safety regulations, increased
the frequency of safety inspections at explosives facilities.
An Executive Order signed by then-Governor Bob Miller on June
10, 1998, mandated safety inspections of explosives
manufacturing facilities at least twice a year.
--Furthermore, in May 1999 Nevada Governor Kenny Guinn signed four
additional measures aimed at improving safety at facilities
where hazardous substances are produced. Signed into law were
four bills prompted by the Sierra Chemical Company incident:
AB111, that requires employers to provide safety training to
their workers in the workers' own language or by a videotape in
a language they understand; AB173 and AB535 that both revise
standards for regulating facilities where highly hazardous
substances are produced, used, stored or handled; and AB 603
that requires a conditional use permit for the same facilities.
--Chemical Health and Safety magazine, a publication of the American
Chemical Society, featured the CSB's investigation report as
its cover story in its January-February 2000 edition. The
publication urged safety professionals to implement the safety
recommendations made as a result of such root cause
investigations. (See attached Exhibit A.)
--The Hazardous Materials (HazMat) Training Department of the
International Association of Fire Fighters (IAFF), a labor
union representing more than 225,000 professional career fire
fighters and emergency medical personnel, used the Board's
report as an ``interactive case study'' on its Distance
Learning website. The exercise requires the user to read a
summary of the report and answer questions about responding to
a ``real-world'' hazardous materials incident.
--The Bureau of Alcohol, Tobacco and Firearms uses the report as a
case study in its training program for recertification of
explosive investigators.
--The Institute of Makers of Explosives (IME), a recipient of Board
recommendations, last month informed us that they are currently
developing, for approval by their Board of Governors, a set of
training guidelines for employees engaged in the manufacture of
commercial explosives. Their stated goal is to produce final
training guidelines as an IME Safety Library Publication.
NITROGEN AND PROPANE INCIDENTS
CSB Report No. 98-05-I-LA, Union Carbide Corporation, Hahnville,
Louisiana, March 27, 1998. One Union Carbide worker was killed and an
independent contractor was seriously injured due to nitrogen
asphyxiation.
--The Hazmat Training Department of the IAFF also used this report as
an interactive case study on its Distance Learning website.
--CSB met with the Confined Space Committee of the American
Industrial Hygiene Association (AIHA) and has established an
on-going process to discuss the less recognized risks
associated with temporary confined spaces and the feasibility
of adding warning properties to nitrogen used in confined
spaces.
--The Institution of Chemical Engineers (IchemE), based in the United
Kingdom, requested and was granted permission by the Board to
reprint this report for IchemE members.
CSB Report No. 98-007-I-IA, Herrig Brothers Farm, Albert City,
Iowa. Two volunteer fire fighters were killed and seven other emergency
response personnel were injured.
--In response to a CSB recommendation, the National Propane Gas
Association improved their emergency response training
materials to better address the hazards of BLEVEs, an
especially dangerous type of explosion.
--Also in response to a CSB recommendation, the Fire Service
Institute of Iowa State University revised their training
program to provide better guidance for responding to BLEVEs.
--The report was used by a local volunteer fire department's safety
officer to successfully challenge the placement of a 14,000-
gallon propane tank 50 feet from a new high school and just 10
feet from a roadway. Using the report, and other information,
the school board in Hagerman, Idaho, finally agreed that the
community did not have adequate emergency responder personnel
to effectively control the explosion that would result from
such a large propane tank. The town instead decided to install
a 2,000-gallon tank as a result.
--A homeowner in Florida also found the report useful in helping to
identify concerns about a propane tank planned for installation
in his neighborhood.
--A fire chief in Florida indicated that he was using the report (and
the CSB's on-line reports of propane incidents) to prepare
comments on proposed standards being considered by the National
Fire Protection Association. Other emergency responders have
indicated that the reported has contributed to ongoing
discussions about Boiling Liquid Expanding Vapor Explosions,
known as BLEVEs, similar to the one featured in this report.
SPECIAL SAFETY STUDY INITIATIVE ON Y2K
At the request of the (Senate Special Committee on the Year 2000
Technology Problem), the Board led a multi-stakeholder special safety
study initiative to build awareness of Y2K chemical safety problems.
Among it efforts, the Board collaborated with the chemical industry,
particularly small and medium-sized enterprises, warning them of the
potential for Y2K-related computer problems that might lead to an
accidental chemical release or inhibit automated safety protection and
response systems. The Board also initiated diverse activities with
Congress and a wide-range of stakeholders, including:
--Testifying before Senate hearings in Washington, D.C. and New
Jersey
--Frequent interaction with the President's Council on Y2K
Conversion, including presentation at a special roundtable on
the chemical sector and a press briefing
--Issuing a Y2K safety alert to the Governors of the 50 states,
Puerto Rico, Guam and the U.S. Virgin Islands
--Issuing safety alerts to emergency response organizations,
including the International Association of Firefighters, the
International Association of Fire Chiefs, the International
Association of Emergency Managers, the National Emergency
Management Association
--Development of a worker training initiative in partnership with the
National Institute of Environmental Health Sciences (NIEHS) and
the National Clearinghouse for Worker Safety & Health Training
--Working with a foundation and an academic research center to
further characterize the vulnerabilities and status of smaller
businesses
--Establishing a Y2K Chemical Safety information clearinghouse on the
Board's web site
In June 1999 a working group consisting of the Board, EPA and eight
trade associations produced and distributed a pamphlet entitled
Addressing Year 2000 issues in Small and Medium-Sized Facilities that
Handle Chemicals.
CHEMICAL SAFETY INFORMATION ON THE INTERNET
The CSB's website has proved to be an important avenue for reaching
a large and diverse public audience. Few other websites are devoted
solely to providing information on chemical incidents and chemical
incident prevention. In 1999, Government Executive magazine named the
site one of the 16 best federal websites.
The CSB website is intended to serve as a virtual library on
chemical safety where safety experts and other stakeholders can do one-
stop-shopping to learn more about particular aspects of chemical
safety, from the very general to very specific technical works. The
Board updates the site daily with new information on chemical
incidents, chemical safety publications from various sources,
investigation news, links to other sites with chemical safety
information, and events related to chemical safety. It also hosts the
Chemical Incident Reports Center (CIRC).
The CIRC is a searchable online database of chemical incidents that
is intended to enable or inspire actions by a researcher, a government
agency or others in support of improving chemical safety. Throughout
the day, every day, the CSB receives initial reports about chemical
incidents that have occurred around the world. The information comes
from the news media, eyewitnesses, companies and others. The sheer
volume of incident reports received each day exceeds the investigative
resources of the CSB or any other single organization. Yet, through the
CIRC database, sharing knowledge of these incidents may make it
possible for others to take actions that may contribute to improving
chemical safety.
Mr. Chairman, Senator Mikulski, and other members of the
Subcommittee: this morning we have shared with you a frank assessment
of both the Board's accomplishments and problems to date. While
admitting that mistakes have been made in the past two years, we have
shown that we have both learned from past errors and have achieved
significant accomplishments in fulfillment of the Board's mandate to
help prevent accidental chemical releases and protect workers, the
public and the environment.
We have charted a new course today, guided by all of the members of
the Board, and supported by a professional staff. We have retained the
support of key stakeholders, and we request the continued support of
this subcommittee. We ask that rather than trust us, you track us as we
implement a more focused set of objectives supported by a more
disciplined allocation of resources.
INVESTIGATION BACKLOG
Senator Bond. Thank you very much, Dr. Taylor. There is no
question that your mission is very important. You have outlined
very persuasively some of the problems and you have talked
about the inputs. But I am looking at the GAO reports. The
board has not made any progress in addressing its
investigations backlog and has not initiated a new
investigation since March 1999.
It seems to me we have wasted a tremendous amount of
taxpayer funds here. Why should we not just shut the agency
down and revert the responsibilities to EPA and OSHA to conduct
chemical accident investigations?
Dr. Taylor. In response to that, Mr. Chairman, I would like
to first say that we are an independent body. And we get the
support of all our stakeholders, including the chemical
industry, the chemical associations, as well as labor support,
as well as public interest groups. And they all support us in
our efforts. We are not an enforcement agency. And we conduct
root cause investigations.
So in doing that, we perform a different function, I
believe, from OSHA or EPA. Having said that--and I understand
that we have not conducted any investigations since last year
or earlier this year--our plan is to focus on our eight
priorities, which I mentioned in my testimony. Those are our
hiring plan, completing two investigation reports, launching
two new investigations before the end of fiscal year 2000,
refining our incident investigation protocol and our selection
criteria, developing a strategic hiring plan and recruiting
additional investigative and safety program staff, also
initiating a new safety study and completing the board's
strategic plan.
We have a set of criteria that we want to complete.
Senator Bond. With respect to the management of the agency,
how effectively does the joint governance arrangement work?
Dr. Taylor. We have had 3 months now, and it seems to be
working well. Dr. Poje is responsible for personnel. I am
responsible for holding and conducting the public meetings that
we hold, as well as our meetings in-house. Dr. Irv Rosenthal is
responsible for reviewing the contracts that are $10,000 and
below. All other matters come before the full board. And Dr.
Hill is responsible for completing the annual reports.
Senator Bond. Dr. Hill, in your view, is the current
arrangement functional? Can the agency produce results?
Dr. Hill. There is certainly some question, Mr. Bond.
Senator, I do believe that under the original business plan
that we developed, there was a fundamental difference in the
approach that we are taking now. Certainly we were relying on
contract support to complete that backlog of investigations.
The approach now with my colleagues is quite different,
relying on all in-house. And as we admit in our testimony,
hiring people into the agency has been very difficult in
recruiting. Therefore, we are projecting a couple of
investigations this year, but, quite frankly, those dates are
pushed back further and further as we have experienced problems
recruiting those people and getting that done in house.
Senator Bond. Dr. Poje, do you have a comment?
INTERNAL MANAGEMENT CHANGES
Dr. Poje. Senator Bond, thank you. I am in charge of
personnel matters. In addition to the board reorganizing,
fractionating the job of the chairman, dividing it amongst the
four board members, we also made two very significant changes
in the internal management structure.
We appointed a new chief operating officer, elevating our
general counsel to that position, and we consolidated two
separate programs, the Office of Investigation and the Office
of Safety. They are now directed by a single director.
The conduct of the board's past activities in investigation
prove the urgency with which we needed to master our own
domain. The charging of the task of investigation to
contractors from other Federal agencies or in the private
sector without internal cohesive guidance from staff fully
trained by the board and operating on behalf of the board has
proven to take far more time to complete an investigation than
we are projecting for the future.
We are onto a course of now hiring internally. We are still
using contracted support for specialized services. But we think
that this will put us in good stead for the future conduct of
investigations. All the hires for the coming year are put into
investigation and safety.
With the new director of that program and a comprehensive
plan of hiring and performance evaluation, we think we are
going to build a department that can actually accomplish the
work in a more timely fashion.
Senator Bond. Dr. Poje, let me ask you, it seems to me that
you have been hemorrhaging staff departures. And I would ask if
you are able to get people on board.
And also, I would ask the broader question to Dr. Taylor:
We understand the agency will lapse as much as half of its
funding this year. And if we are having problems with personnel
departing, and being able to spend the money we appropriated
last year, why should we increase your budget next year?
LOSS OF STAFF
Dr. Poje. Senator, this year we actually have lost very
recently two staff in the information technology arena. This
was an area of early development of the board, that preceded
full board accedence in the movement towards that direction. It
is my intention, and the intention of the other board members,
to put the highest emphasis on safety and investigation
programs. And this requires some degree of restructuring. We
are evaluating every staff position, and we want to see how
those staff positions intersect with the core mission of
investigation and safety.
That is something we certainly are not proud of having to
do in our third year. But unless we do it, we think we will
never be able to achieve the mission of investigating and
producing the quality products that I think three to date have
demonstrated the value of this board as an independent agency
to do.
Dr. Rosenthal. Thank you. Mr. Chairman, I think that your
initial statement as to the fact that lest the board completed
its objectives this year, you would have significant problems.
We will----
Senator Bond. One good thing the board has going for it is,
we share the same initials. My initials are CSB as well.
Outside of that, we have some problems.
Dr. Rosenthal. If we had known that, we could have taken
credit for great planning.
But we will meet our objectives this year. At the same
time, we have to understand, without going back as to who did
what to whom or why, the fact that we have failings is an
existent condition. I do not believe it is productive to go
back into great detail of who did what to whom. We will solve
those problems, but you do not solve problems without
disruption and some loss.
There is a good reason for not going back to OSHA and EPA.
If the board does not do this job properly, my suggestion is
you get rid of the board members and start over again. But the
original mission, the original reason, for doing this that
drove the Congress to create the board remains.
OSHA and EPA are basically agencies that are, by their very
nature, looking out to get enforcement. We are an agency that
is dedicated to working with the information in the private
sector to motivate changes in the basic approach of our country
to accidents. So throw us out. Do not throw the law out.
The last comment I wanted to make was that it takes time to
correct the condition. We could have acceded to the public
demand that you start new investigations. We thought it was
better to pause, clean up the investigations we had, recover
some value, before we started adding more and more--started
investigations, which are just expenses, rather than turning
those expenses and those investigations into meaningful
recommendations.
Senator Bond. Thank you very much, Dr. Rosenthal. I had
kind of suggested that approach to another agency that was here
earlier this morning.
Senator Mikulski.
Senator Mikulski. Thank you, Dr. Taylor and all of those
who participated in this, both testimony and questions and
answers. I am really troubled by our situation here, and I was
an enthusiastic supporter of creating the board in the 1990-ish
clean air amendments.
And I had hoped that it would rise to the stature of the
National Transportation Safety Board, that America knows that
when a tragedy happens, a thorough investigation will be made
and lessons learned will emerge from it. And then advocacy
steps can be taken, both voluntarily by the private sector, as
well as those of us in the statutory area.
This has not happened. Three years, three investigation
reports, no new investigations since February 1999, and a
pretty strong GAO report. And I agree, let us not get into the
finger-pointing business. But what would be, if we were again
talking about getting on track, talking about this committee
and that committee and all of this, but if we are going to fund
it, even if we follow your recommendations, Doctor, the
question is that we have to get results. And the results are
not three investigations over 3 years and $18 million. That is
$6 million an investigation.
And maybe some investigations cost that. You know, we
cannot minimize that investigating chemical accidents is a very
sophisticated type of investigation. It is not gumshoe in a tan
raincoat. It is really a sophisticated scientist.
ORIGINAL MISSION
So what assurances could you give the subcommittee about
steps to be taken to get us on track? What would be the top,
say, three to five assurances that we could have that would be
in place both short range and long range to be able to follow
the original mission?
And Dr. Taylor, I understand you are the voice of the panel
today, but it does not have a chairman. And is this one of the
issues?
Dr. Taylor. I do not think not having a chairman has been
one of the issues in the short term. We have been able to
operate, I believe, effectively in making progress and the
changes that need to be made at the agency with our current
structure, as far as governance and who does what in the
agency.
As I mentioned, Dr. Poje is responsible for personnel. I am
responsible for a task, and so are Dr. Rosenthal and Dr. Hill.
And with that, we are hoping that we can progress with our
investigation protocol, which we already have, that we want to
update and refine. And our plan is that once we have hired the
appropriate staff--we do not have enough staff people in our
investigations and safety programs, enough competent staff, to
actually go out in the field and conduct a strong
investigation. And that is where we are starting, with our
hiring plan, to really develop that.
And with that, I would like Dr. Poje to come in and give us
more information.
Dr. Poje. Senator, if I can say, for the first time the
board has detailed time plans for completing three
investigations this fiscal year. Those have milestones. The
board is regularly reviewing the performance of the staff in
the completion of those. And that is the model for any future
investigation.
There will be no open-ended single investigator reviewed
product coming before the board. It will be part of a
management program that has already in place, in the 3 months
that we have been operating under this fashion, a regular
schedule. We will have a report done in early summer, one in
midsummer and one by late summer, is the way we are projecting
it right now.
We also have a hiring plan as our highest priority. This is
involved in either our office of general counsel, our
administrative office and the investigation and safety program,
to work closely with a professional contracting agency on
personnel matters in the Federal Government, drawing talent and
knowledge and skills from the National Transportation Safety
Board arena, Defense Nuclear Facility Safety Board arena, to
guide us in the development of such a program.
We have milestones that we have established, and we have
achieved some. We have returned to a schedule A hiring
authority, which will accelerate our ability to get the good
people in.
And we have a review process that I have reviewed, that the
senior staff has reviewed, for the interviews, the
advertisements, for the programs that would lower the hurdles,
the relocation programs and policies that would need to be put
into place in order to draw in talent coming from the Texas or
the California area where there are concentrations of chemical
industries and safety professionals with the skills that this
agency needs.
We have time lines for that. And the board meets regularly
to review those time lines and to challenge the staff, if we
see them out of kilter with our urgent needs for fiscal year
2000, to be assured that we can achieve and merit your
consideration for our budget for 2001.
Senator Mikulski. Thank you.
I know my time is up. I turn to my colleague.
Senator Bond. Senator Lautenberg.
Senator Lautenberg. Thanks, Mr. Chairman. And I regret that
I was not here for the earlier hearing to see our friend,
Senator Wofford, who works very hard at his job. And I regret I
was unable to hear the testimony earlier.
But I listened with interest here. And as I read the GAO
report, Mr. Chairman, Senator Mikulski, the fact of the matter
is I think that I have probably been one of the strongest
advocates for this board and function. I come from the City of
Paterson, New Jersey. I was born in a city that has a lot of
chemical operations within it, some of it illustrious and some
of it dismal in terms of what happened with staff, with
employees, over the years.
BEHIND SCHEDULE
And though I see in the GAO report--and I thank Dr. Kidd
for--Dr. Taylor, I am sorry--for your presentation. I think it
was very good. But the fact of the matter is that we are
terribly, terribly behind. And I know the chairman admonished
the board and the organization for its lack of activity to get
the job going, the too few investigations.
I mean, if someone looked at this picture from the outside,
one would say that it presents a picture of squabbling and
disorientation. That is not the kind of thing that either any
of you want or that I fought so hard for, and my colleagues
here, also.
I want to point out the claim that reliable their
statistics are not available. But according to the insurance
industry estimate--and I am sure it is available generally--
each year there are about 225 people die, 10,000 injured on the
job, a billion dollars in direct losses each year, almost $3.5
billion indirectly. And these are horrendous statistics.
And I know that you are taking steps, and I would urge you
to speed up the process and do not let yourselves get caught up
in a bureaucratic maze of deciding who and where. The fact of
the matter is that we are all in this together, you and we
here. And if something does not happen positively, I think
something awful could happen, because I believe in your
functioning. I believe in the mission. I think it is essential.
And I ask you a question that is very specific about an
incident in Paterson, New Jersey, one that relates to the
Morton Salt Company.
I stood in Lodi, the plant that exploded in 1995. I went up
and I made a promise to people, to working people, the union.
Labor groups held demonstrations out there, pleading for the
lives of these people who were sent back into the building
after the fire had started, and nobody knew what to do. It
killed four at the time.
Now in April 1998, I visited another site, which was the
Morton chemical plant. I think it used to be called Morton
Salt. Nine people injured. And I remember that we toured the
plant a couple days later, with members of the Chemical Safety
Board. And the board launched an investigation. Is that
investigation complete?
Dr. Taylor. With reference to Morton Chemical, we plan to
at least have the completed draft report ready in June. That is
our target date for completing that.
Senator Lautenberg. Okay. Let me ask you a question. Is
that--we are now talking about 2 years of time. Does that seem
slow?
ACCELERATING REPORT SOUGHT
Dr. Poje. Senator, that is not a time that any of us would
be proud of or say that that is the direction that we want to
move into. We hope we can produce reports at a much more
accelerated rate. But we have to have our own trained and
competent people overseeing the conduct of everybody in an
investigation in order to bring it home in a way that does
honor and helps promote the system of safety.
The Morton incident that you have pointed to is--bears a
degree of legacy from the Napp incident in Lodi. It was a
reactive chemical incident, a very fundamental issue to the
system of safety right now. Our sister Federal agencies, EPA
and OSHA, are investigating their own competencies in such
matters and are looking at the bigger picture of how do we
shore up the national system of safety.
This is why the Morton incident is being directed as one of
our highest and our next case to come down the line. We have
completed the initial draft gathering of the evidence. The
material has been reviewed by the company and by the union for
confidential business information protections. And we think we
are on course right now for framing ultimate recommendations to
shore up the bigger system of safety out of that one single
incident.
Senator Lautenberg. Well, if the chairman will indulge me
for just a minute more.
Senator Bond. Sure.
Senator Lautenberg. Thank you.
The projected staffing is 40, including the members of the
board.
Dr. Taylor. Yes.
RECRUITING STAFF
Senator Lautenberg. That is the end of the fiscal year, 4
months away, 5 months away from that. And if you could in short
form, whomever would like to answer, tell me what is the
difficulty--or why is it taking so long, and what is the
principal difficulty in getting people to do the job?
Dr. Poje. Part of what we are trying to do right now,
Senator, is build a department of investigation and safety.
That means you want to have every position identified within a
department structure. You want to know what are junior people,
what are senior people, what their roles and responsibilities
will be. And you want to staff it with people who have
expertise and competencies in the chemical, oil refining
industries, those that are at the core business of this board.
That means we have had to develop an advertising plan,
which was just launched last week. We have developed a number
of procedures to reduce the time and the cost by which we can
bring people into the board for interviews. We have to have a
procedure under way for the interviewing process.
Collecting resumes is one thing. Going through 150 of them
to find the one candidate who you think should be on the board
is the challenge that we are going through right now.
We have a management team in place that is doing that. We
have already brought in this past week candidates for
interviewing, physical interviewing, in our offices. And we
have slated a number for next week.
Now we will be working with the trade associations, trade
unions, private companies, to get the word out about our hiring
needs. And we have a few additional policies that the board as
a whole will have to be considering for enhancing the
opportunity to draw people from the private sector into Federal
service.
Senator Lautenberg. Well, you are all talented people. And
I would hope that you could move this process. The things, Dr.
Poje, that you said now are things that would have applied a
year ago. So straighten up and fly right, as I think the
chairman earlier said. Otherwise, we are not going to be able
to continue your funding.
Dr. Taylor. And that is what we plan to do.
Senator Lautenberg. Thank you very much.
Senator Bond. Thank you very much, Senator Lautenberg. That
was kind of the general drift of my message.
We thank the board. Before closing, let me do say we expect
timely completion on final action investigation protocol and
selection criteria. That was supposed to have been completed
back in December last year. But we agree with you, that you do
need to hire people in investigations and safety programs. This
is the basis of it. And we will have questions for the record
and will be following closely your activities.
Thank you very much for your thoughtful comments today. And
we wish you greater success in the future.
Dr. Taylor. Thank you.
Senator Bond. Thank you very much.
DEPARTMENT OF THE TREASURY
Community Development Financial Institution
STATEMENT OF ELLEN W. LAZAR, DIRECTOR
ACCOMPANIED BY MAURICE JONES, DEPUTY DIRECTOR FOR POLICY AND PROGRAMS
Senator Bond. Now I would call the CDFI panel forward.
Our last panel today consists of Ms. Ellen Lazar, Director
of the CDFI Fund, accompanied by Deputy Director for Policy and
Programs, Mr. Maurice Jones. And we welcome both of our
witnesses today.
The administration's budget request for the CDFI Fund asks
for an increase of $30 million, from $95 million for fiscal
year 2000 to $125 million for fiscal year 2001. I remain
concerned about the amount and purposes of the CDFI funding
request, especially as we prioritize the funding needs and the
primary programs and activities under this subcommittee.
It will be critically important not only to understand what
the Fund has achieved, but also how cost effective and
efficient these programs are, especially in comparison to other
similar Federal activities.
You heard me today outline the pressing needs elsewhere in
this subcommittee, which is going to make it a difficult year.
The CDFI Fund has made a greater effort to measure its
performance, but its track record is still unclear. And some of
its activities appear to overlap with those of other Federal
programs designed to revitalize distressed communities.
I am pleased that the fund is working with the Small
Business Administration and other agencies to coordinate the
work of the Federal Government in the area of micro-enterprise
development. It is my hope that the Fund will continue working
on this effort and other economic development areas in order to
minimize duplicative and overlapping Federal activities, such
as those under HUD and NCUA.
With regard to management and operation of the Fund's
independent auditors, KPMG have provided an unqualified opinion
on its financial statements and reported no material
weaknesses. You all are shining stars today in this group. You
get the big star.
As we know, the CDFI Fund had a rocky beginning. That seems
to be a thing of the past. Ms. Lazar, you and your staff
deserve credit for cleaning up mistakes, and I heartily commend
you. Thank you for what you have done.
I would also like to hear how well the Fund is meeting its
performance goals and objectives through its programs. I am
especially interested in the ability of the Fund to monitor and
evaluate programs. In past reports, GAO found that your
programs emphasized outputs rather than outcomes.
Lastly, I am concerned about the Fund's efforts in
addressing distressed communities in rural areas. Many members
of this subcommittee share this concern and would like to hear
how the Fund has addressed this issue.
Senator Mikulski, any comments on this?
Senator Mikulski. Thank you very much. And of course, we
want to welcome Ms. Lazar and her team for their testimony. Ms.
Lazar is also another system Marylander. You can see we have a
lot of talent in this State.
Senator Bond. We would like to put a couple agencies in
Missouri, too.
Senator Mikulski. Well, the agency is not in, but many of
the people who run the agencies are, including men who want to
be president. Like Jack Kemp and Alan Keys live in Maryland.
Moving right along----
Senator Bond. I would stick with the agency heads.
Senator Mikulski. Moving right along, we do look forward to
hearing your budget justification. But Senator Bond raises the
issue of outputs versus outcomes. And what I am tremendously
interested in is your system for oversight to measure what we
really are doing in communities.
One of my concerns is that often we have noble goals and
push to achieve those goals. And then we have unintended
negative consequences. The great passion for creating home
ownership, and particularly in engaging the poor in an
opportunity structure for home ownership, has resulted in great
opportunity for some, but predatory lending and flipping in
Maryland in another, for those who game the system.
I am not saying yours have gamed it, but often we push
people into home--there are people being pushed into home
ownership that were not ready. And it has turned out to be a
hollow opportunity for them.
So what we want to do know is: What is the CDFI
accomplishing in terms of people's lives and people's
communities? But enough said from me. Let us go forward with
hearing from you.
Senator Bond. Thank you very much, Senator Mikulski.
Ms. Lazar.
STATEMENT OF ELLEN W. LAZAR
Ms. Lazar. Thank you. Good morning to all of you, Chairman
Bond, ranking member Mikulski. I am Ellen Lazar, the director
of the CDFI Fund. And at the table with me is our deputy
director for policy and program, Maurice Jones.
For the purpose of time, I will keep my testimony brief. I
would ask that the Chair submit my complete written statement
for the record.
Senator Bond. Without objection, it will be made a part of
the record. We thank you for summarizing it.
Ms. Lazar. Thank you.
MANAGING FOR RESULTS
Today I would like to highlight the CDFI Fund's programs
and management, the impact of the fund's awards on CDFIs in
distressed communities, the demand for fund awards for fiscal
year 2000, and the fund's priorities for fiscal year 2001. The
fund's vision is an American one, which all people have access
to capital and financial services.
Our mission is to promote access to capital and local
economic growth by directly investing in and supporting CDFIs
and by expanded financial service organizations' lending,
investment and services within underserved markets.
I am happy to report that for the third consecutive year,
the fund received an unqualified audit opinion, which you have
already acknowledged. Our independent audit, prepared by KPMG
Peat Marwick, contained no material weaknesses nor reportable
conditions. Our commitment to strong management has resulted in
high levels of productivity for the fund.
CDFI FUND INITIATIVES
The fund has certified over 395 CDFIs in 48 States, the
District of Columbia, the Virgin Islands and Puerto Rico. Our
funding has helped promote access to capital and local economic
growth through the development of community-based lenders and
incentives for traditional financial institutions to increase
their activities in low income communities.
To date, the fund has provided approximately 375 awards
totaling $215 million directly to CDFIs. These award dollars
are significantly leveraged by other public and private
resources. Most notably, core awardees are required to provide
a dollar-for-dollar match of non-Federal funds before they
receive their award.
The fund has also provided 274 awards totaling $89 million
to banks and thrifts for increasing their investments in CDFIs
in distressed communities. This $89 million in awards reflects
roughly $1.8 billion in investments that banks and thrifts have
made in CDFIs in distressed communities, or over 20 times the
amount of the fund's awards.
Even more impressive is the impact that our investments
have had on CDFIs in the communities that they serve. We
recently administered a survey to all of our 1996 and 1997 core
awardees, a total of 71 organizations, to determine the impact
of the fund's investments. To date, we have received and
analyzed responses from 53 awardees. Together, these 53
organizations received $50 million in assistance from the fund.
Preliminary data indicates that these organizations made
$1.5 billion in community development loans and investments,
supported as many as 6,200 micro-enterprises and businesses,
created or maintained as many as 37,000 jobs, developed or
rehabilitated up to 28,000 units of affordable housing,
developed or supported up to 745 community facilities,
including child care centers, health care centers, charter
schools, and job training centers. They have provided business
training, credit counseling, home buyer training and other
development services to over 33,000 individuals and
organizations.
These CDFIs have also strengthened their own capacity to
deliver services. Their assets have grown by 119 percent from
$643 million in the aggregate before receiving an award to
close to $1.5 billion in the aggregate in 1999. The average
awardee's client base is 72 percent low income, 59 percent
minority, 51 percent female, 55 percent from the central city,
35 percent from rural communities, and 10 percent from suburban
communities. Clearly, we are enthusiastic about these results.
In fiscal year 2000, we are experiencing the greatest
demand since the inception of the fund. To help meet this
demand, we were able to use a small carry-over from fiscal year
1999 to add to the $95 million that you appropriated last year,
bringing our total funds available to $105 million in fiscal
year 2000. This $105 million is well below the demand for our
programs.
In fiscal year 2000, the fund announced that we would make
$50 million available for our Core Program. The fund received
$264 million in requests. The fund announced that we would make
$6 million available----
Senator Mikulski. Could you repeat that number?
Ms. Lazar. Certainly. We announced that we would make
available $50 million for our Core Program. We received $264
million in requests.
We announced that we would make $6 million available for
our Intermediary Program and received $9 million in requests.
We announced $25 million would be available for the Bank
Enterprise Award Program. Our preliminary review of the
applications received showed that if the banks complete all of
their projected activities, they would qualify for a total of
$109 million in awards. We also expect our Technical Assistance
Program to be over-subscribed this year.
FISCAL YEAR 2001 BUDGET REQUEST
Each year we have more and more demand for our programs,
which brings me to our fiscal year 2001 request. Because we do
not anticipate having a carry-over in fiscal year 2001, and
because we expect the demand to continue to grow, it is
important that the fund receives the President's full request
of $125 million in fiscal year 2001.
These funds will be used to continue to meet the high
demand for our programs and to cover our related administrative
expenses. Within our fiscal year 2001 budget, we have also
included some initiatives to reach populations that we want to
serve more effectively. Our budget request for 2001 includes a
$5 million set-aside to establish training and technical
assistance programs that serve Native American, Alaska Native
and Native Hawaiian communities. This has evolved from the
Native American lending study, which Congress asked us to
undertake in our original statute.
Furthermore, in fiscal year 2001 we intend to continue our
outreach to rural areas that are not adequately served by
CDFIs. Already in fiscal year 2000, we have conducted either
live or by satellite information sessions in 55 rural
communities, two-and-a-half times the number reached in fiscal
year 1999.
Finally, we plan on making additional innovations in our
programs that will enable us to better serve small and emerging
CDFIs and respond to last year's conference report language
encouraging us to develop programmatic initiatives that serve
this market.
CONCLUSION
In conclusion, the fund is being managed effectively, as
evidenced by our clean audit and by marked improvement in the
disbursements of funds. The fund is committed to supporting
CDFIs in the distressed communities that they serve and is
demonstrating a significant effect upon their operations. Fund
programs are over-subscribed to the extent that we cannot fully
support the needs of many qualified institutions.
PREPARED STATEMENT
I am hopeful that the subcommittee will approve the
President's $125 million budget request for the Fund so that we
may continue to work on creating jobs, affordable housing,
child care facilities, small businesses and economic
revitalization across America.
[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 to you another key member of the Fund who is with me
today; Maurice Jones, Deputy Director for Policy and Programs at the
Fund.
My testimony today will focus on four major areas: (1) the
principles underlying the operations of the CDFI Fund; (2) the Fund's
management systems; (3) the performance of the Fund so far; and (4)
Fund objectives for fiscal year 2001.
THE CDFI FUND: PRINCIPLES OF OPERATION
The CDFI Fund, working with private sector partners across the
country, operates on four basic principles: (1) its programs and
initiatives are highly targeted, focusing on areas and individuals
inadequately served by conventional financial markets; (2) its funds
are recycled within communities in need; (3) its Federal resources
leverage private sector and other non-Federal resources into
underserved places; and (4) its programs stress performance in the form
of both outputs and outcomes.
CDFI Fund programs strive to address gaps in the marketplace by
targeting resources to financial institutions that serve individuals
and communities that cannot adequately access capital from the
traditional marketplace. For example, funds are used to support: (1)
small business loan funds that originate loans, sometimes as small as
$500, that are difficult for mainstream financial institutions to
offer; (2) housing loan funds that provide downpayment and closing
costs assistance, subordinated debt, pre-development grants, bridge
loans and other sources of financing that increase the supply of
affordable housing and enable poor people to get mortgages; (3)
community development banks and credit unions that offer Individual
Development Accounts, Electronic Transfer Accounts, and other products
targeted to underserved populations; and (4) community development
venture capital firms whose highly targeted investments facilitate the
creation and retention of jobs in distressed areas across America.
To ensure that CDFI funds support institutions serving those most
in need, the Fund requires all organizations designated by the Fund as
CDFIs to demonstrate that at least 60 percent of their activities are
targeted to distressed communities, low-income individuals, or other
individuals that have been denied access to mainstream financial
services. The Fund further requires that these organizations provide
technical assistance and training to their borrowers. This requirement
benefits CDFIs as well as their borrowers. CDFIs will enjoy higher
rates of repayment and larger returns on their investments, and
borrowers will acquire general financial and business skills and
develop positive credit histories. As a result, both the CDFIs and the
borrowers they serve become more attractive to mainstream financial
institutions.
The CDFI Fund's assistance to needy communities supports community
and economic development activities for years after the Fund's initial
investment. The Fund requires applicants seeking designation as a CDFI
to demonstrate that their predominant business activity is the
provision of loans, equity investments, deposit accounts or other
sources of capital that can be invested, repaid, and then recycled to
other individuals or organizations in need. In addition, the Fund
provides investments that directly support the long-term growth and
viability of lending-based institutions. Fund awards enable
institutions to build their capacity to better administer their
programs and provide them with the capital needed to grow their loan
funds and make their products more affordable to their borrowers.
The CDFI Fund leverages investments from other public and private
institutions. Under several of the Fund's programs, applicants must
demonstrate that they have significant community partnerships in place.
In addition, certain awardees are required to provide a dollar for
dollar match of non-Federal assistance for each dollar of Fund
assistance provided. These matching funds come from a variety of
sources, including local governments, banks, insurance companies,
foundations, individuals and non-profit institutions. The match
requirement helps to ensure that the awardee coordinates the use of
Fund assistance with other entities in the community, and that these
other entities will be involved in supporting the ongoing operations of
the CDFI.
The Fund also encourages mainstream financial institutions to
invest in CDFIs. Regulated financial institutions may receive awards
from the Fund for, among other things, increasing their provision of
grants, equity investments, loans, deposits or other investments to
certified CDFIs.
The CDFI Fund's programs are designed to achieve maximum community
and economic development impact. When a CDFI applies to the Fund for
assistance, it must submit a business plan that includes its projected
levels of activity and the anticipated impact of these activities upon
the community. Prior to receiving a Fund award, an awardee must agree
to meet performance standards that are based upon the activities and
impacts outlined in its business plan. For example, a housing loan fund
that receives an award would have to meet minimal thresholds not only
for the number and dollar amount of loans it originates, but also for
the number of housing units created as a result of its financing.
Similarly, a business loan fund may be monitored based not only upon
the number and dollar amounts of loans it disburses, but also upon the
number of jobs created or retained by its borrowers. This type of
``performance-based monitoring'' helps ensure that the Fund is
achieving a high degree of community development impact as a result of
its investments.
MANAGING FOR RESULTS
I am pleased to report that our independent auditors (KPMG, LLP)
provided an unqualified opinion on the Fund's financial statements for
the fiscal year that ended September 30, 1999. KPMG's opinion affirms
that the Fund's Statements of Financial Position, Operations, and
Changes in Net Position and Cash Flow are fairly presented. This marks
the third consecutive year in which the Fund has received an
unqualified audit opinion. In addition, for the second year in a row,
the Fund's independent auditors identified no material weaknesses.
Also, the Fund has no reportable conditions. These findings reflect the
tireless commitment of the Fund's staff to sustaining and improving
upon its internal controls, operating policies and procedures, and
awards monitoring.
The Fund continues to comply with the Federal Managers' Financial
Integrity Act (FMFIA) and the Federal Financial Management Improvement
Act (FFMIA). The Fund's system of internal management, accounting and
administrative control has been strengthened and is operating
effectively. Enhanced policies and procedures ensure that Fund programs
achieve their intended results; Fund resources continue to be used in a
manner that is consistent with its mission; and Fund programs and
resources are protected from waste, fraud, and mismanagement.
Enhanced internal efficiencies and improved staff capacity have
resulted in unprecedented levels of productivity at the Fund. In fiscal
year 1999, we selected 260 institutions to receive $112 million in
awards, a 32 percent increase in the dollar amount of awards made in
1998. Our carry-over into fiscal year 2000 was approximately $10
million--a nearly four fold reduction from the $36 million carried-over
in fiscal year 1999. We anticipate having no carry-over into fiscal
year 2001.
As I discussed with the Subcommittee in previous years, the Fund is
committed to managing for results. Its mission is to promote access to
capital and local economic growth by directly investing in and
supporting CDFIs and expanding banks' and thrifts' lending, investment,
and services within underserved markets. I would like to highlight some
of the progress we have made in achieving this important mission.
CDFI FUND INITIATIVES--PUTTING CAPITAL TO WORK
The CDFI Fund pursues its mission goals through seven initiatives:
(1) CDFI Certification; (2) the CDFI Program, which includes the Core,
Technical Assistance and Intermediary Components; (3) the Bank
Enterprise Award (BEA) Program; (4) the Training Program; (5)
Microenterprise Initiatives; (6) Policy and Research Efforts; and (7)
the Native American Lending Study/Action Plan.
CDFI CERTIFICATION
To help recognize and support the growing CDFI industry, the Fund
reviews the applications of organizations wishing to become Federally
certified CDFIs. In order for the Fund to certify an organization as a
CDFI, the organization must meet each of the following six criteria:
1. The organization and its affiliates must collectively have a
primary mission of promoting community development;
2. The organization must be a financing entity (either an insured
depository institution or an institution that principally provides
loans or equity investments);
3. The organization must principally serve a target market
consisting of distressed neighborhoods, low-income people, or other
underserved populations;
4. The organization must provide training or technical assistance
in conjunction with its financing activities;
5. The organization must maintain accountability to its identified
target market; and
6. The organization must be a non-governmental entity.
There are several potential benefits of CDFI certification. First,
certification enables an organization to be eligible to receive
assistance from the Fund. Second, certified CDFIs may increase their
capital by becoming partners with regulated financial institutions
seeking awards from the Fund for investments in CDFIs. Third, CDFI
certification may increase an organization's ability to raise funds
from sources such as corporations, foundations and state and local
governments. Finally, certified CDFIs may receive technical assistance
from the Fund and training support from organizations sponsored by the
Fund.
To date, the Fund has certified over 380 organizations as CDFIs.
These organizations are headquartered in 47 states, the District of
Columbia and Puerto Rico. CDFIs include community development banks,
community development credit unions, housing loan funds, facilities
loan funds, small business loan funds, micro-enterprise loan funds,
multi-bank community development corporations, intermediaries and
community development venture capital funds. On average, the Fund
certifies approximately 75 new CDFIs each year.
THE CDFI PROGRAM
The CDFI Program has three funding components: Core, Intermediary
and Technical Assistance. These three components promote the Fund's
goals, 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. The Fund engages
in targeted outreach to inform potential applicants to these funding
components. The Fund also provides debriefings to applicants that are
not selected for awards.
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 order to build the
capacity of awardees and 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 leverages additional private and public
sector investments into these same organizations through the Fund's
application requirements, particularly the one-to-one non-Federal
matching funds requirement.
In fiscal year 1999, the Fund provided 78 Core Component awards
totaling over $78 million. This represents an 86 percent increase over
the number of Core Awards provided in fiscal year 1998 (42 awards), and
a 77 percent increase over the total amount of dollars awarded under
the Core Component in 1998 ($44 million). Since inception, the Fund has
made approximately 200 Core Awards totaling over $193 million.
On November 1, 1999, the Fund published a Notice of Funds
Availability (NOFA) announcing the availability of $50 million in Core
Component awards for fiscal year 2000. We expect to make approximately
50-70 awards under this NOFA. The application deadline was January 20,
and, as has been the case in every year, we are over-subscribed. The
Fund received 160 applications requesting a total of $264 million, over
five times the amount of money the Fund announced as available under
this program in fiscal year 2000.
The Intermediary Component allows the Fund to invest in CDFIs
indirectly, through intermediary organizations that support CDFIs and
emerging 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. Like Core awardees, Intermediary awardees are
required to obtain matching funds in comparable form and value to the
financial assistance they receive from the Fund.
Since inception, the Fund has made Intermediary Awards totaling
over $15 million to five different institutions. On November 1, 1999,
the Fund published a NOFA announcing the availability of $6 million in
Intermediary Component awards for fiscal year 2000. The application
deadline for this NOFA was January 18, and the Fund received seven
applications requesting over $9 million in assistance.
The Technical Assistance (TA) Component of the CDFI Program was
first introduced in 1998. This component builds the capacity of
``start-up'', young and small institutions. The TA Component allows the
Fund to direct relatively small amounts of funds--generally $50,000 or
less--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. Some
typical uses of our TA grants include: achieving operating efficiencies
through computer system upgrades and software acquisition; producing
internal policies and procedures; evaluating current loan products and
developing new ones; and training staff in operations essential to the
success of the organization.
In fiscal year 1999, the Fund provided 88 Technical Assistance
Component awards totaling over $4 million. This represents a 24 percent
increase over the number of TA awards provided in fiscal year 1998 (71
awards), and a 33 percent increase over the total amount of dollars
awarded under the Technical Assistance Component in 1998 (approximately
$3 million). Since inception, the Fund has made 159 Technical
Assistance Awards totaling over $7 million.
On January 4, 2000, the Fund published a NOFA announcing the
availability of $4.5 million in Technical Assistance awards for fiscal
year 2000. Commencing this year, the Fund will make award decisions
regarding fiscal year 2000 TA applications on a rolling basis with four
separate application deadlines. In this manner, we hope to expedite
both the approval and disbursement of TA awards and give TA applicants
more flexibility in terms of when they apply for funds. We expect to
issue approximately 80-90 TA awards in fiscal year 2000.
Outreach.--To date, institutions in 47 states plus the District of
Columbia, Puerto Rico and the Virgin Islands have received CDFI Program
awards. To inform potential applicants about the Fund's programs, the
Fund conducts informational workshops throughout the country. In
preparation for the fiscal year 2000 round of applications, the Fund
conducted 13 Core/Intermediary Component outreach sessions, including
one that was broadcast by satellite to 73 locations; and 7 Technical
Assistance Component outreach sessions, including one that was
broadcast by satellite to 85 locations. The live sessions were held in
regions of the country where there are relatively fewer CDFIs,
including four sessions specifically targeted to organizations serving
Native American populations.
The Fund is particularly interested in reaching out to
organizations that provide capital and technical assistance to rural
communities. In the past few months, we have conducted, either live or
by satellite, information sessions in 55 rural communities--two and a
half times the number reached in fiscal year 1999. We will continue to
increase our efforts to reach rural communities.
Debriefings.--To further our goal of building the institutional
capacity of the CDFI field, we provide debriefings to applicants that
were not selected for CDFI Program awards. 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 fiscal year 1999, the
Fund provided debriefings to 110 institutions that had been
unsuccessful in seeking awards under the fiscal year 1998 funding
round. Already in fiscal year 2000, we have provided debriefings to 62
organizations that were not selected to receive an award in fiscal year
1999.
THE BANK ENTERPRISE AWARD PROGRAM
The Bank Enterprise Award (BEA) Program is the principal means by
which the Fund achieves its strategic goal of expanding financial
service organizations' community development lending and investments.
The BEA Program recognizes the key role played by mainstream depository
institutions in promoting the revitalization of distressed communities.
The BEA Program provides monetary incentives for banks and thrifts
to expand their investments in CDFIs and/or to increase their lending,
investment and service activities in distressed communities. BEA awards
vary in size, depending upon the type and amount of assistance provided
by the bank and the activities being funded through the bank's
investments. In general, banks that provide equity investments to CDFIs
are likely to receive the largest awards relative to the size of their
investments.
The leveraging involved in the BEA Program is impressive. To date,
274 awards totaling over $89 million have been announced for banks and
thrifts investing in CDFIs and distressed communities throughout the
country. This $89 million actually reflects investments in CDFIs and
underserved communities of $1.87 billion, over 20 times the amount of
the Fund's investment. To date, banks and thrifts receiving BEA awards
have provided $439 million directly to CDFIs, and $1.43 billion to
distressed communities in the form of direct loans, investments and
services.
In fiscal year 1999, as in every year since the program's
inception, the Fund increased both the number and the total amount of
our BEA awards. In fiscal year 1999, we made 103 awards totaling $31.7
million. This represents an increase of 30 percent over the number of
awards made in 1998 (79 awards), and 13 percent over the dollar amount
of the awards made in 1998 ($28.1 million).
On September 1, 1999, the Fund published a NOFA announcing the
availability of $25 million in BEA Program funds for fiscal year 2000.
The application deadline for this NOFA was November 23, 1999. We
received 228 applications, a 64 percent increase over the 138
applications that were received in fiscal year 1999. If the applicant
institutions complete all of the activities proposed in their
applications, we estimate that they would be eligible for awards
totaling approximately $109 million--over four times the amount of
money currently available for the BEA Program.
THE TRAINING PROGRAM
The Training Program, begun in fiscal year 1999, enhances the
Fund's ability to achieve its strategic goal of strengthening the
organizational capacity and expertise of CDFIs. The Training Program
provides funds that support the development and delivery of training
products to CDFIs and other financial service organizations engaged in
community development finance. Training needs will be addressed via
classroom instruction, web-based distance learning, and other
electronic formats. In addition, the Fund will explore supporting other
types of capacity building training opportunities, including structured
internships.
In fiscal year 1999, the Fund initiated its first activity under
this program. We undertook a market analysis of the training needs and
resources of CDFIs and community-focused financial service
organizations. The purpose of the market analysis was to determine: (1)
the quality and extent of training available for CDFIs and financial
service organizations engaged in community development lending; (2) the
training needs of such organizations; (3) impediments to obtaining
needed and adequate training for such organizations; and (4) strategies
for eliminating those impediments. We recently received the results of
this analysis and expect it to inform our future training initiatives.
In fiscal year 2000, the Fund anticipates awarding, through
competitive procurement processes, up to $6 million in contracts to
entities for the purpose of developing and delivering specific training
products to CDFIs and eligible financial service organizations. Funding
will be made available to entities that provide training in a number of
disciplines, including market analysis, financial projections, program
development and organizational development.
Currently the Fund has received and is reviewing proposals from
training providers offering the development and delivery of training
for three specific areas: preparation of financial projections;
preparing a market analysis; and the fundamentals of lending
operations. We anticipate that the proposals will result in over $1
million in contracts. Training provided under these contracts will
begin this year.
MICROENTERPRISE INITIATIVES
As part of its strategy to democratize access to capital, the Fund
works to strengthen the field of microenterprise development and
microentrepreneurs. In addition to providing assistance to
microenterprise loan funds under the CDFI Program, the Fund administers
two initiatives specifically targeting microenterprise organizations
and microentrepreneurs: (1) the Presidential Awards for Excellence in
Microenterprise Development; and (2) the Interagency Workgroup on
Microenterprise Development.
The Presidential Awards for Excellence in Microenterprise
Development is an annual non-monetary awards program that recognizes
organizations that have demonstrated excellence and leadership in
promoting microenterprise development. These awards reflect the
Administration's on-going commitment to advancing the role of
microenterprise development in enhancing economic opportunities for all
Americans--particularly low-income people and others who lack access to
traditional sources of credit and business development assistance. By
recognizing outstanding organizations, the program promotes ``best
practices'' within the microenterprise development field in the United
States and brings wider public attention to the important role of
microenterprise development in the domestic economy.
Awards are given to practitioner organizations--entities that
provide microentrepreneurs access to credit, training, counseling and
technical assistance--for demonstrating excellence in providing access
to capital; alleviating poverty; developing entrepreneurial skills; and
innovative programming. In addition, organizations that support the
effort of practitioner organizations through financial assistance,
technical assistance, research, or other activities are eligible for
awards for demonstrating excellence in public or private support.
The Fund is co-chairing, with the Small Business Administration,
the Interagency Workgroup on Microenterprise Development. The workgroup
was established in 1998 to coordinate the work of Federal agencies
involved in microenterprise efforts, and to develop a coherent
framework for Federal government efforts to promote microenterprise.
The Workgroup includes participants from several Federal agencies and
departments. It is examining Federal policies that affect the
microenterprise field and is harmonizing discrepancies in definitions
and reporting standards among Federal programs that support
microenterprise development. This year the workgroup expects to publish
a policy paper, a matrix of microenterprise programs at the Federal
level, a listing of needs of the field, and case studies highlighting
examples of microenterprise best practices.
POLICY AND RESEARCH INITIATIVES
The Fund's Policy and Research initiatives focus on three areas:
(1) measuring and reporting on the performance of awardees; (2)
promoting industry-wide research and development activities; and (3)
instituting policies that maximize the effectiveness of the Fund's
programs.
Reporting on Performance and Outcomes:
Core Component Survey.--For the second consecutive year, the Fund
conducted a survey of its Core Component awardees to determine the
impact of these awardees on the communities that they serve. We
evaluated only 1996 and 1997 awardees because they have had at least
one year to absorb the Fund's investments and put them to work. As of
today, we have received and analyzed responses from 53 of 71
organizations. Together, these awardees received $50 million in Fund
awards. What has our $50 million helped these institutions to
accomplish?
Our preliminary findings demonstrate that these awardees have
generated significant community development impact. Since the time of
their award, our Awardees have made $1.5 billion in community
development loans and investments, which have helped to: create or
expand up to 4,123 microenterprises and 2,063 businesses; create or
maintain up to 36,718 jobs; develop or rehabilitate up to 28,166 units
of affordable housing; and develop or support up to 745 community
facilities. These facilities have the capacity to provide child care to
as many as 14,255 children, health care to as many as 52,614 patients
and education to as many as 8,381 students.
Our credit union and community development bank awardees provided
76,554 checking and savings accounts totaling $126 million in 1999.
Seventy six percent (76 percent) of these accounts are held by low-
income individuals. These institutions have also provided 372
Individual Development Accounts (IDAs) with deposits totaling $384,000.
Since receiving their Fund awards, the 53 awardees have also
strengthened their capacities to deliver products and services to their
target communities. Our awardees provided business training, credit
counseling, homebuyer training and other development services to up to
32,915 individuals and organizations. Their total assets have increased
by 119 percent, growing from $685 million in the aggregate before they
received their awards to close to $1.5 billion in the aggregate in
1999. The average awardee's client base is 72 percent low-income, 59
percent minority, 51 percent female, 55 percent central city, 35
percent rural, and 10 percent suburban.
Finally, Fund awardees have leveraged significant additional
capital. They estimate that an additional $215 million in capital over
and above the $50 million raised as part of our 1:1 matching funds
requirement can be directly attributed to receipt of a Fund award. In
most cases, their community development loans and investments were part
of a larger deal. In 1999, for every $1 our awardees loaned or invested
in their communities, $1.30 was invested by other entities.
BEA Program Survey.--This past year, the Fund developed a pilot
survey and administered it to a sample of 30 banks and thrifts that
received BEA awards in 1998. Thus far, we have received responses from
23 institutions. Among other things, the survey asked: (1) how the
promise of a BEA award influenced the lending policies or products of
the awardee; (2) how the awardee spent its BEA award. We are still
collecting and analyzing surveys, but the preliminary findings indicate
that the BEA Program is a valuable tool for encouraging banks to
increase their community investments.
The pilot survey indicates that the BEA Program has been successful
in helping banks to offer more flexible products to organizations and
individuals. The vast majority of the respondents reported that the
likelihood of a BEA award allowed them to offer or develop products
they otherwise wouldn't have. These include longer term, lower interest
rate loans; below market rate deposits; and new products such as pre-
development loans. Many of the respondents also indicated that the
prospect of a BEA award allowed them to offset risks of return, and
thus fund projects that they would not have otherwise supported. A
majority of respondents also reported that they increased their
investments in CDFIs and/or built new relationships with CDFIs as a
consequence of participating in the BEA Program.
Twenty-one (21) of the 23 respondents reported that they used their
BEA award monies to fund additional community development initiatives.
This is an impressive outcome, given that awardees are under no
obligation to reinvest BEA Program award funds in this fashion. Many of
the respondents reported using their BEA awards to increase their
grants and investments in CDFIs and in other non-profit community
development organizations. Others used their award money to subsidize
below market rate loans to community development institutions and low-
income borrowers, or to increase the provision of technical assistance
to borrowers.
The Fund is encouraged by the preliminary results of this survey,
as well as the response rate we achieved. These findings suggest that
the BEA Program is an effective incentive for banks to increase their
community development finance activities.
Reporting on Certified CDFIs.--With over 380 organizations
certified as CDFIs and new applications for certification arriving
regularly, the Fund has information on more CDFIs than any other entity
in the country. This past year, the Fund worked with CDFI industry
groups to develop a brief questionnaire that will produce aggregate,
standardized data from every certified CDFI. This data will enable the
Fund to report on the total volume of CDFI lending and investing,
portfolio quality, community development impact indicators, capital
managed by CDFIs, and basic CDFI financial indicators. As of November
1, 1999, all entities seeking certification or re-certification with
the CDFI Fund are required to complete this brief questionnaire.
Promoting Industry-Wide Research and Development.--The Fund has
begun working with CDFI industry groups and other major funders to
develop an industry-wide research agenda. The Fund has solicited input
from practitioners, funders and academics to identify gaps in existing
research and will work with the industry to establish a coordinated
research program that addresses the needs identified by the industry
and its investors. The Fund has also initiated, and will continue to
pursue, in-house research activities that examine various aspects of
our awardees' work.
Developing Fund Policies.--The Fund is constantly seeking to
improve upon its programs and policies to obtain higher levels of
efficiency, and to be more responsive to the needs of our applicants
and awardees. In 1999, the Fund performed a comprehensive review of its
certification and funding processes. The Fund solicited input from
applicants and awardees, external reviewers, and Fund staff about ways
to improve documents and processes to ensure that they are well
coordinated and transparent. With this feedback, the Fund implemented
significant revisions to its certification, Core, Intermediary and TA
applications, application review criteria, awards closings procedures
and reporting requirements. These changes were codified as revised
interim regulations, published on November 1, 1999. As a result,
applicants for certification or for funding in fiscal year 2000 and in
future years will benefit from more transparent and efficient policies,
procedures and application materials.
NATIVE AMERICAN LENDING STUDY/ACTION PLAN
Our Native American Lending Study/Action Plan is intended to
stimulate private investment on Native American reservations and other
lands held in trust by the United States. The first step in
accomplishing this goal is to identify the barriers to private
financing in these areas. To this end, the Fund conducted 13 regional
workshops across the country. The workshops included participants from
Native American communities, financial institutions, Federal and state
agencies, and community development organizations. Participants in
these workshops identified barriers to investments in Native American
communities and developed strategies and actions for eliminating these
barriers. The Fund is also administering a national survey to collect
additional data from Native American organizations and financial
institutions regarding barriers to accessing capital in Native American
communities. The products from these workshops and the results of this
survey will assist the Fund in completing the Study. It is anticipated
that the final report will be submitted to the Congress and the
President by the end of this year. This report will contain
recommendations regarding policy, legal, statutory and regulatory
changes needed to spur more investment within Native American
communities.
THE YEAR AHEAD: FISCAL YEAR 2001
The President's fiscal year 2001 budget request includes $125
million in appropriations for the Fund. This request is $30 million
above fiscal year 2000 funding levels. Of the $30 million in additional
funding requested, the Fund proposes to use $28,360,000 to fund its
various programs and $1,640,000 to cover administrative expenses. These
additional appropriations will assist the Fund in its efforts to
continue to meet the great demand for its programs. In the past, we
have addressed this demand with a combination of new appropriations and
funds carried over from previous fiscal year appropriations. However,
because we do not anticipate carrying over any appropriations into
fiscal year 2001, the Fund will need all of the President's fiscal year
2001 budget request to address the demand for its programs.
In every year since the Fund's inception, interest in our programs
has increased. This year has been no exception to that rule. In fiscal
year 2000, the Fund received 167 Core and Intermediary Component
applications requesting a total of $273 million in awards--or 37
percent more than the $200 million requested under these Components in
fiscal year 1999. The Fund also experienced a 64 percent increase in
the number of BEA Program applications received in fiscal year 2000 as
compared with fiscal year 1999. The additional appropriations requested
for the Fund by the President's fiscal year 2001 budget will enable the
Fund to continue to invest in worthy organizations and proposals at
approximately the same rate as it has done up to now.
The Fund is requesting an additional $1.6 million in appropriations
for fiscal year 2001 to cover administrative costs. These funds will be
used to support 10 new FTE positions and to cover the salary cost of
living increase for existing staff. Consistent with our appropriations
requests outlined above, we anticipate that most of these new hires
will be used to administer Fund programs. Current Fund staff work
tirelessly to ensure that the Fund makes prudent investments and that
our awards are disbursed in a timely fashion. However, the increasing
demand for our programs and a growing portfolio of investments to
monitor makes it necessary to hire additional staff. Sufficient staff
ensures that we will continue to make sound investment decisions and
retain the capacity to monitor the growing number of awardees in our
portfolio.
The Fund's budget request for fiscal year 2001 also includes a $5
million set-aside for the purpose of establishing training and
technical assistance programs to increase access to capital in Native
American, Alaskan Natives and Native Hawaiian communities. The need for
this set-aside was identified in the workshops related to the
development of the Native American Lending Study/Action Plan. This set-
aside would fund educational and other programs that: (1) enable
financial institutions currently serving these communities to enhance
their capacity to provide access to capital and credit; (2) assist
financial institutions contemplating serving these underserved
communities to do so; and (3) assist these communities in establishing
their own community development financial institutions.
We anticipate making additional innovations in our programs that
will enable us to better serve small, emerging and rural CDFIs in
fiscal year 2001. We plan to amend our Technical Assistance Component
to allow small and emerging CDFIs to compete for both technical
assistance and financial assistance in amounts up to $150,000 to
$200,000 per round. This innovation addresses the Small and Emerging
CDFI Access Program idea that Congress encouraged the Fund to consider
last Fall. We are also looking forward to expanding some of our current
research initiatives. We intend to fund a research project this year
that examines the feasibility of creating a secondary market for
community development loans. Pending the outcome of this study, we hope
to be able to fund a secondary market pilot project in fiscal year
2001.
Finally, we anticipate that our nascent Training Program will
facilitate the development and delivery of several new training and
technical assistance products by 2001. The Fund will solicit bids from
prospective developers and providers of training products in fiscal
year 2000, with the intent that they will complete their products and
make them available to CDFIs and other community development financial
service organizations early in 2001.
CONCLUSION
Mr. Chairman and members of the Committee, thank you for giving me
the opportunity to provide this information on the Fund's current
activities and fiscal year 2001 budget. I am hopeful that this
Committee will approve the President's $125 million budget request for
the Fund, so that we may continue to work on creating jobs, affordable
housing, childcare facilities, small businesses and economic
revitalization across America.
Senator Bond. Thank you very much, Ms. Lazar.
Ms. Lazar. Thank you.
Senator Bond. I mentioned briefly the potential overlap
with other agencies. I understand NCUA has requested $1 million
in training in technical assistance to assist low income credit
unions. At the same time, CDFI is also providing assistance.
What kind of coordination and communication do you have with
HUD and NCUA on these issues?
Ms. Lazar. We talk with them quite regularly. Cardell
Cooper, who is the assistant secretary at HUD, serves on our
advisory board. The advisory board meets three times a year.
And we do have an opportunity to talk with him fairly
regularly.
We also speak with NCUA on a regular basis on a host of
matters. And I will let Maurice continue on.
Senator Bond. Mr. Jones.
Mr. Jones. Thank you. With respect to NCUA, what we have to
do by statute is, prior to providing an award to an institution
that they regulate, we have to notify them that we are going to
make the award, ask them for comments on both the propriety of
the award and also the financial and managerial standing of the
institution.
They then comment back to us whether they think the award
is appropriate, whether the uses of the award will be helpful
for the institution, duplicativeness, et cetera.
We do not make the award until we get their approval. If
they disapprove, then we go back to NCUA and the institution
and try to work out whatever issues are there. And we have to
do that by statute.
Senator Bond. Thank you, Mr. Jones. In the testimony and
report you talk about the information sessions in 55 rural
communities during 2000. Looking at it in detail, though, we
saw only 17 of those sessions were in States of less than 2
million, and that was one of the focuses that members of the
committee had asked you to make. And of the 55 sites, there
were rural poverty areas, like Phoenix, Denver, Cincinnati,
Indianapolis, San Antonio and Seattle.
Could you just very briefly talk about the nature of the
information sessions and how these sessions address the needs
of the rural areas? And do you have any other ideas for
addressing those needs?
Mr. Jones. Sure. The info sessions essentially--at the
beginning of each round of awards, what we do is we hold
information sessions whereby we go through the details of the
award round that is applicable. So if it is--let us say it is
technical assistance. What we do is we hold educational
workshops across the country and through satellite whereby we
essentially walk through the applications. We talk about
eligibility criteria. We talk about the evaluation criteria.
We give applicants a sense of the timing for the due dates.
We give them a sense of timing for the types of awards they can
apply for. And most importantly, we engage in a back and forth
with them. We answer all of their questions to the extent that
we can. And we do this with respect to each of our programs.
With respect to reaching out to more rural areas, several
of those video teleconferences were broadcast via the USDA
network. So we reached rural areas that way. In addition, we
had about 83 sites or so via the video teleconferencing.
What we are doing with respect to trying to reach out
further in rural areas, we have already made one change in our
regulations. We noticed that our regulations--we had a
provision in our regulation that said if you are a rural area,
you could qualify if the population loss over a 10-year period
were 10 percent.
What that was doing for rural areas, we learned, is it was
not accounting for the differences that births and deaths were
making. So we added another feature, which allowed rural areas
to qualify if the net migration loss was 5 percent over a 5-
year period. And we did that as of November 1 of last year. And
we will continue to do, as we learn more and more about how our
programs affect rural areas, we will continue to try to do
those things.
Senator Bond. Thank you very much, Mr. Jones.
I have another question, so I will submit that for the
record and turn the questions to Senator Mikulski.
Senator Mikulski. Thank you.
First of all, I was delighted to hear about the way the
mandate works with coordinating with the credit unions over
applications. My question, Ms. Lazar, is: How does CDFI work
with community development corporations?
Ms. Lazar. We work in many ways with community development
corporations. The CDFIs that we certify and fund do a lot of
their lending and investment activity with CDCs directly. A
number of the CDFIs are outgrowths, in fact, of CDCs
themselves.
Some of them have separated off their lending and
investment activity to establish a CDFI in their community. So
they are both working from a lending standpoint and also
customers and clients of CDFIs for their development
activities.
Senator Mikulski. Because in many instances they do not
exist in certain areas. I mean, there continues to be a wide
gap between the demand for lending and so on.
Let me go then to another issue that Senator Bond and I are
tremendously interested in. You have heard one side of the
flipping, the predatory lending where they really gouge the
poor. And they are despicable predators. That name is accurate.
But of the legacies of predatory lending is FHA or so-called
HUD houses in communities that are often wastelands themselves.
And in like my own hometown, HUD in some ways is one of the
biggest slum landlords, holding boarded up property.
Do you--one of the recommendations Cuomo is considering is
giving these houses to community corporations or to cities
themselves. I made the comment, you cannot flip to them because
in many instances they are poor themselves, particularly the
non-profits.
My question is: Do you now play a role in helping deal with
FHA disposal properties, with community groups? Do you see a
role that CDFI could play if so-called asset zones were created
or so on? Because we just do not want to shift HUD's problem on
to either a city or a non-profit without resources, because it
is going to take us nowhere. And I am wondering what--have you
thought about this? Have you heard about this?
Ms. Lazar. A little bit, actually. A lot of the CDFIs are
working on predatory lending issues in their communities. Self-
help down in North Carolina has been very active in focusing
attention on predatory lending activities in their community.
We could certainly spend more time talking about this, but my
initial look at this is that CDFIs could play a significant
role in helping to facilitate moving the properties out of the
HUD portfolio into CDCs, and the CDFIs helping to finance
rehabilitation activity and mortgage activity for the CDCs in
development positions.
Senator Mikulski. Have you been asked to serve on the Cuomo
task force?
Ms. Lazar. No, I have not.
Senator Mikulski. Well, I am going to recommend that, only
because I think we are looking at two issues here. One, the
actual lending and how the poor are gouged and faulty
appraisals and mortgage bounty hunters, all of that. And then
there is the FHA disposal or the so-called HUD houses.
And we think your expertise, both in what you have seen in
terms of lending or whatever, would be useful, but how we
ultimately could get to the core problems, one of which is even
the kind of consumer education that needs to go on through
community groups that then--that helps avoid people heading to
the scams in the first place.
Mr. Chairman, I am out of time. But one of the reasons you
had predatory lending was they had--it was not the banks. The
banks in Baltimore are not overseeing a lot of this. In fact,
many of them have instituted controls and are helping solve the
problem. But there are these institutions that look like banks,
spend like banks, lend like banks, but are not regulated like
banks.
Now I am not in a position to propose a new regulatory
framework, but you filled the gap where banks could not go or
whatever. But you bring a lot of ``banking experience,'' both
in the area of consumer protection and education, as well as
working with institutions and local communities that could deal
with it. Because FHA disposal is not only due to predatories,
but it is due to a lot of other things connected to buying home
ownership.
A melancholy figure was, of the 10,000 houses that were
sold in Baltimore last year, 4,000 are now in default. And of
those 4,000, it is not all predatory lending. So something got
pretty screwed up somewhere. And it has been terrible for the
poor and terrible for the community where those houses have
been vacant.
Ms. Lazar. Well, we would certainly be very happy to
participate in any way you would suggest.
Senator Mikulski. Thank you.
Mr. Jones. Could I just add, I think your conclusion that
trying to dump, if you will, these properties on the non-profit
institutions is not a wise thing for them. One, they are
financially strapped. But two, this is not their--CDFI's at
least--this is not their core competency. Where they can play a
role is educating consumers and providing finance where banks
are not providing it. That is their competency, and that is
what they do as well as anybody.
Senator Mikulski. Well, thank you.
I know that our time is up. We are going to suggest your
membership. The second thing is that whatever you have--what I
am looking for are some of the--how you work--after someone
gets the money, how do you stay in touch with them to see what
they are doing to accomplish the results of what we bankrolled
in the first place. So thank you.
SUBCOMMITTEE RECESS
Senator Bond. Thank you very much, Senator Mikulski.
And my thanks to you, Ms. Lazar and Mr. Jones.
The hearing is recessed. We will keep the record open for
further comments or questions for the record.
[Whereupon, at 11:35 a.m., Wednesday, April 12, 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 2001
----------
THURSDAY, APRIL 13, 2000
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 Shelby, Craig, and Mikulski.
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
STATEMENT OF DANIEL S. GOLDIN, ADMINISTRATOR
ACCOMPANIED BY:
LEE B. HOLCOMB, CHIEF INFORMATION OFFICER
ARNOLD G. HOLZ, CHIEF FINANACIAL OFFICER
MALCOLM L. PETERSON, COMPTROLLER
VICKI A. NOVAK, ASSOCIATE ADMINISTRATOR FOR HUMAN RESOURCES AND
EDUCATION
JOHN D. SHUMACHER, ASSOCIATE ADMINISTRATOR FOR EXTERNAL
RELATIONS
JEFFREY E. SUTTON, ASSOCIATE ADMINISTRATOR FOR MANAGEMENT
SYSTEMS AND FACILITIES
EDWARD HEFFERNAN, ASSOCIATE ADMINISTRATOR FOR LEGISLATIVE
AFFAIRS
JOSEPH H. ROTHENBERG, ASSOCIATE ADMINISTRATOR FOR SPACE FLIGHT
SAMUEL L. VENNERI, ASSOCIATE ADMINISTRATOR FOR AEROSPACE
TECHNOLOGY
EDWARD J. WEILER, ASSOCIATE ADMINISTRATOR FOR SPACE SCIENCE
ARNAULD E. NICOGOSSIAN, ASSOCIATE ADMINISTRATOR FOR LIFE AND
MICROGRAVITY SCIENCES AND APPLICATIONS
ROBERTA L. GROSS, INSPECTOR GENERAL
GHASSEM ASRAR, ASSOCIATE ADMINISTRATOR FOR EARTH SCIENCE
LORI A. GARVER, ASSOCIATE ADMINISTRATOR FOR POLICY & PLANS
OPENING STATEMENT OF SENATOR CHRISTOPHER BOND
Senator Bond. Good morning. The hearing of the Senate, VA-
HUD, and Independent Agency Subcommittee will come to order.
The Subcommittee meets today to review the 2001 budget request
of the National Aeronautics and Space Administration. We
welcome Dan Goldin, the NASA Administrator, and his staff.
I also should acknowledge Roberta Gross, the NASA Inspector
General, and thank her for her good work on computer security
issues. These are very, very important issues, and we thank you
for your diligence and attention to these issues at NASA.
I always look forward to the NASA hearing. NASA has the
unique position and opportunity to lead us into the 21st
century in the exploration of our last frontier, the universe.
We are on the cusp of the bicentennial of the Lewis and Clark
expedition that was the first step in the exploration of what
was to become our Nation. This is a bicentennial in which I
have particular interest, since my State was part of the
Louisiana Purchase and my great, great grandfather poled the
boats up the river for them--he didn't make it in Steven
Ambrose's book, but he was out there plugging away.
In some ways, NASA has a similar opportunity to be the
Lewis and Clark of the 21st century, through its history of
putting men and women in space and on the moon, with the
assembly of the International Space Station and ultimately as
we reach out to the ends of the universe through both manned
and unmanned missions. NASA will help to redefine the measure
of our people as the discoverers and explorers of the 21st
century.
I congratulate you also on the tenth anniversary of the
Hubble Space Telescope. That in itself is a remarkable story of
the little telescope that could. And someday soon we will be
able to look to the far corners of the universe and ironically
see the beginning of time. These are very exciting challenges,
and I applaud the efforts of all the people at NASA.
Having said that, we again have a lot of hard work to do as
we prepare the VA-HUD Appropriations bill for fiscal year 2001.
Despite the rosy optimism of some, we as usual have a number of
hard funding decisions to make. We work with the budget people
and with the Appropriations Committee to assure that we have
the allocations necessary; and we don't have them yet, but
that's not new either. So this will be another struggle.
In NASA's case, the Administration is requesting some $14
billion, an increase of $434.5 million over the fiscal year
2000 funding level of $13.6 billion. This is a significant
increase at a time in which we have to balance a number of
significant other funding priorities, including the need to
provide increased funding for VA medical care and increased
funding for the renewal of all expiring section 8 rental
assistance contracts. Nevertheless, NASA is an important part
of the subcommittee, and as always we will work hard to meet
the budget needs of all of our agencies and try to be as
generous as we can.
NASA's biggest priority remains the International Space
Station, and we continue to have concerns regarding the large
cost overruns and delays in the assembly schedule, as well as
fears that our Russian partners are not going to shoulder their
fair share and meet their commitments.
In particular, as of last year, Boeing had cost overruns of
almost $1 billion. In addition, the cost of the International
Space Station had grown from an estimated $17.4 billion in cost
to some $26 billion currently, and this does not include the
cost of operation. Unfortunately, this makes the space station
a poster child of bad government budgeting and poor decision-
making.
These are big problems, and as you know, the more the ISS
is delayed the more the costs will increase, which ultimately
means that we are losing money that could go to many other
important projects. I hope that you will be able to provide us
today, Mr. Administrator, with some confidence and good news
about the status of the International Space Station.
I also remain concerned about the need to provide safety
upgrades to the space shuttle. I know that shuttle safety is a
priority, but I remain disturbed by recent concerns raised in
the 1999 annual report of the Aerospace Safety Advisory Panel
that warned about risks to the shuttle fleet because of
obsolescence and projected increases in flight rates.
I know that NASA is being proactive with regard to these
concerns as well as problems identified because of workforce
reductions, and I emphasize our continuing support for this
vital component of your mission.
I consider the future of space transportation the next big
debate at NASA. I think we all agree that the cost of going
into space is too expensive to ensure the success of a
commercial space industry, and that the next challenge is the
development of a reusable launch vehicle that should
dramatically lower the cost of accessing space. NASA had
expected to make a decision on a reusable launch vehicle as a
replacement to the space shuttle by this time. While NASA
continues to work with industry on a reusable launch vehicle
such as the Venture Star, we have a long way to go.
NASA currently is proposing a new Integrated Space
Transportation program. Under this program, NASA intends to
commit some $4.4 billion between now and 2005 to develop a
technology base for the replacement of the space shuttle. The
program is designed to attract the investment of the private
sector in the development of new space transportation options,
with the private sector taking the lead in development and
funding after 2005.
NASA plans to use this program to solicit new ideas and
build on the X-33 program, the X-34, and the Venture Star as a
technology base for the development of new technologies and
vehicles. Nevertheless, it's not clear whether there is
adequate private interest to support the amount of private
financial commitment that will be necessary to finance
successfully and complete a shuttle replacement.
Finally, I am concerned about the loss of two consecutive
Mars missions in the Mars Surveyor program, and what this means
to NASA's philosophy of ``faster, better, cheaper''. These
losses could have been avoided. In particular, the $125 million
Mars Climate Orbiter was lost on September 23, 1999 because of
a failure by Lockheed Martin/JPL to convert English units into
metric units. I think you would fail high school freshman math
if you made that mistake.
More recently, the $165 million Mars Polar Lander likely
was lost because of a coding failure that never should have
occurred. Both programs had histories of cost overruns and
schedule delays. These failures follow last year's losses of
the Lewis and the Wide-field Infrared Explorer or WIRE
missions.
Since 1992, NASA has launched 16 robotic space exploration
missions under the ``faster, better, cheaper'' policy, and
seven of these missions have either failed or had serious
problems post-launch.
While the Mars Program Independent Assessment Team Report,
released on March 14, 2000, acknowledged the value of the Mars
program as well as the viability of the ``faster, better,
cheaper'' philosophy, I want to be sure that the right lessons
are learned and applied. In particular, I believe the report
emphasized the need to establish protocols that minimize risk,
including the need to provide experienced leadership, standards
for risk assessment, and the development of realistic budgets
and reserves for each mission, which also tie decision-making
to appropriate headquarter oversight. In other words, the
reasonable test must be made to ensure that the suckers work.
And when we don't do that, we have some very expensive and very
embarrassing losses for all of us.
The bottom line is that NASA missions and activities have
inherent risk, that pushing the envelope of human knowledge
requires some risk and must allow for failure. Nevertheless,
any failure must be smart failure, not stupid failure. And by
that I mean we need to take every reasonable step that is
foreseeable to ensure success. If something totally unknown
happens, that's understandable. But let's at least take all the
reasonable steps we can to avoid it.
I look forward to hearing your views on this issue. I now
turn to Senator Mikulski for her opening statement and
comments.
OPENING STATEMENT OF SENATOR BARBARA A. MIKULSKI
Senator Mikulski. Thank you very much, Mr. Chairman, and
many of the flashing yellow lights that you raised about the
budget are also very much in my own thinking, particularly the
conflict that we will have within our own VA-HUD appropriations
about meeting our responsibilities.
Dr. Goldin, I am going to welcome you today for your eighth
appearance before this subcommittee, and I want to thank you
for your many years of service. I know that when you took the
job of being the NASA administrator at the request of President
George H. Bush, that you made many sacrifices, both financial
and others, to assume this responsibility.
And now you've served two presidents; President Bush and
President Clinton, and in my mind, this is the way the
administrator of a science program should be. Science is not
about a party platform, science is not about ideology, science
is about discovery and our product is knowledge.
This is again, what it says to me is that as we work
together, that hopefully that we view our science programs that
way. We have certainly tried to do this in our appropriations
committee. I can't ever say enough about what it meant for me
to come and work with Senator Garn, who was a great teacher to
me in space, and now this excellent relationship that I share
with this chairman as we look at science. We share the same
populist views and somewhat the same pugnacious style.
Senator Bond. I'm flattered, Senator.
Senator Mikulski. So pugnacious and populist, that's kind
of a--heppy would be another one that I would add.
But your dedication and leadership has helped make NASA
ready to meet many of the new challenges for the new century,
and like anything related to discovery, we've had some big hits
and we've had some big misses. And I know we'll talk about
those, but I could not let this hearing come to an end without
thanking you for what you've done and the team that supports
you, and I also want to acknowledge the role that your family
has played, because they had to be very supportive of the
sacrifices that you made, leaving the private sector to come
here.
You and I just celebrated the tenth anniversary of the
Hubble Space Telescope. It was a great day for NASA and Goddard
and affirmed the wider role that science does play in our
lives. I was very proud of the men and women at Goddard, the
astronauts, technicians, engineers and the staff at the Space
Telescope Institute, which also is very proud of the team that
supports that.
NASA though is not only a science agency, it's also a
technology agency. Thanks to NASA, we are not only exploring
the far reaches of our universe, we are pushing the envelope of
technology. There are many aspects we could talk about, but one
I know that I'm particularly happy about is that through the
Hubble Space Telescope there have been new techniques developed
in X-ray technology; and because of that we will be able to do
better MRIs, we will be able to do better mammographies; so
while we explore the outer space, we are also using the
technology of NASA to explore the inner space, and this I think
is what helps the American people be so supportive of what we
do.
The support also has to come financially. The
administration, I know, has proposed a $400 million increase in
NASA's budget for 2001. This is one of the largest increases in
NASA's history, but considering that it's been flatlined for
some time, the rise is really in keeping with where we should
have been all along.
I really do hope we get a 302B allocation that enables us
to sustain the president's request, and I know we'll be working
very vigorously to do this. Why? There is a lot to be done at
NASA. Much is needed in this budget for the safety upgrades in
the space shuttle. I am committed to do whatever is necessary
to ensure the safety of our shuttle astronauts, and I support
the funding increases for the new hardware and additional
staffing to be able to do that.
We must make every effort to reduce human error in the
shuttle program so that we not only can launch on time, but
it's that: send someone to space and return them safely with
what we asked them to do.
While the shuttle remains the workhorse of our launch
capacity, we do need reliable launch systems that dramatically
reduce the cost of getting to space. One of the biggest
barriers to expanding telecommunications capabilities is the
cost of launching satellites. If we can reduce the cost of
launch, we can further expand our telecommunications market. I
do believe that NASA's new Space Launch Initiative is one of
the best ways to determine the most feasible system for the
next generation of the reusable launch systems, and I think
we're all tremendously interested in this.
Over the next 5 years, I know that NASA will assess the
viability and feasibility of new launch systems that will cost
less than the space shuttle, and I think this is very
important. I know that there will be a 5-year competition among
contractors to see what's the best vehicle and the best
alternative to the shuttle. Cheaper, more reliable launch
systems are the key to unlocking the commercial activity.
While we look ahead at the safety of the astronauts, we
also have to look at some of the issues that I know that we are
confronting. I share the concerns that Senator Bond has raised
about the Mars losses; those were three big losses. They were a
loss of science, they were a loss of time, they were a loss of
money and in some ways a loss of confidence in really this
whole Mars approach.
We look forward to hearing from you about what you really
think is the analysis of the ``faster, quicker, cheaper'' and
what worked and what perhaps are the lessons learned from it. I
know that NASA's budget also includes an increase for space
science. One of the new programs is ``Living With A Star''
initiative; I am going to commend you and Dr. Ed Weiler, the
Administrator for Space Science, for this program and look
forward to hearing more about it.
As I understand it, ``Living With A Star'' will be a series
of missions to better understand how the sun interacts with the
earth; and this is not only a great intellectual and scientific
exercise, but could be very crucial in providing longer
advanced warning of solar storms to protect power grids and
telecommunications.
Two other things: One is, I look forward to discussing with
you nanotechnology, this new breakthrough in technology
development that could take the United States of America so far
into the future with new breakthroughs, and I look forward to
being with you today when you do an agreement with the Cancer
Institute on this exploration of outer space and inner space.
Earth science, unfortunately the 5 year budget outlook
shows a cut in funding of $100 million by the year 2005. This
is the only science program that shows a cut in funding, and it
has raised my concerns about NASA's long term plan for space
science. I do believe that NASA needs a post-EOSDIS vision for
earth science, and would like to discuss that with you.
I am also concerned, once again, about Russian
participation in the International Space Station. There are
consistent reports that the Russians now have diverted money
from the station, and it's gotten into the hands of their
biological warfare program. I am deeply troubled by the fact
that the Russians continually do not deliver, we have to
continually do the backup, they did go to Iran with their
rocket technology, and I sure hope you can tell me that they
haven't taken some of our space money and put it into
biological warfare.
So with that, I am going to conclude my remarks and move
on.
[The information follows:]
Verification of Payments to Biopreparat
INTRODUCTION
On January 27, 2000, the NASA Associate Administrator for Space
Flight directed that a NASA team be formed to review the funding
process for biotechnology research under the Russian Space Agency (RSA)
\1\ contract (NAS15-10110) to determine whether NASA funds were used
for their intended purpose. NASA directed the review because a January
25, 2000, New York Times article reported an allegation by certain
Russian scientists that some of the $1.65 million that NASA provided to
fund biotechnology research may have been inappropriately redirected by
Biopreparat, a major Russian pharmaceutical firm, to fund biological
warfare research. The NASA team included financial, procurement, and
technical officials from the Lyndon B. Johnson Space Center (JSC) and
an auditor from the NASA Office of the Inspector General. (A list of
the participants is at the end of this report.) The team performed the
verification at JSC in late January and early February 2000 and at
Rosaviakosmos during February 7-11, 2000. Appendix A provides details
on scope and methodology.
---------------------------------------------------------------------------
\1\ Now known as the Russian Aviation and Space Agency
(Rosaviakosmos).
---------------------------------------------------------------------------
BACKGROUND
The RSA contract is a firm-fixed-price contract, originally priced
at $400 million, initiated in December 1993 via letter contract, and
definitized in June 1994. As of February 2000, the contract value was
about $537 million, of which $529 million has been obligated and $523
million has been spent. The RSA contract includes two phases. Phase I
involved Shuttle missions to the Russian Mir space station. Phase II
involves Russian services and supplies for the International Space
Station (ISS).
The RSA contract specifies a variety of deliverable items and
services to be provided to NASA by RSA (Appendix B describes the
acceptance and payment process for deliverable items). These include
not only U.S. crew missions and Shuttle docking at Mir, but also crew
training; integration, accommodation, and operation of U.S. research
hardware on Mir; cosmonaut time for the operation of experiments; and
technical data regarding the characteristics of Mir. The research
program to be conducted on Mir was coordinated between the NASA and RSA
by a joint Mission Science Working Group. In addition to the flight
research program on Mir, the contract required a separate program of
predominately ground-based research to be conducted by Russian
investigators.
The contract earmarked funding of $20 million for the solicitation,
selection, administration, and execution of a research program to be
carried out under the RSA Scientific and Technical Advisory Council
(STAC). The contract also identified specific deliverable items, which
RSA was to complete between August 1994 and August 1997 (Appendix C
shows the list of deliverable items). A total of $18.2 million was
available for distribution to investigators (scientists), with the
remainder of $1.8 million allocated for administrative and reporting
expenses, including the solicitation, review, and selection of project
proposals. The contract provided that RSA, through STAC, would use the
proposals to develop an integrated research plan containing scientific
investigations to be performed, milestones, goals, objectives, and
cost. The Deputy Associate Administrator, Office of Life and
Microgravity Sciences and Applications, was responsible for reviewing
the research plan for NASA.
STAC was organized into ten discipline sections (Appendix D shows
the ten discipline sections); each section was chaired by an
acknowledged leader in the field who was the director (or, in some
cases, a senior official) of a research institute or design bureau.
Each section had multiple investigations, representing a variety of
research institutions. One of the sections was Biotechnology, which was
led by Biopreparat and which had funding requirements of about $1.65
million.
RESULTS OF VERIFICATION
Between February 1995 and January 1998, NASA paid RSA $20 million
for space-related scientific research under terms of the RSA contract.
Of the $20 million, RSA paid Biopreparat $1.529 million \2\ for space
biotechnology scientific research.\3\ Of the $1.529 million,
Biopreparat distributed $1.368 million (89.5 percent) to its eight
subcontractors and retained $0.161 million (10.5 percent). (Appendix E
shows the distribution of the $1.529 million.) The activities
associated with the $0.161 million were carried out directly by
Biopreparat under terms of an RSA contract with Biopreparat. The
contract price structure showed how Biopreparat planned to use the
funds that they retained. Also, RSA submitted periodic reports to NASA
as contract deliverable items, which NASA accepted as satisfactory
completion of the planned research. Within the scope of our
verification, we saw no indication that the funds were used for other
than the intended purpose.\4\ We concluded, based on the evidence
collected, that there was no need to expand the scope of the
verification.
---------------------------------------------------------------------------
\2\ The $1.529 million was actually paid in rubles (about 7.904
billion) at an average pre-1998 conversion rate of about 5,170 rubles
to a dollar.
\3\ RSA also paid about $0.121 million to the Shemyaking
Ovchinnikov Institute of Bioorganic Chemistry, which constitutes the
balance of the $1.65 million that NASA paid for biotechnology research.
\4\ A verification of the funding process can determine the
sources, recipients, and amount of funds paid. However, only through
additional steps, such as gaining an understanding of the entity,
observing its operations, and obtaining independent third party
information, might a positive assurance be given on how the funds were
actually used. Contractual access is limited to examination of
financial information of RSA and its first-tier subcontractors.
---------------------------------------------------------------------------
APPENDIX A.--SCOPE AND METHODOLOGY
We selected our sample of payments and performed initial
verification steps at JSC. We then met with Rosaviakosmos
representatives in Moscow to discuss their financial process and
perform further verification steps.
STEPS PERFORMED AT THE JOHNSON SPACE CENTER
Before we visited Rosaviakosmos, the JSC Financial Management
Division identified all payments made for implementation of scientific
and research activities under the scientific program of contract NAS15-
10110 between NASA and RSA, carried out by Biopreparat under
subcontract with RSA. The Financial Management Division identified 18
contract milestone payments to RSA totaling $20 million, with which RSA
paid Biopreparat $1.529 million for 6 subcontract milestones (Appendix
C shows the contract milestones). We reviewed contract payment records
from November 1994 through January 1997 and subcontract payment records
from September 1995 to February 1998. To verify payment amounts and
dates, we compared the amounts and dates of the six invoices to JSC
payment records.\5\
---------------------------------------------------------------------------
\5\ The payment records were the EFT Tape Transmission Report
(R81P6C20) and the Cash Management Detail Schedule Listing (R81P6C04),
which were generated by the JSC Cash Management System.
---------------------------------------------------------------------------
STEPS PERFORMED AT THE RUSSIAN SPACE AGENCY
At Rosaviakosmos, we compared our data to RSA financial records to
verify NASA payments to RSA and the funding flow to Biopreparat.
Through discussions with Rosaviakosmos representatives, we gained an
understanding of the financial processes and procedures used by RSA to
disburse funds to the subcontractors for biotechnology research.
Rosaviakosmos assembled all associated financial records, contract
files, and the bank payment orders associated with the six milestones.
In addition, Rosaviakosmos and Biopreparat presented copies of
subcontractor payment orders that supported the transfer of funds from
Biopreparat to its subcontractors.
We reviewed RSA documentation supporting applicable milestones,
associated payment orders, and bank transfer notices. To determine how
Biopreparat planned to distribute and use the funding provided by NASA,
we reviewed the RSA/Biopreparat price structure and related subcontract
documents. We examined ten funding transfers from RSA to Biopreparat,
which represented the $1.529 million paid by NASA. We also examined and
summarized 140 funding transfers from Biopreparat to its eight
subcontractors, which represented $1.368 million paid by NASA, and
thereby calculated the $0.161 million retained by Biopreparat (Appendix
E shows the calculation).
APPENDIX B.--ACCEPTANCE AND PAYMENT PROCESS FOR DELIVERABLE ITEMS
The RSA contract includes a schedule of deliverable items showing
the amounts NASA will pay RSA for providing specific goods and
services. NASA acknowledges receipt of a deliverable item when the NASA
contracting officer's technical representative determines that the item
conforms to contract requirements and notifies the NASA contracting
officer at JSC. The contracting officer prepares and sends an
acceptance document to RSA, which in turn prepares and sends an invoice
back to the contracting officer. The invoice specifies where NASA
should make payment, usually to the RSA account at the Bank of New
York.\6\
---------------------------------------------------------------------------
\6\ Invoices for reimbursable travel expenses and for support of
RSA offices in Houston and Washington DC specify the RSA account at the
F&M Bank of Northern Virginia. These funds stay in the United States.
The payment process described in this report refers only to the Bank of
New York since those funds are routed to Russia.
---------------------------------------------------------------------------
When NASA receives an invoice from RSA, the contracting officer
matches it to the acceptance document, approves the invoice for
payment, and sends the invoice to the certifying officer at JSC. The
certifying officer certifies the payment of funds (in dollars) to RSA
by the Department of the Treasury. The payment usually covers several
invoices. The certifying officer electronically transmits a payment
schedule to the Austin Regional Finance Center, which routes the funds
through the Federal Reserve System to the RSA account at the Bank of
New York. The Bank of New York receives the funds from the Treasury,
electronically transfers the funds to the RSA account at the Bank of
Foreign Trade, Moscow (Vneshtorgbank), and notifies RSA of the
transactions. Vneshtorgbank receives the transfer from the Bank of New
York and then notifies RSA of the transaction.
RSA directs Vneshtorgbank to convert dollars into rubles in the
amount needed to pay its subcontractors and to comply with conversion
requirements of the Central Bank of the Russian Federation (the Central
Bank).\7\ Since 1999, the Central Bank has required Russian entities to
convert at least 75 percent of foreign currency (dollars) into rubles
within 14 days.\8\ If an entity does not direct the Central Bank to
convert the dollars within the 14 days, the Central Bank executes the
mandatory conversion on the 15th day. RSA timing of the remaining
conversion depends on the requirements to pay its subcontractors and
the expectation of the exchange rate fluctuation. After conversion, RSA
transfers the rubles to RSA accounts at various Russian banks,
primarily the Mir Bank in Moscow.
---------------------------------------------------------------------------
\7\ Before August 1998, Vneshtorgbank charged its customers a
currency exchange commission of not more than about one-half percent
per transaction.
\8\ Before 1999, the mandatory conversion amount was 50 percent.
---------------------------------------------------------------------------
RSA pays its subcontractors in rubles. The amount RSA must pay its
subcontractors is initially established in both dollars and rubles in
agreements between RSA and its subcontractors. However, because of
volatile fluctuations in the dollar/ruble exchange rate, soon after RSA
converts dollars to rubles for a milestone payment, RSA and its
subcontractors amend their agreements to reflect the current amount of
rubles payable.\9\ Upon receipt of a valid invoice from a
subcontractor, RSA makes payment by transferring the rubles to a
subcontractor bank account.
---------------------------------------------------------------------------
\9\ When Vneshtorgbank charged a currency exchange commission or
fee, RSA decreased its payments to subcontractors by the amount it paid
Vneshtorgbank.
APPENDIX C.--DELIVERABLE ITEMS FOR SCIENCE RESEARCH
------------------------------------------------------------------------
Line Completion Funding,
Item No. Description date $M
------------------------------------------------------------------------
0003C3a Solicited Requests for Proposal 8/1/94 0.2
Report
0003C3b Integrated Plan for Science Research 11/1/94 0.2
(initial)
0003C3c Implementation of Integrated Plan for 11/1/94 3.2
Science Research (installment 1 of
6)
0003C3d Administrative Expenses 11/1/94 0.2
0003C3e Integrated Plan for Science Research 2/1/95 0.1
(final)
0003C3f Interim Research Report 8/1/95 0.1
0003C4 Implementation of Integrated Plan for 8/1/95 3.0
Science Research (installment 2 of
6)
0003C5 Administrative Expenses 8/1/95 0.2
0003C6 Interim Research Report 2/1/96 0.1
0003C7 Implementation of Integrated Plan for 2/1/96 3.0
Science Research (installment 3 of
6)
0003C8 Administrative Expenses 2/1/96 0.2
0003C9 Interim Research Report 8/1/96 0.1
0003C10 Implementation of Integrated Plan 8/1/96 3.0
Science Research (installment 5 of
6)
0003C11 Interim Research Report 2/1/97 0.1
0003C12 Implementation of Integrated Plan for 2/1/97 3.0
Science Research (installment 5 of
6)
0003C13 Administrative Expenses 2/1/97 0.2
0003C14 Interim Research Report 8/1/97 0.1
0003C15 Implementation of Integrated Plan for 8/1/97 3.0
Science Research (installment 6 of
6)
-------------------------
Total ........... 20.0
------------------------------------------------------------------------
Note: Shaded areas denote the six line items (milestones) that
included payments for research done by Biopreparat.
APPENDIX D.--SECTIONS OF THE SCIENTIFIC AND TECHNICAL ADVISORY COUNCIL
----------------------------------------------------------------------------------------------------------------
No. No.
Discipline/Lead Organization Investigations Institutions Funding, $K
----------------------------------------------------------------------------------------------------------------
Space Technology and Materials Science; Institute of 17 16 2450.0
Crystallography, Russian Academy of Science..................
Geophysical Studies; Institute of Earth Magnetism and 6 4 1019.32
Radiowaves, RAS..............................................
Space Biomedicine; State Scientific Center-Institute of 71 17 6230.0
Biomedical Problems..........................................
Earth Natural Resources and Environment Monitoring; Institute 21 11 3086.786
of Radioengineering and Electronics, RAS.....................
Investigations of Planets and Small Bodies; Space Research 10 3 1203.55
Institute, RAS...............................................
Space Biotechnology;\1\ RAO ``Biopreparat''................... 13 7 1649.465
Technical Studies and Experiments; Rocket-Space Corporation 8 7 708.86
``Energia''..................................................
Space Astronomy; Institute of Astronomy, RAS.................. 5 5 370.65
Program Integrated Analysis & Formation Effectiveness 6 2 806.45
Analysis, Consortium ``Space Regatta''.......................
Problems of Space Power and Propulsion; Keldysh Research 4 2 674.95
Center, RAS..................................................
-------------------
Total................................................... .............. ............ 18,200.031
----------------------------------------------------------------------------------------------------------------
\1\ Space Biotechnology: Diverse set of investigations similar to U.S. biotechnology interests, including
protein crystal growth, effect of microgravity on genetic and cellular processes, antibodies, and polymers;
electrophoresis, etc.
APPENDIX E.--DISTRIBUTION OF PAYMENTS TO BIOPREPARAT \10\
----------------------------------------------------------------------------------------------------------------
Amount/Percent Amount/Percent
----------------------------------------------------------------------------------------------------------------
Total Amount Paid by RSA to Biopreparat........................... ..................... $1,528,865 (100.0)
Less: Amounts Distributed by Biopreparat:
Joint Stock Company, ``Komposit''............................. $97,686 (6.4) .....................
State Research Institute of Applied Microbiology.............. 287,373 (18.8) .....................
Scientific Technical Center, Ecology and Space................ 95,010 (6.2) .....................
State Research Institute of Highly Pure Biopreparations....... 94,784 (6.2) .....................
Joint Stock Company, ``Biochimmash''.......................... 91,671 (6.0) .....................
Saint Petersburg Vaccine and Serum Research Institute......... 90,567 (5.9) .....................
Joint Stock Company, The Institute of Engineering Immunology.. 228,658 (15.0) .....................
State Research Center of Virology and Biotechnology 381,961 (25.0) 1,367,710 (89.5)
(``Vector'').................................................
---------------------------------------------
Amount Retained by Biopreparat............................ ..................... 161,155 (10.5)
----------------------------------------------------------------------------------------------------------------
\10\ Although payments are shown in dollars, the payments were actually made in rubles at an average pre-1998
conversion rate of about 5,170 rubles to a dollar.
TEAM MEMBERS
John H. Beall, Chief Financial Officer, Johnson Space Center;
Dennis E. Coldren, Program Director, Human Exploration and Development
of Space Audits, NASA Office of the Inspector General; Thomas E.
Cremins, Deputy to the Assistant to the Director for Human Space
Flight, Russia; and K. Lee Pagel, Administrative Contracting Officer.
PROTOCOL
ON NAS15-10110 BIOPREPARAT FUNDING INFORMATION EXCHANGE MOSCOW,
FEBRUARY 7-FEBRUARY 11, 2000
General Purpose:
To verify and confirm the correctness of the financial relationship
and obtain an understanding of Rosaviakosmos' (previously RSA)
financial activities and business process associated with Russian firm
Biopreparat under contract NAS15-10110. Also, to verify NASA funding
transferred through Rosaviakosmos to Biopreparat and the resulting
flow-through of funding to subcontractors.
Specifically:
1. Review Rosaviakosmos' internal documents supporting the transfer
of payments to Biopreparat.
2. Review the support for the individual cost elements contained in
the Rosaviakosmos contract with Biopreparat.
3. Verify the receipt of NASA funds by Biopreparat and subsequent
transfer of those funds to subcontractors (research institutes).
Participants:
Tom Cremins--NASA; Anatoly Ermolaev--Rosaviakosmos; John Beall--
NASA; Roman Yakimenko--Rosaviakosmos; Lee Pagel--NASA; Alla Nazarova--
Rosaviakosmos; Dennis Coldren--NASA/OIG; Larisa Lazutina--Biopreparat;
and Anna Andreeva--TTI (interpreter).
Methodology:
Prior to arrival at Rosaviakosmos headquarters, the NASA team
identified all payments made for implementation of scientific and
research activities under the scientific program of contract NAS15-
10110, between NASA and Rosaviakosmos, carried out by Biopreparat under
subcontract with Rosaviakosmos. Six contract milestone payments paid to
Biopreparat were identified for review. Verification covered records
for the period from November 1994 through January 1997. The scope of
financing in accordance with the terms of contract totaled $1.529
million.
Rosaviakosmos assembled all associated financial records, contract
files, and the bank payment orders associated with the six milestones.
In addition, Rosaviakosmos (with the assistance of Biopreparat)
presented copies of subcontractor payment orders that supported the
transfer of funds from Biopreparat to its subcontractors.
The team verified the flow of NASA funds from Rosaviakosmos to
Biopreparat. From Biopreparat documentation, the team verified 140
funding transfers to subcontractors for the six milestones.
To identify how Biopreparat planned to distribute and use the
funding provided by NASA, appropriate contract documents were reviewed
as well as price computation on the basis of the Rosaviakosmos/
Biopreparat price structure.
Conclusion:
NASA funds of $1.529 million, which were paid under the
Rosaviakosmos/NASA contract, were received by Biopreparat. Biopreparat
distributed $1.368 million between its subcontractors and retained
$0.161 million. The activities associated with the $0.161 million,
which were carried out directly by Biopreparat, amounted to 10.5
percent of the amount under the Rosaviakosmos/Biopreparat contract for
space biotechnology scientific research.
The contract price structure showed how Biopreparat planned to use
the funds that they retained. The NASA team saw no indication that the
funds were used for other than the intended purpose.
Of special note, Rosaviakosmos and Biopreparat representatives were
extremely cooperative and cordial in providing explanations of
Rosaviakosmos financial process and supporting documentation for the
transactions reviewed. Representatives of Rosaviakosmos and Biopreparat
expeditiously submitted all the necessary supporting documentation.
Done in Moscow on February 11, 2000, in English and in Russian with
wordings in both languages in the equal force.
Senator Bond. Thank you, Senator Mikulski.
Senator Craig, do you have an opening statement?
Senator Craig. I do not. I'm here to listen. Thank you, Mr.
Chairman.
Senator Bond. All right. Thank you very much, and Mr.
Goldin, we will now have your presentation followed by your
multimedia show.
STATEMENT OF DANIEL GOLDIN
Mr. Goldin. First, Mr. Chairman, I submitted formal
testimony. I'd like it to be put in the record.
Senator Bond. I should make the statement that we will
accept your full statement as submitted. We will also hold the
record open so that members of the committee may offer
additional questions, and I have far more than I can ask in a
hearing of any reasonable length, and other members may have,
and we invite you to add, in addition to your responses to the
questions submitted to you, any further comments that you think
would be helpful.
Please proceed.
FISCAL YEAR 2001 BUDGET REQUEST
Mr. Goldin. Thank you, Mr. Chairman.
The President's fiscal year 2001 request of $14,035 million
is an increase of 3.2 percent over last year's appropriation,
and reflects future year increases that exceed slightly the
rate of inflation.
It includes an $1.5 billion increase over 6 years to
address Space Shuttle safety improvements through hardware and
software upgrades and other efforts. This investment should
improve the Space Shuttle safety by about a factor of two.
Thanks to support from this committee, the two highest
priority upgrades have already been initiated, and we are
studying a broad range of other upgrades for implementation by
2005.
Funding is included for additional personnel for NASA's
Human Space Flight Centers. We told the committee that if we
found we had cut too far, we would come back and tell you.
After internal and external reviews, we have concluded that we
had cut too far. This funding will stabilize and revitalize our
workforce to ensure that the right skills and staffing are in
place to operate the Space Shuttle safely, and to assemble the
space station.
This year will be a landmark year for the International
Space Station. We are confident that the first crew will begin
to live on board the station. Because of the Russian Proton
rocket failures, launch of the Russian Service Module has been
delayed until July.
I am particularly enthused that the budget includes funding
for Living With A Star, a new scientific research initiative to
understand the sun's impact on earth and the space environment
around it.
It also reflects robust funding for initiation of a
critical new Space Launch Initiative with investment of $4.5
billion over 5 years.
The budget includes a broad range of new initiatives in
science and technology, including additional funding for the
Mars program, in anticipation of the findings of the various
reviews just completed, and investments in biotechnology,
nanotechnology, and information technology that Senator
Mikulski referred to.
NASA SETBACKS
Mr. Chairman, I should note that during the past year NASA
experienced some severe disappointments and problems,
particularly the back-to-back losses of the Mars Climate
Orbiter and the Mars Polar Lander and the Deep Space 2 probes.
NASA deliberately commissioned a number of independent
reviews to examine the problem, search for root causes, and
recommend changes. In the past month, NASA has issued and
submitted to the committee several reports, including those of
the Mars Climate Orbiter Mishap Investigation Board, the
``faster, better, cheaper'' review, and the Mars Program
Independent Assessment Team led by Tom Young.
YOUNG REPORT
I would like to take a moment to address the Young report
in particular. When I was sworn in as NASA Administrator in
1992, I set out on a new agenda. NASA had outstanding people
and incredible support from the American people, but NASA had a
problem, it was clinging very tightly to the past. NASA's
robotic missions were taking too long, taking too little risk,
and costing too much money.
Instead, I proposed empowering the NASA workforce, asking
them to tell us how we can implement our missions in a more
cost-effective manner. How can we do everything better, faster,
cheaper without compromising safety?
Knowing that change is difficult, even when there is little
or no choice, I pledged to the workforce that we would not be
overly prescriptive, we would not micromanage, and we would
encourage them to take risks, do things differently, even
deviate from past practice, so long as it followed sound
principles.
But I reminded them that, in pressing the boundaries they
would encounter failure. In replacing billion-dollar robotic
missions with multiple smaller robotic missions and flying them
more frequently, they could expect two or three failures in
every 10 attempts. But 10 successes out of 10 attempts would
mean that they would not be adequately pushing the boundaries.
And more than two or three failures out of 10 attempts would be
too many.
NASA'S SUCCESSES
Since that time, the revolution has taken hold and NASA has
had spectacular successes. Here's our report card: Since 1992,
NASA has launched 146 payloads valued at a total of $18
billion. Of this number, 136 payloads were successful. Our
total losses amounted to 10 payloads at about a half billion
dollars, or less than 3 percent. Planetary spacecraft, once
launched twice a decade at a cost measured in billions, are now
routinely launched each year at a small fraction of that cost.
This is worldclass performance by any reasonable standard.
We wanted to demonstrate to the world that NASA could do
things much better, and NASA delivered; with Mars Pathfinder,
with Mars Global Surveyor, with Deep Space 1. We pushed the
boundaries as never before and had not yet reached our limit.
MARS 98
Not until Mars 98. We are examining the Mars 98 failures in
microscopic detail, and I might just say, we are probably
punishing ourselves more than anyone from the outside could do
it, because we're such, so focused on success.
We established Red Teams to evaluate the launch readiness
of all our missions for this year, and since we launched the
Mars 98 missions, we have had 12 spectacular successes: XMM,
FUSE, QuikSCAT, ACRIMSat, Stardust, Landsat-7, Terra, ISS
Servicing mission, Chandra, the Hubble servicing mission, the
Shuttle Radar Topography Mission, and IMAGE. Those are $4.6
billion worth of space missions launched successfully.
We have concluded that, in spite of our overall success
rate and the fact that we are still roughly within the bounds I
set, the warning bells of a trend are sounding. So we will take
a pause, but we will not go back.
YOUNG REPORT
I agree with the conclusions of the Young report. In fact,
I told the leaders of the Mars 98 team that in my effort to
empower people I, Dan Goldin, pushed too hard, and in doing so
stretched the system too thin. As NASA Administrator, I accept
responsibility. Mistakes were made that could have been avoided
and must be corrected.
The Young report reminds us how important it is to have
adequate margins in planning and executing programs, but that
is not a license to turn on the funding spigot. There are many
things that we can do that do not involve money.
We know that we have three main areas to work on:
communication, training and mentoring, oversight and review. We
will implement improvement in these areas by focusing upon
people, processes, execution, and advanced tools and
technology. I want to remind this committee how strongly I
believe that we should not throw money at these challenges.
Where it is appropriate, we will add funding, but at this point
in time, I am not asking this committee for any more than our
present presidential request.
ADDRESSING THE YOUNG REPORT
We are already taking steps to address the Young report. We
have streamlined management of the Mars Surveyor program at
NASA Headquarters and JPL, and we just announced two
outstanding Americans to take charge and have better
communications. We are redefining the entire Mars program
architecture, and we will be able to discuss it with you later
this year.
NASA's Chief Engineer, Brian Keegan, is putting together a
matrix that will incorporate NASA's responses to all
recommendations concerning program management to ensure
consistency of best practices and update our processes to take
into account what we have learned.
As has been the case at various times throughout this
Agency's 40-year history, we are committed to learn everything
we can from these losses, alter our approach where prudent, and
move on.
HUBBLE SPACE TELESCOPE
Senator Mikulski, as you mentioned, we just celebrated 10
years of the Hubble Space Telescope operation. The Hubble
started out on orbit as a failure, but NASA overcame that
failure, drawing upon the expertise of the entire agency and
the wonderful people at NASA Goddard. And the world has been
rewarded with 10 years of spectacular discovery.
As was the case with Hubble and a broad range of other
programs, NASA has undertaken a journey towards revolutionary
change with unbelievable support from this committee. And we
are resolved to continue to merit that support.
PREPARED STATEMENT
Mr. Chairman, I am compelled one more time to tell you how
crucial it is for NASA's 2001 request to be fully funded. It is
an affirmation of what the NASA workforce has been striving for
over the last several years. I committed to the dedicated and
courageous employees across the country that I would press
NASA's case with you today and make this plea. Given the
sacrifices this workforce has made in streamlining NASA's
budget since 1993--and you can see the chart there--I hope you
will do all you can to make this very good budget request a
reality.
Mr. Chairman, I am prepared to respond to your questions.
[The statement follows:]
PREPARED STATEMENT OF DANIEL S. GOLDIN
Mr. Chairman and Members of the Subcommittee: I am pleased to be
here to present to you NASA's budget request for fiscal year 2001. This
is a great budget. It fully funds NASA's priorities in fiscal year
2001: make investments in improving Space Shuttle safety; build the
International Space Station (ISS); reduce the cost of access to space
through a new Space Launch Initiative; invest in outstanding science
and technology; and, revitalize the NASA workforce and facilities.
The fiscal year 2001 request of $14.035 billion represents an
increase of 3.2 percent over the fiscal year 2000 enacted level, and
reflects future year increases that exceed the rate of inflation. If
the Administration's vision for NASA is enacted by Congress, funding
for NASA will increase from an fiscal year 2000 appropriation of $13.6
billion to $15.6 billion in fiscal year 2005. That is an endorsement of
our Strategic Plan of a balanced space and aeronautics program and a
tremendous tribute to the NASA team. The percentage of our fiscal year
2001 budget devoted to science and technology has increased from 31
percent in fiscal year 1991 to 42 percent, and is planned to grow to 51
percent by fiscal year 2005. It represents a strong commitment by this
Administration to invest in science and technology, which is the
Nation's foundation for future discoveries and economic prosperity.
Before I discuss NASA's exciting future and the new programs
provided for in this budget, I would like to share with the Committee
NASA's achievements, as well as our disappointments, since the last
time I appeared before you. It is this history on which the fiscal year
2001 budget is built, which prepares us for the future, and which
provides the lessons and character to accomplish what was previously
only imaginable.
We had a very exciting year in fiscal year 1999, full of exciting
missions and discoveries as we transitioned into the New Millennium.
The achievements in fiscal year 1999 extended from improvements in
aeronautics applications to benefit the FAA and the air-faring public
to the far reaches of the universe, which addressed scientific
objectives ranging from the environmental to the cosmological.
The list of accomplishments was impressive:
We started off the year with the launch of Deep Space One, a
mission to test 12 revolutionary technologies including spacecraft
autonomy and ion propulsion. The Submillimeter Wave Astronomy Satellite
(SWAS), a small explorer mission, was launched to study the chemical
composition of interstellar gas clouds. We launched Stardust on
February 7, 1999, to rendezvous with comet Wild-2 in 2004, and bring
back to Earth a sample of comet dust in 2006. In Earth Science, we
launched Landsat-7, the continuation of the successful Landsat
program;Terra, our flagship mission to study the Earth as a system;
Acrimsat the latest in a series of instruments used to study the sun's
energy, and QuikSCAT to tell us how the wind blows over the oceans.
FUSE, the Far Ultraviolet Spectroscopic Explorer, was launched on June
24, 1999, to observe the universe in the ultraviolet and try to answer
questions such as what conditions existed in the universe a few minutes
after the Big Bang.
The first two ISS assembly missions were launched in November and
December. In July, the Space Shuttle Columbia, commanded by the first
female Shuttle commander, Colonel Eileen Collins, deployed the Chandra
X-ray Observatory. The Hubble Space Telescope scientists calculated a
value for how fast the universe is expanding, after 8 years of
painstaking measurement. Astronomers funded by NASA witnessed for the
first time a distant planet passing in front of its star, providing
direct and independent confirmation of the existence of extrasolar
planets. Mars Global Surveyor provided the first global 3-dimensional
map of Mars, and the Compton Gamma Ray Observatory enabled the first
ever optical image of one of the most powerful explosions in the
universe.
NASA and its industry partners developed new technology to allow
planes to land safely in bad weather on parallel runways. The test
version of the X-34 rocket plane, made its first captive-carry flight
toward certification in preparation for testing new technologies and
methods of operation needed to develop low-cost reusable space
vehicles. We worked with the launch industry on the Space
Transportation Architecture Studies, the fruits of which are reflected
in this budget plan. Although safety has always been of foremost
concern in NASA, we increased our focus on the need for a safe,
healthy, and productive workforce and environment, and strengthened our
resolve to reduce program costs as a result of focussing on improving
safety. That philosophy is reflected throughout this budget.
At the end of 1999, NASA safely and smoothly transitioned to the
Year 2000 with no significant problems. NASA's success was due to the
hard work of hundreds of dedicated employees, contractors, and our
international partners. During the transition period and the first few
business weeks of 2000, we experienced only minor anomalies that were
easily addressed. None of the anomalies had any significant impact on
critical operations or functions. Computer hacking was at normal
levels, and no Y2K-related attacks were detected.
In 1999, we also experienced some severe disappointments and
problems: in the Mars Surveyor Program, with the loss of the Mars
Climate Orbiter, the Mars Polar Lander and the Deep Space-2 probes, and
in the Space Shuttle Program, with wiring problems affecting all of the
orbiters, resulting in grounding of the entire fleet from August until
December, as well as a hydrogen leak found in one of the Space Shuttle
main engines. The TERRIERS and Wide Infrared Explorer missions failed.
The X-33 composite hydrogen tank did not pass its qualification tests
and the launch plans for the assembly of the ISS were delayed. We
experienced deferrals in achieving a launch-ready position for the U.S.
laboratory module and other components, although I am pleased to report
these have now been overcome and we will be ready to launch. Our
Russian partners also made good progress in readying the Service Module
for launch, although their funding challenges continue to cause concern
about their ability to fully meet their commitments. In addition, Sea
Launch just experienced its first launch failure, losing an ICO
payload.
1999 also was marked by continuing launch vehicle failures that
directly and indirectly impacted NASA programs. The Russian Proton
failures have had a significant impact on the readiness to launch the
ISS Service Module. The Russians were not alone in experiencing launch
failures, as the Japanese, Europeans, and the United States struggled
as well to achieve safe and reliable access to space. And, as recently
as February 10, a Japanese launch vehicle failed, taking with it NASA's
investment in the Astro-E X-ray spectroscopy mission.
There have been a number of independent reviews to examine these
problems, search for the root causes, and recommend changes. NASA
worked closely with the Department of Defense and others on the Broad
Area Review. We chartered reviews of the Shuttle wiring problems, the
WIRE and Terriers failures, and of course the Mars Surveyor Program
failures. As a result of the Mars failures, I commissioned a Mars
Program Independent Assessment Team in December 1999 led by A. Thomas
Young. That team was charged to review and assess the entire Mars
program architecture, management, content and recent failures. The team
had complete authority to delve into any and every aspect of NASA's
program management. That report was released on March 28, and has been
provided to the Committee. Also, the Mars Climate Orbiter Mishap
Investigation Board Report led by the Director of the Marshall Space
Flight Center, Arthur Stephenson, and the Faster, Better, Cheaper
Review, headed by Tony Spear were released on March 13, 2000.
These reports make several valuable recommendations as a result of
assessing both the recent failures and recent successes, and the
practices that made them such. We have tasked an Agency-wide NASA
Integrated Action Team (NIAT), led by Brian Keegan, NASA's Chief
Engineer, to define a plan to mitigate the root causes for these
failures and enhance the probability of future success. The NIAT has
divided the assessment of all recommendations into four key areas:
people, processes, process implementation, and advanced tools and
technology. An action set will be formulated for each area.
On September 7, 1999, Joseph H. Rothenberg, Associate Administrator
for Space Flight, chartered a Space Shuttle Independent Assessment Team
(SIAT). The SIAT performed an independent technical review of Space
Shuttle systems and maintenance practices. Dr. Henry McDonald, Director
of the Ames Research Center, chaired this joint NASA/DOD/contractor
team. The SIAT concluded their activities and submitted a written
report to Mr. Rothenberg on March 7, 2000. NASA forwarded copies of the
report to Congress on March 9, 2000. The President's fiscal year 2001
budget request has significant increases for investing in Shuttle
safety that could be used to address these issues.
Each of these teams has made recommendations that will help us
improve our processes and make our operations safer and better. After
careful review of these reports, NASA will share our plans to address
the recommendations contained in the reports with the Congress and work
with you and the Administration to ensure their timely implementation.
We must continue to learn, not only from our successes, but also from
our failures.
Mr. Chairman, in spite of our difficulties, I believe the report
card on NASA's performance reflects well on the support of the
Committee and on behalf of the American people. While we accomplished a
great deal in 1999, I see an even brighter future ahead. That does not
mean we will not experience difficulties. We will. The ambitious
programs we undertake are intolerant of human error and stress our
human capabilities to detect and respond to anomalies. Our strategy to
achieve major improvements in safety, taking advantage of emergent
technical tools, such as the Intelligent Synthesis Environment,
includes improving our systems management approaches, and continuing to
infuse the philosophy and practice of safety in all that we undertake.
This budget provides funding for the research into and development of
the technologies that will improve the probability of mission success.
The additional funding requested for personnel and facilities, Shuttle
safety investments, the next generations of launch vehicles, general
aviation aircraft, Intelligent Systems, Bioastronautics, and
nanotechnologies should all be understood as key players in improving
Safety.
FISCAL YEAR 2001 BUDGET OVERVIEW
The fiscal year 2001 budget represents a vote of confidence from
the President that NASA is ready to tackle new challenges and
opportunities in the New Millennium. This budget funds NASA's
priorities and makes critical new investments to improve Space Shuttle
safety, continue to build the ISS, enable a new generation of reusable
launch vehicles that will improve the safety and reduce the cost of
access to space through a new Space Launch Initiative, undertake new
science and technology initiatives to enhance our understanding of our
planet, the solar system and the universe, and invest in aeronautics,
education, our workforce and facilities.
First, the fiscal year 2001 budget includes a $300 million increase
through fiscal year 2005 for additional personnel at NASA's Human Space
Flight Centers to ensure that the right skills and staffing levels are
in place to operate the Space Shuttle safely and to launch and assemble
the ISS. Over the past five years, we completed an exercise to
streamline and downsize the NASA workforce. We told you that if we cut
too far we would come back and tell you. After reviews by both internal
and external groups, we concluded that continuing on our current plan
would indeed cut too far, in light of the increased activity planned
over the next several years as we continue to build the ISS. This
budget includes the necessary funding to stabilize and revitalize our
workforce, particularly at the Human Space Flight Centers.
Thanks to Administration investments, this budget includes a $1.5
billion increase for Space Shuttle safety improvements over six years.
This increase, when combined with $600 million for upgrades in this
year's budget, totals $2.1 billion from fiscal year 2000 through fiscal
year 2005. This will allow us to address Space Shuttle safety
improvements through hardware/software upgrades and personnel,
facility, and other safety investments. This $2.1 billion will improve
Space Shuttle safety by nearly a factor of two. The safety upgrades
will be integrated into the Shuttle fleet by 2005 to be completed in
time to pay benefits, and all safety investments will be managed within
the safety allocation budget.
Thanks to support from the Congress, the two highest priority
safety upgrades have already been initiated: the electric auxiliary
power unit (EAPU), and advanced health monitoring for the Space Shuttle
main engines (SSME). We are studying a broad range of additional safety
investments, including upgrades, personnel, facilities, and other
safety investments. The recommendations of the SIAT Report will provide
an important source of input for identifying these additional safety
investments. The NASA Advisory Council will undertake a review of our
comprehensive safety investment strategy, to ensure that these
investments will generate the most effective safety improvements as
quickly as possible.
This year will be a landmark year for the ISS. We have high
expectations that the first crew will begin to live aboard the Station,
as the United States and our partners begin to reap the benefits of
long-duration research in space. We anticipate that, as planned
research gets underway, opportunities for new unforeseen paths of study
will arise. While we have a number of challenges in the ISS program, we
are committed to its expeditious completion. Because of Russian Proton
rocket failures, the launch of the Service Module (SM) has been
delayed, and we are faced with adding a shuttle mission to service the
station elements on orbit because those elements are operating longer
than planned without the Service Module in place. We are working
closely with the Russian Aviation and Space Agency to understand their
plans for return to flight of the Proton launch vehicle and scheduled
launch of the Russian SM. The Russians have reported that the SM is now
scheduled to launch in a window between July 8-14, and the first
successful Proton launch since last year's failures occurred on
February 12. NASA is proceeding with preparations to launch the Interim
Control Module in December 2000 should SM delays continue. The United
States is leading a 15-nation partnership in building a cutting-edge
on-orbit research facility. We will work through these current
difficulties, and will continue building the ISS. We continue to
strongly support the ISS program as an important investment in
America's long-term future in science and technology.
I am particularly pleased to report to the Committee that this
budget reflects robust funding for initiation of a new Space Launch
Initiative. Safe, cost effective space transportation remains the key
enabler of a more aggressive civil space program, and I believe the
Space Launch Initiative puts us on the track to accomplish this. This
initiative is a result of NASA's Integrated Space Transportation Plan
that consolidated Space Shuttle Safety Upgrades, 2nd and 3rd Generation
Reusable Launch vehicle technology programs, Alternate Access to Space
Station and Aero-Space Base programs into a unified Agency strategy. It
makes the critical investments that will enable major safety,
reliability and affordability improvements for future generations of
space transportation systems. The Space Launch Initiative makes an
investment of $4.5 billion over 5 years for the 2nd generation RLV.
The Space Launch Initiative program is focused on initiating full
scale development of a 2nd generation RLV architecture. It supports a
2005 competition to meet NASA's launch needs through purchase of
commercial launch services by 2010, with the specific goal of achieving
commercial ownership and operation of any new RLVs as early as 2010 if
industry performs as promised. NASA's investments will focus on
reducing technical, design and other programmatic risks through the use
of large scale, long-life ground and flight tests and other risk
reduction activities. We will also invest in reducing risk associated
with systems that would be used for NASA-unique needs. The Space Launch
Initiative is the product of more than a year of study and interaction
between NASA and industry. The focus of the study has been on
developing an integrated space transportation plan to meet NASA's needs
for human and cargo delivery, while seeking synergy with the commercial
space sector. The Initiative also includes procurement of near-term
alternative access to the ISS for cargo transport needs on commercial
vehicles.
This year we will undertake bold new science and technology
initiatives in biotechnology, nanotechnology, and information
technology. Three key emerging, interrelated technologies will provide
NASA with a new pathway to revolutionize our missions and the
scientific and engineering systems that enable them: biotechnology,
nanotechnology and information technology. Over the past decade, there
have been tremendous scientific breakthroughs in the understanding of
these fundamental processes. We are now ready for our technology to
move out and exploit what we are learning. We will develop and execute
our missions with greater safety, performance and robustness, while
continuously decreasing design cycle time and life cycle cost.
The first tier of NASA's technology strategy is biotechnology--the
true revolutionary technology of the 21st century. Since the formation
of the first cells on Earth, all living systems have developed an
extraordinary capacity to adapt to rapidly changing conditions, build-
in a high degree of resilience enabling them to overcome damage and
evolve in response to new environments. In terms of size, memory,
processing speed and energy consumption biological systems are up to a
billion times better than the systems we build today. These are the
characteristics NASA will build into its future missions and systems.
NASA will apply the underlying principles of biological processes to
all our missions. We will develop biologically-inspired materials that
self-repair when damaged, structures that self-assemble to achieve near
perfect final shapes. We will develop concepts for aircraft that change
their shape in flight like birds to optimize performance or perform
complex maneuvers in complete safety.
Nanotechnology provides the capability to manipulate matter at the
atomic level. In the future, we will measure the way we design and
build our systems by the atom, not by the pound. Today, we are
developing material systems, at the molecular level, that are 100 times
stronger than steel at 1/6 the weight. We will also develop sensors and
detectors capable of responding to a single photon of light or the
stimulus from a single electron. Using nanotechnology, we will build
systems on a scale 1000 times smaller than today--at true molecular
level. They will be based on concepts emerging from biology, quantum
mechanics and chemistry, all of which have no current parallel.
Following this hearing, in this very room, Dr. Richard Klaussner and I
will sign a memorandum of understanding between NASA and the National
Cancer Institute to develop new biomedical technologies related to
nano-explorers that can detect, diagnose and treat disease here on
Earth and in space.
NASA is also on a path to ``revolutionize'' the information
technology revolution and apply it to our unique mission needs. Humans
can process the equivalent of about a terabyte of data every second--
that is equivalent to about 24 hours of television--as we process the
data from our multi-sensory systems--sight, sound, smell, touch. We do
this because we do not simply compute, we think. This third tier of our
technology strategy will blur the notion of computer hardware and
software and systems built from chips and black boxes. Our future
systems will look and operate more like living systems than machines.
We will build them with distributed sensory systems--like a central
nervous systems--to allow us to monitor and control every function. Our
computer systems will more resemble the human brain, with the capacity
to learn.
The safety, productivity and health of the human in space supported
by these technology tools are the foundation of our vision to explore.
To catalyze this human-technology interaction, we will base our designs
on biological processes and principles proven over the existence of
mankind to adapt to changing and dynamic environments. The development
and deployment of such technological tools will serve as extensions and
expansions of human cognitive processes and blend inextricably with the
human user.
The Bioastronautics Initiative will significantly improve long-term
crew safety and health, and is the forcing function that focuses the
research already underway to solving operational health and safety
problems. Medical support systems will be developed by accelerating
development and validation of countermeasures for the diagnosis,
therapy, prevention and rehabilitation of crew on long duration
missions aboard the ISS. Solutions to these space health problems find
ready application to a multitude of health problems on Earth.
We are making new investments to enhance our Mars exploration
strategy with funding to establish a Mars Communication Network, a
system of communication satellites around Mars that will greatly
increase the science return and overall success of future Mars
missions. Eventually, this Network will enable researchers and the
public to explore and experience Mars firsthand through live video
links. The Administration has recognized the inherent risk in space
exploration, and given NASA a vote of confidence by providing a total
of almost $350 million in additional funding for Mars. In combination
with the Mars Communication Network, these funds will allow us to
pursue a sustained presence at multiple locations in and around Mars
and build incrementally to support aggressive future goals. If
successful, this approach to Mars could become a model for future
missions to other research targets. As the President said in his State
of the Union address, we must ``set great goals worthy of a great
nation.'' We are doing just that. This budget also contains new funding
for new Discovery Program micromissions to facilitate new low-cost
solar system research opportunities, and restores Space Science funding
for the Flight Validation Program (formerly the New Millennium Program)
that will enable us to develop and test revolutionary technologies to
enable future missions.
A new Space Science program I am particularly excited about is
Living With a Star, a new scientific research initiative to understand
the Sun's impact on the Earth and space environment. The fiscal year
2001 budget includes funding to begin Living With a Star. The program
will deploy some of the most creative and advanced technologies to
construct a network of spacecraft aimed at helping us understand our
star, the Sun, and how it influences the Earth. We cannot talk about
sending people to other planets without first understanding how
astronauts would be affected by the Sun's radiation. How can we fully
understand the Earth's climate system without understanding solar
variability and its affect on the Earth's atmosphere? Using multiple
spacecraft, these Solar Sentinels will be able to track Earth-directed
coronal mass ejections and pave the way for future systems that can
warn of impending danger to terrestrial power grids, our astronauts,
and air passengers flying at high altitudes, and to national security
and civil space assets. Given the importance of understanding and
predicting solar variability to fundamental science, terrestrial
climate, national defense, and technology, NASA has begun to develop
collaborations with NSF, DOD agencies, FAA, and NOAA, and will pursue
collaborations with the commercial space industry as well.
In Earth Science, we will continue to develop a full and
comprehensive understanding of the total Earth system and the impacts
of natural and human-induced changes on the global environment. Through
recent technology efforts, we will shrink the size, cost, and
development time for our missions planned for this decade. Following
decades will see a web of sensors over the Earth in a variety of
orbits, including constellations of intelligent microsatellites that
target resources or major events happening on the Earth's surface.
While pursuing our core Earth Science objectives, we will also provide
the tools to apply satellite imagery and technology to generate the
next great advances in weather and climate prediction, improve
agricultural productivity, and advance the growth of the U.S.
commercial remote sensing industry. These applications have the
potential to enhance our quality of life and stimulate the development
of new commercial products and services based on NASA-developed
technology.
This budget includes funding for new initiatives in Aeronautics.
Over the 5-year period from fiscal year 2001 through fiscal year 2005,
the new Small Aircraft Transportation System (SATS) Program is funded
at $69 million. The budget also supports a funding increase of $100
million for noise and emissions research over the same 5-year period,
including the new Quiet Aircraft Technology (QAT) Program. SATS will
develop vehicle and infrastructure technologies to reduce the accident
rate of small aircraft to that of commercial transports, utilize the
Nation's under-used airspace and landing facilities at non-hub airports
in all weather conditions, and increase capacity for efficient
operations of commuter, regional and runway independent aircraft at hub
airports. QAT will provide the technology to meet the NASA/FAA vision
for a noise-constraint-free air transportation system that would
contain the decibel contour within the airport boundaries, a 10 decibel
reduction from 1997.
The fiscal year 2001 budget makes necessary investments in NASA's
workforce and the NASA institution by providing additional funding for
stabilizing civil service personnel levels at NASA's Space Flight
Centers and addressing pressing facility issues. This will help keep
NASA's highly skilled workforce safe and healthy by spreading the
tremendous workload among more people. In addition, it will help NASA
improve the safety and reliability of our unique assets by ensuring the
right staffing levels are in place to improve the Space Shuttle and
assemble the ISS. An increase of almost $600 million over 5 years will
cover not only increased personnel salary and expense costs but also an
FTE increase over the previous downsizing plans until 2004. The effect
is to hold personnel levels steady at the fiscal year 1999 level at
NASA's Space Flight Centers. An increase of almost $200 million over 5
years is included for facilities revitalization in order to reverse a
long-term trend of declining facility condition, which is impacting
safety and productivity. We have completed a Core Capabilities
Assessment that identified the physical and human assets required to
accomplish the Mission Areas and Center of Excellence assignments
identified in our Strategic Plan. With this as a basis, we can now make
investments in facilities with the assurance that those in which we are
investing are essential for success of our missions and the safety of
our personnel.
One of the many ways in which NASA establishes our relevance to the
American people is through our education program. The NASA Education
Program is comprehensive, addressing all levels of the education system
from K-12 schools to colleges and universities. In all our education
activities we strive to achieve education excellence by involving the
educational community in our endeavors to inspire America's students,
create learning opportunities, and enlighten inquisitive minds.
Included in the budget for fiscal year 2001 is a request for $1
million to begin a coordinated, Agency-wide internship program for
undergraduate students. Through this program, we anticipate providing a
diverse group of 200 students a 10-week internship program at a NASA
Field Center. This program is critical to complete a continuum of
student programs that currently begin in high school and continue
through graduate and post-graduate education. We have also listened to
the Congress, and increased our baseline funding for Space Grant in
this budget. The funding level represents an increase of $5.6 million
over our previous request and is maintained in the outyears. An
additional $7.4 million is included for the Minority University
Research Program to continue the Science, Engineering, Mathematics and
Aeronautics Academy (SEMAA) Program through competitive selections and
to continue partnerships with other institutions in support of math,
science, and technology education at all levels of education for under
represented groups. While our budget for Academic Programs in fiscal
year 2001 is below the overall fiscal year 2000 enacted level, it
maintains our base level funding for our core programs but does not
continue funding for Congressional earmarks.
NASA's proposed fiscal year 2001 budget of $14.035 billion
signifies a strong commitment by this Administration to science and
technology and recognizes the critical role it plays in stimulating the
economy and developing the jobs of tomorrow. Now I would like to
discuss in detail each of the Strategic Enterprises and major program
areas.
NASA ENTERPRISE DETAIL
Human Exploration and Development of Space Enterprise
International Space Station
Compared to the fiscal year 2000 budget, the fiscal year 2001
budget request reflects an overall reduction in the budget and runout
estimates through fiscal year 2005 of about $1.2 billion. Roughly $0.8
billion of this reduction is due to the movement of funding for the
Phase 2 production of the ISS Crew Return Vehicle (CRV) to the Science,
Aeronautics and Technology budget account. The fiscal year 2002-2005
funding estimates will reside in that account pending a decision in the
next two years on whether to proceed with an X-38-based CRV design, in
the context of broader decisions that NASA and the Administration will
make regarding future space transportation architectures. There is also
an approximate $0.4 billion reduction in other ISS funding over 5
years, in order to fund Agency needs and other high-priority activities
such as the Bioastronautics initiative.
In 1998, we celebrated the birth of the ISS, as the first 2
elements were successfully launched and mated; the combined stack has
now completed over 6,700 orbits. In 1999, flight hardware continued to
be delivered to the Kennedy Space Center (KSC). We just successfully
completed the most comprehensive systems integration test and
evaluation at NASA since STS-1. It worked flawlessly. The Mission
Sequence Test sequentially exercised all nominal crew and mission
control interfaces planned for deployment of the U.S. laboratory, per
the 5A flight plan, with actual hardware and software response. The
test was performed as close to the in-flight configuration as possible.
It included additional mission control to ISS interfaces not performed
during previous multi-element tests, allowing engineers to validate
operational flight plans and procedures. These tests--while critical to
ensuring that the ISS will work in space as planned--have taken longer
than planned, resulting in slips last year. However, as a result, we
can now confidently say that we will be ready to launch the American
equipment. Also, last October, on-orbit assembly planning paused after
Russia encountered two setbacks in its long history of over 250 Proton
launches, 95 percent of which have been successful. While these launch
delays are unfortunate, they illustrate both the importance of
integrated testing and the need for redundant launch systems, as the
ISS program has with the Shuttle and Proton.
Decisions made at the General Designers Review in Russia on
February 11 place the SM on a path to launch this summer in a launch
window of July 8-14. Should the SM experience further delays or mission
failure, we will launch the ICM in December 2000. Should the SM be
successfully launched this summer, we will reconfigure the ICM to
enable docking with the SM as early as 2001. I have clearly
communicated to Mr. Koptev that the ISS program will move forward in
2000, regardless of whether the SM is ready for launch.
Relative to the Proton failure, its return to launch, and plans for
launch of the SM (SM), RSA provided their plan and technical
considerations at the General Designers Review. The failure was
attributed to contamination and manufacturing non-compliances during
1992/93 timeframe. None of these engines is slated for future launch.
However, several commercial parties have agreed to launch on inspected
engines from later production sets. The plan for the SM is to launch it
on engines upgraded to increase their resilience against these types of
failures. The SM launch will follow 2 precursor flights using the same
Proton modifications and upgraded engines, as well as other commercial
Proton flights. NASA propulsion experts have reviewed these plans and
are in agreement that the Russian approach provides a high degree of
launch confidence. NASA has also asked the NASA Advisory Council
(Stafford) Task Force on ISS Operational Readiness to review the
findings of various Proton launch failure investigation teams with
RSA's Advisory Expert Council and provide their views on the SM launch
plan.
Delay in the SM launch also impacts Zarya, in that its flight
certification period must be extended. NASA's plans include a Space
Shuttle mission to the on-orbit ISS this Spring to perform critical
maintenance on some of Zarya's systems to re-certify it for flight
through December 2000, consistent with ICM contingency planning. This
approach requires splitting the presently planned mission following the
Service Module launch, 2A.2, into two missions designated 2A.2a and
2A.2b. The 2A.2a mission would occur this Spring to provide the needed
maintenance on Zarya. The 2A.2b mission will be similar to the
currently manifested 2A.2 mission in that it will prepare the SM for
the arrival of its first resident crew in late 2000. Shuttle Orbiter
Atlantis will be used for both missions, minimizing mission unique
costs and enabling a reduced turnaround time for the second flight.
Since some Shuttle missions have been delayed due to the Service
Module/Proton problem, the addition of 2A.2a would not increase the
annual Space Shuttle flight rate, nor materially affect our budget.
Program momentum is being maintained as KSC is taking delivery of
new flight hardware with each passing month. Last year I told you of
the on-going transition from development work into operations. This
trend has accelerated in earnest with many elements for flights through
12A having been delivered to KSC including truss segments, attitude
control system, communications system, the first solar arrays, thermal
radiators, integrated electronics, and the U.S. Laboratory,
``Destiny.''
We have significantly reduced the amount of risk as elements have
moved through the first set of integrated testing. These multi-element
tests, while critical to ensuring that the ISS will work in space as
planned, have taken longer than expected, resulting in slips to the
U.S. Flight Elements Schedules. This summer, we will move into the
second major set of integrated testing activity. This activity will
verify ISS flight hardware to each other and to the orbiters. Also
included in the test will be the mobile transporter, a movable base of
the Station's Canadian mechanical arm that allows it to travel along
the Station truss.
Progress on U.S. items has not been without challenges. Just last
fall we determined the likely cause for a component failure in the ISS
DC to DC Converter Unit (DDCU), the U.S. pacing component for flights
3A-5A. We are now working delivery of alternate parts to maintain our
schedules.
U.S. flight elements are now prepared for the next major steps in
the ISS assembly. By this fall, Flight 3A will carry the Z-1 Truss
Segment, Control Moment Gyros (CMG), the third Pressurized Mating
Adapter (PMA-3), Ku-band and S-band equipment, and extravehicular
activity subsystem components. The Z-1 truss will provide a base for
temporary installation of the P-6 photovoltaic module to Node 1. That
will provide U.S.-based electrical power early in the Station's
assembly process. PMA-3 will provide a Space Shuttle docking location
for installation of the laboratory on Flight 5A. Russian Flight 2R will
deliver the first long-duration crew, Commander Bill Shepherd, Soyuz
Commander Yuri Gidzenko, and Flight Engineer Sergei Krikalev. We will
also see the arrival of the first crew in a Soyuz spacecraft; it will
remain attached to the ISS and provide an emergency return capability
for the crew. Permanent human presence aboard the ISS begins with this
expeditionary crew. By the close of Fall, Flight 4A is scheduled for
launch, and includes the P6 Truss structure containing the long spacer,
the Integrated Electronic Assembly (IEA), the P6 photovoltaic array,
External Active Thermal Control System (EATCS) and additional S-band
equipment. This launch will establish initial U.S. user capability by
providing power generation and photovoltaic thermal control. In January
2001, the U.S. laboratory will be launched on flight 5A along with 5
integrated systems racks and the Human Research Facility (HRF) rack.
The capability to conduct research aboard the ISS will begin with
delivery and outfitting of the HRF. Flight 5A.1, is to be launched to
continue the outfitting of the U.S. laboratory with 6 additional lab
system racks and one HRF payload rack. The Italian-built Multi-Purpose
Logistics Module (MPLM) will be used as the pressurized carrier for
this hardware. Flight 6A will be launched to continue the outfitting of
the U.S. laboratory with the addition of 2 stowage and 2 EXPRESS
payload racks. Also included are the UHF antenna and the Canadian Space
Station Remote Manipulator System (SSRMS), the ``arm'' that will help
with Station assembly. MPLM-2, known as Leonardo, will be used as the
pressurized carrier on this flight. The UHF antenna will provide space-
to-space communications capability for U.S.-based EVA, while the SSRMS
will be used to perform assembly operations on future flights. Flight
7A will launch the airlock and high-pressure oxygen and nitrogen. The
addition of the airlock to the on-orbit stack permits ISS-based EVA
without the loss of environmental consumables such as oxygen. Flight 7A
completes Phase 2 of the ISS Program. Finally, Flight 7A.1, and the
initial utilization flight (UF-1) will complete the fiscal year 2001
schedule of activities.
As the program transitions into the assembly and operations phase,
manufacturing activities are declining. Over 90 percent of the U.S. ISS
development contract is complete, with the majority of flight hardware
scheduled to be delivered to the launch site this year. With these
changes, it is in the best interest of the Government to concentrate
resources on assembly planning, operations and utilization readiness,
and on the on-orbit assembly of the ISS. As such, NASA restructured the
Prime contract to focus resources on the work remaining in the most
efficient manner. The restructure provides the Government and Boeing
flexibility in directing the work force at a time when fast responses
to unanticipated problems are desirable. The restructure also provides
incentive for Boeing to improve performance through a revised award fee
system for the remaining work.
Relative to operations, the communications systems between Mission
Control Center (MCC)-Houston, MCC-Moscow, and the ISS have been
successfully demonstrated and avoided Y2K related issues. The U.S.-led
international control teams have been vigorously exercised as they
worked anomaly resolution, avoidance maneuvers, an ISS reboost and the
first docking with the ISS.
NASA continues to evaluate program progress and take contingency
steps to mitigate risk in case any partners have problems meeting their
commitments. NASA is making good progress toward completing these
steps. A key element in this plan is the development of the U.S.
Propulsion Module. The Preliminary Design Review process for the
Propulsion Module will be completed in June, leading to initiation of
its critical design phase.
A second set of contingency plan activities is the purchase of
unique Russian goods and services. As ISS development, assembly and
operations have progressed, NASA has identified goods and services that
would allow the implementation of the next steps of NASA's Contingency
Plan and provide improved crew training and operational capabilities.
The goods and services NASA intends to purchase are:
--outside the scope of what Russia has agreed to provide as part of
its commitment to the ISS;
--uniquely available from Russia, and would be much more costly and
significantly delayed, if purchased from U.S. or other sources;
and
--needed to ensure timely availability of U.S. contingency
capabilities.
Russia has a good record of on-schedule and on-budget delivery of
items purchased, and NASA is confident in the timely delivery of these
needed items. I believe that the provision of these goods and services
will reduce risk to our crew and to the overall ISS program. Protecting
the ultimate safety of our ISS crew and the investment of the American
people is paramount in our decision to embark on this transaction. An
Operating Plan change request was submitted to the Committee on
February 11, and I thank you for your expeditious response. The most
time-critical of the hardware, specifically a pressure dome and an
Androgynous Peripheral Docking Adapter (APAS), need to be purchased in
the very near future to support contingency scenarios. While the recent
enactment of HR 1883, the Iran Nonproliferation Act of 2000, will
affect the process by which NASA purchases these items from the
Rosaviakosmos, HR 1883 provides for a streamlined reporting procedure
to the Congress for the hardware of most immediate interest to NASA.
In the United States, development of Crew Return Vehicle (CRV)
operational technologies through the X-38 program is progressing well,
with testing of two 83 percent scale atmospheric flight vehicles,
construction of a full scale space reentry vehicle, and testing of a
full operational scale 7500 sq. ft. parafoil, the largest in the world.
The first test flight of the full-scale parafoil was successfully
completed in January 2000, with flawless deployment dynamics and a safe
touchdown--a major project milestone. In a future Operating Plan
adjustment, we plan to reallocate an additional $21 million in fiscal
year 2000 for CRV Phase I development to assure success of critical
validation tests and design. We are proceeding toward an fiscal year
2002 competition down-select to 2 contractors to get ready for a
production decision. We will work with the Aerospace Safety Advisory
Panel (ASAP) to make sure we have the safest design.
While NASA works aggressively toward deployment of a U.S. crew
return capability, we have decided to move funding for the CRV
production phase into the Science, Aeronautics and Technology funding
line. Production funding will remain in this line while we work toward
validation of the X-38/CRV approach as the safest way to provide the
crew return function, and evaluate the potential of Crew Transfer
Vehicle (CTV) concepts as an alternative approach. Until the arrival of
the CRV, the Russian Soyuz will be the only means of crew rescue. The
CRV was planned to be available in May 2004 (based on the June 1, 1999
Revision E assembly sequence), but X-38 program delays and a cut in
fiscal year 2000 appropriations to the CRV project has delayed
availability by 12 to 18 months. Given the delays in assembly since the
Rev. E assembly sequence was released, and the impact of those delays
on 6-person readiness, most of the 12-18 month slip in CRV delivery
should be accommodated in the new assembly schedule. If 6-person
capability is achieved prior to availability of a U.S. crew return
capability, the launch of a 6-person crew could be deferred a few
months, or additional Soyuz crew return services could be purchased to
fill the gap.
The contributions of our other International Partners will become
more prominent as assembly progresses throughout this year. Two of the
3 Italian Multi-Purpose Logistics Modules (MPLM) and the Canadian Space
Station Remote Manipulator System (SSRMS) have been delivered to KSC
and are in preparation for launch. The third MPLM is in assembly in
Turin. In late 2001, initial deliveries of the Japanese Experimental
Module (JEM) begin to arrive in the United States. The European
Columbus Orbital Facility is in production and is on schedule for
delivery in early 2004.
Economic Development of Space
While much of the early effort regarding the economic development
of space was focused on the ISS due to its enormous potential in
scientific and business applications, NASA has also reached out into
other space opportunities. We believe that the key to increasing and
accelerating space commercialization, not just maximizing what is
currently available or achievable, is to bring in new players--
investors, customers, suppliers, and users--and make it easy for them
to include space as part of their business strategies and operations.
We solicited and incorporated inputs from all sectors of the economy as
we worked on our approach for enabling the economic development of
space.
Beginning in 1998, NASA committed to set aside at least 30 percent
of the ISS payload capacity for commercial development. During 1999, we
put in place the necessary management systems and processes with which
to conduct a vigorous economic development program for the ISS. Process
improvements made in the past year included: single point of entry
process for all entrepreneurial offers; policies to protect private
intellectual property and proprietary data; an ISS demonstration
pricing policy to stimulate commercial investment and government/
industry partnership; and, a soon-to-be published price list for using
ISS resources such as research racks, crew time, power, and other
resources. This integrated and inclusive approach has resulted in
entrepreneurial offers from private companies wanting to use part of
the ISS and related infrastructure for non-Government businesses. Most
offers involve private investment and non-Government use of space
assets.
We are also working on the development of a Non Government
Organization (NGO) for ISS utilization management. This has the
potential to greatly enhance the scientific and commercial uses of the
ISS, while at the same time freeing up precious NASA resources to
concentrate on pushing the boundaries of science and technology.
Near term commercialization opportunities include NASA TV and its
related multi-media infrastructure; commercial habitation module;
reimbursable space shuttle flights; remote sensing, multiple use
research centers; and solar power platform for communications and
surveillance. With the help of the Administration and Congress, we have
an exciting start in our initiative for the economic development of
space. The pending launch of the ISS laboratory module, and the start
of the permanent human presence in space should take us to yet another
level in our quest to open up space to increasingly more people and
applications. Our next step is the inclusion of and coordination with
our international partners to further expand the commercial
opportunities and reach of our assets.
All recent policies, reports, and procedures can be found at http:/
/commercial.nasa.gov/.
Space Shuttle
The fiscal year 2001 Space Shuttle budget is $3.165 billion, a 6.2
percent increase over the fiscal year 2000 budget. The Space Shuttle
continues to prove that it is the safest and most versatile launch
vehicle ever built. The team has proven again that safety, not
schedule, dictates launch readiness. I salute them.
The Space Shuttle manifest currently reflects 9 missions scheduled
to fly during fiscal year 2001--7 ISS assembly flights, the second half
of the Hubble Space Telescope's third servicing mission, and a research
flight. This is a significant increase over the 4 missions that were
conducted in both fiscal year 1998 and fiscal year 1999, and a further
increase over the 5 missions currently manifested for flight in fiscal
year 2000. The fiscal year 2001 budget of $3.165 billion will enable
the system to successfully meet its goals to: (1) fly safely; (2) meet
the flight manifest serving diverse customers; (3) improve the system;
and, (4) improve supportability. This year, and in the near-term, the
manifest is dominated by ISS assembly.
We must continue to ensure the Space Shuttle's viability as a safe,
effective transportation system and scientific platform. The Space
Shuttle will need to be capable of supporting the critical human space
transportation requirements for ISS assembly and operations and through
at least a significant portion of the 10 years of the completed Space
Station's life. To accomplish this, we must continue to invest in the
system's safety and supportability until a replacement vehicle is
available. We have found that investing in upgrades provides, not only
a safer vehicle, but one that is more reliable and one that is easier
to maintain.
I appreciate the additional $25 million that the Congress provided
in fiscal year 2000 to invest in high priority safety upgrades and
start the process. In addition, we reprioritized the existing budget
within Human Space Flight to bring the total fiscal year 2000 budget
for high priority safety upgrades to $50 million. The Space Shuttle
program is initiating two high priority safety upgrades and has
recommended additional investments for study. In the fiscal year 2001
request, the Administration has provided additional funding to continue
the initiatives that started in fiscal year 2000, as well as additional
high priority safety upgrades that are being funded in fiscal year
2001.
I have directed that safety upgrades be developed and implemented
into the Orbiter fleet no later than 2005 to realize the benefits of
these high priority safety upgrades to the fullest before we transition
to a Space Shuttle replacement. I am happy to be able to report that
work on these upgrades in currently underway. Because safety and
reliability benefits can be realized from investing in the Space
Shuttle, additional investment candidates have been identified for the
Orbiter and propulsion elements of the vehicle. Examples include the
Block III Space Shuttle Main Engine (SSME), the Solid Rocket Booster
(SRB) Advanced Thrust Vector Control (TVC), and the Electric APU or
Solid Propellant Gas Generator (SPGG). These candidates will be
studied, along with other upgrades, personnel, facility or other safety
investments, to validate priorities and cost in fiscal year 2000 prior
to decisions whether to initiate their implementation or development in
fiscal year 2001 as part of the Shuttle safety allocation. Additional
studies are being conducted in several areas such as the Space
Shuttle's Thermal Protection System (TPS) lower surface tile upgrades,
propulsion system, and hazard protection during processing. Completion
of these studies is vital to successfully supporting our safety efforts
and will be complemented by outside reviews.
The Administration's fiscal year 2001 budget proposes to redirect
funding identified in the fiscal year 2000 appropriation bill to
partially pay for another dedicated research mission into safety
investments by hiring additional civil service personnel at the Human
Space Flight Centers, and accelerating the development of the Space
Shuttle safety upgrades. These are very high priorities for this
Agency. I am also a firm believer in the value of providing sufficient
research opportunities to the science community impacted by the delays
in the Space Station's assembly. I agree with Congress on the merits of
doing so. That is why we have plans to fly a research mission (STS-107)
in early fiscal year 2001, and use increased Shuttle middeck locker
opportunities during Shuttle assembly flights. Over the next five
years, we plan to increase the number of investigators in Life and
Microgravity research to enable us to take advantage of every flight
opportunity and we must continue to focus limited resources on getting
ISS built and its research hardware developed as soon as possible.
Space Shuttle Independent Assessment Team
As a result of the ascent anomalies experienced on STS-93, on
September 7, 1999, Associate Administrator for Space Flight, Mr. Joseph
H. Rothenberg, chartered the Space Shuttle Independent Assessment Team
(SIAT). Dr. Henry McDonald, Director of the Ames Research Center,
chaired an independent technical team to review the Space Shuttle
systems and maintenance practices. The team was comprised of NASA,
contractor, and DOD personnel and examined NASA practices, Shuttle
anomalies, and civilian and military experience.''
The SIAT began work on October 4, 1999, and concluded their
activities with a written report, submitted to Mr. Rothenberg on March
7, 2000. The SIAT focused their activities in the following technical
areas: Avionics, Human Factors, Hydraulics, Hypergolics and Auxiliary
Power Unit, Problem Reporting and Tracking Process, Propulsion, Risk
Assessment and Management, Safety and Mission Assurance, Software,
Structures, and Wiring. The Team's goal was to bring to Shuttle
maintenance and operations processes a perspective from the best
practices of the external aviation community. The Johnson Space Center,
the Lead Center for Human Space Flight and the Space Shuttle Program,
will provide a plan or response to the short term recommendations in
June. The Program's responses to the intermediate and long-term
recommendations will follow in August and October, respectively. Four
team recommendations were reviewed and closed prior to return to flight
in December 1999. The fiscal year 2001 budget includes significant
increases for investments in Shuttle safety that could be used to
address these issues.
Human Space Flight Workforce
As NASA builds the ISS and supports the infrastructure and upgrades
to the Space Shuttle program as well as its Expendable Launch Vehicle
(ELV) commitments over the next 5 years, the workload will increase
steadily. Internal and external workforce assessments have convinced
NASA management that civil service FTE targets at NASA's Human Space
Flight (HSF) Centers must be adjusted. As mentioned earlier, from
internal reviews, such as the Core Capabilities Study, to external
evaluations by the ASAP and the Space Shuttle Independent Assessment
(McDonald) Team, it became apparent that the HSF workforce required
immediate revitalization. Five years of buyouts and downsizing have led
to serious skill imbalances and an overtaxed core workforce. As more
people leave, the workload and stress remaining increase, with a
corresponding increase in the potential for impacts to operational
capacity and safety. HSF Centers will begin to accelerate hiring in
fiscal year 2000, in order to address immediate critical skill
shortfalls. After the initial hiring of 500 new personnel across the
four HSF Centers in fiscal year 2000, HSF workforce trends will begin a
one-for-one replacement process and will allow HSF Centers to attain a
steady state in civil service employment by fiscal year 2001. We will
continue to monitor HSF Center hires and attrition, ensuring that
workforce skill balances are achieved and maintained.
NASA will work with OMB in the coming months, to conduct a
personnel review with an eye towards the future. This review will
assess management tools and innovative approaches for personnel
management that might best equip NASA to evolve and adapt our civil
service workforce in the future. This will be particularly important as
we continue our transition from operations to a focus on advancing the
frontier with cutting edge research and development in science and
technology.
Expendable Launch Vehicle Mission Support
NASA's Expendable Launch Vehicle (ELV) team coordinated the launch
of 10 ELV missions during the past year. The team supported launches
from Cape Canaveral Air Station, including the Mars Polar Lander in
January, Stardust spacecraft in February and the Far Ultraviolet
Spectroscopic Explorer (FUSE) spacecraft in June. The NASA ELV team
also supports launches from Vandenberg Air Force Base in California
making it a bi-coastal team. The team supported the successful launch
of ARGOS in February, the Wide-Field Infrared Explorer (WIRE)
spacecraft in March, Landsat 7 in April, the TERRIERS satellite in May,
the Quick Scatterometer (QuikSCAT) mission in June, and the Terra and
AcrimSat spacecrafts in December.
There are 2 launch services competitions in work this year. The
NASA Launch Services (NLS) acquisition providing launch services for
future NASA missions will be completed. These contracts provide for
awards to multiple suppliers with vehicles that have a demonstrated
flight history. Also, the Next Generation Launch Services (NGLS)
acquisition will be initiated. NGLS will enable competition for the
emerging launch services companies with little or no flight history to
offer launch services to NASA. Last year, I met with the CEOs of
entrepreneurial startup companies, and NASA has taken a number of steps
to ensure that we can create an opportunity for them to compete with
the major launch companies. The ELV Mission support budget for fiscal
year 2001 is $30.6 million. The fiscal year 2001 budget provides
funding to support NASA's intention to award as many as five indefinite
delivery/indefinite quantity launch service contracts to provide launch
opportunities for university, science and technology payloads.
Space Operations (SOMO)
A new era in space communications began in January 1999, with the
implementation of the Consolidated Space Operations Contract (CSOC). A
major objective of the CSOC is to reduce NASA's space operations costs
while continuing to deliver high quality services. Operations
performance has continued to be of high quality in this first full year
of the SCOC contract. With respect to savings, in the fiscal year 1998
budget to Congress, NASA reduced its budget in anticipation of CSOC
savings and we do not expect to see any significant additional savings
in the first few years of the contract.
Consistent with Congressional direction, NASA provided a CSOC
commercialization plan in November. The plan addresses the purchase of
space communications services from the private sector as well as the
sale of available capacity from our existing NASA capabilities. As an
example of this commercialization effort, CSOC is obtaining the use of
commercial facilities to supplement the current NASA polar ground
network. Additionally, all wide area network telecommunications are now
being provided through commercial arrangements. We will be conducting a
vigorous effort in fiscal year 2000 to increase the use of emerging
commercial capabilities to meet our space communications and operations
needs.
HEDS Technology/Commercialization Initiative
The Human Exploration and Development of Space (HEDS) Technology/
Commercialization Initiative (HTCI) will support studies, technology
developments and demonstrations that advance safe, affordable and
effective future programs and projects of human exploration and
discovery, while advancing the commercial development of space. The
HTCI will pursue technologies and infrastructures for the future human
exploration of space that also support commercial space development by
making high-leverage investments that will enable progress toward
innovative systems concepts and breakthrough technologies.
Life and Microgravity Science and Applications
NASA's Life and Microgravity Sciences and Applications Program is a
partner in NASA's Human Exploration and Development of Space (HEDS)
Enterprise. The program conducts ground- and space-based investigations
to gain new knowledge to advance the health and safety of the
astronauts in space. This interdisciplinary research will also increase
the fundamental knowledge of biological, physical, and chemical
processes; enable the development of space for human enterprise; and
create new products and services. This knowledge and new technologies
will be transferred to the private and government sectors as broadly as
possible within the United States.
The fiscal year 2001 budget request of $302.4 million for Life and
Microgravity Sciences and Applications is 10 percent higher than fiscal
year 2000, and will support a research base attracting new
investigators (for a total of 986), as well as expanding cooperation
with other agencies. This program will take advantage of the
opportunities presented by the deployment of the Destiny laboratory to
the ISS and other opportunities to access space. Early in the assembly
phase of the ISS, research will concentrate on investigations taking
advantage of the Human Research Facility (HRF) and the EXPRESS racks.
This research will focus on identifying and improving the spacecraft
environment, habitability and crew health. To help maintain NASA's
research communities during the ISS build-up, NASA plans to fly a
research mission (STS-107) in early fiscal year 2001, and use increased
Shuttle middeck locker opportunities during Shuttle assembly flights.
A new effort this year is the Bioastronautics Initiative, which
will significantly improve crew safety and health aboard the ISS, and
further strengthens research already underway to focus on the health,
safety, and performance of humans in space. This initiative will
accelerate research and development of solutions for diagnosis,
therapy, prevention, and rehabilitation of crew on long duration
missions aboard the ISS.
The Life and Microgravity Science and Applications program has
embarked on a focused program to develop advanced technologies that are
critical for long-duration space flights to monitor and enhance human
health, safety and performance. This research in biologically inspired
technology is being fostered through dedicated NASA Research
Announcements (NRAs). These fields of research have great potential for
application to health care issues here on Earth. I have also
established a formal collaboration with the National Cancer Institute
(NCI) in the area of biologically inspired technology. This is part of
the Bioastronautics initiative and is being led by the NASA Chief
Scientist.
A major portion of the Bioastronautics Initiative will support the
National Space Biomedical Research Institute (NSBRI). It is a
consortium of 12 U.S. medical research academic institutions led by
Baylor College of Medicine. These institutions and others will use the
knowledge gained by working with NASA to improve health maintenance and
care for patients on Earth. NASA is currently evaluating options for
and benefits of integrating facilities and capabilities where
astronauts, medical professionals, scientists, engineers, and
operational specialists could interact as a team in accomplishing this
Bioastronautics Initiative.
NASA's Life and Microgravity Science and Applications research and
development activities have also provided benefits in other areas such
as improvements for the visually impaired which have been advanced by
the development of an optical detector by the NASA Space Vacuum Epitaxy
Commercial Space Center. Growth of 3-dimensional active heart tissue in
the NASA bioreactor has also been accomplished. Successful engineering
of heart tissue could eventually be used to repair damaged heart tissue
inside the body, test new drugs on heart diseases, and study general
heart development and function.
Space Science Enterprise
The fiscal year 2001 Space Science budget of $2.4 billion
represents an increase of 10 percent over the fiscal year 2000 enacted
level. The Space Science Enterprise is the arm of NASA that looks up,
out, and back in time . . . at planets, stars, galaxies and other
phenomena that populate our Universe. Despite the vastness and
complexity of the Universe, the ultimate goal of all Space Science
missions and research can be narrowed down to pursuing answers to three
fundamental questions: How did the Universe begin and evolve? How did
we get here? Are we alone?
Mission by mission and scientific discovery by scientific
discovery, we are getting closer to the answers we seek. In recent
years, space science discoveries have rewritten textbooks, challenged
long-standing scientific beliefs, and inspired a sense of awe in the
inhabitants of planet earth as we contemplate our place in this amazing
cosmos.
Though there were both ups and downs for NASA's Space Science
Enterprise this year, overall there was a wealth of compelling science
delivered by this program.
Losing Mars Climate Orbiter and Mars Polar Lander back-to-back was
a blow not only for the Space Science Enterprise, but also for NASA as
a whole. However, as has been the case at various times throughout this
Agency's 40-year history, we are going to learn what we can from these
losses, change our approach where it is prudent to do so, and move on.
Right now we have an expert team studying these failures and our entire
Mars program architecture. This is a very important study for NASA, and
we look forward to having their analyses and recommendations. One of
the most exciting Space Science events of the past year was the launch
of the long-awaited Chandra X-ray Observatory (CXO), the third of
NASA's four Great Observatories. In July, the Space Shuttle Columbia,
commanded by Colonel Eileen Collins, carried the CXO to space and sent
it on its way to a highly elliptical orbit, where it is studying the
wonders of the Universe in the X-ray part of the spectrum. As you have
already seen, the images from Chandra taken during its short time in
space are phenomenal and are a wonderful complement to the dazzling
images and important scientific discoveries that the Hubble Space
Telescope (HST) has delivered in the ultraviolet, visible, and near
infrared wavelengths.
I am pleased to report that following the successful mission of
STS-103 in December, the Hubble Space Telescope is back and better than
ever. Thanks to new gyroscopes, a new computer, and a host of other
upgrades, HST is more powerful and robust than at any other time in its
almost-ten-year history. In addition to the thousands of breathtaking
images that the telescope delivered last year, one result was a long-
awaited, scientific coup: after eight years of painstaking measurement,
Hubble scientists found a value for how fast the universe is expanding.
This rate of expansion, called the Hubble Constant, is essential to
determining the age and size of the Universe, which scientists now
believe to be about 12 billion years. Measuring the Hubble Constant was
one of the 3 major goals for the telescope when it was launched in
1990.
In planetary news, the Mars Global Surveyor spacecraft has given us
the first global, three-dimensional map of the Martian surface. This
incredible database means that we now know the topography of Mars
better than many continental regions of Earth. This mapping mission has
revealed many new insights about Mars' varying topography including an
impact basin deep enough to swallow Mount Everest, mysterious magnetic
lines on the ancient surface reminiscent of plate tectonics on Earth,
and weather patterns raging across the North Pole. This new global map
of Mars is changing our fundamental understanding of the red planet and
will likely influence scientific research of Mars for years to come.
The increasingly detailed high-resolution map represents 250 million
elevation measurements gathered in 1998 and 1999.
The Cassini spacecraft, currently on a journey to Saturn, completed
a highly accurate swing-by of Earth in August. This fly-by was
necessary to give Cassini a boost in speed, sending it toward a
rendezvous with Saturn and its moon Titan in 2004. Cassini will flyby
Jupiter in December 2000.
Astronomers, racing the clock, managed to take the first-ever,
optical images of one of the most powerful explosions in the Universe--
a gamma ray burst--just as it was occurring on January 23, 1999. Such
bursts occur with no warning and typically last just for a few seconds.
We also had some exciting news about our own star, the Sun. NASA-
sponsored scientists have discovered that an S-shaped structure often
appears on the Sun in advance of a violent eruption, called a coronal
mass ejection, which is as powerful as billions of nuclear explosions.
Early warnings of approaching solar storms will prove useful to power
companies, the satellite communications industry and organizations that
operate spacecraft, including NASA.
I think most of us, on a day-to-day basis, take the Sun for
granted. We know it is always there . . . big and yellow and warm. Kind
of like a friend we are always happy to see. But, I want to remind you
that the same Sun is also a huge, violent ball of energy. The Sun gives
off about a million tons of matter every second--and that is just on an
average day. Occasionally, the Sun has explosions known as coronal mass
ejections, the largest of which can have the energy of 1 billion
megatons of TNT and eject 10 billion tons of solar gas. Even though by
the time this solar matter reaches the Earth's magnetic field it is
diluted by its 93-million-mile journey, its effects can still be
dramatic and far-reaching. Solar disturbances can affect civilian and
military space systems, human space flight, electric power grids, GPS
signals, high-frequency radio communications, long-range radar,
microelectronics and humans in high-altitude aircraft, and terrestrial
climate.
Recognizing the critical role that solar events can have on Earth,
the fiscal year 2001 budget includes an exciting new initiative. As I
mentioned earlier in my testimony, this new initiative is called
``Living with a Star,'' and it will undertake the most comprehensive
study of the Sun and its interaction with the Earth to date. This is a
major initiative that will take the talents of many, many people--
people at NASA, in other Government agencies, academia, and the private
sector. Working together, I know we will reach the ultimate goal of
this program, which is to help astronomers understand and predict
storms and other solar phenomena that can have a direct and often
critical impact on Earth and its citizens.
This budget includes an increase of 17 percent for continued
aggressive programs in Solar System Exploration that will enhance the
science return and overall success of future mission to Mars and other
key research targets. This is a vote of confidence from the
Administration on behalf of the American public that we will fix what
is wrong, develop a more robust program, and continue to explore the
red planet. The budget supports a Mars Communication Network and other
potential sustained presence concepts that will enable us to build
incrementally towards aggressive future goals at multiple locations in
and around Mars. The budget also includes additional outyear funding
that will enable us to apply such research capabilities to other future
solar system targets.
The budget request also features funding for a new branch of an
existing program. Called ``Discovery Micromissions,'' this series of
missions to various Solar System targets will be similar to our Small
Explorers program, enabling regular small, low cost missions throughout
the solar system and creating new opportunities for university-based
research.
NASA's fiscal year 2001 budget request provides strong support for
a robust technology base, as evidenced by funding for the Intelligent
Systems Initiative. Although this funding will allow the Agency to
pursue a broad range of information technology investments, we will
place highest priority on investments to enable robotic networks that
support new approaches to our Solar System exploration programs. In a
related field, NASA has increased the budget for nanotechnology. This
investment in microminiaturization and related technologies is crucial
for future exploration and allows us to participate in the new
interagency nanotechnology initiative. And finally, this budget request
provides for Astrobiology instrumentation and technology research and
for a restructured Flight Validation Program through fiscal year 2005.
The President's proposed fiscal year 2001 budget supports a robust
and scientifically diverse Space Science program with nine planned
launches this calendar year. It allows us to continue studying the
Universe we live in and develop the technologies necessary to expand
our presence in it. Profound scientific discoveries and glimpses of new
phenomena occurring in the Universe have long been hallmarks of this
great program. This budget request ensures that the Space Science
Enterprise will continue to bring value and wonder to the American
public.
Earth Science Enterprise
The President's budget request for Earth Science in fiscal year
2001 is $1,405.8 million, down $37.6 million from $1,443.4 million in
fiscal year 2000. This budget reflects a decrease in funds for
observing systems and an increase in research and technology as we pass
the peak of development of the Earth Observing System (EOS). Fiscal
year 2001 continues formulation of the National Polar-orbiting
Operational Environmental Satellite System (NPOESS) Preparatory Program
(NPP), a cooperative program between DOD, NASA and NOAA, that will be
launched in 2005. NPP will simultaneously continue the Terra and Aqua
mission research measurements and demonstrate new and innovative
sensors for the NPOESS.
From our birth as the Nation's civilian space agency, NASA has used
the vantage point of space to view the Earth in order to understand how
it functions as a dynamic system of land, oceans, ice, atmosphere, and
life. We give people a ``window on the world'' to understand how it
changes, and what the impacts of those changes might be on human
civilization.
The year 1999 marked a milestone in humanity's quest to understand
our home planet. We began deployment of the EOS series of satellites,
the first attempt to examine all major interactions among the key
components of the Earth system. Deployment of the EOS began with the
launch of Landsat 7, the cornerstone of the world's space-based land
remote sensing efforts, with wide application in agriculture, forestry
and regional planning in addition to its scientific value. Terra, the
flagship satellite of the EOS, was successfully launched in December
and the activation and checkout of its instruments are proceeding. In
April, NASA launched the QuikSCAT satellite to resume global
measurement of winds at the ocean surface to improve short-term weather
prediction and tracking of major hurricanes and tropical storms
globally. Also in December, we launched AcrimSat, an instrument that
extends our measurement of variability in the output of the Sun.
Fiscal year 1999 was a year of substantial scientific
accomplishment in our understanding of the major elements that comprise
the Earth system using satellites launched in prior years, along with a
variety of aircraft campaigns and ground-based research. Using data
from the NASA/Japan Tropical Rainfall Measuring Mission (TRMM), the
Earth Science Enterprise (ESE) reduced the uncertainty in measuring
rainfall over the tropics by one half, thus improving short-term
weather prediction and availability of fresh water globally. Over the
ice caps, NASA and other researchers determined the thinning and
thickening rates for the Greenland ice sheet. We conducted an
international field experiment in the Amazon to help understand the
role of vegetation on Earth in removing carbon dioxide from the
atmosphere.
This year promises to be equally exciting, as we begin to see the
first results from the Terra mission. Eight Earth science missions are
planned for launch this calendar year, including 3 deferred from 1999
to assure mission success. Among these 9 missions are several important
complements to the EOS. The Shuttle Radar Topography Mission, completed
in February, will provide a 3 dimensional digital map of nearly all the
inhabited portions of the Earth's land surface. The QuikTOMS mission
will continue our fulfillment of our Congressional mandate for ozone
monitoring. The first Earth-oriented New Millennium Program mission is
scheduled to fly this calendar year, and will demonstrate new and lower
cost land imaging technologies.
Within the President's fiscal year 2001 budget request for Earth
Science, the largest activity is the continued deployment of the EOS
($447.1 million). This calendar year will see the launch of the Aqua
satellite, the second of the three major components of EOS (along with
Terra in 1999 and Chem in 2002). Aqua will provide highly accurate
atmospheric temperature and humidity measurements essential for climate
change research. Other EOS components in fiscal year 2001 are ICEsat,
which will measure the topography of the world's major ice sheets, and
the SeaWinds instrument that will continue the ocean winds measurements
currently taken by QuikSCAT. Fiscal year 2001 EOS funds will also
continue development of Chem and SORCE.
This budget also includes $120.4 million for Earth Probes, a series
of small, rapidly developed missions such as the ESSP that explore
unfamiliar Earth system processes. Fiscal year 2001 will see the launch
of the Gravity Recovery and Climate Experiment (GRACE) which will
provide a precise mapping of the Earth's geoid, thus substantially
improving the accuracy of our satellite measurements of sea level. The
Triana mission has just completed a review by the National Academy of
Sciences, with very favorable results. Triana will detect sunrise-to-
sunset changes in ozone, aerosols, clouds and surface ultraviolet
radiation as well as provide warning of space weather events.
Development will continue on two new ESSP missions, PICASSO and
Cloudsat, which will make 3-dimensional measurements of aerosols and
clouds in the atmosphere.
Implementation of the Earth Observing System Data and Information
System (EOSDIS) will continue and is funded at $252.0 million in fiscal
year 2001. Problems encountered in 1999 have been overcome, and EOSDIS
is meeting its requirements for operation of Terra and management of
the already extensive set of Earth remote sensing data collected from
existing satellites.
Within a nearly level budget, the ESE is increasing its investment
in research and advanced technology development by $63.9 million over
last year to $533.3 million in fiscal year 2001. The ESE has updated
its research strategy for the next decade, highlighting specific
questions about forces of change acting on the Earth system, and how
the Earth responds.
The fiscal year 2001 budget also funds a series of partnerships
that may turn our scientific results into practical applications. Topic
areas of these partnerships include fire hazard prediction and water
availability in the West, farming and forestry in the upper Midwest and
the South, as well as urban and regional planning in the Northeast. The
standard of success for applications and commercial partnerships is
that they become self-sustaining entities based on the quality and
utility of the applications products we help them demonstrate. In
keeping with NASA's continued commitment to meet research needs, to the
extent possible, through scientific data purchases, the Commercial
Remote Sensing Program expects to identify new commercial sources of
Earth Science data.
Fiscal year 2001 promises to be a year of substantial payoff from
prior investments in the EOS program, as well as a year of new
opportunities from small missions and from partnerships that
demonstrate new uses of Earth remote sensing data across the Nation.
Aero-Space Technology Enterprise
The President's fiscal year 2001 request for NASA's Aero-Space
Technology Program is $1.193 billion, which represents an increase of
$68 million increase over fiscal year 2000. We have restructured this
budget to reflect our priorities and to maximize the benefit arising
from synergy between aeronautics and space transportation technologies.
The increase represents expanded investments in existing programs
(Aviation Safety, Flight Research, and Information Technology) and new
programs (Space Launch Initiative, Small Aircraft Transportation
System, and Quiet Aircraft Technology). These increased investments and
new initiatives reflect our priority objectives in safety, aviation
systems capacity, noise reduction, next-generation design tools,
experimental aircraft and access to space. These investments also
support out collaborative effort with the FAA and DOD to achieve the
national aviation goals described in the National Science and
Technology Council's ``National Research and Development Plan for
Aviation Safety, Security, Efficiency and Environmental
Compatibility.''
Aero-Space Technology Programs
The Enterprise is making great progress in accomplishing all 3 of
its major goals, which we refer to as ``Pillars for Success''--Global
Civil Aviation, Revolutionary Technology Leaps, and Access to Space.
Pillar One, Global Civil Aviation.--Over the years, NASA has
embraced safety as its number one core value, articulating an
unwavering commitment to safety for the public, astronauts and pilots,
and the NASA workforce, as well as for high value equipment and
property. Although flying is the safest of all the major modes of
transportation, the predicted tripling of air traffic over the next 20
years will render even today's low rate of less than two accidents per
million flights unacceptable. Therefore, as part of our commitment to
the public, we have taken dramatic steps, through joint FAA and NASA
research, to assure unquestioned safety for both travelers and crew on
our Nation's commercial airlines. The goal of NASA's Aviation Safety
Program is to reduce the aircraft accident rate by a factor of five
within 10 years, and by a factor of 10 within 25 years.
Of the many technologies now under development, two may have
profound impacts on aviation safety. The first is Synthetic Vision,
which will turn every flight into a clear daylight flight and alert the
crew to any safety hazard. This system will greatly reduce the single
most critical factor impairing the safety of worldwide aviation
operations--controlled flight into terrain (CFIT). The second is Flight
Data Analysis Tools, which will be used by airlines and governments to
identify and fix problems before they cause incidents or accidents. The
Agency is also collaborating with the Canadian Atmospheric
Environmental Services and the Federal Aviation Administration (FAA) in
researching the formation of ice on aircraft wings. In the area of
weather prediction and adaptation, NASA researchers continued their
work on the Advanced Vortex Sensing System (AVOSS)--a key to both
improving the safety of flight and reducing the impact of the growing
demand for air travel. New features included improvements in wake
prediction, observational weather systems, and real-time weather
forecasting.
With regard to environmental issues, NASA's collaborative
initiative with Pratt & Whitney demonstrated that the company's low-
emission combustor can reduce nitrogen oxide (NOX) levels by
half during landing and take-off cycles. It also showed comparable
reductions in cruise NOX emissions, carbon monoxide, and
unburned hydrocarbons. NASA has also been effectively addressing noise
pollution, through development of a new aircraft noise impact model
that help reduce noise by optimizing aircraft approach trajectories.
The new Quiet Aircraft Technology program will extend this research by
developing technologies for engine and airframe noise source reduction
and advanced operations to reduce community noise impact.
Another important development is NASA's increasing cooperation with
the U.S. Air Force, exemplified by the creation of a new Air Force-NASA
Partnership Council for Aeronautics. The Council is initially focusing
on six areas, one of which is classified. The five non-classified areas
are: Aging Aircraft, Propulsion, Concurrent Airspace Operation of
Autonomous Aircraft, Simulation-Based Acquisition /Intelligent
Synthesis Environment, and Advanced Vehicle concepts.
Pillar Two, Revolutionary Technology Leaps.--Progress continued
during fiscal year 1999 in NASA's general aviation initiatives.
Researchers completed assembly and initial performance and operability
testing on a new advanced internal combustion engine will be
demonstrated on experimental aircraft at the Summer 2000 Oshkosh Fly-In
in Wisconsin. Also, in the context of NASA's Advanced General Aviation
Transport Experiment (AGATE) program, researchers made final selections
of systems deemed most suitable for future integration into an
experimental general aviation aircraft. Selected systems include both
improved structural materials and an Intuitive Pilot Interface, which
provides pilots with a graphic depiction of a desired flight path--or
``Highway in the Sky''--taking into account weather, traffic, terrain
and any airspace issues, without the use of voice communications. The
new Small Aircraft Transportation System (SATS) program will apply this
research in a focused demonstration of how increased use of safer,
small aircraft could improve air system crowding. This new initiative
has the potential in the long-term to change the way people in outlying
communities view air travel.
Remotely piloted aircraft (RPA) have also been a focus of NASA
research. In July 1999, the Environmental Research Aircraft and Sensor
Technology (ERAST) project conducted a flight demonstration at Edwards
Air Force Base involving the Altus vehicle, which is capable of
performing science missions of greater than 4 hours above 55,000 feet
in areas such as the polar regions. The first low-altitude flight of
the Helios RPA was conducted in September 1999--the first step on the
way to eventual flight at an altitude of 100,000 feet in fiscal year
2001.
Pillar Three, Access to Space.--I am very excited about our new
Space Launch Initiative and I believe that no effort will be as
important to the future of this Enterprise and this Agency as this one.
In recent years, NASA has made significant progress in transitioning
routine space operations to the private sector so that taxpayer
resources can be concentrated on high-leverage science research and
technology development functions. However, commercially competitive,
privately-owned, low-cost, safe, Earth-to-orbit launch for human space
flight remains the most critical, fundamental step this Agency can take
to enable more aggressive civil space exploration and to stimulate new
space commerce. If successful, the Space Launch Initiative will mark a
dramatic maturing of our space program, with the potential to
revolutionize NASA's and the industry's roles and responsibilities. The
Initiative more than doubles fiscal year 2000 funding and supports our
goal of conducting a competition in 2005 to meet NASA's human space
flight needs through commercial launch service procurements by 2010 if
industry is capable of delivering on its promises.. To achieve this
goal, the Space Launch Initiative will pursue a three-pronged strategy:
(1) technical risk reduction activities to support full-scale
development decisions for at least two commercially competitive
reusable launch vehicles prior to the 2005 competition, (2) hardware
development to meet NASA-unique needs such as crew transport and cargo
return on commercial launch vehicles that cannot economically meet
these requirements alone, and (3) launch service procurements to
provide alternative access for select Space Station needs in the near-
term. In addition to these activities, the Space Launch Initiative also
incorporates ongoing NASA space transportation Pathfinder programs.
Among the most important of these ongoing programs are NASA's X-
vehicle demonstrator programs. The X-33 program made considerable
progress in fiscal year 1999 by beginning testing of the world's first
aerospike engine at the Stennis Space Center. Engine testing is on
track to be completed this summer. A significant challenge also arose,
involving a structural failure of the X-33's unique, composite material
liquid hydrogen fuel tank after successful completion of a rigorous
testing sequence. We are dealing with cutting-edge technology with
large composite designs, which have never been tested before. An
independent investigation team will release a report on the X-33
incident within the next month. In NASA's X-34 program, progress was
evident throughout fiscal year 1999, with delivery of the first flight
vehicle and captive carry tests by the companion L-1011 vehicle
successfully carried out. Stennis Space Center also conducted hot fire
testing of the X-34's innovative Fastrac engine. In addition, the wing
was installed on the second X-34 test vehicle, for use during the X-
34's first powered flights.
Research involving highly innovative space transportation
propulsion systems took a step forward with the ground testing of a
pair of hydrogen-fueled Rocket Based Combined Cycle (RBCC) flowpath
models. The transition from air-augmented rocket to ramjet operating
mode was demonstrated in a unique new facility that allows continuous
variation of the simulated mach number. Beyond this, NASA's Propulsive
Small Expendable Deployer System (PROSEDs) experiment is exploring the
potential role of electrodynamic tethers as a means of propulsion in
space, without the use of propellants. A Critical Design Review of the
project was carried out in early September 1999, and the experiment is
scheduled for launch in August 2000. In addition to the Space Launch
Initiative, NASA's fiscal year 2001 budget request includes $1.2
billion over five years, an increase of approximately $200 million, for
a base level of space transportation research that supports 2nd and 3rd
generation RLV technologies.
Commercial Technology Programs
Since its inception in 1958, NASA has been charged with ensuring
that the technology it develops is transferred to the U.S. industrial
community, thereby improving the Nation's competitive position in the
world market. The fiscal year 2001 budget request of $135 million
continues this important aspect of our mission. The Agency's
commercialization effort encompasses all technologies created at NASA
centers by civil servants, as well as innovations produced by NASA
contractors. The technology commercialization program involves the
following components: conducting a continuous inventory of newly-
developed NASA technologies, maintaining an internet-based database of
this inventory, assessing the commercial value of each technology,
establishing R&D partnerships with industry for dual use of the
technology, disseminating knowledge of these NASA technology
opportunities to the private sector, and supporting an efficient system
for licensing NASA technologies to private companies. Included in the
amount requested for NASA commercialization efforts is $100M to carry
out the provisions of the Small Business Innovation Research (SBIR)
Act, which requires that 2.5 percent of NASA's total extramural R&D
spending be set aside for small business research grants. An additional
set-aside, involving 0.15 percent of NASA's total extramural R&D
spending, applies to the Small Business Technology Transfer (STTR)
Program. The NASA SBIR program has clearly contributed to the U.S.
economy, fostering the establishment and growth of over 1,100 small,
high technology businesses.
CONCLUSION
Mr. Chairman, I am enthusiastic and pleased with the budget I am
presenting to the Committee. It gives us the stability to: continue
vital safety investments in our Space Shuttles, start a Space Launch
Initiative that will revolutionize our approach to meeting human space
flight launch needs, continue construction of the ISS, and to do the
cutting-edge research in science and technology that will make the
missions of tomorrow a reality. While there will continue to be
challenges with our ISS partnership, we will push forward and complete
the ISS. We are on the brink of having a state-of-the-art laboratory in
space that will provide unprecedented opportunities for long-term space
research and provide the foundation for opening the space frontier in
low-Earth orbit and beyond.
With a healthy launch industry, NASA would be able to focus its
sights beyond Earth orbit. We will revolutionize our understanding of
the universe and send rovers back to Mars while we look outward to
Europa and try to uncover the mysteries locked beneath the icy surface
of the Jovian moon that contains water and perhaps life. We will
continue to develop the technology that will ultimately enable us to
discover earth-size planets around other stars. We will continue to
study our own planet Earth to try and understand the Earth system as a
whole. We will push leap-frog technology which will not only make the
missions we have not yet dreamed of a reality, but will also provide
the technology push for continued economic prosperity and the exciting
jobs of tomorrow.
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION FISCAL YEAR 2001 ESTIMATES
[In millions of real year dollar]
----------------------------------------------------------------------------------------------------------------
Fiscal years--
-----------------------------------------------
1999 OPLAN 12/ 2000 OPLAN 2001 PRES
23/99 REVISED BUDGED
----------------------------------------------------------------------------------------------------------------
INTERNATIONAL SPACE STATION..................................... 2,299.7 2,323.1 2,114.5
SPACE FLIGHT OPERATIONS (SPACE SHUTTLE)......................... 2,998.3 2,979.5 3,165.7
PAYLOAD & UTILIZATION OPS....................................... 182.0 165.1 ..............
PAYLOAD & ELV SUPPORT........................................... .............. .............. 90.2
INVESTMENT & SUPPORT............................................ .............. .............. 129.5
-----------------------------------------------
HUMAN SPACE FLIGHT........................................ 5,480.0 5,467.7 5,499.9
===============================================
SPACE SCIENCE................................................... 2,119.2 2,192.8 2,398.8
LIFE & MICROGRAVITY SCIENCES & APPS............................. 263.5 274.7 302.4
EARTH SCIENCE................................................... 1,413.8 1,443.4 1,405.8
AERO-SPACE TECHNOLOGY........................................... 1,338.9 1,124.9 1,193.0
MISSION COMMUNICATIONS SERVICES................................. 380.0 406.3 ..............
SPACE OPERATIONS................................................ .............. .............. 529.4
ACADEMIC PROGRAMS............................................... 138.5 138.8 100.0
-----------------------------------------------
SCIENCE, AERONAUTICS & TECHNOLOGY......................... 5,653.9 5,580.9 5,929.4
===============================================
SAFETY, MSN ASSURANCE, ENGRING & ADV. CON- CEPTS............... 35.6 43.0 47.5
SPACE COMMUNICATION SERVICES.................................... 185.8 89.7 ..............
RESEACH & PROGRAM MANAGEMENT.................................... 2,109.6 2,217.6 2,290.6
CONSTRUCTION OF FACILITIES...................................... 168.5 181.9 245.9
-----------------------------------------------
MISSION SUPPORT........................................... 2,499.5 2,532.2 2,584.0
===============================================
INSPECTOR GENERAL............................................... 19.6 20.0 22.0
-----------------------------------------------
TOTAL BUDGET AUTHORITY.................................... 13,653.0 13,600.8 14,035.3
TOTAL BUDGET OUTLAYS...................................... 13,663.0 13,446.0 13,675.0
----------------------------------------------------------------------------------------------------------------
Note: Fiscal year 2000 includes rescission and supplemental/transfer of $20.2M from HSF TO MS.
ASSEMBLY OF THE INTERNATIONAL SPACE STATION VIDEO
Senator Bond. Mr. Administrator, I think you have a show
and tell here for us?
Mr. Goldin. Our staff talked to your staff, and we
committed to show this film, which shows, in four and a half
minutes, the assembly of the International Space Station.
Could we have the video?
Senator Bond. That's without objection.
Senator Mikulski. Whatever you say.
Senator Bond. We'd like to see it.
[Video shown.]
MULTIMEDIA PROJECTS
Senator Bond. Thank you very much, Mr. Goldin, and I guess
we are ready to turn to the questions.
My first question is on the multimedia projects. I
understand that NASA has been receiving proposals for the
development of multimedia products and services with regard to
the International Space Station. I am very concerned that these
proposals be judged according to objective criteria, on an even
playing field, and we have heard some concerns from the
community.
I understand there is not a formal RFP with a source
evaluation board, so I'd like to know the status of this
program, what criteria will be used in judging them, how the
proposals will be selected, and if there is a procedure for
handling disputes about the award of this contract, if one or
some of the applicants are not happy with the result. How is
this going to work?
Mr. Goldin. First, Mr. Chairman, let me say we're in new
territory. We are not dealing with standard government
contracts, be they cost-type or fixed-price contracts. What we
are attempting to do is engage the private sector in providing
high definition TV services, multimedia services, so the
taxpayers don't have to make an investment and, in fact, have
the potential for gaining money back from the profits that
might occur.
Senator Bond. And I agree with that. I think that's a great
approach. I'm excited about it.
Mr. Goldin. And saying that, there's a great deal of
anxiety because we have a different contractual approach. I am
not a source selection official, so as a result I am not in
that process and I won't be briefed until a decision is made.
We're right in the middle of the process.
I have talked to my people, and they have assured me that
there are objective criteria for selection, there will be an
opportunity for people to comment after the selection is made.
Senator Bond. I mean has there been a formal RFP, and do
the people making the proposals know what the criteria are?
Mr. Goldin. There has been--Joe, could you come up, please?
I would prefer that he do it because I have not been in the
process.
Mr. Rothenberg. Yes, sir. In fact, it's not a formal RFP,
but we put out a request or an invitation for industry to
submit proposals relative to forming a cooperative agreement
with us.
The RFP or the invitation is on the net, and visible on the
web page, as is the evaluation criteria by which we will select
the people to negotiate. It has all been on the web since the
day we put it out.
The process is a formal process. In fact, we actually
validated it as part of our ISO-9000 certification last year.
The whole solicitation, so to speak--it's not a solicitation in
the traditional sense--is being run very formally. There is
evaluation criteria, it is on the net, and there is a team to
evaluate it.
Senator Bond. How many proposals, how many different
organizations are making proposals?
Mr. Rothenberg. Twelve.
Senator Bond. And what is your time frame for making the
selection?
Mr. Rothenberg. We hope to be able to do it over the next
month. However, again, it's charting new territory, and there
are policy issues and things to resolve to make sure we are on
firm ground when we do.
Senator Bond. Would you mind submitting to the committee a
summary of the criteria? Is there something you can summarize.
Mr. Rothenberg. Certainly.
Senator Bond. We don't want a 500-page document, but----
Mr. Rothenberg. It's pretty straightforward. Certainly we
will.
[The information follows:]
MCDONALD REPORT
ROTHENBERG SUMMARY OF TOP ISSUES
Workforce erosion threatens continued Shuttle safety--Hiring will
address this concern, however the number of in-flight anomalies today
are significantly less in magnitude and significance then those when
the shuttle workforce was at its peak.
Shuttle is not an Operational Vehicle--its processing is highly
dependent on touch labor and human actions. Touch labor and human
actions are inherently weak links in the safety chain and should be
reduced wherever possible--Safety and maintainability studies will
attempt to identify and quantify upgrades which reduce opportunities
for human error.
Formal Aging Program covering all subsystems needs to be put in
place--New Shuttle Development Office as well as AMES support will
address.
Risk management, maintainability and maintenance processes and
tools need to be improved and take advantage of more modern tools
including: a PRACA relational database front end; a more quantitative
QRAS model; and processing support equipment such as non invasive
wiring fault detection--Upgrade maintainability initiative, newly
formed Shuttle Development Team and AMES Support will address.
Shuttle design incorporates a level of risk which needs to be re-
examined to see if they can be eliminated or reduced including:
redundant wire routing; numbers of joints in engine and hydraulic
plumbing; routing of redundant hydraulic lines and APU technology--
These will be systematically reviewed by the Shuttle Program Office and
as appropriate included in the upgrade program.
Workforce stress--Broader survey by NASA at MSFC and by USA doesn't
support all of the Human Factors findings.
ASAP recommendations not always followed and the need for ASAP
turnover--Team did not have the benefit of all NASA responses to ASAP
but we have not responded by agreeing fully to the prescribed approach
for every ASAP recommendation such as the 98 and 99 skill shortage
concerns.
RUSSIAN SERVICE MODULE
Senator Bond. Okay. All right. Thank you very much.
Mr. Administrator, let me turn to the question that Senator
Mikulski raised about Russia. You know, Russia's participation
has been a significant roadblock to meeting the scheduled
development of hardware and assembly as well as scheduled
launches for the ISS assembly.
In particular, the next scheduled element is the Russian-
built service module, the element which was described here with
living quarters and is part of the critical path. The element
was scheduled for launch last year and has been rescheduled for
launch by Russia later on I guess this year, on a Proton
rocket, which also had problems.
The GAO in its report recently questioned the safety
requirements of the Russian-made service module, and since it's
a critical component in providing crew quarters and control
functions, it identified, the GAO said the service module falls
short of NASA's safety requirements--inadequate shielding,
inability to operate after losing cabin pressure, excessive
noise, lack of verification of design.
Can you tell us what the actual status of the service
module is, and is the assembly complete in Russia? Has it been
tested fully to ensure that it meets all requirements, both
hardware and software.
Mr. Goldin. The service module testing is complete and
they're going back and doing what's called regression testing,
because there's additional time available. But sometime, by
late this month, all testing will be complete, even the
regression testing, and it will be put in a container awaiting
readiness for launch.
The major problem we have had over the last year with the
service module is not the module itself, but the failure of the
Proton rocket. And I might say that America last year had
trouble with its Delta and its Titan rockets, as did Europe
with its Arian and Japan with it's H2 rockets. In that sense we
are not concerned; and in fact our people have been over in
Russia and have been briefed by the Russians on their fixes to
the Proton rocket, and they believe they're on the right path.
In fact, they commented that their testing was even more
rigorous than the kind of testing we do.
That right now is our issue. We told the Russians we wanted
them to launch a minimum of four flights, two with the existing
Proton rockets and then two with the modifications. Two
launches have already occurred of the existing configuration
successful. There will be another launch this month, and in May
and June there are two launches with the modified Proton
rocket.
Presuming those launches are successful, we are on target
for a launch between July 8 and July 14.
Now to comment with regard to the GAO, we have communicated
with the GAO, we have gone through each of those issues, we
have taken specific steps in working with the Russians, and we
do not believe that there is a safety problem. We thank the GAO
for pointing out these issues, and we have worked them through.
Senator Bond. Thank you very much, Mr. Administrator. Let
me turn now to Senator Mikulski.
CHEMICAL AND BIOLOGICAL WARFARE
Senator Mikulski. Thank you, Mr. Chairman. I would like to
just follow up on the Russian issue to really get your
response.
Last year, allegations were raised that U.S. funds you
designated for the space station were being diverted to a
company called Biopreparat.
This company was allegedly involved in chemical and
biological warfare. This is a persistent rumor that continues
to appear, and I would like for you to tell me, one have you
investigated this rumor and two what have been the outcomes of
that investigation?
Mr. Goldin. Thank you, Senator Mikulski.
We sent a team to Russia, the Russians were very, very open
with us. That team included the Chief Financial Officer from
the Johnson Space Center, the administrative contracting
officer, we had a representative from the I.G.'s office, and we
had a number of other people.
I will submit for the record the formal report that they
came back with and the protocol that they signed, but it says:
``The NASA team saw no indication that the funds were used for
other than the intended purposes.''
And it goes into the process that they used for the
investigation and their findings. In addition to which, on our
own cognizance, the I.G. is taking a further step by talking to
the scientists that have been engaged in this program, and she
will be coming out with a follow-up report in about a month.
Senator Mikulski. The I.G. will be coming out with a
report?
Mr. Goldin. Yes.
Ms. Gross. Not the scientists that were at Biopreparat, but
scientists from America who attended Russian scientific
presentations that we funded, and also those attended from U.S.
presentations. We're also looking at the internal controls that
were used to engage in this funding and how it interacted with
the State Department.
Senator Mikulski. Thank you. Well, that sounds like you've
done a pretty rigorous evaluation of this, and that steps will
be taken in terms of controls.
Because we are very upset about this, and you know, we got
the Russians involved in this space station so they wouldn't
sell their technology to countries wanting to engage in weapons
of mass destruction. They did go to Iran, their fingerprints
are on other sales of technology. Part of that is the way the
Russian government handled our money, and we won't go into that
today, but biological and chemical warfare really is bone-
chilling, so whatever we can do would be great.
EARTH SCIENCE BUDGET
Let's move on, though, to one of the other issues. As I
understand it, the earth science budget is cut by $100 million
over the next 5 years. It does not appear that NASA also has a
mission for earth science after EOSDIS.
Tell me, why is earth science the only program that's being
cut at NASA, and then also, what is the strategic plan for
earth science beyond EOSDIS?
Mr. Goldin. The Administration felt that given we have had
incredible success in getting the phase one of the Earth
Observation System underway, we needed to take a pause before
we thought about the investments we will make in the next
phase, which begins about 3 years from now, 4 years from now.
So they asked us to prepare a plan, an earth science
implementation plan----
Senator Mikulski. This is OMB that asked you?
Mr. Goldin. Yes. And to coordinate with all the other
agencies of government--the National Science Foundation, the
U.S. Geological Survey, the Department of Defense, and come
back to them in the 2002 budget with a very detailed, agreed-to
peer-reviewed earth science plan.
The plan has come out, we've submitted it to the National
Academy for review and our NASA oversight committees for
review. We're engaging with the entire scientific community,
and this plan will be part of the 2002 budget, and at that time
I believe we will have a very significant outlook for the
second phase of the Earth Observation System.
Senator Mikulski. Well, Doctor, I really need to be kept
apprised of this, and I will tell you why. I understand the
logic OMB presented to you, and ``let's all take a pause.'' But
you see, conveniently that comes out--and this is not about you
in which you were directed to do--when we have a new
administration, a new head of OMB--and quite frankly, I am
afraid that earth science will get stiff-armed in the
transition, because we take pauses and breathers and so on.
So I can't have earth science literally fall between the
transition cracks, and I would be very concerned about it. It
would be my desire that even if the pause seems logical, that
we know this year's appropriation what we are going to be
talking about in 2002 so that we maintain the building blocks,
and we're all aware that we do not want earth science to fall
between the transition crack, or a new administration says
``Since we took a pause one year, why don't we take a pause
next year? And how about the pause after that?''
And I will tell you, from this Senator's perspective, it is
not a pause that refreshes.
Mr. Goldin. Senator, I don't know that I could add to what
you just said.
PEER REVIEWED ANALYSIS
Senator Mikulski. When do you think your peer--I see my
time is up.
Senator Bond. That's all right. Take another shot. You've
got him on the ropes.
Senator Mikulski. When do you think your peer reviewed
analysis will be done?
Mr. Goldin. I think it will be done in late summer of this
year, in time for the 2002 budget submittal, but before the
Congress goes out of session.
Senator Mikulski. Do you think we could have this sooner
rather than later, at least the preliminary picture so that we
can have a sense of this as both the chairman and I work
together, and we really are working with our House
counterparts?
Mr. Goldin. I would be pleased to submit for the record a
consolidated version of what I believe the direction is going
to be and ought to be in response to this hearing, if that
would be----
Senator Mikulski. Then we will accept it as NASA's view,
been peer-reviewed, but at least it will give us a picture of
the direction that NASA and its internal leadership, as well as
yours, thinks it should go.
Mr. Goldin. I would be pleased to do that, and I believe
that this is one of the most significant things NASA is doing.
We are just trying to understand how the earth is changing and
what are the consequences for life on earth. I can't think of a
more important program. So I will personally prepare this
document and submit it to this committee for the record in
response to your question at this hearing.
Senator Mikulski. Thank you very much.
[The information follows:]
Exploring Our Home Planet NASA's Earth Science Enterprise in the New
Decade
EXECUTIVE SUMMARY
NASA's Earth Science Enterprise is charting the future course of
its exploration of planet Earth from space. The roadmap of this
exploration runs through the phases of characterizing, understanding
and predicting changes and their effects in the Earth system. The Earth
Observing System is providing that characterization, showing how the
Earth's major components of land, atmosphere, oceans, ice and life
interact on a range of time scales. The coming decade will see our
understanding of the forces acting on the Earth system, how it
responds, what will be the consequences for life on Earth. This new
understanding will result in a growing national predictive capability
for climate, weather and natural hazards.
We know what are the science issues and questions that must be
answered in the new decade. We have a maturing picture of what the
observing and research architecture must be to answer these questions.
We have identified the technology challenges that must be overcome to
make this architecture both feasible and affordable. And we know that a
variety of commercial, interagency and international partnerships will
be required.
As the Earth Science Enterprise deploys the Earth Observing System,
it is in parallel defining its Research Strategy and resultant
observational requirements for the next decade. The Enterprise's
Research Strategy is being reviewed by the National Academy of Sciences
this Summer. Candidate mission concepts arising from the requirements
and criteria in the Research Strategy will be identified in the fiscal
year 2002 budget request. Those already identified are the NPOESS
Preparatory Project and the Landsat continuity mission (perhaps a data
purchase or other partnership). Stability in the outyear budget for
Earth Science will assure technology development and related
formulation activities can occur for post-2002 mission concepts as we
complete deployment of the first series of EOS, complete development of
the EOS Data and Information System, and conduct science and
applications research based on the resulting data.
1. Earth Science is Science in the National Interest
If we could extend practical weather forecasts to 7 to 10 days, the
benefits to utility companies, to building contractors, to just about
everyone, would be enormous. How will we get there? The same way the
Nation achieved the current 3-5 day forecasts--by adding NASA's
satellite technology to NOAA's operational weather forecasting
capability.
If we understood how and why climate is changing, we could take
prudent steps--and avoid costly mis-steps--to lessen our impact on the
climate system and our vulnerability to its changes. If we knew how
much rainfall the Southeastern U.S. could expect to receive next
season, farmers could make better decisions on planting drought
resistant crops or more thirsty ones. How will we know? The same way we
came to understand the extent and causes of ozone depletion, the
mechanics of El Nino and La Nina, and the impacts of incoming solar
energy on the Earth's atmosphere, oceans and land surface--by designing
new space--based scientific instruments to measure key Earth system
features, and by partnering with USDA, USGS, and other Federal agencies
to get that information to those who need it at the state and local
levels.
If we understood the true shape of the Earth's surface, and how the
motions of the Earth's interior affected it, we could begin to predict
volcanic eruptions and the impacts of earthquakes and floods. How will
we find out? The same way we have begun to measure land surface shifts
in the Los Angeles Basin, and to collect the data needed to build a
three-dimensional model of nearly the entire inhabited portion of the
Earth--by combining new satellite remote sensing techniques with
ground-based instruments to measure the Earth's gravity field and
surface strain. And by partnering with USGS and FEMA to apply these
data to their maps of geologic faults and flood plains.
2. Scientific Challenges
NASA's Earth Science Enterprise aims to obtain a scientific
understanding of the entire Earth system on a global scale by
describing how its component parts and their interactions have evolved,
how they function, and how they may be expected to continue to evolve
on all time scales. The challenge is to develop the capability to
predict those changes that will occur in the next decade to century,
both naturally and in response to human activity. The strategic
objective of the Enterprise is to provide scientific answers to the
overarching question: How is the Earth changing and what are the
consequences for life on Earth?
The view of Earth from space afforded by NASA's research satellites
of the past four decades has led researchers to see the Earth as a
complex and dynamic system. Its varied components of land, atmosphere,
oceans, ice, and life are highly interactive. Incoming energy from the
Sun and the motions of the Earth's interior drive these interactions.
They constitute the natural forces acting on the Earth system.
Especially in the last few millennia, and accelerating in recent
centuries, human activities have constituted additional forces acting
on the Earth system.
These forces illicit a wide variety of responses in the Earth
system. These include large-scale changes in ecosystems over time (as,
for example, when `ice ages' expand and recede, or when forested lands
are converted to agricultural or residential use), or even, perhaps,
the frequency of severe storms. The Earth's own natural variability
makes it difficult to isolate natural from human-induced impacts.
Further, many Earth system responses feed back on the system to become
forcing factors themselves.
By examining the Earth as a system, as the view from space enables
us to do, NASA aims to understand the forces, responses and feedbacks,
and what they imply about natural and human-induced change. This
conceptual approach applies in essence to all research areas of NASA's
Earth science program, although it is particularly relevant to the
problem of climate change, a major Earth science-related issue facing
the countries of the world. The scientific strategy to address this
immensely complex problem can be laid out in five steps or fundamental
questions, each raising a wide range of cross-disciplinary science
problems:
--How is the global Earth system changing?
--What are the primary causes of change in the Earth system?
--How does the Earth system respond to these natural and human-
induced changes?
--What are the consequences of change in the Earth system for human
civilization?
--How well can we predict future changes in the Earth system?
For each of these, a set of detailed, answerable questions have
been posed, and what information is required to begin to answer them
identified. Together with a set of decision How is the Earth changing
and what are the consequences for life on Earth?
--How is the global Earth system changing?
--Is the global cycle of water through the atmosphere accelerating?
--How is the global ocean circulation varying on climatic time
scales?
--How are global ecosystems changing?
--How is stratospheric ozone changing, as the abundance of ozone-
depleting chemicals decreases?
--Are polar ice sheets losing mass as a result of climate change?
--What are the motions of the Earth and the Earth's interior, and
what information can be inferred about Earth's internal
processes?
--What are the primary forcings of the Earth system?
--What trends in atmospheric constituents and solar radiation are
driving global climate?
--What are the changes in global land cover and land use, and what
are their causes?
--How is the Earth's surface being transformed and how can such
information be used to predict future changes?
--How does the Earth system respond to natural and human-induced
changes?
--What are the effects of clouds and surface hydrologic processes
on climate change?
--How do ecosystems respond to environmental change and affect the
global carbon cycle?
--Will climate variations induce major changes in the deep ocean?
--How do stratospheric trace constituents respond to climate change
and chemical agents?
--Will changes in polar ice sheets cause a major change in global
sea level?
--What are the effects of regional pollution on the global
atmosphere, and the effects of global chemical and climate
changes on regional air quality?
--What are the consequences of change in the Earth system for human
civilization?
--How are variations in local weather, precipitation and water
resources related to global climate change?
--What are the consequences of land cover and land use change?
--To what extent are changes in coastal regions related to climate
change and sea-level rise?
--How well can we predict the changes to the Earth system that will
take place in the future?
--To what extent can weather forecasting be improved by new global
observations and advances in satellite data assimilation?
--To what extent can transient climate variations be understood and
predicted?
--To what extent can long-term climate trends be assessed or
predicted?
--To what extent can future atmospheric chemical impacts be
assessed?
--To what extent can future atmospheric concentrations of carbon
dioxide and methane be predicted? criteria (below), these
comprise a Research Strategy for the next decade. This
Earth Science Enterprise Research Strategy is being
reviewed by the National Academy of Sciences this Summer.
The Earth system science issues outlined above are remarkable for
the number and diversity of topics, the complexity of the interactions,
the multiplicity of spatial and time scales involved. A great number of
scientific questions have been posed by the nation through NRC reports.
Establishing research priorities becomes a major challenge when
priorities cross a number of different disciplines. The challenge
facing the ESE is to balance competing demands in the face of limited
resources and to chart a program that addresses the most important and
tractable scientific questions and allows optimal use of NASA's unique
capabilities. The criteria for setting priorities among science
questions and implementation approaches are shown here.
3. Progress Thus Far and Prospects for the Future
The Nation's investment in Earth Science at NASA has yielded some
remarkable returns. NASA's ability to make global and regional-scale
observations, to engage in basic research, and model Earth system
components gives it a unique ability to formulate and answer
scientifically important and policy relevant questions. Examples of
achievements thus far include:
--Established the Earth's radiation budget (accounting for what
happens to the solar energy that reaches the Earth) and its
contribution to Earth's temperature and climate conditions;
--Created a global database of land cover as a baseline to track
future change due to natural and human-induced forces;
--Made the first direct measurements of global ocean circulation and
wind speed and direction at the ocean surface, and discovered
their role in short-term weather events such as hurricanes and
other storms, and seasonal variations in climate such as El
Nino/La Nina;
--Made the first measurements of the Earth's seasonal and annual
biosphere fluctuations and their impact on food and fiber
production;
--Established the global carbon budget (accounting for circulation of
carbon among the land, oceans and atmosphere), quantifying the
uncertainties in our knowledge of it, to support sound
environmental policy decisions; and
--Monitored the seasonal and annual change in stratospheric ozone
concentrations, and confirmed the sources and chemical
processes of ozone destruction.
The following two tables document progress thus far in
understanding the forces and responses of the Earth system. The first
identifies the key forces acting on the Earth's climate and estimating
their relative contributions to climate change. The second identifies
principal response areas and their relative impact on our lives. For
each, an assessment is made of how well we understood them before the
era of Earth-observing satellites, how well we understand them now, and
where we think we can be in 2010.
Together, these two tables summarize our anticipated movement
beyond characterization of the Earth system to understanding the
forces, responses and feedbacks at work in the system. Requisite for
this progress is a balanced program of observations, research and
modeling enabled by advanced technology development for the next
decade. The Earth Science Enterprise has already begun laying out this
architecture.
4. Observing & Research Architecture
NASA's Earth Observing System, now being deployed, will enable
scientists to study all the key interactions among the major components
of the Earth system--the land, atmosphere, oceans, ice and life. It
will help us understand how the Earth works. The first EOS missions,
Landsat 7, QuikSCAT, Terra, and ACRIMsat, are already in orbit and
providing valuable science data, which is being distributed through the
EOS Data and Information System (EOSDIS). Through 2003, another 20
missions will round out the first phase of the Earth Observing System.
Together, the EOS and related small satellites and Earth Probes such as
QuikTOMS will allow researchers to observe these forcing and response
factors in parallel to yield a synoptic view of the Earth system. Thus,
EOS represents an historic increase in our ability to understand in
unprecedented ways the planet on which we live.
Recent gains in science and technology enable the design of an
Earth observing and research architecture for the next decade. Moving
from characterization to understanding requires an integrated program
of observations, information management, research and analysis,
modeling, and knowledge dissemination and application. This framework
for understanding then provides the groundwork for reliable Earth
system prediction.
4.1 Observing Strategy
EOS will lay the scientific foundation for the future climate
monitoring system--the joint NOAA, DOD National Polar-orbiting
Operational Environmental Satellite System--that will also be the
future satellite system for both civilian and military weather
forecasting. And EOS will provide the broader context of Earth science
for future missions to explore Earth system processes about which
little is known.
These two additional contributions of EOS point to two of the three
pillars of observing strategy for the next decade.
Systematic Measurements
The first pillar is continuity of selected long-term, or
``systematic'' measurements for which is believed that more than one
decade of observation is required to understand natural variability and
human influences on a key Earth system parameter. One example is
atmospheric temperature and humidity, which is seen as a basic
barometer of climate change. Another is land cover change, which both
affects and is effected by regional climate change. Solar variability
requires long term monitoring commensurate with its decadal variability
so that internal and external forces on the Earth system can be
quantified.
For each systematic measurement to be sustained, a plan for its
continuity must be established. Some can be assumed by the NPOESS
satellites. The key issues for NASA then are: (a) providing the means
to bridge the time span between EOS and NPOESS; (b) developing the
technology that will enable NPOESS to acquire reliable, low cost
instruments; (c) assuring the algorithms and calibration procedures
exist to enable science-quality data to be derived from the operational
instruments; and (d) securing long-term maintenance of these
observations. For those systematic measurements not (or not yet)
planned for assumption by NPOESS, NASA must seek other appropriate
operational agencies (domestic or foreign) to continue the
measurements. NASA, after all, is a research and technology
organization not well suited to carry on operational, long term
monitoring tasks--our role is to advance the state of the art in
science and technology, facilitate its adoption by essential service
providers like NOAA and USGS, then move on to the next challenge.
In the 2003-2010 timeframe, some of the systematic measurement
requirements will be met by the NPOESS Preparatory Project, a joint
mission planned by NASA and the NPOESS Integrated Program Office for
2005. NPP will continue essential measurements from Terra and Aqua
(including cloud and vegetation cover and temperature and humidity
profiles) as well as demonstrate instrument technology for NPOESS. NASA
and USGS are partnering to formulate the plan for continuity of the
Landsat data set, perhaps through domestic and/or international
collaboration. Other systematic measurement needs are being assessed as
part of the review of the Research Strategy, including those for ocean
and ice altimetry, global precipitation, and stratospheric chemistry.
The ideal observing system of the future will comprise multiple
satellites operating in a coordinated fashion from multiple orbits (low
Earth orbit, geostationary orbits, L1, L2). Small, smart satellite
technologies and high rate on-board computing and communications will
enable constellations of satellites that will provide high temporal
resolution as well as robustness. Already, the Enterprise is taking its
first steps in this constellation approach by ``formation flying'' its
land imaging satellites Terra, Landsat and EO-1. We will do the same
for the atmosphere with Aqua, Aura, PICASSO and Cloudsat. From its
position at L1, Triana will view the full, Sun-lit disk of the Earth in
some of the same channels as TOMS, adding the synoptic but frequent
view as context for the local but infrequent one by TOMS. The next
decade will provide new opportunities to advance the state of the art
in multi-satellite science with such concepts as the Global
Precipitation Mission, which will employ a main sciencecraft in tandem
with existing and emerging operational weather satellites serving as
drones to measure global precipitation distribution from pole to pole
on a daily basis.
Exploratory Measurements
The second pillar is a set of exploratory missions that examine
Earth system processes whose basic workings and impact on global change
is largely unquantified. In some cases, they involve processes of known
importance, but where the technology to measure them is only now
becoming available at (an affordable cost). The Earth System Science
Pathfinder (ESSP) missions now in development are in this category. The
Gravity Recovery And Climate Experiment (GRACE-2001) will make the
first precise measurements of the Earth's geoid. These measurements
will serve to improve the precision of ocean altimetry as well as add
to our understanding of the Earth's interior. PICASSO-CENA and Cloudsat
(2003) will use space-borne lasers to provide vertical profile
measurements of aerosols and clouds, respectively, to help determine
how they moderate the impact of solar energy reaching the atmosphere or
reflected from the surface.
In the 2003-2010 timeframe, candidate exploratory missions include
soil moisture measurement, ocean salinity, and land surface topography
& deformation. Recent research has demonstrated that soil moisture is a
key missing component in models of the global water cycle--and the
availability of fresh water resources around the globe. Regionally,
soil moisture influences evaporation, which in turn affects
precipitation. Thus, accurate measurements of soil moisture on regional
scales can improve forecasts of precipitation.
Exploratory measurement requirements are also being addressed in
the review of the ESE Research Strategy. The Earth Science Enterprise
will avoid creating a ``queue'' of such missions. Rather, the tactic of
mixing strategically focused and highly innovative scientific
experiments within exploratory mission solicitations will be pursued to
allow a combination of strategy and opportunity (along with assessments
of technology readiness) to influence mission concept selection.
Operational Pre-cursor and Technology Demonstrations
A third pillar comprises demonstration missions that prepare the
way for new and lower cost capabilities to support our national Earth
remote sensing strategic objectives. Operational pre-cursor missions
are those which primarily serve interests outside the research
community. NOAA, for example, sees measurement of tropospheric winds as
yielding the next great improvement in weather forecasting. NASA has
invested extensively during the past decade in development of solid
state laser technologies that enable measurements of tropospheric wind
speed commensurate with NOAA's needs. NASA and NOAA are discussing
possible approaches (including commercial partnerships) to generate
these data. NASA will only pursue such missions where it has the
expertise and required technologies, and where there is a partner who
will use their products, and who will co-sponsor development and
execution of the mission.
We use technology demonstration missions to ``flight test'' new
instrument and spacecraft technologies that enhance capabilities and/or
lower the cost of measurements we need to make in the future. ESE will
launch the New Millennium Program Earth Observer-1 (EO-1) mission to
demonstrate a low cost means to meet the requirement for future
Landsat-type data as well as to demonstrate the scientific and market
value of hyperspectral imagery. ESE recently selected its next New
Millennium mission to demonstrate the ability to make atmospheric
sounding data from geostationary orbits that enable significant
improvements (from 80 percent to 90 percent) in accuracy and extend the
range of weather forecast from 3-5 days to 7-10 days.
4.2. Data and Information System Services
The Earth Observing System Data and Information System (EOSDIS) is
functioning well and supporting the EOS missions launched to date. New
EOSDIS releases are planned to support the balance of EOS missions to
be launched through 2002. Over the past few years the National Academy
of Sciences has been encouraging NASA to pursue an even more open and
distributed architecture for data and information services. NASA is
studying approaches to the data and information requirements of the
future, with the goal of capitalizing on our investment in EOSDIS while
embracing a broader range of modes of information product development
and distribution. NASA will be presenting a concept for post-2002 data
and information system services for review by the National Academy of
Sciences later this year.
This emerging new concept is intended to meet the challenges posed
by higher data volumes, increasing demand and variety of data products
required by diverse users, and continued rapid advancement of computing
and communications technology. It will feature collaboration among
participants on standards and protocols, competition in selection of
new and innovative components, and rigorous processes to ensure
transition of important data records to long-term archives (principally
at other agencies). Components of this new Data and Information System
Services (NewDISS) concept include: Backbone Data Centers evolving from
the current Distributed Active Archive Centers (DAACs); Mission Data
Systems to produce basic data products from new missions for broad use;
and Science/Multi-Mission Data Centers to produce innovative
information products, often by combining data from two or more
missions. These are conceptual components; in reality, strategic
alliances and competitive processes will likely result in cases where
these functions are combined for some data product types. Such a
concept will capitalize on an evolving EOSDIS infrastructure while
adding new, flexible components to enable the ``understanding'' phase
of Earth System Science. We envision that rapid developments in
information system and telecommunications technologies will enable us
to process and distribute geospatial information to users in near real-
time.
4.3. Research & Analysis
The intellectual capital for both the planning and exploitation of
Earth system observations is vested in a robust research and data
analysis program. Research and analysis is the conceptual source of
Earth system science questions, and of strategies to address them. The
research program generates new scientific ideas and emerging research
approaches, supports the early development of innovative observing
techniques. In some cases, it generates new instruments and the linkage
of instruments with platforms. This program develops processing
algorithms, organizes field tests, and generally charts the path for
scientific and engineering developments that enable future advances. It
assures the linkage between global satellite observations, in situ
process-oriented observations, and the computational models used to
provide both a framework for interpretation of observations and a tool
for prediction.
4.4. Earth System Modeling
Computer-based models are the principal means by which observations
are translated into understanding in Earth science. Two key, related
reasons account for this. First, as has been often described, the Earth
is a dynamic system of interacting components. For example, it is the
interaction of ocean temperatures and atmospheric winds and moisture
that produce El Nino and La Nina. Atmosphere and land interactions,
principally evaporation and precipitation, play a large role in
regional weather. Models are the means by which these dynamic processes
can be represented and studied. Second, because climate and other Earth
system processes cannot be subjected to controlled experimentation,
models are the only way in which predictions about changes in the
future can be made. Weather forecasts are made based on models
initialized with current weather conditions and mathematically-
expressed climate system relationships. Questions about the affects of
changing concentrations of trace gases on future climate can only be
addressed via models.
A variety of models exist for specific Earth system processes, such
as formation of cloud particles in atmospheric convection, and ozone
destruction and replenishment. Earth system component models, such as
for the whole atmosphere, have been constructed and are being improved,
employing in some cases the results of process models. Further,
component models are being coupled to represent the key interactions in
the Earth system, including ocean-atmosphere and land-atmosphere
interactions, in order to improve our understanding of the global water
cycle, the global carbon cycle, and the various forcings, responses and
feedback in the Earth system.
Accurate models are the key to the ``understanding'' phase of Earth
system science. The modeling work now underway, and the observations
from EOS and future satellites which drive them, should yield a
quantitative understanding of Earth system change under present
conditions and provide prediction of future changes. During the coming
decade, the Enterprise will run fully interactive ecosystem-climate
models to assess the impacts of climate change on land and marine
productivity. We will assimilate wind data and precipitation data into
climate and weather forecasting models to improve near-term and
seasonal-to-interannual weather prediction.
These modeling efforts depend on a successful program of
observation in the next decade to acquire data on such parameters as
winds in the troposphere, global precipitation, soil moisture, and land
surface change. Some are measurements that must continue from the EOS
era (e.g., ocean surface winds, land cover change), while others will
be new space-based measurements (e.g., soil moisture, tropospheric
winds, land surface deformation).
We must also invest in development and utilization of
supercomputers that support efficient execution of Earth system models
that can predict future changes in the Earth on seasonal, annual, and
inter-annual time scales.
4.6 Partnerships
The ESE research program is conducted within a larger national and
international context. This implies both opportunities for task-sharing
with partner agencies, and the responsibility to seek optimal
coordination of mutually supportive programs of these national and
international partners. Domestically, both commercial and inter-agency
partnerships are essential to the long-term success of the Enterprise.
The U.S. commercial remote sensing industry comprises both
providers of satellite data and producers of value-added information
products. Some companies are involved in both. The first wholly
commercial remote sensing satellite was launched in 1999, and several
more are planned over the next few years. Thus it is increasingly
likely that some Enterprise science data needs will be met by
commercial providers, and Enterprise mission solicitations will offer
these opportunities. ``Value-added'' companies are being engaged in our
applications demonstration partnerships with state and local
governments and universities, with the intent that new, direct industry
to user commercial relationships will result. While NASA has been
instrumental in the birth and growth of the commercial remote sensing
industry, it has evolved to the point where NASA has limited ability to
influence their investment decisions. This is a good thing, but implies
a change of relationship to a more equal partner status. Conversely,
the growing industry has a limited ability to invest in high risk
development; this will continue to be the area of NASA's contribution,
along with scientific research.
The Enterprise has been actively seeking the cooperation of
operational agencies (principally NOAA and USGS) to ensure the long-
term continuity of key environmental measurements in the long term. To
achieve this goal, NASA will promote the convergence of the operational
observation requirements of partner agencies with ESE research data
needs for systematic observations, share the cost of new developments,
and develop precursor instruments and spacecraft technologies for
future operational application missions. NASA will also encourage the
continuing involvement of scientific investigators in the calibration
and validation of operational measurements, the development of more
advanced information retrieval algorithms, and the analysis of
operational data records. From this perspective, the potential for
serving operational needs or commercial applications is a priority
criterion for ESE programs, since such applications imply the potential
for cooperation with relevant government agencies or data purchase from
commercial sources.
Internationally, partnerships will continue to be essential for
global change research. In the EOS era, $4 billion worth of activity
were invested by foreign governments directly in EOS missions, and $4.7
billion more was leveraged by the Enterprise through data sharing
arrangements. Both traditional partners Europe, Japan and Canada and
newly emerging ones like Brazil and Argentina are being engaged in
discussions of an integrated global observing strategy for the future.
In addition to the cost savings resulting from such partnerships, it
has become apparent that foreign governments are more willing to accept
the findings of research when their researchers and space programs are
engaged.
The Earth Science Enterprise will pursue all three types of
partners as we design the observing and research architecture for the
next decade. The likelihood of success in leveraging resources invested
by partners is greatly enhanced when the U.S. exhibits budget stability
in the planning and implementation of satellite programs.
4.7 Getting Scientific Results to Users
Earth Science is science in the national interest. That is, it
produces information with uses far beyond the scientific community--in
weather forecasting, in agriculture and natural resource management, in
urban and regional planning, and in environmental policy-making. Beyond
research, then, the Enterprise must work with its partners to assure
that timely, useable information products are available to a broad
range of decision-makers. Several avenues exist and must be
strengthened over the next decade to accomplish this.
The first is NASA's partnerships with operational agencies--those
agencies like NOAA, FEMA, USDA and USGS that provide services on a
routine basis to the public. NASA already develops the weather
satellites operated by NOAA for weather forecasting. In the next
decade, NASA will help NOAA and the DOD to develop a new generation of
weather satellites. A prototype satellite is planned for mid-decade
that will meet NOAA's technology demonstration and risk mitigation
needs as well as provide climate data to extend that begun by the first
series of EOS. Joint research projects are underway with FEMA, USDA,
and others to apply remote sensing data to their concerns (e.g., flood
and drought preparedness). The next decade will see these agencies
routinely applying remote sensing data to improve the services they
provide to the public.
The second are scientific assessments of environmental change. The
nature of the scientific enterprise is that initial results will be
reported through the peer-reviewed scientific literature and presented
at scientific meetings. The sheer volume of scientific findings and, in
many cases, the diversity of ideas, imply that a synthesis effort is
needed to communicate the information usefully outside the scientific
community. The assessment process, in which groups of scientists work
to synthesize their knowledge in a particular area, is perhaps the best
established means to make the connection between research results and
the answers sought by the sponsors of research and by policy decision-
makers. In such assessments, the scientific community comes together to
answer not only questions such as ``What do we know?'' but also, and
perhaps equally importantly, ``How well do we know what we think we
know?'' These take place on both the national and international levels,
through such organizations as the World Meteorological Organization and
the US Global Change Research Program. Assessments in the next decade
will include progress in the recovery of the stratospheric ozone layer,
the health of the world's ecosystems supporting the global economy by
providing goods and services, and impacts of climate change on various
sectors of the economy. NASA is a provider of objective scientific
information to these assessments.
The third are partnerships with state and local governments to
demonstrate new applications of geospatial data to regional concerns.
These partnerships will often include commercial data product
producers, who will independently generate these products once the
viability of the techniques and market are demonstrated. The Enterprise
currently has several mechanisms with which to form such partnership.
The next decade will see this effort mature from an ad hoc set of
actions to a coordinated program that is national in scope,
characterized by competition, merit review, and ``demand-pull'' from
state and local users.
One key to achieving broad and efficient production and
distribution of information products is computing and communications
technology. The Enterprise is sponsoring a number of new research
projects in this area. Of equal importance to more powerful computing
hardware are the software tools and protocols to combine diverse data
sets into readily useable forms. NASA, other agencies, and the private
sector are pursing a ``Digital Earth'' concept for the next decade that
will focus on means to combine diverse data types into a broadly
accessible, intelligent architecture that can be queried by users with
specific, unforeseeable interests.
5.0 Anticipated Outcomes for the Nation: A Predictive Capability
The observing and research architecture outlined in this section
builds on the nation's investment in the Earth Observing System. It
extends and improves upon selected EOS measurements for which longer
term data records are required to answer key climate change questions.
It adds some new measurements where recent research uncovers a need and
technological advancement makes them feasible and affordable. And it
focuses on the integration of observations, research and models made
possible by EOS in order to reveal the forces, responses and feedbacks
driving the directions of Earth system change--to provide answers to
the science questions posed earlier. It is a flexible architecture that
will allow for inclusion of advances in science and technology. It will
yield a quantitative understanding of the Earth system, with such
products as:
--7-10 day weather forecasts;
--Seasonal prediction of precipitation;
--Quantification of the major forces and responses in the climate
system, and seasonal climate forecasts; and
--Quantified trends in terrestrial and marine ecosystem productivity,
and impacts on production of goods and services.
Beyond this, it lays the groundwork for a predictive capability.
Visionary Earth scientists foresee the coming constellations of
coordinated satellites evolving toward a ``sensorweb'' of intelligent
satellites in a variety of orbits keeping watch over the Earth. This
sensorweb will employ the understanding gained in the next decade and
demonstrate for our service--providing partners the capability to
produce:
--10-14 day weather forecasts;
--12 month rain rate estimates;
--10 year climate forecasts;
--10 day forecasts of pollution alerts;
--5 day volcanic eruption prediction & routine forecast of ash cloud
trajectories for civil aviation; and
--15-20 month El Nino forecasts.
Such forecasts will greatly enhance national and local efforts to
protect the health and safety of both people and high-value physical
assets. The nation's investment in Earth science over the next decade
will continue to yield substantial, tangible returns in the years and
decades to come.
6. Implications for NASA Earth Science Enterprise Budget
The ten and twenty year anticipated outcomes defined above are
scientifically and technologically achievable. However, the nation is
currently under-investing in Earth science if these are our goals.
Essential elements requiring funding to implement this vision of Earth
Science are:
(1) Securing data continuity for important systematic measurements.
As indicated above, the Enterprise is looking to NPOESS to assume
responsibility to provide some key systematic measurements. In turn, a
subset of these will be continued from EOS by the NPOESS Preparatory
Project. But other important measurements (e.g., ocean and ice
altimetry, stratospheric and tropospheric chemistry, land surface
deformation) remain to be addressed.
(2) Upfront investment in advanced technologies. Examples include:
--the ability to migrate selected sensors from low Earth orbit to
geostationary and higher orbits to achieve greater temporal
coverage commensurate with the dynamic nature of atmospheric
and surface processes;
--nanosatellite technology to enable intelligent constellations of
inexpensive sensorcraft to form a system that is both adaptive
to new scientific understanding and robust enough to
demonstrate the reliability required by operational users.
--computing and communications advances that will allow near-real
time processing, combination, and visualization of data sets,
and modeling of weather and climate systems.
(3) Demonstration of means to serve the broader, non-scientific
community. Currently, the Enterprise is running a number of small pilot
projects to demonstrate the applicability of remote sensing to
practical problems. But in order to make the use of Earth science data
and results ubiquitous in society--to see it make a substantial impact
on economic growth and environmental quality--means must be developed
to make geospatial data both accessible and meaningful to the broadest
range of users.
In the upcoming fiscal year 2002 budget process we will be
considering the appropriate level of funding that is needed to conduct
the research observations and technology development that will fulfill
the goals of the ESE Research Strategy.
CONCLUSION
The next decade promises to be an exciting one for the nation in
Earth Science. We will move beyond characterizing the Earth system to
genuinely understanding how it works, so that we can begin to predict
future change. New scientific knowledge and practical applications will
be streaming from EOS and Earth probes missions. Advanced technology,
lower cost missions will be developed to assure the continuity of
essential science data. Small, innovative missions will discover facets
of the Earth system that we can only guess at today. An information
management system that will ensure affordable and timely delivery and
access to data products by scientists, practitioners and policymakers.
New ways of combining geospatial data into innovative, useful
information products will engage a broader range of users to multiply
the return on the national investment in Earth science. And the result
will be a robust climate, weather, and natural hazard prediction
capability for the nation.
[Clerk's note: For further information about NASA's DRAFT Earth
Science Enterprise Research Plan 2000-2010 visit there web site at
http://www.earth.nasa.gov/visions/index.html]
RUSSIA'S OBLIGATIONS AS AN ISS PARTNER
Senator Bond. Thank you, Senator Mikulski.
Staying on the ISS questions, I remain tremendously
concerned about Russia's ability or possible lack of commitment
to meet its obligations as a partner in the ISS. I am concerned
about the additional cost, and duplication that will hit us.
What are the key pieces of hardware and software for which
Russia is responsible and are essential to complete the
assembly of the ISS? What is NASA's policy for addressing the
risk of Russian failure to meet its obligations, what would our
associated costs be, can we complete the ISS without Russia,
what steps would NASA have to take under what timeline, are
there any sanctions in the state-to-state agreement? I'd like
to know, and really how much money we have had to spend, to
backfill or meet existing Russian obligations.
I know this is a broad question, but this is a major
concern. So I'd like to have you address that whole question.
Mr. Goldin. I will try and remember each element, but----
Senator Bond. Well, let's start off from the back. How much
have we spent to date on backfilling on Russian failure to meet
obligations?
Mr. Goldin. We have felt it was necessary to make the space
station more robust, and early on we decided to build a crew
return vehicle. Initially we were going to rely on the Soyuz as
a crew return vehicle, but we did this for another reason: The
Aerospace Safety Advisory Panel felt that they would like us to
have a crew return vehicle so that all crew members could get
into this vehicle at one time----
Senator Bond. It was seven rather than three.
Mr. Goldin. Than three. That program is on the order of
about 800 to 900--no, no, it's on the order of $1 billion.
We made a decision about a year or two ago that to make the
station more robust in the event that the Russians could not
meet their propulsive function, which is the most critical
function they have to perform, that we would build a propulsion
module. That propulsion module is presently estimated at over a
half a billion dollars. I would say that that is a very
specific step we took to make that station more robust.
Senator Bond. What are the key pieces for which Russia is
responsible in addition to those, and what are your back-up
plans if Russia fails to meet its obligations?
Mr. Goldin. The most critical element that we need is a
service module on orbit. Once that service module is up there,
we will have the very key link, and from that point on, we will
be in a much better position.
There are a number of other things, small elements the
Russians have to deliver. The other critical element that the
Russians have to deliver are Soyuz vehicles, two per year; and
Progress vehicles, this year three, next year about three, and
after that I think three to six per year. Those are the core
things that we are expecting of the Russians and want them to
take care of. Now in the event that they have a problem on
launch with the service module, because we believe it is ready
to go, we have built----
Senator Bond. Have you all looked at the service module?
You are convinced that that's okay, meets standards and----
Mr. Goldin. Our people have been in the factory as it has
been built, and right now we believe, as I indicated earlier,
the key path element is the Proton vehicle. If we have two
successful Proton launches with the modifications, we're ready
to go.
In the event that there's a problem on the launch with that
Proton, we have built at the Naval Research Lab what's called
an interim control module, which we could launch up to the
space station in its present configuration and keep it up in
the sky with a propulsive capability.
If the Russians do not perform with the service module, we
then could have a very significant delay to the program, but we
have the backup in keeping it up there safely with the interim
control module.
IRAN NONPROLIFERATION ACT
Senator Bond. One related question, and this again was
raised by Senator Mikulski. We are all familiar with the Iran
Nonproliferation Act, which requires the President to certify
Russia is not assisting Iran with ballistic missile technology
or other weapons of mass destruction. But without the
Presidential certification, NASA is prohibited from sending
funding to Russia except under certain circumstances.
What's the potential impact of the nonproliferation act on
NASA and Russia's ability to work together, and if the
President were not able to certify Russia was free of Iran
Nonproliferation Act violations, what impact would that have on
the space station, and what would NASA have to do?
Mr. Goldin. First, let me start off by saying we are going
to live with the letter of the law of the Iran Nonproliferation
Act, and at the present time, under the auspices of the Act, we
are in the process of seeking to buy $14 million worth of
equipment that will enable us to hook up this interim control
module and the propulsion module to the space station. We
anticipate, under the Act we will be able to make this $14
million purchase, and it was called out in the Act itself.
There is $21 million more of purchases we would like to make
which pertain to the safety of our astronauts and the safety of
the space station, and we anticipate those purchases being made
at some point later this year.
Beyond that, if the Russians do what they say they're going
to do, their president just said he is going to provide the
proper finances for the space station--everything ought to
flow. If the Russians do not perform, then we will be facing a
decision, do we want to buy some further elements for the space
station to keep it up there, until we bring all our other
equipment from the United States? I am not yet ready to say we
are going to spend a nickel beyond the $35 million I have just
defined until we better understand the situation.
Senator Bond. That's their performance. When would the
Nonproliferation Act--would that potentially impact any of
those purchases?
Mr. Goldin. It could, beyond that $35 million I have just
defined, and it may prevent us from buying some goods and
equipment that could help keep the Russians going in the event
they don't get the proper funding from their government. That
would be smart for us to do because it would avoid spending
billions of dollars on our side to make up for that deficiency.
And at the present time we feel we're okay, but it could lead
to a problem later this year.
Senator Bond. Thank you.
Senator Mikulski.
LIVING WITH A STAR
Senator Mikulski. Well, I share the chairman's concerns and
how we really need to stand sentry on this. I won't pursue an
additional line of questioning, but I am going to be associated
with his line of questioning about the space station.
I would like to come back to space science again. In your
budget presentation, you're talking about a new initiative
called Living With A Star. And as I understand it, it would be
a multimillion dollar project over 10 years.
Could you, because this will be a new initiative and I
think we are being very careful about new initiatives, could
you tell me what is the goal of Living With A Star and what do
you think will be the benefits of the program and why should we
embark upon it?
Mr. Goldin. It is a very important program. It will help us
understand how and why does the sun vary, and how does the
earth respond to these variations.
I might give you a point of reference: A tenth percent
change in the energy from the sun reaching the earth has a
significant impact on our climate, and has had over the years.
So these are very important small numbers we're looking at. We
believe that this is going to impact us in four ways. And if
you asked me this question 200 years ago, I would say ``Well,
it could impact the climate, but we have no control, so we'll
just keep on chugging along.'' But with high tech, it is the
interaction of the radiation coming from the sun that could
shut down our high tech.
So the first area is the national economy. It could damage
communication and weather satellites, and we've seen pagers
shut down just a few years ago, and the whole country ground to
a halt. It disrupts the electrical power grid. It could disrupt
GPS navigation signals which are crucial to airline safety in
almost everything we do. High frequency radio communications,
and it could damage electronics and people flying at very high
altitudes in planes.
The second area we are concerned about and are working with
the Department of Defense is national defense. Space weather
could impact guidance and navigation of precision weapons,
disrupt space operations, interrupt communications, affect long
range radar, and impede navigation, all crucial to the national
defense, and we don't have the kind of space weather
forecasting that's necessary for that.
The third area is understanding the variations in the sun
and how it impacts global change here on earth. One of the key
missions for NASA is to understand the forces on our climate.
Some are natural like the variability from the sun, others are
human-induced. Understanding what the sun does and
understanding what people do and separating out the two allows
us to have real mitigation strategies.
And finally, for NASA, human exploration. One of the
biggest challenges that we will have in sending astronauts to
Mars is in protecting them from the dangers and rigors of space
radiation and, in fact, this will be the subject of the
announcement we'll be making with the National Cancer Institute
later today.
We only have a 1 hour warning on solar storms. In the
limit, if we are successful in this program, we could get
warnings of up to 2 weeks, and with a high tech economy, if you
know what's coming, you could mitigate it and not have the
devastating effect that it might have. So I would say of the
things that NASA is doing, this touches every American, it
touches every person on this planet, it touches our economy, it
touches the national defense, it touches our climate, it
touches everything and our vision for going to Mars.
Senator Mikulski. So your basic position is Living With A
Star will be a very important set of scientific activity that
will then have great impact here.
TECHNOLOGY TRANSFER
Well, as you know, one of the things I continually advocate
is what I call tech-transfer, growth of knowledge. Today I know
you will be signing again another bilateral agreement with NIH,
and I recall when Dr. Bernadine Healy was head of NIH, in the
Bush Administration, and you were the NASA administrator,
encouraged you two to get together, that if we could have
treaties around the world, that you two could have a bilateral
agreement on the space science as well as the wonderful work at
NIH.
Could you tell us today what we are going to be signing,
and could you describe any of the protocols that have come out
of this agreement between NASA and NIH?
Mr. Goldin. I might say that if we had a treaty, you were
the chief negotiator, and that it has been unbelievably
successful. We have signed 22 agreements with the National
Institutes of Health in aging, in pulmonary disease, in heart
disease, in balance problems, in cancer research. We now have
transferred our bio-reactive technology to the National
Institutes of Health to build tissues in three dimensions so
they could do cancer research outside the body and have high
quality tissue to work on.
Today we are going to take the next step, with the National
Cancer Institute, and using very advanced NASA technology, in
nanotechnology, biotechnology and information technology. We're
in the limit, we will build things an atom at a time and be
able to perhaps even do self-replication. We hope to be able to
work with the bio-informatics knowledge at the National Cancer
Institute to be able to build what's called micromolecular
sensors, where we can sense inside the body at the sub-cellular
level, and search out disease before it really spreads.
For example, a cell could mutate, and until it becomes an
impact on your body could be 10, 20 years and you wouldn't even
know it. So we're going to work on these micromolecular
sensors, and we hope to build nano-explorers, nano-diagnostics,
and nano-therapists to in the limit help our astronauts deal
with the radiation that they'll have to come in contact with in
going to Mars, and help on earth begin to get some real
advanced sensing devices to help people understand when disease
gets into their body much earlier.
Senator Mikulski. I think that this is very, very exciting,
and I don't want to prolong my questions, but as I understand
it, and I know I'm going to sound like science fiction news
here.
But these biosensors are really very small nanosensors that
truly an astronaut in space, and if we perfect it between NASA
and NIH could then move into our own civilian clinical
practice. But you truly could consume, through a pill, an
inhalant, so on, a device that then breaks up and you'd have
these mini-micro, nano----
Mr. Goldin. It's a thousandth the size of a micro.
Senator Mikulski. That can go through your body,
essentially sensing--like literally an MRI, zipping through
your body--and that down here at Planet Earth, we could then
get a picture of what was happening with our astronaut. Am I
correct in that?
Mr. Goldin. It may even be better than that. These devices
could have intelligence and communications capability, and in
the limit communicate with an onboard computer and then provide
real-time therapy without ever having to communicate back with
earth. In the limit that's what we would like to be able to do.
Senator Mikulski. Isn't that----
Senator Bond. Awesome.
Senator Mikulski. Yes. Yes.
Well, Dr. Goldin, I know that Senator Shelby is here--I
think that this nanotechnology, both through the Science
Foundation, NASA and so on, could offer one of the most
important breakthroughs that our nation could offer. And I hope
to talk with the chairman about really how we can, in a very
steady, progressive way, move forth in the development and
exploration of nanotechnology. Because I truly think that this
will--what miniaturization meant two or three decades ago, that
this will be so leapfrogging us into the future and would like
to discuss this with you.
Mr. Chairman, that will conclude my questions. But again,
Dr. Goldin, I'd like to thank you for all that you've done. We
will be talking a lot over the next several months as we work
on our appropriations.
But again, both to you and to your team, I would like to
express my thanks to your wife, because we've met on a number
of occasions--but the same with FEMA and James Lee Witt and the
people out there with spouses. Often we are in crisis
management situations and so on, long hours, financial
sacrifices.
So I want to express my appreciation to her, and I really
mean it for all in the room who--you know, behind every great
person is a spouse that adds spice and support.
Senator Bond. Either that or a surprise mother-in-law.
Well, thank you, Senator Mikulski. I just hope we don't let any
of the protest groups know about this potential breakthrough,
because we don't want to have to fight them in the street as
well.
We now are delighted to welcome Senator Shelby, a valued
member of the committee, and ask him to pose his questions.
Senator Shelby. Thank you, Mr. Chairman.
Mr. Chairman, to you and Dr. Goldin, I am sorry I missed
some of the hearing, I had another commitment in another
committee, like everybody, but this is a very important one.
Dr. Goldin, I want to associate myself with the remarks of
the Senator from Maryland. I have had the privilege of meeting
your wife, and she is dynamic in her own way and that helps you
in many ways, but so are you. You have brought a lot of
leadership to NASA at a crucial time. You come from a technical
background which is very, very important in the job that you
do. And I think oftentimes it's nice for all of us to
appreciate the obvious, and I think that's obvious.
ENABLING CUTTING-EDGE TECHNOLOGY
Having said that, given the budget constraints which we've
been through, and you've really been through on the front line,
over the last 7 years do you think that NASA has been able to
sufficiently invest in space propulsion research facilities an
equivalent? In other words, to enable cutting-edge technology
breakthroughs, because that's a big future, is propulsion.
Where do we go, how do we save money, and so on? I've sat and
talked with you about this before. I know we've had some money,
but is it sufficient, really?
Mr. Goldin. Up until this year's budget it has been very
thin, and if you can indulge me for a moment, Senator----
Senator Shelby. Absolutely.
Mr. Goldin [continuing]. Shelby, I have a chart up here,
and I'll ask the NASA comptroller to go to the chart. I believe
you have a copy in front of you.
Senator Shelby. I can see that, as long as it's way off.
Mr. Goldin. This chart is testimony to the incredible work
force at NASA and their belief in what the American people
want. On that chart you will see four lines. The bottom line is
labeled NASA, and we've normalized the budget to fiscal year
1993.
Relative to our budget in 1993, over these last 7 years the
NASA budget has come down 5 percent. If you take a look at
Defense, it has had its share of problems, but it has gone up 5
percent. If you take a look at all the other discretionary
agencies, they are up about 17 percent.
This NASA team really wanted to do more with less, which is
what the American people asked for. And this is the first time
in 7 years that I am sitting before this committee saying we
need more money. We have made a modest increase of about 3.2
percent, which will get at the issue that you're talking about.
We are being very frugal in what we do, and in fact we
found we cut too hard, and I personally accepted the
responsibility for pushing because I didn't know where the
boundary was. But I felt it was essential to gain the
confidence of the American people that we do the right thing.
Having had some failures, we pushed too hard, and that is why
in this year's budget we put a significant increase into
propulsion; because without propulsion, you don't get to where
you want to go in the solar system and universe.
Senator Shelby. Propulsion is very important and central to
the future of NASA, is it not?
Mr. Goldin. Yes.
NEXT GENERATION REUSABLE LAUNCH VEHICLE
Senator Shelby. Dr. Goldin, I also understand that the core
activity, the Space Launch Initiative, includes competition in
the private sector, to result in a decision around 2005 or
something like that, about your next generation reusable launch
vehicle.
Who will be encouraged to compete, and how many competitors
do you plan to fund?
Mr. Goldin. Well, we intend to encourage not just the big
companies, but the small companies. I personally had dinner
with the CEOs of eight or nine of these small companies in
anticipation of the budget. We even have a special competition
set aside for alternate access to the space station, and we're
looking for innovation approaches. Innovation could come from
small companies or big companies.
Senator Shelby. Oftentimes it does, doesn't it?
Mr. Goldin. Yes. And we intend to down-select to perhaps,
in the first round to four to six companies in this alternate
access to the space station. So we want to be as inclusive as
possible and go as far as our funds could take us, but it is
essential to have competition.
Senator Shelby. Are you building on what we have today? You
know, NASA has already made progress in the current reusable
launch vehicle programs, the X-33 and X-34. Will you be
building on that, or will you be looking at everything?
Mr. Goldin. We're going to be building on that, but we're
hoping for other proposals. You know on the X-33, it is the
first time in 25 years NASA has a radical new engine that's
being tested in Stennis, Mississippi. We're hoping for
innovation.
In fact in yesterday's trade, the Aerospace Daily, it
talked about the fact that we're working on a rocket-based
combined cycle engine which breathes oxygen in addition to
carrying its own fuel. So we're going to push the limits on
everything.
SPACE LINER 100 PROGRAM
Senator Shelby. Dr. Goldin, can you give me an update on
the Space Liner 100? Last year we added $80 million for that.
What's going on there?
Mr. Goldin. First I'd like to thank you and Senator Lott
and a number of the other members who helped work with us to
get Space Liner 100 going. And in this year's budget, I believe
we have what we call third generation reusable launch vehicles,
which is in essence a continuation of Space Liner 100. I
believe we have about $400 million in the budget, and when you
include synergy with some of the aeronautics activities, it's
even more money.
So we are continuing, and this is really pushing the limit,
like with a MagLev launcher--they built a 50 foot track down
there in Huntsville, Alabama. We think you could save 25
percent of the energy if you could accelerate the vehicle up to
100 miles an hour using electricity on the ground so it makes a
simpler, smaller vehicle. We are looking at building a test
track as long as one mile.
Senator Shelby. That's good.
Mr. Chairman, thank you. And Dr. Goldin, thank you for your
courtesy.
EXPORT CONTROL PROGRAM
Senator Bond. Thank you very much, Senator Shelby.
Following up on the question on Iran proliferation, the
I.G. audit of March 23 raised some concerns about potential
export violations by two or three NASA contractors, exporting
NASA-funded control technology. This, from Goddard, Johnson,
and the Marshall Space Flight Center, the responsible managing
program personnel were unable to identify NASA-funded control
technologies that contractors export.
Without the proper knowledge and control, do we lack
assurance that contractor export activities are in accordance
with the applicable laws and regulations? What corrective
action has NASA taken to ensure that these violations do not
reoccur?
Mr. Goldin. First let me say at the highest levels of the
Agency I consider myself the chief security officer for this
Agency, I don't delegate it to anyone else. I have gone to and
asked for help from the director of the CIA and the director of
the FBI. I did this some half year to a year ago because I did
not want NASA to have any problems. And I said ``Send in your
people, openly audit us, tell us where the problems are'' and
we are getting ready for a briefing on that subject now.
I have relied very heavily on John Schumacher who supports
the security function for me, but I want you to understand I am
in charge of security. We have done unbelievable things in
training of our people doing the right things. Occasionally
some people make some mistakes, and I thank the I.G. for doing
her studies. We view the I.G. as a friend of the Agency because
she looks for where problems are.
Senator Bond. That's two unusual things.
Mr. Goldin. I don't know the details of that problem----
Senator Bond. Relying on the I.G. is not something we find
often in this committee.
Senator Shelby. That's unusual, Mr. Chairman.
Senator Bond. Nor do we find somebody who takes
responsibility when things--you stick out like a sore thumb,
and we appreciate it.
Mr. Goldin. We are dealing with public money and the public
needs to have confidence in us. And the I.G. is independent. We
don't always agree, but the fact of the matter is, I value the
fact that she goes out and searches where problems are. I'd
rather hear it from the NASA I.G. than read it in The
Washington Post.
Let me ask John Shumacher to address that specific
question.
Mr. Shumacher. Thank you, Mr. Goldin.
Real quickly, on export control. First, NASA, since 1994
has had a comprehensive export control program, that is for
NASA and all our centers. We just had our annual export control
conference where, as Mr. Goldin has said, we bring in other
agencies to learn best practices and enforcement agencies like
FBI and others to also tell us about threats and what they see,
and that is to enhance the capability of NASA and NASA working
with its contractors.
Now with contractors in particular, they are directly
responsible by law to adhere to the export control laws of the
United States. We are glad to use our export control program as
a resource to help them if they have questions and that type of
thing, but there is direct accountability when a contractor is
making exports pursuant to a contract that they are executing.
If they are executing through NASA, a NASA agreement or such,
then we have some work with them on that, but we try and make
sure the lines are very clear about what is a contractor
responsibility and what are NASA responsibilities.
Also, as Mr. Goldin has indicated, the I.G. has looked at
both NASA's export control program as well as contractor
execution of their export control responsibilities, and their
report recently came out. Any violation obviously we take very
seriously and we want to understand what corrective actions are
being taken by the contractor.
SPACE TRANSPORTATION VEHICLE
Senator Bond. Let me ask one more. We've talked about the
lifeboats and the Soyuz and the CRV that you are developing,
the crew return vehicle, seven persons useful life of three
years. I understand that NASA is looking to use the X-38 as a
test vehicle and may spend $1 billion in its development.
This CRV, at a cost of $1 billion, appears somewhat
limited. Why not look to use this requirement to fund the
development of the reusable launch vehicle or at least a more
sophisticated space transportation vehicle that both could
serve as an emergency vehicle and a supply vehicle?
Mr. Goldin. Well, Mr. Chairman, we are looking at that as
part of this integrated space launch initiative. Over the next
few years, while we're testing the X-38, we're going to work
with industry and see if it's possible to integrate a crew
return function, which is only one activity, with a crew
transport function, which is taking the crew up, and seeing if
on the margin we could add to this billion dollars with a
reasonable amount of money so that we could have alternate
access a lot sooner. We are openly soliciting proposals from
the industry to work with us, but we are going to continue to
get this X-38 ready so that we could go build it should we have
a need for it.
Now the other reason is, the Aerospace Advisory Panel
really wants us to move out. So in a certain sense, we're
caught between a rock and a hard place, we've got to assure the
safety of our astronauts. We have a 2 year window here in which
to make a decision. If it looks like it could be done for a
reasonable additional amount of money to get this crew
transport function done----
Senator Bond. It certainly would be a better----
Mr. Goldin [continuing]. And in a reasonable amount of
time, we will do it. But we will have to get this decision made
in the next year or two. But you are absolutely on the right
track, and our proposal and plan that you have submitted from
the President covers just this very point.
Senator Bond. Senator Mikulski?
Senator Mikulski. Mr. Chairman, I've concluded my
questions.
Dr. Goldin, I'll see you at the NIH signing. I need to
excuse myself for another hearing. And I also, in acknowledging
your work and the members of your team, I would also like to
acknowledge the work of the NASA I.G., Roberta Gross, and the
job that she's done, and exactly what you said, where these
have to be separate. But really, the fact that the NASA
administrator takes the I.G. seriously, and the I.G. takes her
role very seriously I think has helped us really get to the
bottom of some of the issues we're facing.
So I am going to thank you.
Mr. Goldin. Thank you.
Senator Mikulski. Thank you, Ms. Gross.
Senator Bond. Senator Shelby.
PROLIFERATION--SECURITY
Senator Shelby. Mr. Chairman, I just have a few
observations in what you brought up, and that is proliferation,
security and so forth. Dr. Goldin comes from the private sector
and he understands how important research is, but also how
important security is. So many things that you do in your
research at NASA has many applications, oftentimes future
military applications.
Mr. Goldin. We're proud of that, and we transfer that
technology to the Department of Defense.
Senator Shelby. You do well there. But there is, and for
good reason, added emphasis on security securing what we have
as best we can, because people in the world want it, they don't
want to pay for it, and oftentimes we don't want to sell it. So
that is very important, what your aide is doing there, and also
what the I.G. is doing.
BIOMEDICAL RESEARCH
The other observation is what Senator Mikulski brought up
just a minute ago, and that is the, I call it biomedical
research, you know, and things, so many things that will come
out of the basic research that you do, and working with the
NIH, working with everybody else in the biomedical field.
It's things like that we couldn't think of. I think she
used the word miniaturization, but it's even sub that, isn't
it, Dr. Goldin. We just keep reducing it and reducing it, and
we get a lot out of it. I can see, as a layman, the potential
good that the American people will get out of this. And
considering our budget, although it's hard, to fight and get
it--and the chairman knows better than I do because he's on the
front line. I think NASA is a bargain for America. But we
shouldn't take it for granted.
Thank you, Mr. Chairman.
SHUTTLE SAFETY AND UPGRADES
Senator Bond. Thank you very much, Senator Shelby.
Mr. Administrator, we're getting near the end. The rest of
it, I've just got a book or two full of follow-up questions for
the record.
Let me here raise a question about, the Aerospace Advisory
Panel since 1998 has expressed concerns regarding future
shuttle safety and the need for upgrades. And independent
review of shuttle safety released last month identified nine
key issues as well as 81 recommendations to improve shuttle
safety.
What steps are you taking to implement the recommendations
and needed upgrades? What's the cost and how are you going to
balance off the need for upgrades with the development of the
reusable launch vehicle?
Mr. Goldin. First let me say, I didn't appreciate how
crucial the NASA Administrator's role is relative to the safety
of the astronauts. I used to put payloads in the shuttle, and I
wouldn't worry until my payload came out when it was on orbit.
The first time I went down to a launch as NASA
Administrator, the full importance of this job became very
clear to me when I walked over and talked to the family members
of the crew. You have to be there and see how they feel. I want
to put some perspective on this for you. When I took over as
NASA Administrator, the probability of a major problem
occurring on the shuttle was about one part in about 70, 72.
That was a very rudimentary calculation at the time. Today we
believe it's about one part in 250. If you're a combat pilot,
in combat, I'm told that the probability you'll have a major
problem is one part in 20,000. If you get onto a commercial
airliner, the probability of a major problem is one part in
2,000,000. So what you have to rely upon is the genius and
ingenuity of the people you have to deal with three million
things that could go wrong, and fight the laws of probability,
but you're never going to beat it by factors of 10.
We tried to change the culture, and we have not put people
who watch people who watch people, but we get quality people
taking responsibility for what they're doing, and we
transferred functions to the private sector. And we said we'd
monitor as we went along, and the Aerospace Safety Advisory
Panel was with us until 1998 then they began saying ``You know,
we need to do some things.'' They made some suggestions, the
people in Houston made some suggestions, people in Alabama made
some suggestions, and Kennedy, and I took those suggestions to
the President. And the Office of Management and Budget said,
``Yes, but you're developing a reusable launch vehicle.'' I
said ``But it isn't going to fly at least until 2010, and I am
personally responsible for the lives of the astronauts. This
isn't politics, this is not economics, it is mandatory, the
number one priority of NASA, number one priority is protecting
the lives of the astronauts as best we can, but not
guaranteeing it.''
And I got the budget that I asked for. I asked for an
additional billion five on shuttle safety upgrades, and we are
going to do fundamental things that these reports had asked
for.
One, we use rotating machinery to provide auxiliary
electrical power, it has toxic propellants. They thought it
could be improved, that was their number one suggestion, the
Aerospace Safety Advisory Panel, and the Shuttle Independent
Assessment Team. We have money in the budget for that.
We made a whole list of things, we have another outside
panel reviewing all these upgrades. But what I'd like to ask
you to think about is say that the shuttle and the astronauts
deserve our attention and we can't let go of the bat for a
better grip while we're developing a new system.
I know it sounds strange, but we're going to have to spend
what it takes to keep those astronauts safe. We're not going to
spend money to make it cheaper to compete with other systems,
but we will spend every nickel it takes to make it safe.
I learned from the Mars experience. I pushed the system,
and we're now at a limit, and we are backing off. We're adding
over a thousand people to the human space flight account at
NASA, in Huntsville, at Cape Kennedy, in Houston and in
Stennis, Mississippi. And if we have to add more people, I feel
comfortable coming back to this committee and I will not be
concerned about those wanting to compete on an RLV. The shuttle
must be as safe as we know how to make it, and we're shooting
for a factor of two immediately, and we think there are some
other possibilities.
But I hope you understand the position I'm taking.
OVERSIGHT ON THE SPACE SHUTTLE
Senator Bond. Yes. Following along that line, I'm concerned
about oversight on the space shuttle. The L.A. Times and the
Dow Jones News Service reported on March 16, it appears that
two flawed engine seals that should have been thrown away were
reused on the Space Shuttle Atlantis. Not a new problem,
apparently Space Shuttle Discovery with Senator John Glenn
aboard flew with two defective seal segments.
As I said earlier, there are unknown dangers that may come
up, but using something that should have been thrown away
doesn't appear to be a very bright mistake. What happened
there, and how did those things get in?
Mr. Goldin. Let me give you the big picture, and then I'd
like to ask Joe Rothenberg to give you the details. But it gets
back to, it was a sub-tier supplier that, as I understand it,
didn't classify parts they got in the system, and our people
made the discovery that those parts were in the system and
searched them out. And they wouldn't launch the shuttle because
they felt there were defective parts, and in one case we
stopped the launch and said ``there's a defective part in it''
and pulled it back. So we don't believe we endangered the
astronauts.
Senator Bond. So you did not use them, you stopped them
before they went?
Mr. Goldin. When we learned about it, we did not launch. On
one launch we weren't aware of it, and we did not have a
problem. But when one of our people found out about it, they
stopped the launch.
The thing about the shuttle that I'm so proud of is, any
one person could stop a launch if they have a concern, and that
system really works. But I might point out that when we had a
wiring problem on the Chandra, when we launched the Chandra
telescope, there was some nicks in the wiring that caused a
short that could have been a problem.
We went back and we searched out and found nicks in the
wires that existed from the day the shuttle was built. These
are the issues we have to deal with, so when you find the
problem you bore in. The key to it is when a problem is found,
it is generally found by NASA and one of our employees, even at
the lowest level. We stop, and we did stop when we found out
about it. I'd like to ask Joe to go through the details of the
issue in the L.A. times.
Mr. Rothenberg. Yes, sir. These are called tip seals, and
during the launch of, I believe it was 103, in the process we
discovered there were 12 seals built from an improper material.
And the way these seals are made, they're sliced off like
slices of bologna and then used, so there was one assembly.
We then went through a process, in that launch we knew
during the flight readiness review that we had discovered that
this happened. We found this back in the factory. We went
through a process then of elimination to convince ourselves
that there were none of those seals aboard 103, which was the
Hubble repair mission in December, if I've got the dates right.
We went through that process, and what happened is, we
could count on the engines on that mission not having any of
the seals. We could not account for where all the rest of the
12 seals were. And what had happened is, when we came to the
next launch, SRTM, we looked at it and at that point we were
still not convinced that the seal, one of the residual 12 seals
were not in one of those engines. So we actually delayed the
launch to change out the engine, such that we could be positive
that it wasn't on board.
So it was the same problem in the safety process we had in
place--to catch it, we couldn't convince ourselves we didn't
have it, so we changed the engine out to be safe. So it was one
problem and two actions to resolve it.
INDEPENDENT VALIDATION AND VERIFICATION
Senator Bond. I mentioned earlier the concerns, you've
taken responsibility for the failures on the Mars program,
we've recognized that it's appropriate to push the envelope of
human nature and take all reasonable steps to ensure that we
don't have a failure which is a coding mistake or a conversion
to metric mistake.
Do you have any additional comments for us on how you're
addressing these problems?
Mr. Goldin. I view the problem we had as not so much that
the error occurred, but the fact that the system wasn't
resilient to the error. The system should have been able to be
tolerant of the error.
Let me back off a little bit and say, what is happening on
the ground with the digital revolution is happening in space.
Where in the past when we used analog systems and our engineers
were comfortable with it with a relatively small software
content, the digital content of our spacecraft is growing by
leaps and bounds, the software is growing by leaps and bounds,
and as a result, they're becoming much more complex.
So the tools of just 5 years ago are not as good anymore
today. One of the areas that we believe we need to do some
major work is in an area called Independent Validation and
Verification of the software.
Senator Bond. That would be my question. With all of this
new technology, this gives you much greater complexity, but it
also gives you, does it not, give you the means to make a--to
try out all these things and attempt to get a computerized
judgment on whether the whole package works together?
Mr. Goldin. Yes.
Senator Bond. I am not technically competent, I am not at
all proficient, but it seems to me that you ought to be able to
develop a system to verify that all the widgets and gadgets and
whozit's and whatzit's are fitting together properly. Is this
possible.
Mr. Goldin. You are absolutely on the right track, and in
fact we just sent a team to Fairmont, West Virginia, which is
our Center of Excellence for Independent Verification and
Validation. We are strengthening that activity. And I might say
that Senator Byrd worked with us about 5 years ago to get that
going. And I believe he made a major, major contribution
because now we are ready, we have the technology there, we're
putting them under the cognizance of NASA Goddard, and we are
going to be insisting that our programs have this independent
validation and verification--not to have their own people do
it, but people outside the system. So that is going to be a
significant process improvement, not just for the Mars program,
but for everything we do at NASA.
ADVANCED SOFTWARE
There's another thing that you alluded to when you made the
statement, and you said you didn't understand software. I think
it's a very key statement you made.
The software we use right now are called hard deterministic
software where you write each line of code, then you have to
verify that line of code and you have to check it, and it's
very cumbersome and mistake-prone. NASA is developing, with
some of our other partners, a new set of software which I'll
call soft software, which has a capacity to learn.
I want to give this one example because it's cognizant,
it's very appropriate for this point. We took 10,000 lines of
code--I think it was 10,000 to 20,000 lines of code in what's
called a neural network or learning software, and we replaced a
million lines of code in an F-15 that operated the ailerons and
the flaps, and we trained that software on a simulator with a
pilot to figure out how to turn the ailerons, how to move the
flaps to get that plane to fly.
After we had it trained, we put it in the plane and
replaced the software. Then we trained it how to respond to
failures, and we simulated the partial loss of a wing. And
within 2 seconds it responded. We simulated loss of aerodynamic
control surfaces.
So when you have software that has a capacity for learning,
you could then use that software to check out the other
software that you have. So we're going to follow a parallel
path and in this year's budget we have significant money in
that so that we can work on advanced software. And we'll work
on independent verification and validation, and with these
tools, NASA is going to develop techniques that will be not
only improving our own systems, but it will be available to the
commercial sector. So you are absolutely right on with your
question.
OVERSIGHT ON THE SPACE SHUTTLE
Mr. Rothenberg. Mr. Chairman, I'd like to correct something
I just said, in trying to remember numbers off the top of my
head, I missed something in the chronology.
The problem with the tip seal was discovered post-flight on
the Hubble mission, which was 103 in December during a
boroscope inspection. The tracedown of the problem with the 12
seals, STS99, which was the SRTM to be launched in January, was
the one where we went through and convinced ourselves it wasn't
on board that vehicle. And 101, the rollout of 101, which was
the next flight, was the one where we made the decision to
change the engine to be safe.
Senator Bond. Thank you.
Senator Shelby, you had a question.
RELYING ON HUMAN LIFE
Senator Shelby. Just an observation, may be a question.
First observation, Dr. Goldin, I think you're absolutely
right when you talk about human life--very important. No thing
is perfect, we know that, and there's risk in space, there's
risk in our military. We witnessed what happened this past
weekend with the hybrid vehicle that--we don't know what
happened, we'll find out.
But quality control in the construction of a space vehicle
or a military vehicle, I don't think you can do too much there.
You are getting the tools, more tools, but there will never be
a substitute for what the humans do--in building something.
Because if it's put in there wrong, that is, a part, or if it's
a defective part, or of it's not up to standard like it should
be, and you've got a vehicle that's made up of thousands if not
more of parts, you do have a problem. It's not insurmountable,
but it's a big problem, isn't it?
Mr. Goldin. It's very big.
Senator Shelby. Not just in NASA, but in our military, in
our marketplace, with everything.
Mr. Goldin. We human beings are frail, and we make
mistakes, and what we have to do is be tolerant of the human
spirit and encourage people to do the right thing. And in this
case, we believe it's the smart thing to add more people. We're
not adding computers, we're saying we need to add more people
to the shuttle and the space station and the Human Space Flight
account to make sure we're doing the right thing. Maybe at some
point way, way out there we'll have computers do even more, but
right now we've got to rely on people. People make mistakes,
and what we try and do is set up a system that's tolerant of
mistakes. We don't punish people when they make a mistake,
because then they won't tell you when they're making a mistake.
But I have to say they will continue to make mistakes in the
environment that this man is trying to set for that human space
flight area is the right one----
Senator Shelby. Well, he's to be commended for his work.
Thank you, Mr. Chairman.
HIGH ENERGY SOLAR SPECTROSCOPIC IMAGER
Senator Bond. Let me point out just one other thing, and
ask for your comments on it. I understand this is also JPL, but
I gather that a 75 million high energy solar spectroscopic
imager was damaged during tests in March when the engineers
mistakenly shook the spacecraft 10 times harder than intended
during a preflight test.
How much damage, what's the cost of the damage, and what
kind of protocols can be put in place to lessen the likelihood
of this kind of mistake?
Mr. Goldin. As I understand it, and we don't have the full
failure report, there was a problem with the actual hardware,
the shake table if you will, that simulates the rocket launch.
Initially, it stuck and then it broke loose and put a force in
larger than it should have. In this case, I don't believe it
was human error. We'll have to wait for that report to come
back and understand it.
Senator Bond. That was just something broke in the shake
table, or----
Mr. Goldin. There may have been something wrong with the
shake table, but we need the report. However, there are some
advanced techniques that we're developing that would be fault-
tolerant and make the system capable of handling something like
that, and we're looking at some of these new techniques as part
of the advancement of making things less susceptible to
problems that occur with the equipment that we have, using new
computer techniques, using new advances in sensors.
ADDITIONAL COMMITTEE QUESTIONS
Senator Bond. Well, thank you very much, Mr. Administrator.
As I said, we have questions for the record, and I want you to
be prepared for the announcement this afternoon. We thank you
and your people for joining us today. We look forward to
working with you and following up on the other questions and
all of the exciting programs you have.
[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 CHRISTOPHER S. BOND
CURRENT COSTS OF THE ISS
Question. What is the current cost estimate for complete assembly,
and what is NASA doing to control costs?
Answer. The current estimate to complete the International Space
Station (ISS), with a seven-crew capability, is between $24.1B and
$26.4B.
NASA's schedule assessment, consistent with the fiscal year 2001
Congressional Budget submit, reflects assembly complete to be achieved
in the range of May 2005 to November 2006. This assessment included a
3-5 month projected delay to the Service Module (SM) launch schedule of
March 2000, and approximately 13 months schedule margin for potential
unknown delays that could affect the remainder of the assembly
sequence. (The Service Module was successfully launched and docked to
the ISS in July 2000.)
From a budgeting perspective, NASA seeks to maintain reserves for
the program for nominal cost growth and changes in requirements. This
allows the program to prioritize requirements within a reasonable
funding envelope, rather than seeking new funding every time a change
is required or growth occurs.
On the program side, all design, testing, and operational changes
are subject to a series of control boards and management processes
prior to approval and incorporation into the baseline program.
Proposals are subject to technical, cost and schedule evaluations to
determine the necessity of each change. Additionally, the program
office monitors and assesses contracts costs, performance and schedules
on an ongoing basis (see also response # 2).
It is believed that earlier NASA and program decisions to minimize
development deferrals by maintaining hardware delivery schedules have
avoided significant cost growth. Estimates for total Vehicle
development of the ISS have been relatively stable over the past two
years. Increases in the total ISS cost estimate have been driven by new
requirements in response to contingency planning activities, and the
``stretch-out'' of the assembly sequence. These delays in the launch
schedules have generally been accommodated without significant increase
to projected annual funding levels. The impact of extension of the
schedule is generally reflected in estimated cost increases in the
operations and research areas.
BOEING COST OVERRUNS, ISS
Question. Please review your corrective actions to date that
address these cost overruns.
Answer. Approximately $1 billion in cost growth is derived from
Prime contractor under-performance to the original contract estimate
and schedules. Production and performance problems, qualification test
and rework problems, and software delivery delays typical of most new
technology programs, as well as labor rates increases, are contributing
causes.
The ISS is a large, unique, and complex vehicle, and NASA
anticipated some cost growth as hardware elements and software packages
are integrated and tested as complete launch packages for the first
time. However, Boeing's cost growth is a deep concern. NASA has
undertaken a variety of corrective actions since cost and schedule
variances first began to appear to mitigate the cost and schedule
implications. In addition to actions we have initiated, the program has
also received recommendations from numerous external review groups and
has been responsive to their recommendations as well. As the Program
has transitioned from development to operations, NASA adjusted its
approach, thereby maintaining effective contract management. This has
been a complex and difficult undertaking, but NASA believes it has
resulted in improved Prime planning, scheduling, and control processes
on baseline ISS content. Some of the past actions taken include:
--Stepped-up surveillance when potential risks have been identified,
in order to apply appropriate funding and work force resources
to trouble spots and to maintain station hardware and software
delivery schedules.
--Identification of non-production-related activities that might be
curtailed or eliminated early to free resources needed by
production and test teams.
--Formally requesting the NASA Inspector General's office to review
NASA's contract management processes as well as inviting other
external advisory groups to provide advice and recommendations.
--Establishing more frequent reporting requirements and adjusting
reporting processes.
--Working with the Prime contractor to achieve a monthly de-staffing
plan which calls for a systematic reduction in staffing at the
prime locations and the product groups.
--Identification of areas of Program content under the Prime scope of
work which could be pulled out and performed less expensively.
--Working with the Prime's corporate management to ensure that
required corporate assets are available to this critical
Program and that the necessary levels of management experience
and tools are applied.
--Working with the Prime to develop and implement as rapidly as
possible a workforce destaffing plan that aggressively removes
Tier One and Two contractors from the work force as soon as
hardware and software development efforts are completed.
--Restricting change orders to the contract to only those that are
absolutely essential to the successful operation of the
Station.
--Structuring contractor incentive and award fee criteria that
clearly demonstrate NASA's overall concern with performance.
As a result of Boeing's last cost increase in early 1999, NASA
negotiated a restructure of the contract to better focus resources on
the development work remaining. The restructure reorganized Boeing's
work into four categories, with the development effort tied to previous
delivery milestones. A new fee structure allows Boeing to gain some
additional fee if its performance improves, and contractor staffing and
production milestones are monitored very carefully by the Program
Office and at Headquarters. Other development activity which is
primarily integration and operations (I&O) in nature, was reassigned to
a completion form effort tied to key launch package milestones. This
allows Boeing and NASA to redirect resources to critical hardware and
software production or integration areas as unforeseen problems arise.
Prime spares production was segregated to allow the government more
visibility into the delivery of high value replacement parts. All new
development work, additions to contract scope, will be held separate
from the core Prime effort, and will be under a different fee structure
which gives the government increased leverage over Boeing's future
performance. Boeing may earn up to 11 percent fee on the new work, or
no fee at all if performance is unsatisfactory.
BOEING REORGANIZATION
Question. What is the cost of Boeing's reorganization that NASA has
or will pay for? How is the amount determined and how are savings
measured?
Answer. The costs and savings associated with Boeing's
restructuring activities are included in Boeing's overhead accounts,
which are distributed across all of Boeing's contracts, including those
with both NASA and the Department of Defense. Government review of
Boeing's restructuring activities is performed by the Defense Contract
Management Agency (DCMA) which is assigned the responsibility to act
for the entire Government to ensure that indirect expenses, including
restructuring and reorganization expenses, meet the appropriate
criteria required by Government regulation and that all Government
contracts receive equitable treatment.
The DOD Federal Acquisition Requirements (FAR) Supplement requires
that a contractor achieve a 2-to-1 savings-to-cost ratio for external
restructuring activities, which are non-recurring, and included events
such as facility closings and consolidations. Other indirect costs
associated with mergers and acquisitions that result from changes to
accounting structures, management systems, and the establishment of
common processes, are not subject to the FAR Supplement savings-to-cost
requirement, but are subject to standard cost allowability criteria.
The $82 million of cost for NASA identified by the NASA IG represented
an early Boeing estimate of NASA's share of total indirect costs
associated with the Boeing reorganization, and included both external
restructuring costs and other indirect costs.
An advanced agreement signed by Boeing and DCMA achieves over a 3-
to-1 savings-to-cost ratio for external restructuring activities over a
five-year period. NASA's share of the external restructure savings is
calculated to be $63M against $20M in costs, and DCMA has quantified
actual savings for NASA of $14.3M against $5.5M in costs through the
end of fiscal year 1999. The other indirect costs resulting from the
reorganization are under review by NASA and the DCMA. Accounting change
cost impacts are reviewed prospectively by DCMA as part of the
Government's Cost Accounting Standards administration processes, which
protect the Government, as a whole, from paying unreasonable cost
increases. However, because this type of impact is just one component
of the company's overhead cost structure, it becomes difficult over
time to isolate the costs and savings of these actions from other
events and actions that affect indirect costs. Early indications are
that these costs may offset a significant portion of the savings
achieved with the external restructure activities, but the total impact
is not yet known.
CRITICAL PATH ISS HARDWARE AND SOFTWARE
Question. There remains huge concerns regarding Russia's inability
or lack of commitment to meet its obligations as a partner in the ISS.
I am very concerned about additional cost and duplication by the United
States. What are the key pieces of hardware and software that Russia is
responsible for and are essential to complete the assembly of the ISS?
For purposes of this response, the term essential will be
considered as a capability, without which ISS program schedules could
be deferred by a period of one year or more, or in which Program cost
could increase by over $1 billion beyond that currently budgeted. The
essential contributions Russia is providing are best characterized by
addressing ISS capabilities. A summary of these capabilities follows:
Propulsion.--Russian partnership responsibilities have included
propulsive guidance, navigation, and control since the inception of the
International Space Station in 1994 (Service Module, Progress resupply,
FGB operations). The two primary functions provided by Russian
contributions in the propulsion area are reboosting the station to keep
it at a safe altitude, and providing attitude control during reboost
and for collision avoidance from orbital debris when necessary. NASA is
mitigating this risk through use of Shuttle reboost and development of
the Interim Control Module (ICM) that provides redundant capability for
reboost, and development of a Propulsion Module (PM) which can provide
both reboost and attitude control. At the current time, U.S.
contingency plans do not provide a 100 percent redundant capability
over the entire ISS life cycle.
Command and Control.--The NASA Flight Director, located at Mission
Control-Houston will always maintain the leadership role for
commanding. However, the Russian control center will determine and
issue commands to their respective on-orbit segment. While 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. Russian ground equipment,
Russian FGB and Service Module technical knowledge, and Russian vehicle
operational skills remain essential to the success of the program.
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. When launched,
should Russia falter, the U.S. cannot 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.
Absent this information, the SM would need to be decommissioned in some
manner and the ISS crew capability would be reduced by three people.
Logistical Capabilities
Dry Cargo Transfer.--Partnership agreements call for the Russians
to provide dry cargo via the Progress cargo ship. Depending on the
extent of the shortfall, the loss of this important function could be
offset by delivery of dry cargo by U.S. vehicles as intended by the
Alternate Access element of the Space Launch Initiative, or by bringing
up additional dry cargo on Shuttle flights, which could negatively
impact the assembly schedule. In addition, the Japanese HII Transfer
Vehicle (HTV) will deliver dry cargo to the station.
Propellant Transfer.--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).
Question. What is NASA's policy for addressing the risk of Russia
failing to meet its obligations and what are the associated costs?
Answer. NASA's approach to contingency planning is to incrementally
fund only those activities that permit the United States to continue to
move forward should the planned contributions of our ISS partners not
be delivered as scheduled, rather than to assume the responsibilities
of other ISS partners. In fiscal year 1997, the budget line item
entitled, U.S./Russian Cooperation and Program Assurance, was
established. This budget line item had two parts, U.S./Russian
Cooperation (Russian Space Agency contract support) and Russian Program
Assurance (RPA). The first part, primarily support needed to accomplish
Phase 1 of the ISS program (Shuttle/Mir), has been completed. The
second part, Russian Program Assurance (RPA), was re-established within
the Space Station budget line. The RPA budget was established to fund
contingency activities and backup capabilities in response to concerns
about the impact of the Russian Government's problems in meeting their
ISS commitments.
The RPA funding provides contingency activities to address ISS
program requirements resulting from delays on the part of Russia in
meeting its commitments to the ISS program, allowing the U.S. to move
forward and build the ISS in spite of Russian shortfalls. These
contingency activities are not intended to fully protect against the
loss of Russian contributions. Depending on the degree of Russian
shortfall, it could cause an extended delay to the program,
necessitating additional crew return, life support, reboost, and
guidance and control capabilities to replace planned Russian
contributions, and result in a significantly less robust space station.
In spring 1997, NASA embarked on the initial steps of a contingency
plan that consisted primarily of the development of an Interim Control
Module (ICM). During summer 1998, NASA initiated activities to build a
U.S. propulsion capability, enhance Shuttle logistics capabilities,
modify the Shuttle fleet for enhanced Shuttle reboost of ISS, and a
limited procurement of needed Russian goods and services to support
Russian schedules for the Service Module and early ISS Progress and
Soyuz launches.
NASA believes its approach of working with Russia to assure near-
term critical capabilities while developing independent U.S.
capabilities over the long-term provides the best approach to address
the impacts from the Russian economic situation.
The Russian Program Assurance (RPA) total funding is estimated at
about $1.3 billion, of which about half was appropriated between fiscal
year 1997-2000. The focus of these funds is developing redundant
capabilities in the U.S. Only a fraction of this the funding is planned
to purchase needed goods and services from Russia. ISS schedule delays
have resulted in cost impacts and additional Shuttle flights, which are
reflected in the ISS operations and research funding estimates and the
Shuttle budget. While Russian delays have contributed to overall
schedule delays, U.S. and other International Partner delays have also
contributed.
Question. Can we complete the ISS without Russia and what steps
would NASA have to take under what timeline to complete the ISS?
Answer. Elimination of Russia from the ISS Program would clearly
result in a significant redesign and/or operational changes to enable
ISS assembly without on-board crew. It would be less capable, much more
costly, and significantly delayed. It would also likely result in a
loss of international political support due to lengthy deferral in the
assembly buildup.
The delay to the assembly timeline would certainly be measured in
years, but just how much would be dependent on what level of Russian
cooperation would exist prior to their departure. Without their support
ISS elements on orbit would be at risk. Without Russia, we would likely
separate from the FGB, Service Module or any other Russian elements we
could not sustain independently. We would place the Interim Control
Module (ICM) in orbit, but not continue to build beyond a minimum
station keeping capability until we had a clear confidence in the
launch date of a permanent U.S. propulsion capability, with adequate
ICM propellant reserves to proceed.
Question. Are there any sanctions in the state-to-state agreements
for failure to meet obligations, such as termination?
Answer. Each Partner's ability to meet its obligations is
predicated on availability of appropriated funds and best efforts to
achieve technical milestones. While the Service Module has encountered
delays, RSA has met its operational responsibilities to date. Should
any partner fail to perform its operations responsibilities or to
provide for its share of common system operations responsibilities, all
partners would meet to jointly determine what action should be taken.
Such action could result in an appropriate reduction of the failing
partner's rights to its allocations.
Question. How much money has NASA spent to date to backfill or meet
existing Russian obligations?
Answer. None. RSA has met its operational responsibilities to date.
Question. Once the station is complete and in orbit, to what extent
are we dependent on Russia where our astronauts would be at risk?
Answer. Regardless of the makeup of the international crew, all
partners are committed to crew safety. Rules and procedures are
designed to preclude exposing the crew to unwarranted risk. Crew will
not be launched or maintained in an unsafe environment, nor without
certainty of safe return in the case of operational anomalies or health
problems.
The Russians are responsible for capabilities that contribute to
the safe operation of the station and crew safety. They are committed
to maintaining a Soyuz on-board the station for the duration of the
operational period. This will be augmented by a crew return vehicle
currently in the planning stage. Their responsibilities also include
propulsion and logistics resupply contributions. Any operational
failure or shortfall that puts the crew at risk would mandate the
return of the on-orbit crew.
NASA's overall knowledge of space flight and the difficulties of
living and working in the harsh environment of space has been
strengthened through our Russian partnership. Likewise, the station has
a more robust on orbit infrastructure and transportation capability to
respond to unforeseen events. Russian segment specifications and safety
requirements are in place and their hardware goes through the same
thorough safety review process as NASA and other internationally
provided hardware. NASA has a rigorous safety review process developed
over the past thirty-plus years of human space flight. We have made
concerted efforts to understand and address compliance with
requirements from a safety perspective between Russian Aviation and
Space Agency (Rosaviakosmos) and NASA. Safety of flight, is, and will
continue to be, our number one goal. This does not change with the
involvement of the Russians or any of our other international partners.
COSTS OF OPERATION OF THE ISS
Question. NASA has estimated that the cost to operate the ISS will
average $1.3 billion, or $13 billion over a 10-year mission life from
2005 to 2014. What activities are these costs associated with? For
example, do these costs include the cost of spares? What are the
responsibilities of other partners to maintain and operate the ISS?
Answer. The cost estimates for ISS operations include all on-orbit
mission operations, cargo resupply and return, crew operations and
support, on-orbit maintenance, ground operations, launch processing
(exclusive of Shuttle flight costs), sustaining engineering, spares and
logistics. Also included are science utilization costs, and the
operation of research capabilities and facilities supporting on-orbit
science. Most spares for the ISS Program are being purchased up front,
as many sources of supply will cease production after the station is
assembled. The operations estimate includes the replacement of some
spares where demand analyses have determined they will be necessary and
where the industrial base will support reprocurements. It also includes
costs for expendable supplies and consumables needed for core station
operations. In addition to the ISS costs, approximately 5-6 Shuttle
flights per year are anticipated for operations and research logistics
and resupply, and crew transport.
Not included in the $1.3 billion estimate are costs associated with
any continued development or preplanned program improvement (P3I) for
the core station or research capabilities. The current space station
budget does not include funds for these activities, but they could be
considered in future budgets.
Per the intergovernmental agreements with each ISS Partner, common
operating costs are shared among the U.S., Canada, ESA, and Japan.
Russia is responsible for 100 percent of the cost of operating its on-
orbit segment, and all partners support their own elements. The Russian
provision of propulsion, logistics and crew transport for the total ISS
operations offset their share of common operations costs. Of the $1.3
billion estimated for average annual U.S. ISS operating costs, about
$300M is expected to provide common cost operations. The U.S. is
responsible for 77 percent of these costs, while Canada, ESA, and Japan
will cover the remaining 23 percent. As station resource needs have
matured, and partner capabilities to deliver cargo, especially
propellant, have been factored in, NASA expects much of the ESA and
Japanese responsibilities will be offset by contribution of common
cargo delivery services. These contributions will not reduce the $1.3
billion average annual U.S. funding for the ISS, but rather reduce the
requirement for U.S. Shuttle flights.
MANAGEMENT OF ISS RESEARCH
Question. NASA, in the past, has suggested the creation of a non-
government organization (NGO) to manage the science research on the
ISS. What is the status of this suggestion and how would this approach
be better than NASA's current approach to selecting and managing
science research? What would be NASA's relationship to this NGO be, and
are there any additional costs that must be considered?
Answer. NASA has initiated an internal study with representatives
from Headquarters, the Johnson Space Center, Kennedy Space Center, and
Marshall Space Flight Center that is scheduled for completion in Fall
2000. The first task is to thoroughly and comprehensively define in
detail the specific functions associated with ISS research and
utilization, as well as the current performing organizations and
budgets. The second task will be to develop one or more options for re-
allocating the functions among the organizations, including a potential
NGO. Finally, if one of these options appears to offer distinct
advantages in terms of ISS research productivity over the life of the
program, NASA will consult with the executive and legislative branches,
as well as our international partners, before any final decision.
The purpose of the internal study will be to determine if there is
a better approach and if the principle of ``continuous improvement''
can be applied effectively to the ISS research program. NASA has
experienced success in the past through the use of non-government
organizations, such as the Space Telescope Science Institute, National
Space Biomedical Research Institute, and other non-government research
institutes. This experience may have been instrumental in leading the
National Research Council Task Group to their conclusion that, ``The
strengths of the recommended [NGO] approach include its strong support
for research, logical division of roles, well-focused responsibilities,
and flexibility for evolution.'' (NRC Space Studies Board and
Aeronautics and Space Engineering Board, Institutional Arrangements for
Space Station Research, December 1999, p. 47.)
If NASA proceeds, a direct contractual relationship, obtained
through a competitive procurement process, appears to be the most
effective approach. This is consistent with both our past experiences
and the NRC's recommendation. In all cases, NASA would continue to
maintain full fiduciary responsibility for all public funds
appropriated.
There may be additional costs associated with the start-up period,
during the transition phase. This will be determined during the course
of the internal study. It is premature to project costs without
detailed definition of the scope of functionality.
space flight operations contract phase ii cost benefit analysis
Question. Mr. Goldin, I applaud your efforts to improve
efficiencies throughout NASA through your ``Better Faster Cheaper''
approach. However, I remain deeply concerned that contract oversight is
insufficient and I am skeptical of some consolidation efforts. For
example, a recent audit found that NASA had not performed a cost-
benefit analysis prior to consolidation of Space Shuttle prime
contracts into one prime contract with the United Space Alliance. This
indicates to me that you are not relying on a complete analysis and
documentation of estimated benefits for the consolidation. This lack of
analysis also fails to provide you with a baseline by which you can
later determine whether or not the consolidation was successful. I
understand that you will ensure an appropriate cost-benefit analysis is
conducted and applied to all phases of the operation. When will these
corrective actions be complete and how will you ensure that these
corrective actions are applied to consolidation efforts in the future?
Answer. An effort is currently underway at the Johnson Space Center
(JSC) to analyze the cost benefit of consolidating the External Tank,
Solid Rocket Motor and Space Shuttle Main Engine projects under the
Space Flight Operations Contract (SFOC) and is expected to be complete
in the late CY00. This analysis will serve as a baseline and be one of
a number of criteria to aid the Associate Administrator of Space Flight
in determining the ``End-State'' of Space Shuttle Operations (see
attached memorandum dated March 16, 2000).
Should the Associate Administrator determine that further
transition of Space Shuttle projects to the SFOC is in the best
interest of the government, an additional cost benefit analysis will be
conducted prior to the transition of each project.
In conjunction with the fiscal year 20O2 budget formulation, the
Space Shuttle program is also validating the cost benefit of the
transition thus far. That information will be available with the
release of the fiscal year 2002 budget.
GP-B
Question. Gravity Probe-B, a spacecraft designed to test Einstein's
theory of relativity, is currently some $70 million in cost overruns
with a potential slip in its launch schedule to 2002. When is enough
and a project canceled?
Answer. NASA's management procedures call for a termination review
when projections show that a project will exceed its baseline cost,
schedule, or technical performance requirements by ten percent or more.
A project will be considered for termination when a thorough assessment
concludes that there are no options for meeting the project's baseline
requirements, coupled with a determination that the science objectives
do not warrant making extraordinary sacrifices to proceed with the
project. The goal of our termination review process is to maintain the
delicate balance between achieving scientific objectives and living
within our prescribed resources.
The NASA Program Management Council recently reviewed the GP-B
program in response to the technical and cost problems, and a new
system of management controls has been established for the program. In
particular, a series of Headquarters-controlled, near-term (April 2000-
April 2001), critical milestones has been created. We are closely
monitoring the progress made toward these milestones. Failure to meet
this milestone schedule may result in a termination review by NASA's
Program Management Council.
Question. Also, what other missions are suffering from having to
pick up the shortfalls on this project?
Answer. Decisions on funding GP-B will be finalized within NASA's
fiscal year 2001 initial operating plan. Details are not known at this
time, and will depend, in part, on GP-B program performance against the
critical milestones described above over the remainder of the current
fiscal year.
Question. Basically, what are the rules of the road for cost
overruns? What kinds of reviews are required to justify the continued
funding of a project that has slipped this badly?
Answer. There is a hierarchy of reviews at NASA, beginning with
regular reviews at the Program Manager level. Centers also conduct
regular reviews via their Program Management Councils, which feed in to
regular reviews at the NASA Enterprise level in Headquarters. Finally,
the NASA Program Management Council, chaired by the NASA Deputy
Administrator, also reviews major programs (such as GP-B) on a regular
basis. The ``rules of the road'' on cost overruns are as described in
the answer to Question 8 above.
LIVING WITH A STAR INITIATIVE
Question. NASA is proposing a new program, Living With A Star, that
would have initial funding of $20M in fiscal year 2001, with total
costs of $511 million through fiscal year 2005. I support the mission
of the program that will focus on understanding the origin of solar
disturbances and how they affect human-made space and terrestrial
technology. However, the total cost of the program through fiscal year
2010 will be about $1.7 billion. This represents a huge outyear
commitment, which must be measured against existing obligations. Where
would you place this program in a priority list of the Space Science
programs or does NASA intend to reduce funding for Earth Science
missions to pay for these costs? What makes this program so valuable
and why can't the goals of this program be achieved through the Sun-
Earth Connections program?
Answer. Living With a Star is important because it seeks to develop
the scientific understanding necessary to effectively address those
aspects of the connected Sun-Earth system that directly affect life and
society. It is the study of the physics of solar variability and its
effects. Why do we care? We have increased dependence on space-based
systems, soon a permanent presence of humans in Earth orbit, and
eventually human voyages beyond Earth. Solar variability can affect
space systems, human space flight, electric power grids, GPS signals,
high-frequency radio communications, long range radar, microelectronics
and humans in high-altitude aircraft, and terrestrial climate. Prudence
demands that we fully understand the space environment affecting these
systems. In addition, given the massive economic impact of even small
changes in climate, we should fully understand both natural and
anthropogenic causes of global climate change.
The new Living With a Star missions will provide unique
capabilities not available from the on-going Solar Terrestrial Probes
series of missions to be developed in the next decade. The Solar
Sentinels will provide for the first time, the ability to observe the
entire solar surface, including the side of the Sun facing away from
Earth, and thereby observe ``solar weather'' globally. This will enable
improved long range prediction of ``space weather'' and enable a more
complete understanding of the life cycle of solar storm regions which
are normally hidden from Earth's view for half their lifetimes when
they rotate onto the solar farside. The farside Sentinel will also fill
in a gap in solar seismology data used to probe the solar interior. The
Solar Dynamics Observatory, a follow-on to the highly successful SOHO
mission, will have high temporal and spatial resolutions to enable
tracking of solar storm regions above and, for the first time, below
the solar surface. This new capability, coupled with SDO's measurements
of long term solar cycle dependent changes in the solar interior where
the solar dynamo or ``solar weather engine'' resides, will enable major
progress in understanding the physics of solar variability--why the Sun
varies. The Geospace Mappers are specifically targeted at studying
those aspects of geospace affecting human activities, unlike the Solar
Terrestrial Probes geospace missions which have a pure science focus
and therefore may or may not address physics problems related to human
utilization of space.
The LWS initiative was developed taking into consideration
activities planned for the on-going SEC program, as well as the results
and recommendations of the recent Space Science strategic planning
process. The program also takes into account the multiple national
interests discussed in interagency discussions and reports involving
the National Space Weather Program and the Office of the National Space
Security Architect, and scientific objectives given in reports of the
National Research Council/National Academy of Sciences. The National
Security Space Architect (NSSA) Space Weather Study and subsequent NSSA
Space Weather Architecture Transition Plan states: ``Fundamental to the
success of the Space Weather architecture is a robust, user-focused R&D
program addressing the unsolved scientific problems that prevent
current Space Weather products from meeting user requirements. The R&D
program shall encompass basic research leading to the development of
physics-based Space Weather models, development of Space Weather
sensors, and generation of Space Weather products for users in all
three domains, i.e., the solar and interplanetary medium, the
magnetosphere, and the ionosphere/thermosphere.'' This is a primary
goal of the LWS program. It is designed to meet critical scientific
objectives articulated in the NSWP and NSSA reports. The NSSA Space
Weather Study also points out that research and development sensors are
a valuable data source and greatly benefit data-starved operations. The
LWS missions will continue the NASA tradition of providing such data,
as currently done with research missions such as ACE, Yohkoh, SOHO, and
IMAGE.
Addressing these multiple national interests properly in a timely
fashion requires an expanded program studying solar variability and its
effects. To meet this challenge NASA's budget request for fiscal year
2001 includes a budget increase that averages out to a little more than
1 percent in its yearly budget over the next decade. NASA does not
intend to reduce funding in Earth Science missions to pay for the LWS
program. LWS will provide important information about solar inputs that
affect the Earth system and thereby complement Earth Science research
into climatological, geological, biological, and anthropomorphic Earth
system inputs. LWS is the highest priority new Space Science program.
THE INTEGRATED SPACE TECHNOLOGY PROGRAM
Question. NASA is requesting some $730 million in the Integrated
Space Transportation program, with a 5-year total of some $4.4 billion
to develop a technology base for the replacement of the space shuttle.
This program is designed to develop a second generation Reusable Launch
Vehicle (RLV) program. The program is designed to attract the
investment of the private sector in the development of new space
transportation options, with the private sector taking the lead in
development and funding after 2005. NASA plans to use this program to
solicit new ideas and build on the X-33 program, the X-34 and the
VentureStar as a technology base for the development of new
technologies and vehicles. Nevertheless, it is not clear whether there
is adequate private interest for the type of financial commitment that
will be necessary to successfully finance and complete a shuttle
replacement.
We clearly need to find a cheaper way to access space to ensure
commercial interest and growth. However, what makes $4.4 billion the
right amount of funds to develop these new technologies and attract the
private sector. I want a specific answer, not a general answer.
Answer. Private sector interest in developing a new launch vehicle
is predicated on two prerequisites: (1) reasonable technical certainty
that a new vehicle can be built and competitively operated at projected
costs, and (2) reasonable market certainty that a customer base large
enough to use a new vehicle will exist.
The $4.5 billion Space Launch Initiative directly addresses
prerequisite #1 above and is a key component of NASA's overarching
Integrated Space Transportation Plan, which coordinates investments in
Space Shuttle safety, a Crew Return Vehicle for Space Station, base
space transportation research, and the Initiative. The goal of the
Space Launch Initiative is for NASA, by 2010, to meet its human space
flight needs on commercial launch vehicles that will improve safety and
reduce costs. NASA plans to undertake three major activities through
the Initiative to meet this goal:
--One, invest in technical risk reduction activities to enable
competitive, full-scale development of privately owned and
operated launch vehicles by 2005 (Risk Reduction and
Competition, $2.4 billion);
--Two, develop hardware that can be flown on these commercial launch
vehicles to meet NASA's unique needs, such as crew transport
(NASA-Unique Systems, $1.6 billion); and
--Three, pursue procurements of existing and emergent vehicles for
select Space Station needs as a means of providing near-term,
assured access and demonstrating new, innovative approaches
(Alternative Access, $300 million).
In addition to these three major activities, the Space Launch
Initiative also funds ongoing x-vehicle programs like X-34 and X-37 and
critical systems engineering and requirements definition activities
that will tie these elements together ($200 million).
The fiscal year 2001 budget runout for the Space Launch Initiative
reflects the Administration's current best estimate of what it takes to
reduce the technical risks of developing a second-generation, Earth-to-
orbit launch vehicles for at least two viable, competing designs prior
to the 2005 competition (prerequisite # 1 above). The estimate, and the
structure of the Space Launch Initiative, are based not only on the
lessons learned in the Space Shuttle, X-33, and X-34 development
programs, but also on the results of the industry-led Space
Transportation Architecture Studies of 1998-99. Industry inputs from
these studies fed directly into the planning estimates for the Space
Launch Initiative.
This process resulted in a prioritized list of technology
investments based on investment options that NASA examined through an
analytical hierarchy methodology. Each technology was subjected to a
cost/benefit analysis and ranked based on potential payoff to cost,
safety and technical risk. All analyses were based on architecture-
level economic metrics.
The results of the integration and analysis process served as the
foundation for a series of roadmaps that illustrate the development
required to advance the Technology Readiness Levels (TRL) of the key
technologies to the point that they are mature enough for full-scale
development. These key technologies include: crew escape and survival
systems; operable, long-life propulsion systems; long-life, lightweight
integrated airframes; advanced thermal protection systems; integrated
vehicle health monitoring systems; and vehicle operability.
It is important to note that NASA has more limited capability in
directly addressing prerequisite # 2 above. If the Space Launch
Initiative is successful in developing one or more commercially
competitive, privately owned and operated launch vehicles that reduce
cost and improve safety, NASA will transition its human space flight
needs to the commercial market, thus enlarging and further stabilizing
the overall launch market. However, NASA human space flight needs will
still only comprise a fraction of the overall launch market.
Developments in the non-NASA portions of the launch market could
substantially alter industry investments in new launch vehicles. If the
commercial launch market were to stay flat, the level of industry cost-
sharing for full-scale development of a new launch vehicle would likely
be smaller than if the market were to grow substantially. For this
reason, NASA has taken a staged approach to the Space Launch
Initiative, i.e. reducing technical risk and reassessing market
conditions prior to the 2005 competition. It is also for this reason
that NASA is pursuing investments outside the Space Launch Initiative
through ISTP in areas like Space Shuttle safety.
lack of strategic planning for the space transportation mission (s-34)
Question. One of your ``faster, better, cheaper'' projects is the
X-34 Technology Demonstrator. Recent reports that NASA has not
adequately performed strategic planning for the Space Transportation
mission lead me to believe that you should put more emphasis on the
``better'' portion of the equation. Requirements for the next-
generation Reusable Launch Vehicle (RLV) technology must be clear, and
management should be confident that the technologies resulting from the
X-34 project support RLV needs.
Please update us on NASA's strategic planning and management
initiatives to improve the overall effectiveness of Space
Transportation programs and projects.
Answer. The intensive study, review, and planning that went into
NASA's Integrated Space Transportation Plan, and especially the Space
Launch Initiative, is the single, largest, recent improvement in NASA's
space transportation programs. ISTP improves NASA's space
transportation programs in two key respects:
1. ISTP coordinates future decisions across all NASA space
transportation investments. For example, Space Shuttle safety
investments are now focused on improvements that will be fully in place
by 2005 so that Shuttle can benefit from these safety investments
before a potential replacement would be available through the Space
Launch Initiative in 2010. In another example, prior to a full-scale
development go-ahead decision on a Space Station Crew Return Vehicle,
NASA will fully examine a range of designs for other, cost-effective
options that meet both the crew return need and other needs, such as
crew and cargo transport, on future launch vehicles developed under the
Space Launch Initiative.
2. ISTP, and especially the Space Launch Initiative, provide
multiple, competing paths to future systems with back-up alternatives.
For example, the Space Launch Initiative seeks to reduce technical risk
for at least two competing Earth-to-orbit launch vehicle designs to
enable full-scale development decisions in 2005 with operational
vehicles by 2010. By pursuing at least two competing designs, NASA
intends to spur industry innovation and have more than one development
path if technical issues pose roadblocks to a particular design. If
technical issues or market conditions delay development decisions in
2005 or operability by 2010, ISTP is making concurrent investments in
Space Shuttle safety to ensure continued U.S. human access to space. In
the near-term, the Space Launch Initiative also seeks alternate means
of access to Space Station for cargo on existing or emergent commercial
launch vehicles to back-up the Space Shuttle.
With respect to X-34 and other existing x-vehicle programs,
decisions on expanding investments in those vehicles will be tied to
industry proposals under the larger Space Launch Initiative to reduce
technical risk and prepare viable, competing designs for the 2005
competition. In this way, ISTP coordination and Space Launch Initiative
goals provide an important context for decisions on specific space
transportation investments.
NASA'S MISSION
Question. There has been very little discussion of what happens
after the assembly of the ISS. There has been no public discussion of
NASA's mission. Nevertheless, internally, and despite the current
failures in the Mars programs, NASA seems to be focusing on Mars,
possibly as a manned base. What is NASA's long term mission focus?
Answer. While NASA's first priority is to complete the
International Space Station to reap the benefits of long-duration
research in space, we also continue to invest in research strategies
and technologies to prepare for more challenging future missions. While
we have not identified specific long-term missions or goals for the era
after the International Space Station is fully operational, NASA is
committed to taking steps now to prepare for challenging future goals
and missions. We have initiated Agency-wide decadal planning studies
designed to enable NASA to create a variety of blueprints for human and
robotic space exploration scenarios, following ISS operations.
One of the early outputs from these studies is the universal
recognition that reliable and cost-effective space transportation
remains the key enabler of a more robust civil space program. To meet
this crucial need, NASA's new Space Launch Initiative makes the
critical investments to assure more reliable access to space in the
years ahead. In addition, we continue to invest in new science and
technology initiatives in biotechnology, nanotechnology and information
technology. These technologies will provide NASA with a new pathway to
revolutionize our missions and the scientific and engineering systems
that enable them, bringing down the cost, while enhancing safety. These
strategic investments must be made in the near term if we are to expand
our presence in the solar system in the long term, no matter what
specific missions are ultimately pursued.
STAFFING NEEDS
Question. For fiscal year 2001, NASA is proposing to increase its
FTEs by 328 people following several years of downsizing. This request
reflects recent concerns that NASA has downsized to quickly. The recent
1999 Annual report of the Aerospace Safety Advisory Board identified
workforce staffing needs as its # 1 finding in that ``the continuing
downsizing at the Office Of Space Flight Centers, coupled with the
effects of the prior hiring freeze and unplanned departures, has
produced critical skills deficits in some areas, growing workforce
pressure and stress levels, and a serious shortfall of younger S&Es''.
Staffing concerns have become so acute that the Administration has
asked for $20 million in the fiscal year 2000 Supplemental bill for
staffing increases.
The report gave workforce needs an aura of an emergency. Did this
problem sneak up on NASA and what are the most critical workforce
needs?
Answer. Due to concerns raised from within by internal reviews such
as the Core Capability Study and by outside groups such as the
Aerospace Safety Advisory Panel, senior NASA management became
convinced that we had gone too far in our reductions at the Space
Flight Centers. In the first quarter of fiscal year 2000, we decided to
discontinue downsizing at these Centers and begin the revitalization of
the workforce to correct skill shortages and imbalances. We decided
that the staffing situation required more immediate action and an
accelerated hiring plan was proposed. This plan included hiring 550 new
personnel across the Space Flight Centers in fiscal year 2000 followed
by 300 in fiscal year 2001 and one-for-one thereafter in order to reach
a staffing levels that strengthen program management and ensure Shuttle
safety. Since the fiscal year 2000 budget had already been passed when
the decision to begin the revitalization in fiscal year 2000 was made,
a supplemental bill was needed.
These new critical staff hires are intended to support program
requirements for Space Shuttle Operations and Upgrades, Space Station
Development and Operations, Expendable Launch Vehicles, Advanced Space
Transportation Technology and other Center mission related and
administrative requirements. The hiring of these new employees is
geared to alleviate stress impacts resulting from expanding workload
pressures; eliminating critical skill shortages across our programs and
Centers; and pursuing fresh-out hires to revitalize our Science and
Engineering (S&E) knowledge base for future program and project
management responsibilities. In addition, NASA is seeking to refocus
our workforce composition towards a future oriented research and
development base.
MIR
Question. Despite promises by the Russians to deorbit the Mir,
Russia seems committed to maintain the Mir as an active space station.
What impact will this have on Russia's commitment to the ISS and what
steps is NASA taking to ensure that resources that should be going to
the ISS are not being redirected to the Mir?
Answer. NASA believes that it would be extremely difficult for
Russia to support two space stations simultaneously, even if funding
were obtained. As such NASA continues to press RSA on their specific
plans for Mir. However, NASA believes that any decision concerning the
future of Mir is the purview solely of the Russian Government. RSA has
assured NASA that ISS remains its top priority and that Mir will remain
on-orbit only if the resources can be found to maintain the two
stations simultaneously and that the Mir lifetime can be accomplished
with no impact to the ISS as long as both space stations do not
concurrently experience off-nominal situations.
REMOTE SENSING
Question. While the LightSAR program was terminated in the VA/HUD
fiscal year 2000 bill, this technology offers great potential for a
number of practical applications, most particularly as an all-weather
method for remote sensing of the earth's surface. The report to that
appropriations bill required NASA to report on the actions NASA can
take to support industry-led efforts to develop an operational
synthetic aperture capability in the United States. What is the result
of NASA's review?
Answer. The Conference Report (House Report 106-379) accompanying
H.R. 2684, the fiscal year 2000 VA-HUD and Independent Agencies
appropriations bill, directed NASA to review the history of the
LightSAR program, and to report to Congress on actions the Agency can
undertake to support industry-led efforts to develop an operational
synthetic aperture radar (SAR) capability in the United States, with
particular focus on NASA as a data customer. The report was submitted
to Congress on May 30, 2000. The report indicates:
NASA has technology and scientific interests in Synthetic Aperture
Radar (SAR) data, particularly L-band, for its studies of the Earth's
surface and interior. We are currently weighing this interest among all
others in the context of our Earth Science Enterprise Research
Strategy. This plan was recently reviewed by the National Research
Council (NRC) and NASA is currently preparing a response to the NRC
recommendations.
Commercial interest exists for X-band or C-band SAR data, but the
market for such data is not sufficiently mature to justify a
commercially-funded mission. NASA is mainly interested in
interferometric L-band SAR data for its Solid Earth and Natural Hazards
scientific programs. This was demonstrated by the latest and highly
successful Shuttle Radar Topography Mission (SRTM). NASA is continuing
its investment in SAR technology to reduce the cost of a possible
future SAR satellite opportunity. Based on the outcome of the science
planning and technology development activities, and our dialogue with
stakeholders in government and industry, we will determine the
appropriate course of action.
Question. What is the status of NASA's transition to full cost
accounting?
Answer. NASA is actively pursuing the implementation of key full
cost accounting and related practices. The basic implementation
strategy is to phase key full cost practices into Center and Agency
operations over the next few years. NASA Centers initiated full cost
practices in fiscal year 2000. They are beginning to distribute direct
labor costs to projects, and to standardize the structure and content
of General and Administrative (G&A) costs and service pool costs across
the agency. By the end of fiscal year 2000, NASA plans to decide on
fiscal year 2001 full cost activities, depending on progress on fiscal
year 2000 activities.
NASA also plans to continue the transition to a ``full cost''
budget during fiscal year 2002. As part of the transition to a ``full
cost'' budget, the ``Mission Support'' account will be distributed to
the appropriate activities in the remaining appropriations accounts:
Human Space Flight and Science, Aeronautics, and Technology. All
program and Agency support and operations will be distributed. The
number of appropriations (excluding the Office of the Inspector General
appropriation) will thus decrease from three to two.
PROCUREMENT
Question. NASA's procurement obligations accounted for over 87
percent of NASA's total obligations in fiscal year 1998; and NASA
procures some $12.5 billion in goods and services annually. In January
1999, GAO identified NASA's contracting management as a high risk area.
What is NASA doing to address this?
Answer. NASA's Office of Procurement has taken corrective action on
all recommendations issued by the GAO. The GAO has recognized that
there are no open recommendations remaining related to NASA's contract
management; nonetheless, GAO continued to include contract management
on their High Risk list due to the delay in implementing IFMP. However,
IFMP is now under review in order to determine how the project will
continue. Future plans will be decided this summer, during the fiscal
year 2002 budget formulation process.
NASA has adopted a revised procurement measurement system effective
November 19, 1998. One new measure--and a key one for tracking
results--is that of customer satisfaction. Three electronic surveys
were issued to three different groups of customers over the last year.
The first survey (of about 4500 NASA procurement office customers) was
completed in spring 1999. Approximately 37 percent of those polled
responded. Survey results were provided to the NASA Procurement
Officers for their review, which will help them improve their
organizations' customer service. A follow up survey will be issued to
those same customers in June 2000 to assess satisfaction levels in the
areas of: effective communication, customer service, meeting mission
goals, and procurement knowledge and skills.
We have also collected data from two additional surveys: a survey
of the Headquarters procurement office's procurement customers in the
field (with a 49 percent response rate), and a survey of the
Headquarters procurement office's other customers at Headquarters and
Center management. Those survey results have been reviewed at
Headquarters and any identified problems are being addressed. It is our
intent to issue these surveys annually in the future. The results will
be used to improve services to our customers.
Regarding procurement self-assessments, GAO recommended that
Headquarters provide the NASA centers with specific Agency-wide
guidance regarding the self-assessment process. In a letter dated June
17. 1997, the NASA Associate Administrator for Procurement forwarded to
all Center Procurement Officers specific guidance entitled,
``Functional Management of Self-Assessments.'' This guidance is
intended for the Center Procurement Officers' use in preparing and
submitting annual functional self-assessments. These Center self-
assessments are an integral part of the annual certification by the
Associate Administrator for Procurement pursuant to Executive Order
12352 to the NASA Administrator that NASA Procurement Systems are
adequate. In addition, the Office of Procurement converted the existing
Procurement Management Survey Guide, previously used by NASA survey
teams which evaluate the quality, effectiveness and efficiency of
procurement and grant programs at all NASA Centers, into a Self-
Assessment Guide for use by the Centers in performing their own
procurement self-assessments. The Self-Assessment Guide was updated in
March, 2000. Also, the results of Center self assessments are one of
the items reviewed by NASA survey teams in their on-site reviews.
The NASA Office of Procurement has implemented a number of
initiatives and innovations to relieve the affects of the Agency
downsizing effort. They include the Consolidated Contracting Initiative
(CCI), which emphasizes developing contracts, whenever appropriate,
that can be used by other procurement offices within NASA and by other
government agencies; and using existing contracts to the maximum extent
to satisfy Agency requirements. The goals of this initiative are to
reduce user time spent on acquisition-related tasks; shorten
acquisition lead times, thereby meeting users' needs faster; minimize
contract duplication; save money by consolidating requirements; reduce
closeout backlogs; and improve cooperation across NASA and with other
government agencies. Further, the Office of Procurement has initiated
the NASA Contracting Intern Program (NCIP). This is a two-phase
recruitment/employment effort. The program consists of a two to three
year cooperative education program targeted to college sophomores and
juniors followed by a two-year internship beginning at college
graduation. It includes an orientation session, formal training
courses, and a rotational assignment at a different NASA Center when
the co-op graduates into a permanent Intern position. This program was
initiated in order to ensure that there are adequate numbers of well-
trained procurement professionals whose training and education meet the
statutory requirements. This program will be used to fill approximately
30 percent of the anticipated vacancies in NASA procurement Agency-
wide.
The NASA Office of Procurement has also initiated a number of
contract management initiatives. These innovations include:
Performance-Based Contracting (PBC) which entails structuring all
aspects of an acquisition around the purpose of the work to be
performed as opposed to how the work is to be performed or broad and
imprecise statements of work. It emphasizes the use of quantifiable,
measurable performance requirements, and performance quality standards
in developing statements of work, selecting contractors determining
contract type, structuring incentives, and performing contract
administration, including surveillance. The Office of Procurement
recently completed a reassessment on the agency-wide PBC implementation
in order to ensure that Center procurement offices fully understand how
PBC is to be structured for inclusion in NASA contracts. It was
determined that the PBC implementation was successful and numerous NASA
centers ``best practices'' were highlighted during the reassessment.
Profit/Fee innovation.--NASA revised its structured approach for
determining profit and fee objectives in order to ensure that profit
and fee levels are competitive, appropriately motivate ``faster,
better, cheaper'' contract performance, and use a methodology that
adequately reflects the realities of today's business environment.
NASA's revised structured profit/fee approach uses risk analysis to
determine the Agency's objective instead of the former cost element
approach.
NASA has established Phase I of a Virtual Procurement Office (VPO).
As a result of the explosion of WEB technology and the access to
information, the efforts of the NASA Acquisition Internet Service
(NAIS) Team in developing a range of tools for the contracting
community, and the need to assimilate procurement activities with the
Integrated Financial Management Program (IFMP), we have developed the
VPO. The VPO assembles in one place on the Internet the myriad of
references, tools, and sample documents available to contract
specialists. The VPO is designed to organize the rules (FAR, NFS, and
local instructions), samples and tools along the familiar lines of the
NASA Form 98, ``Checklist for Contract Award File Content''. The VPO
provides a convenient reminder of tasks that need to be accomplished
and immediate access to the tools available to accomplish the tasks.
Further, it highlights areas such as contract management and financial
reporting that may be prime candidates for future development. The
response to the VPO concept from all levels of procurement
professionals has been very enthusiastic. The VPO has been
substantially implemented at all NASA centers. NASA is now evaluating
the steps to be accomplished in Phase II which will concentrate on
Contract Management functions, procurement data warehouse, electronic
filing, etc.
NASA has submitted a proposed rule to the Federal Register that
would change the NASA FAR Supplement (NFS) to emphasize considerations
of Risk Management, including safety, security, health, export control,
and damage to the environment, within the acquisition process. The
proposed rule addresses risk management within the context of
acquisition planning, selecting sources, choosing contract type,
structuring award fee incentives, administering contracts, and
conducting contractor surveillance. Additionally, the proposed rule
would require offerors to structure their proposals to emphasize risk
management, whenever the solicitation requires a technical proposal.
Furthermore, the proposed rule would allow that contractors not be paid
award fee for any evaluation period in which there is a major breach of
safety or security.
Award Term Contracting is a pilot program that will test a non-
traditional method of motivating and rewarding contractor performance.
The Award Term Contracting (ATC) evaluation and award process itself is
directly analogous to the Award Fee process. However, instead of
earning fee, a contractor receives periodic performance evaluations and
scores, which can result in an extension of the term of the contract in
return for excellent performance.
Past Performance of contractors has traditionally been considered
by NASA in its formal source selections and is now required by the FAR
in competitive procurements over $1 million. A systematic collection of
data on past performance for NASA contracts commenced during the third
quarter of fiscal year 1998. NASA maintains contractor performance data
for all contracts in excess of $100,000 in accordance with Federal
Acquisition Regulation (FAR) 42.1502.
COMPUTER HACKING AND TERRORISM: NASA IG, ROBERTA GROSS
Question. The issue of computer terrorism and hacking have become
significant security issues to the United States. I know that the NASA
IG has made this a priority issue for her office and NASA. However,
there remains a huge risk. There was a recent CNN website article that
discussed the fact that both Brazil and NASA have been under a wave of
online attacks with the result that Brazil's telecommunications
regulatory agency was shut down for nearly 6 hours on March 15th. How
big a risk to NASA is hacking and other forms of computer terrorism and
what kind of risk? For example, could satellites be affected? How about
the Space Shuttle or the ISS?
Answer. Response provided by the Office of Inspector General
directly to the Subcommittee.
EXPANSION OF THE KECK OBSERVATORY ON MAUNA KEA
Question. I understand the Office of Hawaiian Affairs is
considering a lawsuit to block the expansion of the Keck Observatory on
Mauna Kea. Hawaii, because of religious concerns. In this case, Native
Hawaiians consider the summit of Mauna Kea a sacred religious site. How
does NASA plan to deal with these very sensitive local concerns.
Answer. The Keck Interferometer is a key element in NASA's Origins
Program, a program to search for life in the universe. The Keck
Interferometer is an important component of the program because it will
provide data necessary for the design for the Terrestrial Planet Finder
(TPF) mission, a key element of the Origins Program. The objective of
TPF is to search for, and identify habitable planets, like our own
Earth, orbiting nearby stars.
The site at Mauna Kea is uniquely suited to demonstrating optical
synthesis imaging necessary for the design and development of TPF for a
number of reasons. First of all, the site already houses the two very
powerful 10-meter Keck telescopes. Combined with the proposed four
outrigger 1.8-meter telescopes, the configuration will yield an
interferometric array with 15 different baselines that have lengths of
up to 140 meters and angular resolution 10 times better than each of
the Keck telescopes alone. This combined array will be used for both
imaging of scientific objects and for advancing the development of
synthesis imaging.
Another very important facet is the fact that the atmosphere at
Mauna Kea is extremely dry and stable. This provides for a very simple
and straightforward atmospheric correction scheme for each outrigger
telescope.
While NASA has not done a formal study of alternate sites, it has
given consideration to several possibilities. Unfortunately, none of
them have the advantages that Mauna Kea does. Alternative locations
would require building 6 telescopes instead of 4, and they would have
to be outfitted with additional optical systems to compensate for the
poorer atmosphere. This would add significant cost to the project and
would also delay the return of scientific results.
NASA officials, in coordination with staff of the W. M. Keck
Observatory and the Institute for Astronomy, had a series of meetings
this March with representatives of various Hawaiian entities. They met
with several representatives of the State of Hawaii (including Dr. Don
Hibbard of the Historic Preservation Division), interested Native
Hawaiian community groups, and Senator Daniel Inouye's Hilo field
representative, Mr. William Kickuchi. These consultations were part of
an effort by NASA to understand the concerns of the Native Hawaiian
groups and to determine if NASA might be of assistance in undertaking
prudent mitigation measures that would address concerns related to
NASA's proposed outrigger telescopes project. The information obtained
from these meetings will be used to develop a draft mitigation plan.
Upon completion of the draft mitigation plan, NASA will provide a copy
to each of these entities in late June and be prepared to discuss its
contents. They will have a 30-day review period. After we receive their
comments, we anticipate having another consultation meeting to resolve
any outstanding issues.
BOEING BUSINESS JET
Question. NASA is looking to acquire a business jet that would
provide international emergency medical facilities. This seems a
Question.able acquisition for activities that can currently be
performed by the US Military if necessary. I understand that this would
be paid for by the Japanese as part of a swap which means that it is
not really free and there would be additional operational costs. I need
more information, but I would like a commitment if NASA goes forward
that this plane would be used solely for medical emergency uses and not
passenger use.
Also, it has been suggested that NASA could contract for aircraft
needs through private airline companies and time-share contracting. I
understand that NASA has been looking at this issue and I would
appreciate a summary of the pros and cons, including a cost analysis.
Answer. The International Space Station (ISS) Program has a
requirement to provide emergency medical response to safeguard the well
being of astronauts in the event of an unplanned return to Earth of the
ISS crew members. A worldwide rapid response capability is needed to
achieve this. Additionally, the stabilization of long duration
crewmembers after such an emergency return requires special medical
equipment and medical personnel specially trained to this specific
discipline. NASA is exploring numerous options to meet this need
including the DOD and private sectors. NASA has been unable to identify
any organization that could respond in a reasonable time-frame with the
proper equipment or with personnel trained to deal with issues
associated with long-duration space flight. The DOD Medevac mission has
requirements, which are fundamentally different from NASA's. NASA's
preferred solution at this time, is to obtain a specially outfitted,
extended-range Boeing 737 aircraft. Should NASA pursue this option, the
aircraft would not be used to carry passengers for administrative
purposes. NASA is beginning to assess options for how to acquire such
an aircraft, and one of the preliminary options under consideration is
a potential barter arrangement with Japan.
NASA is assessing options for contracting for aircraft needs
through private airline companies and time-share contracting, and will
provide a summary when the assessment is complete.
LANDSAT 7
Question. Landsat, as the world's first civil earth-observation
satellite program, has provided us with a continuous stream of land-
image data since 1972, and with Landsat 7, launched in April 1999, we
have begun to collect and process seasonal global data sets of land
image data. The management of Landsat 7 is currently the responsibility
of the U.S. Geological Survey under a multi-agency memorandum of
understanding. Does the USGS have financial responsibility for this
program and to what extent? Can this be a model for future agreements
between agencies?
Answer. As a result of an interagency agreement between the USGS,
NASA, and NOAA, signed in November, 1998, the USGS has been designated
to be the operational agency for the Landsat Program. Financial
responsibility for the Program in fiscal year 2000 is shared by NASA
and the USGS.
The USGS funds operation of the Landsat 7 ground data collection
system (receiving, preprocessing, and permanently archiving Landsat 7
images) from a combination of USGS appropriations and fees received for
transmitting Landsat 7 data directly to international cooperator ground
receiving facilities. The USGS also has funding responsibility for
product generation and distribution, and supports this activity through
income derived from product sales, with products distributed at cost of
reproduction.
NASA is funding fiscal year 2000 costs for operating the Landsat 7
satellite and management of ground receiving stations in Alaska and
Norway (shared facilities supporting other NASA missions). In fiscal
year 2001, the responsibility for funding and managing Landsat 7
satellite flight operations will transfer in its entirety to the USGS,
pending final signature of the revised Presidential Decision Directive,
and receipt of fiscal year 2001 support of Landsat 7 flight operations.
This transition should serve as a model for such activities in the
future. We believe this is an excellent model for transitioning a key
capability from a research and development agency (NASA) to an
operational agency (USGS) with the mandate for obtaining and preserving
long term records of change.
Question. Please identify all current projects with a projected
total cost of the missions that exceed $50 million that are currently
(or expected to be in fiscal year 2000) in excess of their annual or
total budget by 15 percent. Please identify the status of the mission,
the reasons for the cost overruns, the process in place for reviewing
the cost overruns, and the status of each mission in the process, and
the criteria that will be used to determine whether a mission will be
continued or terminated.
Answer. There are currently 4 projects over $50 million that exceed
their total budget by 15 percent, three of which are within the Earth
Science Enterprise and one in the Space Science Enterprise. These
projects have experienced cost growth and schedule delays for a variety
of reasons including technical problems, increased reviews and emphasis
on risk reduction, and, in one case, Congressionally-driven changes in
requirements. The NASA Procedures and Guidelines (NPG)--NPG7120.5A
Program and Project Management Processes and Requirements set forth the
internal Agency review process for reviewing program, technical, cost,
and schedule performance.
The NPG requires that a special purpose review be called to assess
continuation of a project or mission that is projected to be unable to
meet its commitments. A review is conducted by the appropriate Center
Program Management Council when any project exceeds or is projected to
exceed by more than 10 percent the total development run-out cost
identified at Mission Confirmation Review (MCR) or its equivalent,
exceeds or is projected to exceed the NASA mission cost cap identified
at MCR or its equivalent, delays or is projected to delay launch
readiness by 15 percent (based on time frame between MCR or its
equivalent and Launch Readiness Date as defined at MCR or its
equivalent), or fails to meet minimum success criteria as defined by
Level I Requirements.
In these reviews, NASA typically considers science benefit,
availability of funding to address shortfalls, existing program risks,
and all other relevant factors in determining whether to terminate or
continue the mission under review. Findings are submitted to the
Associate Administrator (AA) for review. The review recommends either
continuation or termination of the mission. The AA then, in turn,
submits termination or continuation recommendations to the
Administrator.
The following is the requested information about the specific
projects and missions that exceeded the budget/cost thresholds
referenced in the Question:
(1) Earth Observing (EO-1).--EO-1 is a technology demonstration
mission to validate in space new earth imaging technologies considered
vital for future science and Land Remote Sensing. EO-1 experienced a
failure in the power converter of the Wide Band Advanced Recorder-
Processor (WARP) in early January 2000 which was caused by
contamination of a wire bond in a hybrid reference diode. Because of
its original intermittent nature, the failure was difficult to trace
but it was eventually found to be caused by a random manufacturing
defect. This issue can be resolved by replacing the power converter.
ESE management tracked the cost and schedule impacts associated with
this failure and other technical issues. When final cost projections
showed cost growth sufficient to trigger a termination review,
management discussions were held to decide whether to proceed with such
a review. ESE decided not to press for a termination review based on
the following factors:
--The spacecraft appeared technically sound despite the random
manufacturing defect problem and the fact this was a ``higher
risk'' technology demonstration.
--ESE management successfully tracked the evolution of the problem so
there was little new information a termination review was
likely to provide.
--Since the agency had required a Red Team Review for all CY2000
launch missions, ESE felt this would be a meaningful venue to
assess the technical readiness of EO-1 for launch.
--While the programmatic funding adjustments needed to cover the EO-1
cost growth were difficult, they could be managed within the
New Millennium Program.
The value of the technology to NASA, as well as the increased
management oversight, was the basis for continuing this technology
development effort. Despite the technical problems and additional
testing recommended by independent reviewers, corrective actions are
underway and the satellite is on target for launch in October 2000.
(2) Vegetation Canopy Lidar (VCL) Project.--VCL experienced
development problems and schedule slips because of its Multi-Beam Laser
Altimeter (MBLA) instrument. The instrument failed to achieve
performance requirements. An independent review team recently
identified ongoing technology issues and made recommendations to
mitigate risk in areas such as laser performance, contamination
control, and testing methodology. The independent review team developed
recommendations relative to continuation of the mission. The Goddard
Space Flight Center Program Management Council (PMC) conducted a
Termination Review of VCL and generated a series of options for
continuation. The NASA Headquarters Program Management Council also
conducted a review of VCL on June 22 to weigh options for continuation
or termination, resulting in an action to refine the options. A second
meeting is scheduled for early August, after which a decision will be
taken on the future of the mission.
(3) Triana.--The Triana satellite mission presented a special case.
The Conference Report (House Report 106-379) accompanying H.R. 2684,
the fiscal year 2000 VA-HUD-Independent Agencies appropriations bill,
included direction for NASA to suspend all work on the development of
the Triana program until the National Academy of Sciences (NAS)
completed an evaluation of the scientific goals of the program.
Consequently, in October 1999, NASA suspended work on the Triana
Project. This ``stand-down'' lasted five months. In March 2000, the NAS
released its report that determined Triana's science was substantial
and achievable. As a result of this review, NASA is implementing
recommendations to increase instrument testing and calibration, as well
as to increase the development and testing of data reduction
algorithms. These additional requirements, as well as the required
stand-down while the review took place and the final structure of a
partnership with Italy, have resulted in cost growth and schedule
slips. NASA did not subject Triana to a formal Termination Review
because the delays and cost growth were largely externally driven.
However, over the past several months, the Agency has conducted several
reviews of the restart plan for Triana, and, in each case, the outcome
was a recommendation to proceed with the program. In April, the GSFC
Program Management Council (PMC) reviewed the Triana restart plan. In
addition, the GSFC PMC chartered an independent review of Triana, which
was conducted in May. Most recently, at the end of June, the GSFC
reported its restart plan to complete Triana to the Headquarters PMC
and received a recommendation to continue. Currently, spacecraft
integration and testing is underway and instruments are ready for
integration into the spacecraft.
(4) Gravity Probe B.--Failed its science instrument functional
tests last year, due primarily to thermal and gyroscope problems. As a
result the science payload had to be disassembled and design
modifications had to be made. The technical solutions are in work, and
the project is currently on track for starting integrated payload
testing in mid-September 2000, with a plan to initiate full space
vehicle testing in September 2001, pointing toward a projected launch
in May 2002. We are aware that new issues could surface as a result of
the design modifications that are being made. A Headquarters-controlled
near term (April 2000-April 2001) critical milestone schedule is in
place for GP-B. We are closely monitoring the progress made toward
these milestones. Failure to meet this milestone schedule may result in
a termination review by NASA's Program Management Council (PMC).
______
QUESTIONS SUBMITTED BY SENATOR TED STEVENS
HUBBLE SPACE TELESCOPE SERVICING MISSION COSTS
Question. The Conferees provided $23 million in order to address
the critical shortfalls in the HST program due to the initial
unavailability of the Columbia Orbiter for the third servicing mission
and the subsequent decision to split this servicing mission into two
parts. Following this action, we understand that the Shuttle Fleet was
down for wiring inspections and SM3A slipped until December.
What is the total cost of Shuttle impacts on HST in fiscal year
20OO and the next five years?
Answer. The additional $23 million provided by the Conferees was
sufficient to cover the additional near-term costs from the split of
SM3 into two parts, and related Shuttle impacts. The slip of SM3A from
October into December 1999 was absorbed by reserves included in the
$23M estimate.
There is a $44 million additional out-year cost associated with the
new HST servicing mission schedule. Sufficient time must be maintained
between servicing missions to enable the workforce to complete
necessary planning activities. In order to maintain a reasonable amount
of time between SM3B and SM4, we delayed the planned launch of SM4 by
about six months, until summer of 2003. The slip of SM4 means that we
must maintain the Hubble servicing workforce for an additional 6
months, increasing the HST budget requirement by $44 million in fiscal
year 2003, with no changes necessary in other fiscal years.
Question. How are these being addressed? Please provide a year by
year summary of impacts, including impacts on Goddard and contractors.
Answer. The $44 million impact in fiscal year 2003 was addressed
during our out-year budget planning last summer by transferring funds
from NGST in fiscal year 2003. There is a strong link between the HST
and NGST programs, both scientifically and in their budgets. The two
programs essentially ``share'' a given level of funding in the budget;
thus increases in the requirements of one will force a reduction in
funding for the other. Per this arrangement, as NGST progresses through
the development phases in coming years, the ramp up in its budget will
be largely offset by the significant ramping down in HST following SM4.
The $44 million taken from NGST in fiscal year 2003 had no significant
impact to the NGST program (either contractors or civil servants),
since schedule slips driven by technology readiness and other issues
have slowed the NGST ramp-up, making these funds available for HST.
Despite this slip, NGST remains a very high priority within Space
Science, in accordance with the new Decadal Survey report from the
National Research Council. This report maps out the priority
investments in astronomy research over the next decade, and gave the
highest priority to NGST.
Question. What is the status of the $40 million AO for ATD that was
issued in 1999? How many proposals were submitted in response to this
competitive solicitation and how many will be selected?
Answer. Evaluation of the proposals to the $40M cross-cutting
engineering technology development (CETD) AO (actually a NASA Research
Announcement or NRA) was completed in late August. Thirty-nine panels
composed of independent reviewers from NASA, other government agencies,
and universities reviewed the 1,229 proposals submitted. Final
selection is expected to occur in mid-September 2000. The average
proposal is for $1.2 M over a three-year performance period, meaning
that approximately 100 of the proposals will be selected within the
$40M budget.
Question. What plans does NASA have to continue this competitive
process in the future? With fiscal year 2000 funds? With fiscal year
2001 funds?
Answer. It has always been NASA's policy to solicit the best ideas,
and NASA plans to continue the competitive CETD NRA program. With few
exceptions, proposals received are for a three-year performance period
but will be reviewed for performance annually. New solicitations will
occur as funds roll over from completed existing and future projects.
Question. Would the Agency consider expansion of future AO's to
include mid-level technology readiness levels (TRLs), as opposed to
just early TRLs?
Answer. NASA considers the proactive transition of promising low-
TRL technologies to higher levels of application to be a critical
aspect of technology development and has a number of strategic programs
for that important purpose, such as the openly competed New Millennium
Flight Experiment Program. NASA has long recognized the need to
continue the development of promising low TRL technologies developed
under its AO processes. It also recognizes the potentially huge
benefits of adapting low TRL technologies developed elsewhere for use
on NASA missions. Unfortunately, as technologies move up to higher
maturity level, the amount of resources required to continue their
development increases, a factor that limits the number of technologies
that can be funded within a constrained budget. Developing new
strategies for accomplishing the low-to-mid TRL transition process
continuous within the Cross-Enterprise program is a part of on-going
planning activities.
Question. The Agency has changed its position over the last several
years about its support for the Committee's directives in fiscal year
1998, 1999 and 2000 to compete 75 percent of all ATD funds, both
focused and core program elements. What is the Agency's current
position on this directive and schedule for plans to implement it
fully?
Answer. NASA has two requirements from Congress: (1) compete 75
percent of all ATD programs and (2) preserve center core competencies
for technology development to support future missions. These
requirements are not independent. NASA's technology core competencies
are embodied in a group of technologists with in-depth knowledge and
skills as to the possibilities, limits, and state of readiness of
technology critical to NASA's missions. Examples are aerodynamics/
aerothermodynamics, space power, microelectronics, advanced materials
and structures, and robotic spacecraft. These technologists work
closely with university and industry technologists and mission
developers to provide system and mission level integration of disparate
technologies. For example, a space-materials technologist understands
the space-related value and problems of adapting a promising generic
nanotechnology material developed by a competitively selected physical
chemist who has no space background. The establishment of firm center
core competency requirements is currently in progress under the
direction of the Chief Technologist and involves about 35 technologies
over the nine NASA centers and the Jet Propulsion Laboratory. An
implementation strategy that integrates ATD core competencies with
complementary competed ATD programs will follow. NASA believes that
competed programs should not put the necessary NASA core competency
personnel in conflict with potential government partners in
universities and industry in the competitive proposal process. This
belief is based on long experience in working with the external
community to develop ideas to a useful state. It was underscored by the
experience of the recent CETD NRA where competitive conflicts impeded
the willingness of technology suppliers to communicate openly in
matters not related to the NRA for fear of disclosing new technologies
in discussions of applications other than the specific ones being
proposed competitively. Beneficial information exchange that enables
NASA to plan future technology dependent missions and to evaluate the
benefits and risks of new technologies in combination with other
mission factors and technologies, i.e. be a smart buyer, are
compromised. An approach that enables NASA technologists to retain
working relationships with all potential bidders in a full and open
competition, without compromising internal cutting-edge knowledge and
skills, is a crucial part of this strategy.
Question. Please provide a detailed breakdown of the uses of all
``Core Program'' ATD funds (which totals roughly $800-900 million) for
the last four years (fiscal year 1997-2000) by subprogram element,
technology readiness level classification, project, contract and NASA
center?
Answer. The last four years total (fiscal year 1997-2000) for the
Core Program is $843M. The subprogram elements that fall under Core
Program consist of:
[In millions of dollars]
Intelligent Systems............................................... 18
Information Systems............................................... 90
Advanced RTG...................................................... 3
R&A Instrument Development........................................ 36
Remote-Exploration & Experimentation (RE&E)....................... 37
Explorer Program Technology....................................... 13
Planetary Flight Support.......................................... 36
Other OSS Core Technology......................................... 55
Cross Enterprise Technology....................................... 555
Technology readiness level (TRL) classification for the ``Core
Program'' ranges from 1 through 9. Below is the breakout by each
program element.
Program Element TRL
Intelligent Systems............................................... 1-6
Information Systems............................................... 5-8
Advanced RTG...................................................... 3-5
R&A Instrument Development........................................ 5-8
Remote-Exploration & Experimentation (RE&E)....................... 4-6
Explorer Program Technology....................................... 4-7
Planetary Flight Support.......................................... 7-9
Other OSS Core Technology......................................... 1-6
Cross Enterprise Technology....................................... 1-4
Please note that very little ATD work is being done within the
Information Systems and Planetary Flight Support elements. Any ATD work
that is being done within these two projects is technology upgrade and
improvement.
Within the Core Program NASA spends approximately 45 percent at the
NASA centers (JPL is included) and 55 percent is contracted out via
contracts, grants and inter-agency transfers.
Question. How many civil servant and/or contract employees (e.g.
JPL) are supported with these ``Core Program'' funds either through
direct salary or program support? How many NASA Center-based technology
labs are comparably supported with these?
Answer. On an annual year basis the Core Program funds support
approximately 500-550 civil servants and 700-750 contracted employees;
JPL is considered as contracted employees.
The ``Core Program'' funds support seven NASA centers (GSFC, GRC,
LaRC, ARC, JSC, JPL, MSFC).
Question. How are projects evaluated for funding with the Core
Programs, including life cycle costs analysis? Who makes the decision
to fund individual projects and tasks?
Answer. For purposes of this response, we are interpreting ``Core
Programs'' to mean those Space Science missions selected via the
strategic planning process, rather than missions selected through the
Discovery or Explorer process.
The evaluation and funding of Space Science programs is done with a
great deal of input from the outside science community. NASA involves
groups like the National Academy of Sciences/Space Studies Board; the
NASA Advisory Council; the Space Science Advisory Committee and its
subcommittees; and representatives from academia, industry, and other
government agencies in determining science priorities. These are laid
out in the Space Science Strategic Plan, which is published every three
years. Once these science priorities have been identified, detailed
studies of mission concepts to carry out the science objectives are
conducted. The results are presented back to the science community for
prioritization. A number of factors are taken into consideration during
this process. Among these are cost, technology readiness, launch
vehicle availability, schedule, etc. So there is not one single factor
that determines the fund/don't fund decision. With considerable input
from the science community, selections are made by senior space science
officials at NASA Headquarters.
Question. Are there plans to change the management of the Core
Programs line from Code S (space science) to Code R (aeronautics and
space technology)? If so, can you explain the rationale for this and
which funds identified in the budget justification on page SAT 1-49 are
affected, and why this change was not included in the budget request
for 2001? When will a reprogramming/reorganization notice be submitted
to the, Committee to request permission to make this change?
Answer. The movement of the oversight of a part of the Core
Programs line from Code S to Code R in fiscal year 2001 is in progress
as a part of integrating the Office of the Chief Technologist and the
Office of Aerospace Technology. The rationale is to concentrate, under
Code R, the early development of technologies that will eventually
apply to many missions in multiple enterprises. The current program is
being reviewed by Code R, and it is envisioned that programmatic
changes may occur in addition to the recent management change. Final
recommendations on specific changes will be identified after selection
of the NRA winning proposals and evaluation of their contribution to
the total needs for NASA technology. Any significant changes to the
program will be communicated to the Committee via the Agency fiscal
year 2001 Operating Plan following OMB approval.
Question. Please provide the Committee with a detailed breakout by
proposed flight or strategic initiative (including specific funding
centers) by fiscal year for the period of fiscal year 1998--2005 of all
``Focused Program'' ATD funds, beyond the level of detail displayed on
page SAT 1-55156. For example, Deep Space Systems for fiscal year 2001
has $181 million request, yet only $112 million is identified in
detail.
Answer.
----------------------------------------------------------------------------------------------------------------
Fiscal years--
-----------------------------------------------------------------------
1998 1999 2000 2001 2002 2003 2004 2005
----------------------------------------------------------------------------------------------------------------
Origins (SIM, NGST, KECK, TPF).......... 77.1 92.2 131.2 133.2 186.9 295.3 482.5 449.8
-----------------------------------------------------------------------
SIM..................................... 34.2 31.2 40.9 48.0 95.0 136.3 182.6 142.8
NGST.................................... 20.1 32.2 46.6 61.5 55.4 66.6 209.5 223.5
TPF..................................... 0.4 1.6 4.0 10.0 13.0 19.0 21.0 42.0
=======================================================================
KECK INTERFEROMETER..................... 9.5 16.4 13.7 6.4 6.4 7.5 7.8 8.5
-----------------------------------------------------------------------
ST-3/FLIGHT DEMO........................ ....... 9.2 8.0 17.0 32.0 57.0 51.0 22.0
FUTURE ORIGINS.......................... 12.9 1.6 18.0 -9.7 -14.9 8.9 10.6 11.0
=======================================================================
Deep Space System (Europa & Pluto)...... 51.5 97.1 162.2 181.8 227.1 218.1 212.7 267.1
-----------------------------------------------------------------------
EUROPA ORBITER.......................... 2.9 15.4 57.3 93.0 101.2 56.7 31.6 31.4
CISM.................................... 8.5 4.9 8.7 10.9 13.1 13.9 14.5 14.8
Advanced RTG............................ 9.7 9.7 9.6 9.6 8.6 8.6 9.6 9.8
PLUTO/KUIPER............................ 1.0 0.7 7.0 19.6 61.2 72.4 65.2 34.1
Deep Space-4 closeout................... ....... 11.4 ....... ....... ....... ....... ....... .......
X-2000.................................. 15.2 38.4 65.6 49.8 28.3 27.0 39.9 40.7
Future Deep Space Missions.............. 14.2 16.6 14.0 -1.1 14.7 39.5 51.9 136.3
=======================================================================
Search for Evolution & Universe (SEU)... 18.7 14.6 22.9 31.5 45.9 106.0 125.9 127.3
-----------------------------------------------------------------------
FIRST................................... 9.5 6.7 16.1 20.8 18.1 16.0 9.8 4.1
GLAST................................... 3.3 4.8 4.9 8.7 22.5 84.3 93.5 44.3
Future SEU Missions..................... 5.9 3.1 1.9 2.0 5.3 5.7 22.6 78.9
=======================================================================
Sun-Earth-Connections (SEC)............. 7.9 20.2 26.6 78.0 160.8 240.9 310.7 448.3
-----------------------------------------------------------------------
Solar-B................................. 0.8 5.0 9.6 19.5 23.3 10.6 7.2 10.3
Stereo.................................. 3.4 7.0 8.3 23.6 54.0 73.7 64.6 22.8
Solar Probe............................. 1.9 0.4 3.2 7.4 13.9 16.0 45.4 98.3
Living With a Star...................... ....... ....... ....... 20.0 64.0 117.0 133.0 177.0
Future Solar-Terrestrial Probes......... 1.8 7.8 5.5 7.5 5.6 23.6 60.5 139.9
----------------------------------------------------------------------------------------------------------------
The budget estimates as identified above represent total funding
for the projects/program lifecycle (ATD, mission studies and pre-
project planning, development, launch, and mission operations and data
analysis) cost. The budget numbers as identified above are consistent
with the fiscal year 2001 President's budget.
Note that all unresolved shortfalls, currently carried in the
``Future Missions'' lines, will be resolved during the preparation of
the fiscal year 2002 budget. This activity is currently underway, with
each project's performance and progress during this year being used to
revise future plans, schedules, and funding requirements. Resources
will be reallocated to minimize the impact across the entire Space
Science Enterprise, in accordance with the priorities established in
the NASA and Space Science strategic plans.
Question. For all flight projects or strategic initiatives
(including funding centers) broken out in response to the previous
question, please provide the full life cycle costs (including full
multi-year projections) for ATD phase of these activities and the
number of NASA employees (including JPL) working on each project or
initiatives.
Answer. Current life-cycle budget estimates for flight missions
that are currently being funded within the ``Focused Program'' are as
follow:
[In millions of dollars]
Life-cycle cost
Selected Flight Mission (Real Year $)
SIM............................................................... 1,030
NGST.............................................................. 1,700
TPF............................................................... 2,100
ST-3.............................................................. 220
Europe Orbiter.................................................... 450
Pluto/Kuiper...................................................... 350
FIRST............................................................. 190
GLAST............................................................. 330
Solar-B........................................................... 160
STEREO............................................................ 320
Solar Probe....................................................... 360
Please note that the estimates identified above represent current
assumptions, in many cases based on initial mission concepts that may
vary considerably from the design that eventually flies many years from
now. As a result, these numbers may change as the missions move from
early formulation to the start of the implementation phase, where the
mission design, technologies and development schedules are defined
sufficiently to provide accurate estimates for full-scale development.
It is at that point, just before the beginning of implementation, that
NASA will carry out a detailed non-advocate review of these projects,
and will establish a baseline cost estimate.
The number of NASA employees (including JPL) working on each
project or initiatives varies from year to year, and they are as
follows:
Project # NASA employees
(JPL included)
SIM........................................................... 85-110
NGST.......................................................... 110-150
TPF........................................................... 3-150
KECK INTERFEROMETER........................................... 10-20
ST-3/FLIGHT DEMO.............................................. 10-55
EUROPA ORBITER................................................ 46-142
CISM.......................................................... 19-34
Advanced RTG.................................................. 6
PLUTO/KUIPER.................................................. 4-13
X-2000........................................................ 73-155
FIRST......................................................... 5-29
GLAST......................................................... 12-30
Solar-B....................................................... 4-11
STEREO........................................................ 5-15
Solar Probe................................................... 1-17
Living With a Star............................................ 27-80
Also note that the number of NASA employees as identified above
will change as projects or initiatives move through the formulation and
implementation phases.
MARS
Question. The five-year budget project estimates that almost $2
billion (see Page SI-20) will be spent on the Mars program. Please
breakout by activity, including advanced technology development and
launch vehicle costs, how funds in the Mars Surveyor program have been
spent to date (approximately $1.1 billion through fiscal year 2000).
Answer. During the five-year (fiscal year 1995-fiscal year 2000)
period, NASA has spent
--$730M for the planning and development of the spacecraft and
instruments for the Mars Global Surveyor (MGS), Mars 98 Orbiter
& Lander, and Mars 01 mission.
--$205M for launch vehicles for the MGS, Mars 98 Orbiter & Lander,
and Mars 01 missions.
--$70M for Mission Operations & Data Analysis.
--$60M for advanced technology development.
Question. Please indicate how funds spent on the Mars program in
the future will be competed to permit greater outside support for it,
including at academic labs and research universities?
Answer. As with all of the past missions, the scientific research
on each future Mars Surveyor mission will come from competitively
selected payloads. The 2003 mission will fly the Athena rover package
that was competitively selected to fly on the cancelled 2001 lander
mission. All missions beyond 2003 will select science payloads on a
competitive basis, with proposals solicited from all scientific
sources. The selected proposals will be integrated into each mission.
Moreover, during the ongoing Mars program re-planning process we
are also considering the addition of a relatively large number of
smaller science and technology missions. Payloads, technologies, and
possibly entire spacecraft for these missions will also be selected
utilizing a competitive process similar to that used in NASA's
Discovery Program. In addition, the future Mars program is studying
adoption of an outreach strategy with Industry, Academia, NASA centers
and other Government facilities that have not traditionally played a
major role in the program.
Question. Prior to the latest mishaps, the Committee understands
that the ``research and analysis'' portion of the Mars program was
severely underfunded, to the tune of only a few percent of the
program's total costs, compared with the community average of no less
than 10 percent. How will future Mars activities correct this serious
shortcoming?
Answer. An analysis on the existing Mars Program indicates that
NASA is spending about 10 percent per year on Mars research and
analysis. Although comparable to other missions, NASA plans on a new
philosophy for funding Mars research and analysis, in which each Mars
mission will have sufficient science funding. Mission requirements will
be the driver of the budget allocation rather than an arbitrary ``fit-
in-the box'' allocation.
Question. What role is the extramural planetary research community
playing in shaping the future Mars program? Please provide the
Committee with some examples.
Answer. NASA's Space Science Enterprise is openly considering all
facets of its Mars Exploration Program starting with the 2005
opportunity and carrying through 10 to 20 years. In order to cast a
wide net for capturing ideas and potential participants for missions,
mission elements, and experiments that fit within the broadly defined
scope of this program, NASA is sponsoring a two and half day workshop
to be held at the Lunar and Planetary Institute (LPI). The workshop is
specifically dedicated to the extramural community, i.e. open to
scientists, engineers, and other colleagues from academia, Federal
Laboratories and industry. The intent of the workshop is to provide an
open forum for presentation, discussion, and consideration of various
concepts, options, and innovations associated with a strategy for Mars
exploration that calls for ``following the water'' strategy that is
central to the ``quest for life'' on Mars.
In addition to the workshop we are reaching out to the Industry for
their ideas and concepts via a Request For Information (RFI).
Other extramural planetary research communities that also play a
role in shaping the future mars program include:
--The National Academy of Sciences, Space Science Board, Subcommittee
on Planetary Exploration (COMPLEX)
--Space Science Advisory Committee (SSAC)
--Solar System Exploration Subcommittee (SSES)
--Mars Advisory Science Team (MAST)
--Mars Exploration Program Advisory Group (MEPAG)
Question. Last year Agency provided the Committee with a
consolidated resource schedule for SOMO by account and program element
with a total SOMO budget of $715 million. Please provide a comparable
chart for the three year fiscal period (1999-2001) based on the 2000
operating plan and the 2001 budget submission, breaking out each
program element activity dollars by sub-program element, project,
contract (e.g., CSOC, TMOD or other) and NASA field center.
Answer. The table below represents the Consolidated SOMO Resources
Schedule information available from the fiscal year 2001 NASA budget
formulation.
Question. The recent report on TMOD to the Congress identifies
TMOD's budget as roughly $188 million per year. The budget
justification, at page SAT 6-1 identifies JPL's allocation of fiscal
year 2001 space operations budget as $131.1 million. Please provide a
cost analysis of this difference by program element and project
activity, identifying all fund sources in detail for the estimate
provided in the $188 million figure.
Answer. The table below is a cost breakdown that reconciles the
$188 Million in the TMOD report to the $131 Million in the NASA Budget
narrative.
------------------------------------------------------------------------
TMOD SAT 6-
Program Area Mgmt/funding report 1
------------------------------------------------------------------------
Cassini........................... Space Science....... $41.2 ......
Galileo........................... Space Science....... 3.6 ......
SVLBI............................. Space Science....... 3.3 ......
Ulysses........................... Space Science....... 4.3 ......
Voyager........................... Space Science....... 4.6 ......
DSMS/AMMOS........................ Space Science....... 37.6 ......
DSMS/DSN.......................... SOMO................ 94.0 $94.0
Ka-Band upgrade................... SOMO................ ...... 12.2
Overseas sites.................... SOMO................ ...... 24.9
---------------
Total....................... .................... 188.6 131.1
------------------------------------------------------------------------
The bases of estimate in the TMOD report falls into two categories,
Flight Projects and Deep Space Mission System (DSMS). The flight
project cost estimates reflect JPL's commitment to deliver science
products to the projects. The TMOD report reflects two different
sources of funding and content as shown that is different from the SAT
report. The SAT report includes other content (Ka-Band Upgrade) that
was not in place at the writing of the TMOD report.
Question. The TMOD report also suggests that much of TMOD's works
is R&D activity instead of true operations. Please indicate in detail
(by program element, mission and project) what portions of the TMOD/JPL
space operations budget finance ``operations'' and what portion
finances ``R&D'', explaining the differentiation between the two.
Answer.
[In millions of dollars]
Operations (CSOC)................................................. 56
Operations (Non-CSOC)............................................. 44
Systems Development............................................... 73
Research & Technology............................................. 71
______
TMOD Report Total........................................... 188
Total budget estimate for fiscal year 2001.................. 244
Programmatic responsibilities for TMOD include telecommunications,
mission operations, ground-based radio astronomy, solar system radar,
radio science observation, and management of assigned flight projects.
Operations support is provided through the CSOC contractor,
Lockheed-Martin, and other contractors.
Research and Development tasks enable the conduct of on-going and
new missions by the NASA strategic enterprises. The funds support the
continuing advance and upgrade of the DSN and Advanced Multimission
Operations System (AMMOS), including increased telecommunications
performance and addition of new services and tools. Together, the DSN
and AMMOS comprise the Deep Space Mission System (DSMS) that supports
deep space missions. R&D funding also incorporates the science
investigations for Voyager, Ulysses, Galileo, Cassini, Space VLBI, and
the technology initiatives that benefit future communication
requirements and reduce operational costs.
Question. How many ``research and development'' projects or
components were initiated, and over what time period, to create the
Deep Space Mission System. Please identify each project, how much was
spent per year, the JPL FTEs dedicated to each, the status of each
project, and how each project's final cost compared to the estimate
made at the start of each project.
Answer. Deep Space Mission System (DSMS) is the name of the program
within the TMOD responsible for the Deep Space Network (DSN) and the
Advanced Multi-Mission Operations System (AMMOS). DSN systems
implementation began in 1957, with the first antenna operational in
1958. The DSN systems implementation is currently managed and funded by
Office of Space Flight. The AMMOS concept began in the 1960's, and its
evolution is managed and funded by the Office of Space Science.
System evolution and upgrade projects to date for the DSN and AMMOS
systems, collectively known as the DSMS, are numerous. Project
historical records are not readily available at a detailed level due to
the longevity of the program.
The program content over the years was determined based on program
priority and technical merit. Please refer to question number 21 for
current upgrade initiatives.
Question. Please identify each project, and amounts allocated by
fiscal years 1999, 2000 and 2001, in the Deep Space Network mission and
data services upgrades line. Page SAT 6-12 says that the Network
Control Project was mostly completed in 1999. Please provide the
original cost estimate for NCP and the cost at the project's
completion. Please account for any changes.
Answer. The matrix below is a list of current tasks.
------------------------------------------------------------------------
Fiscal years--
Major DSN Upgrade Project Plans Prior -----------------
Years 2000 2001
------------------------------------------------------------------------
Network Simplification Project (Includes $16.4 $10.4 $5.4
completion of the Network Control Project)..
Cassini Radio Science Ground System.......... 9.2 6.4 1.9
Frequency and Timing Subsystem Monitor and 0.8 0.9 0.9
Control.....................................
Beam Wave Guide Ka-Band Upgrades............. 2.0 5.1 9.7
70-Meter X-Band Uplink....................... 10.3 3.3 1.7
Antenna Renewal.............................. 3.1 1.0 5.3
26-Meter Automation.......................... 1.6 0.8 .......
DSS-26 Electronics........................... 3.9 2.5 0.3
Turbo Decoder................................ 0.5 1.0 0.5
Maser Replacement............................ 1.0 0.5 .......
Enhanced Reliable Network Service............ ....... 1.3 0.4
--------------------------
Total.................................. 48.8 33.2 26.1
------------------------------------------------------------------------
The objective of the Network Control Project (NCP) is to infuse
industry developed monitor and control technology into the DSN
infrastructure and to reduce operational costs. NCP represents an
evolution and combination of several tasks over a number of years. With
this history, it is difficult to precisely define an original cost.
However, it is estimated that the final cost is about $50M including
approximately $10M growth. The growth was primarily due to recovering
from the use of Commercially available but not-yet-sufficiently-mature
technology used for one component of NCP.
Question. What is NASA's level of confidence in the NCP and its
ability to deliver the capabilities originally promised at the
project's beginning?
Answer. NASA is very confident that the intended NSP capabilities
will be delivered with the exception of a Network Planning and
Preparation subsystem. This subsystem was eliminated in fiscal year
1999 to obtain resources needed to ensure Y2K compliance. An
equivalent, low cost approach to the NPP function was implemented by
upgrading the subsystem which the NPP was intended to replace.
The initial delivery of NCP was completed in late 1999. This
delivery provided a basic implementation of all the remaining
capabilities and is being operated in parallel with the legacy system
at the DSN complexes for training and evaluation. Further deliveries of
NCP are scheduled in 2000 to enhance the basic implementation and
repair minor discrepancies identified in the original release.
Question. Provide the original costs estimates, and the current
cost data, by fiscal year, for the Network Simplification Project,
including schedule and capability data.
Answer. The table below is a cost comparison of the fiscal year
1999 cost estimate contained in the Project Commitment Document (PCD)
for NSP to the current fiscal year 2000 PCD cost estimate.
----------------------------------------------------------------------------------------------------------------
Fiscal years--
PY ------------------------------------------- Total
2000 2001 2002 2003 2004
----------------------------------------------------------------------------------------------------------------
Cost estimate (1999 PCD)............................. 4.8 9.7 8.8 4.1 2.5 0.8 30.7
Cost estimate (2000 PCD)............................. 16.4 10.4 5.4 3.7 4.5 ....... 40.4
----------------------------------------------------------
Change \1\..................................... 11.6 0.7 (3.4) (0.4) 2.0 (0.8) 9.7
----------------------------------------------------------------------------------------------------------------
\1\ NSP cost growth is entirely due to adding the final costs of the NCP to the beginning of the NSP.
Key Schedule Milestones are:
Tracking and Navigation--July 2, 2002.
Downlink Consolidation complete--August 3, 2002.
Uplink Consolidation complete--August 3, 2002.
Tracking and Navigation will include delivery of new telemetry
hardware automation capabilities and diagnostic tools.
Downlink Consolidation will deliver new DSN Telemetry and Tracking
racks, each with full Block V Receiver telemetry and tracking
equipment.
Uplink Consolidation will include delivery of new/consolidated
command, exciter and ranging hardware.
These deliveries will allow removal of all obsolete, high
maintenance equipment performing these functions today.
Question. Please provide the current schedule for the transfer of
MOPS contract work to CSOC.
Answer. See response to question number 25.
Question. There has been discussion that JPL wishes to reclassify
``Mission Operations'' as one of its ``core competencies'' and retain
all related work in-house, requesting an additional 500 FTE's for this
purpose. Please advise as to the accuracy of such a comment.
Answer. Mission operations are largely contractor supported. There
has been no reclassification of operations work to core competency.
The Mars Program Independent Assessment Team report presented by
Mr. Tom Young identified a need for more program management and project
oversight at JPL and for increased staffing in individual projects. JPL
did receive a ceiling increase from NASA of 500 work-years to meet this
and possible other needs. Approximately 35 work-years of this increase
will be used to maintain key JPL activities in planetary operations.
The MOPS initiative was cancelled because the increase in the JPL
workforce ceiling obviated the need for a contract partner in the area
of planetary operations. A request for proposal (RFP) for the
institutional computing services element that comprised the majority of
effort in the MOPS procurement will be issued shortly, most likely to a
small business.
MAJOR DEVELOPMENT
Question. Please provide detailed breakouts for each major program
element for earth science identified on page SAT 3-15, beyond the level
of each particular project to include all relevant details that make up
the individual projects identified in the new budget structure. For
example, $110.3 million is requested this year for the Chemistry
mission. Breakout the detailed costs in 2001 for each of the flight
projects (Terra, Aqua, Chemistry, Special Spacecraft and Landsat 7)
identified on SAT 3-15.
Answer.
Fiscal year
TERRA: Spacecraft/S/C GFE......................................... 3.1
=================================================================
________________________________________________
AQUA:
Project Support/Reserve....................................... 10.7
Instruments................................................... 5.9
Spacecraft/S/C GFE............................................ 23.1
Launch Vehicle................................................ 3.2
______
Fiscal year 2001 budget request............................. 42.9
=================================================================
________________________________________________
AURA (Chem):
Instruments................................................... 40.4
Spacecraft.................................................... 29.2
Project support/Reserve....................................... 15.6
Launch vehicle................................................ 23.5
OMI accommodation............................................. 1.6
______
Fiscal year 2001 budget request............................. 110.3
=================================================================
________________________________________________
IceSAT............................................................ 46.3
Solstice/SORCE.................................................... 23.0
Seawinds.......................................................... .4
ACRIMSAT.......................................................... .5
Meteor SAGE III................................................... .2
Scisat ELV........................................................ 5.7
Program Support................................................... 10.6
______
Total Special............................................... 86.7
=================================================================
________________________________________________
Landsat-7:
Spacecraft.................................................... 1.2
Instrument.................................................... 0.2
______
Fiscal year 2001 budget request............................. 1.4
ALGORITHM DEVELOPMENT
Algorithm Development is addressed in response to question 27 and
EOS Follow-on is addressed in response to question 28.
Question. $82.1 million is requested for algorithm development (SAT
3-15). Explain the principal activities, which will be undertaken with
these funds. Please also breakout how these funds will be allocated by
project and principal investigator. In addition, provide the total cost
for algorithm development, project and/or principal investigator for
the period fiscal year 1996-2000.
Answer. Algorithm Development is the basic work to develop the
initial set of at-launch algorithms (development through launch plus 1
year), including geolocated and calibrated radiance data (Level 1),
swath sampled fundamental science data products (Level 2), gridded/
averaged data products (Level 3), and Level 4 data products
incorporating Level 2 or 3 data from multiple algorithms and/or more
significant model calculations. Algorithm development includes
supporting experimental and theoretical (modeling) work. It also
includes code development and testing, pre-launch algorithm validation
with experimental data, and first-order validation of the data products
in the early post-launch period including work to address issues of
instrument calibration and artifacts.
Algorithm development in the post-launch era includes long-term
maintenance of the algorithms, such as implementation of improvements
resulting from continuing validation work and user/application
experience, and continued development of algorithms for research data
products (planned Level 2 data products not available at launch).
Instrument operations ensures the integrity of instrument
operations with primary emphasis on Level 1 data products. This support
continues through the life of the mission and includes updating of
calibration information, treatment of changing on-orbit instrument
characterization, and code modifications and reprocessing of the data
products to reflect these developments.
Also included under EOS algorithm development is support for the
science team computing facilities (SCFs) that support data processing
for algorithm development and maintenance, instrument operations and
calibration studies, science data validation studies, and science data
analysis. This involves a significant buildup prior to launch, and
continuing post-launch maintenance and support.
EOS ALGORITHMS FISCAL YEAR 1996-FISCAL YEAR 2001
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal years--
-----------------------------------------------------------------------
1996 NOA 1997 NOA 1998 NOA 1999 NOA 2000 NOA 2001 NOA
----------------------------------------------------------------------------------------------------------------
Terra (formerly AM)..................... 37.641 38.885 42.809 48.297 50.244 22.128
EOSP.................................... .240 .260 .331 .375 .366 ..........
Aqua (formerly PM)...................... 6.926 7.671 9.878 12.988 12.748 15.960
Ocean Data Assimilation................. .090 .090 .090 .......... .......... ..........
Aura (formerly Chemistry)............... 3.674 4.921 7.500 13.004 18.041 21.472
Data Assimilation....................... .......... .090 .090 .090 .......... ..........
SAGE III................................ 1.730 2.469 3.097 3.475 3.918 1.208
Jason................................... .......... .835 1.277 .......... .......... ..........
GLAS.................................... 2.194 1.455 2.603 4.124 5.894 3.537
TRMM (LIS & CERES)...................... 3.956 3.995 5.007 5.326 4.840 ..........
Landsat................................. 1.450 1.327 2.243 2.309 2.639 ..........
ACRIM................................... .250 .478 .303 .506 .425 86.000
SeaWinds................................ 3.146 1.712 5.210 6.129 4.231 4.051
SORCE (formerly SOLSTICE)............... .501 .542 .609 .443 1.596 1.103
Program Management...................... .051 .120 .......... 3.466 .......... ..........
Computing............................... 4.602 .......... .......... .......... .......... ..........
Data Assimilation Office................ 6.849 11.050 11.253 13.061 16.758 12.555
-----------------------------------------------------------------------
Total............................. 73.300 75.900 92.300 116.800 121.700 82.100
----------------------------------------------------------------------------------------------------------------
EOS FOLLOW-ON
Question. Please breakout, in $500,000 or smaller increments, the
uses of funds appropriated for this activity in fiscal year 1999 ($4.5
million) and fiscal year 2000 ($24.7 million), including contracts
funded, studies undertaken, conferences supported, etc. How much of
this money was used to conduct meetings and travel? Have any specific
mission studies (phase A or B) been undertaken with these funds?
Answer.
[In millions of dollars]
Advanced Technology Microwave Sounder (ATMS) instrument design
stud-
ies........................................................... .3
Project support for formulation activity.......................... .7
CERES Flight model 5.............................................. .5
CERES Aqua support................................................ 1.4
CERES Terra support............................................... 1.3
CERES TRMM on orbit award fee..................................... .3
______
Fiscal year 1999 content........................................ 4.5
These are the smallest increments available.
[In millions of dollars]
Fiscal year 2000 content:
(SAT 3-15).................................................... 24.4
Less operating plan adjustments............................... -9.4
CERES support................................................. -1.4
______
Remaining for NPP........................................... 13.6
Please see smallest increment available detail breakout below.
Preliminary Design Contracts $4M each to Aerojet and Ball
Aerospace..................................................... 8,000
Engineering support from QSS, MIT/Lincoln Labs, Swales............ 487
______
ATMS Instrument............................................. 8,487
=================================================================
________________________________________________
Rapid Spacecraft Studies: $150K each to Ball, TRW, Lockheed
Martin, Orbital, Spectrum Astro............................... 750
Initial RSDO awards ($50K to each catalog vendor)................. 300
Technology demonstrations: several in-house C&DH data bus
technologies.................................................. 235
Engineering support from QSS, etc................................. 270
______
Spacecraft.................................................. 1,555
=================================================================
________________________________________________
In-situ ground terminal: initiate in-house system design for
future commercialization...................................... 300
FPGA development: in-house development for technology evaluation.. 309
Engineering support from Aerospace Corp. to develop Science Data
Segment specifications........................................ 750
______
Ground Systems.............................................. 1,359
=================================================================
________________________________________________
IV&V support...................................................... 450
Contract engineering support: CSC................................. 430
Contract engineering support: SSAI................................ 160
Misc. engineering support: IMDC charges, Swales................... 80
Project control support (CM, scheduling, general business support)
and
Misc.......................................................... 791
______
Project Support............................................. 1,911
=================================================================
________________________________________________
Contingency....................................................... 308
______
Total fiscal year 2000 NPP budget...........................13,620
None of the funds above are used to conduct meetings and travel.
The funds required to support these activities are in the Mission
Support Appropriation.
Question. Please explain why there is no current mission profile
for the follow-on line given that planning for this activity has been
underway for almost two years? Please explain how funds would be
allocated in fiscal year 2001, including use of any carryover from
prior years and allocations for specific missions.
Answer. There is no mission profile in the fiscal year 2001
President's request because there was no approved Research strategy in
place to scientifically justify a particular type of measurement and
mission required to obtain that measurement. Since the budget request,
the Earth Science Enterprise has submitted a Research Strategy for
2000-2010. This strategy has been reviewed by an interdisciplinary
panel established by the National Academy of Sciences at NASA's
request. NASA developed this plan with help from members of our Earth
System Science and Applications Advisory Committee (ESSAAC) of the NASA
Advisory Council (NAC), and from the Earth Observing System
Investigators Working Group (EOS/IWG). In doing so, we have taken into
account recommendations from a number of National Research Council
(NRC) reports issued during the past two years. The Research Strategy
provides an extended overview that sets the scientific, policy and
programmatic context. This overview identifies the primary science
objectives and the detailed questions that will guide our research and
mission concept definition over the next decade. The draft reviewed by
the Academy has been made publicly available on our ESE website
(www.earth.nasa.gov).
The ESE Research Strategy establishes the paradigm for NASA's
approach to Earth System Science. It establishes the logical
progression from characterizing Earth system variability through
identification of forces of change, Earth System responses,
consequences of change, and, finally, prediction of future change. For
each step along this path, a prioritized set of science questions is
defined. These, in turn, lead to observational requirements, which
become the basis for mission definition.
The plan will help to balance competing demands in the face of our
limited resources and yet still chart a program that addresses the most
important and tractable scientific questions and allows optimal use of
NASA's unique capabilities for global observation, data acquisition and
analysis, and basic research. To facilitate a sharper definition of
primary mission requirements and clearer selection criteria, the plan
also distinguishes among three types of space flight missions, each
with a different purpose: systematic observation missions, exploratory
missions, and operational precursor or technology demonstration
missions. The identification of these different mission categories
marks a significant departure from the original architecture of the
Earth Observing System and should lead to a shorter development cycles
and more cost-effective implementation.
A set of prioritization criteria is defined for the purpose of
turning science needs into a priority mission set. These criteria
include such factors as technology readiness and partnership
opportunities. Recognizing that the ESE research program is conducted
within a larger national and international context, the plan envisions
seeking out opportunities for task sharing between our programs and
those of our national and international partners. For instance, under
the plan, NASA will promote the convergence of the operational
observation requirements of partner agencies with ESE research data
needs for systematic observations, share the cost of new developments,
and develop precursor instruments and spacecraft technologies for
future operational application missions. By doing so, ESE assures some
of its very long-term high quality observational needs are met through
operational systems.
ESE is establishing a list of priority systematic measurement
missions as part of the fiscal year 2002 budget process based on our
Research Strategy for the next decade. While preserving some
flexibility in the order of these missions, their timing will be driven
in part by the need for continuity with systematic measurements from
the first series of EOS missions. As outlined in the Science
Implementation Plan, NASA will actively support the development and
implementation of an appropriate process to ``complete the cycle'' in
which questions are formulated, scientific studies are carried out, and
specific answers are developed to answer the questions. This is a
dynamic process. For example, based on an earlier draft of the Science
Implementation Plan, we are beginning formulation of what is called the
NPOESS Preparatory Project (NPP) or ``bridge'' mission and the Landsat
continuity mission.
For the ``bridge'' mission, we expect to complete our formulation
activities and proceed into the Implementation Phase (completion of the
Mission Confirmation Review) in late calendar year 2001. For the
Landsat continuity mission, we expect to release a solicitation
instrument in August of 2001. As future priority missions are defined,
we will proceed with them based on the availability of funds.
In addition, for fiscal year 2001, NASA anticipates reprogramming
many of these follow-on funds to accommodate launch delay impacts and
mitigate risk on several of the EOS and Earth probe missions nearing
development completion.
NPP
Question. The NPOESS Preparatory Project is listed as being in
formulation studies. How much has been spent to date, by fiscal year,
on NPP and from what lines in the earth science budget have these
monies been allocated?
Answer. The NPP funding is allocated within the EOS Follow-on line.
------------------------------------------------------------------------
Fiscal years--
---------------------
1999 2000
------------------------------------------------------------------------
NPP Funding to Date............................... 1.0 13.6
------------------------------------------------------------------------
GODDARD AND EARTH SCIENCE
Question. Goddard's allocation of earth science dollars, both as an
annual amount and as a percentage of the Earth Science Enterprise
budget has dropped very sharply in the last five years. Please explain
how you intend to reverse this problem, including identification of
specific missions, in the near future, commencing, with the 2001
operating plan.
Answer.
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal years--
------------------------------------------------------
1997 1998 1999 2000 2001
----------------------------------------------------------------------------------------------------------------
Total Earth Science...................................... 1,362 1,417 1,414 1,443 1,406
GSFC Earth Science....................................... 1,024 930 882 895 812
GSFC percent Earth Science............................... 75 66 62 62 58
----------------------------------------------------------------------------------------------------------------
This reduction in Earth Science funds allocated to GSFC is due to
the rampdown of the development for the first series EOS missions. ESE
is establishing a list of priority future systematic measurement
missions as part of the fiscal year 2002 budget process based on our
Research Strategy for the next decade. GSFC's Earth Science future
funding levels will be established as post-2002 missions are defined
based on the new ESE Research Strategy, and as GSFC successfully
compete for new research activities. We anticipate that GSFC will be a
major contributor in the development of this future follow-on activity.
For example, GSFC is beginning implementation of the NPOESS Preparatory
Project (NPP) or ``bridge'' mission and involved in the formulation of
the Landsat continuity mission.
ENTERPRISE AND CENTER TAXES
Question. Please indicate, by program element and project, how
headquarters, enterprise and center ``taxes'' are assessed against the
earth science budget--by program element and project, including: SOMO
charges, support contractors, inter-agency and international
agreements, special initiatives--whether statutory or not, conferences
& workshops, program evaluation, proposal review and proposing,
administrative overhead and any other relevant charges assessed against
the earth science budget by headquarters, Code Y management, or any
individual center.
Answer. NASA Headquarters (Office of the Comptroller) makes a flat
rate assessment across the board of less than half a percent on the
Earth Science budget. This assessment is not broken out by program,
project, statutory, non-statutory requirements, etc. This assessment is
taken off the top of the Earth Science appropriation. It is used to
fund the following: (1) GSFC Center Director's Discretionary Fund
(CDDF--the vast majority of the assessment goes to this), (2) Agency's
Cost Estimating function and, (3) Earth Science closed accounts (old/
late bills that come in that must be paid). When the agency receives
Earth Science related reimbursable funds (domestic or international), a
small assessment is withheld from the program/project, at NASA
Headquarters and used for the financial and contract administration of
reimbursable funds. The Office of Earth Science does not assess taxes
on the Earth Science budget. GSFC Center assessments on Earth Science
programs/projects are calculated based on a complex budget/cost
algorithm that takes into account: project/program budgets, flight vs.
non-flight projects, Full-Time Equivalents, level of institutional
usage of facilities and services, and other Center unique costs and
activities. The remaining activities (e.g. support contractors, SOMO)
are directly funded within the project budgets.
EOSDIS
Question. Please breakout EOSDIS costs (for fiscal years fiscal
year 1996-2001) by each of the six major components identified on SAT
3-30, explaining the general activity of each component. Explain the
relevant deltas for activity between fiscal year 1999, 2000 and 2001
for each component.
Answer.
General Activity Descriptions:
EOSDIS Core System (ECS).--Provides the Mission Operations segment
for EOS spacecraft and the Science Data processing System (SDPS). The
SDPS provides ingest, processing, archiving and distribution of EOS
mission data.
EOS Data and Operations System (EDOS).--Responsible for data
capture from EOS spacecraft, interface up-link of command, processing
and distribution of Level 0 data products and archival of Level 0 data.
EOS Polar Ground Network (EPGN).--Provides X-band receiving
capabilities for science data dumps and S-band telemetry, tracking and
command capabilities for Landsat-7, and EOS spacecraft.
Science Investigator-led Processing System (SIPS).--Responsible for
producing standard data products and delivering them to the Distributed
Active Archive Centers (DAACs). This instrument team processing of data
is an alternative some investigators have chosen from providing the
science software to the DAACs to allow data production generation at
the DAACs.
DAACs.--Eight geographically dispersed science data processing
centers responsible for EOSDIS data management and user services within
a particular science discipline. The DAACs also archive the data for
future use.
NASA Integrated Services Network (NISN).--EBNet is part of the
larger NISN which provides the communications to support EOSDIS
including: forward- and return-link communications for flight
operations; high-capacity circuits for transport of science data from
ground terminals to EDOS to the DAACs; inter-DAAC communications;
communications with cooperating data centers and international
partners.
SIX MAJOR ELEMENTS OF EOSDIS FUNDING SUMMARY
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal years--
Budget area -----------------------------------------------------
1996 1997 1998 1999 2000 2001
----------------------------------------------------------------------------------------------------------------
ECS....................................................... 121.5 100.7 83.0 118.6 104.8 73.8
EDOS...................................................... 34.5 24.4 22.1 22.1 10.4 10.8
EPGN...................................................... ....... 1.8 4.8 7.1 4.8 2.6
SIPS...................................................... ....... ....... ....... 3.3 10.3 17.6
DAACS..................................................... 29.4 36.1 28.9 33.7 39.9 52.0
NISN...................................................... 6.0 7.4 7.4 7.4 19.2 8.1
----------------------------------------------------------------------------------------------------------------
Relevant Deltas fiscal year 1999-fiscal year 2001:
ECS.--The fluctuations in the ECS line reflect large equipment
purchases in fiscal year 1999. In fiscal year 2000 and 2001 the costs
are primarily labor driven and tied to releases of both science and
mission operation systems primarily for Terra and Aqua.
EDOS.--The significant decrease in the EDOS line from fiscal year
2000 to 2001 is a result of the completion of the work and expiration
of the EDOS contract in fiscal year 2001.
EPGN.--The delta from fiscal year 1900 to 1901 in EPGN reflects a
change in agency philosophy to have projects buy services through the
Space Operations Management Office (SOMO) and no longer purchasing
equipment and contracting directly for the requirements.
SIPS.--The ramp up of costs in the SIPS area is a result of more
missions and therefore more SIPS coming on line.
DAACs.--The ramp up of costs in the DAAC area is a result of
increased requirements to support the added missions in orbit.
NISN.--The large increase from fiscal year 1999 to fiscal year 2000
is primarily a result of Landsat-7 and Terra launches. The large
decrease from fiscal year 2000 to fiscal year 2001 is based on the
assumption that SOMO will pay for data transmission services beginning
in fiscal year 2001.
DAACS
Question. Please breakout the full life cycle investment for each
of NASA's DAACs since they were each created, including civil service/
salary and expense costs for the relevant ``in-house DAACS (including
JPL, facilities charges (including capital renovation or new
construction) and instrumentation/equipment. Costs for algorithm
development should be included where applicable.
Answer. The end-to-end life cycle costs (fiscal year 1991-fiscal
year 2005) for the NASA DAACs are shown below. The costs shown include
operations, science support, and development and maintenance costs for
the Version 0 and TRMM systems at the DAACs (including the JPL
development costs for the ASF systems). The estimates of civil servant
salaries have been included for EDC, GSFC, and LaRC. The operations
costs for the ECS systems at the DAACs are estimated based on the ECS
contract proposal. These costs do not include the development or
maintenance costs for the ECS system nor the costs incurred by ESDIS
and ECS for general DAAC operations support. The development and
maintenance costs for the ECS system and the general operations costs
are included in the data provided for Question 33.
Life Cycle DAAC Costs
[In millions of dollars]
Fiscal year 1991-fiscal year 2005:
ASF........................................................... 138.6
EDC........................................................... 99.3
GSFC.......................................................... 137.9
JPL........................................................... 72.0
LaRC.......................................................... 123.6
MSFC \1\...................................................... 12.1
NSIDC......................................................... 46.2
ORNL.......................................................... 29.3
SEDAC......................................................... 29.8
\1\ MSFC DAAC was closed in 1998.
---------------------------------------------------------------------------
SCIENCE INVESTIGATOR-LED PROCESSING SYSTEMS (SIPS)
Question. Please provide detail for all awards in this component
for fiscal years 1999, 2000 and anticipated for 2001, indicating all
funding recipients. Please differentiate funds between regular SIPS
activity and those identified as the 24 ESIPS (Earth Science
Information Partners), the so-called EOSDIS Federation, providing
funding allocations, by year, for all three years (99,00, 01) for each
of the 24 ESIPS. For 2001 estimates, include any funds proposed for
allocation to the ESIPS from the ESARP Applications budget identified
on page SAT 3-65.
Answer. The SIPS, or the DAACS as the case may be, are responsible
for standard data and information whose production, publishing/
distribution, and associated user services requires considerable
emphasis on reliability and disciplined adherence to schedules.
SIPS BUDGET
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal years--
EOS Mission(s) EOS Instrument(s) Organization -----------------------------
1999 2000 2001
----------------------------------------------------------------------------------------------------------------
Terra (AM) & Aqua (PM)............. CERES................. NASA LaRC............ .894 3.027 2.240
Terra & Aqua....................... MODIS................. NASA GSFC............ 1.415 4.469 8.100
Terra.............................. MOPITT................ NCAR................. .120 .240 .102
Aqua............................... AMSR-E................ NASA MSFC............ .396 1.104 1.017
ICESat............................. GLAS.................. NASA GSFC............ .336 1.064 .979
Aura (CHEM)........................ HIRDLS................ NCAR................. ........ ........ .468
Aura (CHEM)........................ MLS................... NASA JPL............. .164 .361 1.505
Aura (CHEM)........................ TES................... NASA JPL............. ........ ........ 3.220
-----------------------------
Total........................ ...................... ..................... 3.325 10.265 17.631
----------------------------------------------------------------------------------------------------------------
The Earth Science Information Partners (ESIPs) differ from the
regular SIPS in that they do not produce standard products from NASA
Earth Science missions, as do the SIPS.
Type 2 ESIPs are responsible for data and information products and
services in support of Earth System Science (other than those provided
by the DAACs/SIPS) that are developmental or research in nature or
where emphasis on flexibility and creativity is key to meeting the
advancing research needs. They depend on data products provided by
SIPS, but develop higher level geophysical data products in support of
interdisciplinary science investigations.
Type 3 ESIPs are those providing ESE-based data and information
products and services to users beyond the Earth System Science research
community who enter into joint endeavor agreements with NASA ESE in
order to extend the benefits of ESE beyond the research community or to
enhance EOSDIS capabilities.
The ESIP Federation is an organization wherein the DAACs (aka ESIP
1s), the ESIP 2s and the ESIP 3s can exchange scientific and technical
information related to data and information system and service
provision. Money set aside for the Federation provides the means to
customize existing interfaces, tools, and data for a community of users
to meet the needs of other user groups being served by the diverse
ESIPs. Included, as requested, are the funding allocations, year by
year, for the 24 ESIPs.
FISCAL YEAR 2000 ESIP FUNDING
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal years--
Contract Number ESIPs Type 2 Principle Investigator -----------------------
1999 2000 2001
----------------------------------------------------------------------------------------------------------------
NCC5-300............................. University of Maryland.. Dr. J. Townshend....... 1.250 1.200 .400
NCC5-301............................. Univ of California/LA... Dr. R. Muntz........... 1.000 1.100 .375
NCC5-302............................. Univ of California/SB... Dr. J. Frew............ 1.000 1.100 .350
NCC5-303............................. Michigan State Dr. D. Skole........... 1.000 1.000 .350
University.
NCC5-304............................. Univ of New Hampshire... Dr. B. Moore........... 1.000 1.000 .350
NCC5-305............................. IBM..................... Dr. C. Li.............. 1.000 1.000 .350
NCC5-306............................. George Mason Univ....... Dr. M. Kafatos......... 1.050 .985 .215
NCC5-307............................. Univ of Rhode Island.... Dr. P. Cornillon....... .950 .911 .240
NCC5-308............................. Univ of California/SD... Dr. J. Simpson......... .400 .425 .150
MSFC.................... Dr. R. Spencer......... .950 .900 .300
JPL..................... Dr. V. Zlotnicki....... .800 .800 .200
JPL..................... Dr. T. Yunck........... .850 .850 .300
-----------------------
Total Type 2 ESIPs............. ........................ ....................... 11.3 11.3 3.6
=======================
NCC5-309............................. Univ of New Mexico...... Dr. S. Morain.......... .200 .200 .251
NCC5-310............................. Univ of North Dakota.... Dr. G. Seielstad....... .500 .500 .500
NCC5-311............................. Rice University......... Dr. P. Reiff........... .450 .475 .400
NCC5-312............................. Planet Earth Science.... Dr. C. Gautier......... .130 .150 .200
NCC5-313............................. Calif Resources Agency.. G. Darling............. .470 .320 .338
NCC5-314............................. NBC Corp................ Dr. D. Jones........... .400 .400 .350
NCC5-315............................. USRA.................... K. Kalpaakis........... .320 .340 .230
NCC5-316............................. Univ of Minnesota....... Dr. T. Burk............ .240 .260 .199
NCC5-317............................. Bay Area Shared Info.... D. Etter............... .200 .200 .150
NCC5-318............................. Scientific Fisheries.... P. Simpson............. .030 .034 ......
NCC5-319............................. MRJ Technologies........ D. Kliman.............. .038 .040 .010
NCC5-320............................. Reading Info tech....... F. Sun/K. Meagher...... .067 ...... ......
-----------------------
Total Type 3 ESIPs............. ........................ ....................... 3.0 2.9 2.6
Total ESIP Funding............. ........................ ....................... 14.3 14.2 6.2
----------------------------------------------------------------------------------------------------------------
NEW DISS
Question. Please detail who has been involved in the New DISS
activity (SAT 3-31), how much has been spent on this activity to date,
what is projected in the future (2001 and beyond), and what contracts,
if any, have been supported for this New DISS work. Also please explain
what specific work has been done and what NASA's plans are for how the
New DISS will build upon the EOSDIS investments made over the last
decade.
Answer. To date the New DISS activity has been in the stage of
concept development. A team of experts from academia, Industry and
Government was assembled in October of 1998, and met several times
throughout fiscal year 1999 and fiscal year 2000 to prepare a New DISS
concept document.
The total cost of the New DISS activity so far has been to support
meeting costs (4 meetings) for the non-civil service members of the New
DISS expert team, approximately $80K.
The Earth Science Technology Office at GSFC let a study (contractor
was Aerojet) of the technologies that would be needed to implement the
New DISS concept in fiscal year 1999. Cost of the study was $59K.
NASA is presently organizing a transition team to look at how the
New DISS concept can be implemented. As the question indicates, the New
DISS concept is to build upon NASA's EOSDIS investments while evolving
our data and information systems and services to incorporate
information technology advances, which should make the system more
flexible.
Funding for this activity in fiscal year 2001 and beyond is under
review at this time.
New DISS Team Members
Members
Martha E. Maiden, NASA Headquarters, Chair; Vanessa Griffin, NASA
Goddard Space Flight Center; Mathew Schwaller, NASA Goddard Space
Flight Center; Candace Carlisle, NASA Goddard Space Flight Center;
Ronald L.S. Weaver, University of Colorado; Roy Jenne, National Center
for Atmospheric Research; Karen White, NASA Headquarters; Sara J.
Graves, University of Alabama, Huntsville; David L. Skole, Michigan
State University; Anngienetta R. Johnson, NASA Headquarters; Guenter R.
Riegler, NASA Headquarters; Thomas A. Lasinski, Lawrence Livermore
National Laboratory; and John R. G. Townshend, University of Maryland,
College Park.
Consultants
Mark R. Abbott, Oregon State University; George David Emmitt,
Simpson Weather Associates Incorporated; James Frew, University of
California, Santa Barbara; David M. Glover, Woods Hole Oceanographic
Institution; Anthony C. Janetos, World Resources Institute; Thomas
Karl, NOAA National Climatic Data Center; Pamela A. Matson , University
of California; Dorothy Perkins, NASA Goddard Space Flight Center; Moshe
Pniel, Jet Propulsion Laboratory; Carl Reber, NASA Goddard Space Flight
Center; Richard B. Rood, NASA Goddard Space Flight Center; and
Christopher Scolese, NASA Goddard Space Flight Center.
EARTH PROBES
Question. Please provide the life cycle cost estimates for each of
the earth probes listed on SAT 3-37, including the original cost
estimate at the start of the project (Phase B and C/D), and the current
estimate cost for each. Please explain.
Answer.
Background
The Earth Probes listed on page SAT 3-37 of the NASA 2001 Budget
Request to Congress (see URL http://ifmp.nasa.gov/codeb/budget2001/for
more information) are:
[In millions of dollars]
------------------------------------------------------------------------
Original Life Current Life
Earth Probe Mission Cycle Estimate Cycle Estimate
------------------------------------------------------------------------
Total Ozone Mapping Spectrometer $34.3 $34.3
(QuikTOMS).........................
Earth System Science Pathfinders:
VCL............................. 59.8 ( \1\ )
GRACE........................... 86.0 ( \2\ )
PICASSO-CENA (in formulation)... 112.2 112.2
CloudSat (in formulation)....... 115.8 115.8
Volcam alternate mission study \4\ 500 \4\ 500
\3\............................
Experiments of Opportunity.......... \5\ 250 \5\ 250
Triana.............................. 75 117
University Class Earth System \6\ 15 \6\ 15
Science............................
------------------------------------------------------------------------
\1\ Under review.
\2\ Replan in process.
\3\ No Life Cycle estimate applicable as this is a funded study only.
\4\ In thousands of dollars.
\5\ Thousands of dollars each.
\6\ Millions of dollars each.
Explanations:
General.--The Life Cycle Estimates above are for NASA only. Many of
these missions involve partnerships with significant contributions from
other US Government and/or International Space Agencies.
Total Ozone Mapping Spectrometer (QuikTOMS).--The $34.3M figure
shown is the funding from the Earth Probes line only. Additional
funding comes from operations and science budget lines.
VCL.--NASA confirmed the original life cycle cost estimate of
$59.8M at the Mission Confirmation Review in March of 1998. More than
one year later, NASA directed the VCL team to switch to Athena 1
(former Clark launch vehicle), increasing the cost estimate to $67.3M.
Recent difficulties with the delivery of the instrument, and concerns
over the quality assurance of missions in this class based on the
failure of the Mars missions, has led NASA to reassess VCL. This
reassessment is on-going.
GRACE.--NASA confirmed the original life cycle cost estimate of
$86.0M at the Mission Confirmation Review in December of 1998. A replan
is underway due to the contractor (German Company DSS) diverting
workforce from GRACE to the CHAMP mission delay in addition to GRACE
hardware and software problems.
PICASSO-CENA.--Original cost of $112.2M. NASA will establish the
baseline life cycle cost at the Mission Confirmation Review, based upon
proposed cost, impact of risk reassessment, and the impacts of launch
vehicle costs savings.
CloudSat.--Original cost of $115.8M. NASA will establish the
baseline life cycle cost at the Mission Confirmation Review, based upon
proposed cost, impact of risk reassessment, and the impacts of launch
vehicle costs savings. Additionally, NASA may provide CloudSat with
additional funding based on the arrangement with the Canadian Space
Agency for the RFES hardware.
Volcam alternate mission.--Volcam is the alternate mission, should
either PICASSO-CENA or CloudSat fail to demonstration that it can
satisfy its level one requirements at the time of Mission Confirmation
Review. The VOLCAM team is supported at a low, study effort level.
Experiments of Opportunity.--The Experiments of Opportunity are a
series of very low cost (approximately $250K each) payloads on free
flying satellites, the space shuttle and International space missions.
Examples include the Global Positioning Satellite (GPS) experiments on
the already launched Orstead and Sunsat and the upcoming Champ and SAC-
C missions.
Triana.--House Report 106-379 directed ``NASA to suspend all work
on the development of the Triana satellite using funds made available
by this appropriation until the National Academy of Sciences (NAS) has
completed an evaluation of the scientific goals of the Triana
mission.'' The Academy released a favorable report in March 2000. The
House Report recognized that ``there will be some additional cost
resulting from the delay.'' The additional cost to the Triana program
associated with the suspension of development and related activities is
approximately $40 million. This brings the total cost of the Triana
project from the original baseline of $77 million to $117 million. Of
the $40 million cost growth, $16.5 million is associated with the stand
down and recovery. This includes funding to address some technical
problems in developing the sophisticated scientific instruments that
were exacerbated by the stand down. NASA added $7.5 million to
implement several NAS recommendations. Another $6.8 million is required
to refurbish an alternate deployment platform that NASA is borrowing
under an agreement with the Italian Space Agency to safely deploy
Triana from the Shuttle bay. The decision to use this platform was
taken in response to the Shuttle safety review process; this hardware
has flown on a prior mission. And, $9.1 million has been added for risk
reduction, including a moderate augmentation to program reserves.
Triana's current launch readiness date is October 2001. Triana is
manifested as a secondary payload on STS-112 (Research Mission), which
is currently targeted for launch on April 18, 2002.
University Class Earth System Science.--In fiscal year 2000 NASA
competitively selected four University team concepts for mission study
funding. In fiscal year 2001, NASA intends to select two of these
concepts for final formulation and implementation. Each mission is
capped at $15M.
Question. Almost $18 million is budgeted in the 1999-2001 period
for program support and future missions. Please explain what these
funds have supported, including which contracts and kinds of program
support. Why does the justification fail to describe anything about
this activity, given that it is scheduled to grow by 163 percent (from
$3.5 million to $9.2 million) between 2000 and 2001?
Answer. We apologize for our oversight in failing to describe the
Earth System Science Pathfinders (ESSP) Program Support and Future
Missions in the budget justification.
The Earth Probes program support allows NASA to take an integrated
view of the Earth Probe missions for quality assurance and cross-
project optimization. Program support provides for NASA technical
insight through engineering support contracts for reviews, analysis,
technical expertise, quality assurance, Space Operations Management
Office (SOMO) related costs and independent validation and verification
(IV&V). It also provides for the independent reviews and review teams
for cost analysis, confirmation and Red Teams. In addition, the program
support line includes institutional expenses and assessments.
For future Earth Probe missions, the strategy of the Earth Science
Enterprise is not commit in advance to a set program of experimental
satellite missions for the next ten years. Instead, NASA will issue
successive solicitations for comprehensive mission implementation
proposals addressing specific science themes and their associated
priorities subject to the peer review process. NASA will determine step
by step the sequence of scientific disciplines addressed by the Earth
Probe program, taking into consideration scientific priorities
confirmed by scientific institutions and bodies, technical and funding
capabilities, and opportunities for international cooperation. These
exploratory missions, yielding new scientific breakthroughs, are a
significant component of the Earth Science Enterprise's program, in
conformity with the strategic mission of NASA to promote research and
development. Each exploratory satellite project is expected to be a
one-time mission that can deliver conclusive scientific results
addressing a focused set of scientific questions/objectives. This is
the epitome of faster, better, cheaper, enabling rapid response to
emerging scientific priorities, maturing technical solutions, and
creative partnership opportunities.
EARTH SCIENCE PROGRAM SCIENCE
Question. Please identify all R&A solicitations released (and
dollars used to fund proposals) in 1999 and 2000. Please provide a
crosswalk for amounts provided for R&A in each year as identified on
SAT 3-45 and explain any deltas.
Answer.
[In millions of dollars]
------------------------------------------------------------------------
Funding
NRA # Release Date Per
Year
------------------------------------------------------------------------
Fiscal year 1999 Research
NRA's:
Solid Earth & Natural NRA-98-OES-13.. 12/24/1988..... 3.5
Hazards.
EO-1 Data Evaluation NRA-99-OES-01.. 04/02/1999..... 1.5
Program.
Earth Science Education NRA-99-OES-02.. 06/29/1999..... \1\.8
Program.
Tropical Rainfall NRA-99-OES-03.. 07/21/1999..... 5.5
Measurement Mission
(TRMM).
Modeling & Data Analysis NRA-99-OES-04.. 07/23/1999..... 22.0
Research.
Ozone Monitoring NRA-99-OES-05.. 09/29/1999..... 2.5
Instrument (OMI).
Land-Cover & Land-Use NRA-99-OES-06.. 07/29/1999..... 2.0
Change.
--------
Sub-Total Fiscal Year ............... ............... 37.8
1999 Research NRA's.
Funding to support ............... ............... 98.2
Grants awarded in
fiscal year 1997 and
fiscal year 1998.
Total fiscal year 1999 ............... ............... 136.0
R&A--Science.
========
Fiscal Year 2000 Research
NRA's:
SIMBIOS.................. NRA-99-OES-09.. 12/02/1999..... 3.0
RADARSAT-1/ADRA-2........ NRA-99-OES-10.. 12/20/1999..... 2.0
Trace P.................. NRA-00-OES-01.. 01/28/2000..... 6.0
Uninhabited Aerial NRA-00-OES-02.. 02/28/2000..... 4.0
Vehicle (UAV).
EOS Aqua................. NRA-00-OES-03.. 05/08/2000..... 2.0
New Investigator Program. NRA-00-OES-04.. 04/27/2000..... 1.5
Oceanography............. NRA-00-OES-05.. 05/26/2000..... 4.0
--------
Sub-Total Fiscal Year ............... ............... 22.5
2000 Research NRA's To-
Date.
Funding to support ............... ............... 141.8
grants awarded in
fiscal year 1998 and
fiscal year 1999 and
grants yet to be
awarded in fiscal year
2000.
Total Fiscal Year 2000 ............... ............... .......
R&A--Science.
------------------------------------------------------------------------
\1\ Jointly funded w/Codes F, E ($800K in Code Y portion).
Notes: 1. The difference between SAT 3-45 budget for fiscal year 1999
and 00 is due to 2nd and 3rd year renewals from previously selected
solicitations; 2. Before 2nd and 3rd year renewals are funded, an in-
depth annual review of the PI's progress is done; 3. There will be
additional R&A solicitations released in fiscal year 2000.
EOS SCIENCE AND MISSION SCIENCE TEAMS--RESEARCH
Question. How are awards made for each of these sub-program
elements listed on page SAT 3-45? Are they all award competitively
through the peer review process (please explain in detail)? Detail all
individual or institution-based awards for 1999 and 2000, by flight
project or other relevant indicator, and explain, the use and proposed
allocation (by subject and individual institution/investigator) of
extra funds (+$44.2 million/+81 percent) requested for 2001 for Mission
Science Teams--Research in 2001.
Answer. The award process used for Research and Analysis--Science,
EOS Science, Mission Science Teams--Research, and Uncrewed Aerial
Vehicles (UAV) described below:
NRA's are periodically developed by the EOS Project Science Office
in cooperation with appropriate Earth Science Program Managers from
NASA Headquarters, with input from the EOS instrument science teams via
their publicly accessible and peer-reviewed Science Data Validation
Plans, and from the external science community via open workshops. The
NRA's are subject to the normal peer review and approval process and
are advertised via Commerce Business Daily and through various mailing
lists maintained by NASA Headquarters. Peer review is used extensively
in NASA science, applications, education, technology (SAET) and
appropriate flight mission acquisitions. It is essential for a high
quality, relevant program. The use of external peer review enhances the
quality of NASA's investigations and activities because it brings the
best and most critical national and international experts to the
evaluation process. External peer review ensures that fresh viewpoints,
alternative perspectives and state-of-the-art understanding are
included in the evaluation process. Each review includes a written
record of the evaluation and evaluation records are maintained. The
evaluation results are used to make a judgement about the merits of
each proposal and ultimately are used as the basis to make a selection
for an award. For more detailed information regarding our peer review
and approval process please see our Office Work Instructions HOW17040-
Y012 found on our web site http://HQISO9000.HQ.HASA.GOV/. Submitted
proposals are subject to a rigorous peer review process including
written mail reviews and a panel review by experts. Program Scientists
from NASA Headquarters are actively involved in the NRA development and
proposal review process to ensure appropriate integration with NASA's
Research and Analysis Programs. The selecting official is Director,
Research Division, Office of Earth Science, NASA Headquarters. Grants
are implemented within 6 months prior to the planned launch of a
platform to enable the required preparations to occur prior to the
availability of the satellite data and, thereby, speed the validation
process. The Airborne Science and Applications and Information Systems
activities are not competitively awarded.
[In millions of dollars]
------------------------------------------------------------------------
Fiscal years--
--------------------------------
1999 2000 2001
------------------------------------------------------------------------
TOMS Science Team...................... 0.9 1.0 1.0
TRMM Science Team...................... 14.3 11.3 13.2
Seastar Science Team................... 2.5 2.5 2.7
RADARSAT Science Team.................. 2.5 2.4 2.5
UARS Science Team...................... 4.9 4.7 3.0
ERBE/SAGE Science Team................. 4.3 4.5 3.5
Altimetry Science Team................. 2.3 1.4 1.5
NIST Calibration....................... 0.1 0.1 0.1
SBUV/2 Science Team.................... 1.3 1.3 1.2
Ocean Winds Science Team............... 4.4 3.1 3.7
AVIRIS/AIR SAR/TIMS Science Team....... 1.6 1.7 1.7
Pathfinder Data Sets................... 3.5 3.7 3.3
SIMBIOS................................ 5.5 2.0 4.2
SLR Science............................ ......... 8.7 6.7
Land Cover Science Office.............. ......... 1.7 1.5
ESSP Science........................... ......... ......... 1.0
--------------------------------
Mission Science Teams............ 48.1 55.8 100.0
================================
Funding Shift from Algorithm
Development to Mission Science Teams:
TRMM Science (transfer \1\ from ......... ......... 4.5
Algorithm Development)............
Altimetry Science (transfer from ......... 3.9 4.0
Algorithm Development)............
Ocean Winds (transfer from ......... 1.8 1.8
Algorithm Development)............
Terra Science Team................. ......... ......... 18.9
Aqua Science Team.................. ......... ......... 7.3
SAGE III Science................... ......... ......... 3.0
IceSAT Science..................... ......... ......... 2.7
Landsat-7 Science.................. ......... ......... 2.6
ACRIM Science...................... ......... ......... 0.5
SORCE Science...................... ......... ......... 0.7
Guest Investigator Program......... ......... ......... 3.2
--------------------------------
Total Transfer from Algorithm ......... 5.7 49.2
Development to Mission Science
Teams...........................
------------------------------------------------------------------------
\1\ Recommend deletion of word ``augmentation & replace with word
``transfer''--statement is consistent with restructure
Mission Science Teams.--Research consists of two primary
activities:
--Data Analysis which supports use of the satellite's (both existing
and new ones) data to produce science results and the
processing and re-processing of the data toward this end,
including special requests and requirements for augmented
science data processing and combination with other data and/or
models.
--Calibration and validation which includes activity that supports
pre- and post-launch calibration and validation required by the
instrument team to assess the validity, quality and
applicability/limitations of the derived data products. This
includes comparisons of data products to those produced by
other instruments and platforms, vicarious calibration
(calibration validation via correlative measurements) of Level
1 data products, and use of analysis and correlative
measurements to validate Level 2 data products where the latter
may involve continuous, regular or episodic in-situ and/or
remote ground-based and/or airborne measurements.
Fiscal Year 2001 Mission Science Teams-Research $44.2M increase.--
The Mission Science Teams-Research budget provides the opportunity for
scientists from all institutions to participate in the analysis,
verification, and utilization of data from NASA's currently operating
space-based instruments. The budget increase in fiscal year 2001 is the
result of funds that were in the past provided to the EOS instrument
science teams for algorithm development being converted to mission
analysis. This increase largely reflects the inclusion of the Terra and
Aqua as members of NASA's currently operating space-based instruments.
APPLICATIONS--RESEARCH AND ANALYSIS
Question. Please breakout allocations for this line on SAT 3-65 for
1999, 2000, and 2001, including data for each of the four activities
listed on 3-69 and 3-70 (RESACs, NASA-USDA cooperation, ESIPS, and the
state and local government initiative).
Answer. (a) The breakout allocations for SAT 3-65 (Research and
Analysis--Applications) are as follows:
FUNDING
[In millions of dollars]
------------------------------------------------------------------------
Fiscal years--
Applications Research -----------------------
1999 2000 2001
------------------------------------------------------------------------
Applications and Assessments.................... 5.9 9.4 6.8
Earth Science Extension Network................. 0.5 2.6 7.0
Natural Hazards................................. 5.4 6.4 5.4
Project Support................................. 2.4 3.5 2.0
Applications Earmarks........................... 11.4 11.4 ......
-----------------------
Total applications........................ 25.6 33.3 21.2
------------------------------------------------------------------------
(b) The breakouts for the four activities listed on SAT 3-69 and 3-
70 are as follows:
FUNDING
[In millions of dollars]
------------------------------------------------------------------------
Fiscal years--
--------------------------
1999 2000 2001
------------------------------------------------------------------------
Regional Earth Science Applications Centers 13.7 ....... .......
(RESACs) RESACs were fully funded in fiscal
year 1999 for three years of performance
($M)........................................
NASA--USDA Cooperative Projects ($M)......... 2.6 2.4 2.3
Type 3 Earth Science Information Partnerships 2.9 2.8 2.6
(ESIPs) ($M) [ESIPs are funded by EOSDIS]...
State and Local (not RESACs or ESIPs) ($M)... 7.3 23.4 8.6
Applications (ESARP)..................... 4.3 4.9 5.1
State and Local Initiative............... ....... 0.6 3.5
Congressional Interests:
RACs................................. 3.0 0.3 .......
Cayuga County........................ ....... 9.2 .......
Raytheon............................. ....... 6.3 .......
Univ. of Missouri.................... ....... 1.8 .......
State Univ. of NY.................... ....... 0.3 .......
------------------------------------------------------------------------
APPLICATIONS PARTNERSHIPS/PROJECTS
Question. Please detail all major projects and/or partnerships
supported by the Applications, Commercialization and Education whose
total support over the fiscal year 1999-01 period will exceed $250,000,
and amounts allocated to each, including such things as the 13 projects
identified in the USDA partnership, the Type 3 ESIPs, and the 11
cooperative agreements in state and local programs.
Answer.
[In thousands of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
FISCAL YEARS--
STATE PROJECT PRINCIPAL INVESTIGATOR PI AFFILIATION -----------------------------
1999 2000 2001
--------------------------------------------------------------------------------------------------------------------------------------------------------
USDA Partnerships--(Ag NRA)
California \1\........................ Viticultural Integration of Lee Johnson NASA/ARC and CSU........ 200.0 200.0 200.0
NASA Technologies for ([email protected]
Assessment of the v).
Grapevine Environment
(VINTAGE).
California \1\........................ Implementation of Oliver Chadwick UCSB.................... 124.5 110.7 151.5
Predictive Soil Modeling ([email protected]).
in the National
Cooperative Soil Survey.
California \1\........................ Using Remote Sensing to Kenneth Tate UC-Davis................ 199.5 188.3 155.7
Monitor the Impacts of ([email protected]).
Flood-Irrigation of
Meadows in the East Walker
River Basin of California.
Colorado \1\.......................... Prototyping Value-added EOS Mark Weltz USDA-ARS................ 199.9 199.1 199.0
Data for Rangeland ([email protected]).
Management and Assessment.
Kansas \1\............................ Remote Sensing-based Mark Jakubauskas Univ. of KS............. 198.9 200.0 180.0
Geostatistical Modeling ([email protected]
for Coniferous Forest ).
Inventory and
Characterization.
Maryland \1\.......................... Forest Characterization and Ralph Dubayah UMD..................... 199.6 198.0 199.5
Inventory using Airborne ([email protected]).
and Space-based Lidar.
Maryland \1\.......................... Assessment of Global Crop Paul Doraiswamy USDA-ARS................ 170.1 164.0 156.9
Production from New ([email protected]
Generation Remote Sensing ).
Technology.
Michigan \1\.......................... Forest Structure from Multi- Craig Dobson Univ. of MI-Ann Arbor... 194.9 198.8 200.3
spectral Fusion. ([email protected]).
Minnesota \1\......................... Integrating Satellite Marvin Bauer Univ. of MN............. 200.0 200.0 200.0
Remote Sensing into Forest ([email protected]).
Inventory and Management.
Minnesota \1\......................... Mapping Consistent Within- Damien Lepoutre GEOSYS Inc.............. 200.0 200.0 200.0
Field Patterns of (dlepoutre@geosys__intl.co
Variability Using Multi- m).
temporal Satellite Images.
Mississippi \1\....................... Leaf Area and Volume Scott Roberts MSU..................... 182.1 96.8 .......
Estimates in Loblolly Pine ([email protected]).
Forests Derived from
Aerial Lidar.
Montana \1\........................... Developing Methods for Robert Keane USDA Forest Service..... 199.2 198.7 199.3
Mapping Fuel ([email protected]).
Characteristics for
Predicting Fire Behavior
Across the United States.
South Dakota \1\...................... Regional Change Monitoring Data Douglas Stow SDSU.................... 199.1 198.8 199.0
of Habitat Reserve Systems ([email protected]).
with Very High Resolution
Remotely Sensed.
South Dakota \1\...................... Application of Remote Maribeth Price SD School of Mines & 115.7 93.1 97.2
Sensing to Forest Resource ([email protected]). Techn.
Inventory and Habitat
Modeling.
Type 3 ESIPs ( \2\ ) and Coop Agreements ( \3\ )
California \2\........................ ESE Education Series....... Catherine Gautier Planet Earth Science Inc 130.0 150.0 200.0
([email protected]).
California \2\ \3\.................... California Land Science Gary Darling CERES, California 470.0 320.0 338.0
Information Partnership ([email protected]). Resources Agency.
(CaLSIP).
California \2\ \3\.................... Integration and Application David Etter Bay Area Shared Info. 200.0 200.0 150.0
of MTPE Data and ([email protected]). Consortium.
Information to the San
Francisco Bay Area and
Monterey Bay Region.
District of Columbia \2\.............. NBC News and Information: Dave Jones WRC-TV.................. 400.0 400.0 350.0
ESE Data to the World. ([email protected]).
Maryland \2\.......................... Integrating Environmental Konstantinos Kalpakis USRA/CESDIS............. 320.0 340.0 230.0
and Legal Information ([email protected]).
Systems.
Minnesota \2\ \3\..................... TerraSIP: A Spatial Thomas Burk Univ. of MN............. 240.0 260.0 199.0
Information Partnership ([email protected]).
for Land Managers.
New Mexico \2\ \3\.................... Performing a Regional Stan Morain UNM..................... 200.0 200.0 251.0
Assessment and Prototyping ([email protected]).
Internet Accessible ESE
Products for the Upper Rio
Grande Basin.
North Dakota \2\...................... A Public Access Resource George Seielstad Univ. of North Dakota... 500.0 500.0 500.0
Center (PARC): Empowering ([email protected]).
the General Public to Use
EOSDIS Phase III
Operations.
Texas \2\............................. Creating Museum and School Patricia Reiff Rice Univ............... 450.0 475.0 400.0
Learning Modules and ([email protected]).
Immersive Planetarium
Shows.
Cooperative Agreements
Arizona \4\........................... NASA Southwest Earth Roger Bales Univ. of AZ............. \5\ 1,500. ....... .......
Science Applications ([email protected]). 0
Center.
Arizona \4\........................... Support of USGCRP Regional Wil Orr.................... Prescott College........ 430.0 430.0 430.0
Workshops on Global
Climate Change: Develop
Model Linking Local
Sustainability to Global
Climate: Remote Sensing
Applications Research for
Local Governments.
California \4\........................ California Water Resources Norman Miller LLL..................... \5\ 1,500. ....... .......
Research and Applications ([email protected]). 0
Center.
California \4\........................ Southern California Center Chris Lee CSU, Dominguez Hills.... \5\ 1,600. ....... .......
for Managing Fire Hazards ([email protected]). 0
at the Urban-Wildlands
Interface.
Connecticut \4\....................... Better Land Use Planning Chester Arnold Univ. of CT............. \5\ 1,100. ....... .......
for the Suburbanizing (chester.arnold__jr@uconn. 0
Northeast. edu).
Maryland \4\.......................... Remote Sensing for Resource Stephen Prince UMD..................... \5\ 1,730. ....... .......
Management: The Mid- ([email protected]). 0
Atlantic RESAC Consortium.
Minnesota \4\......................... Upper Great Lakes Regional Marvin Bauer Univ. of MN............. \5\ 1,500. ....... .......
Earth Sciences Application ([email protected]). 0
Center.
New York \4\.......................... Use of ESE Data for Cayuga Bob Brower Cayuga County, NY....... 3,000.0 9,200.0
County Planning. ([email protected]).
Other Projects
Alabama \6\........................... Southeast Regional J.F. Cruise UAH..................... 300.0 300.0 300.0
Assessment. ([email protected]).
Alabama \6\........................... Economic Impact of Water J.F. Cruise UAH..................... 150.0 100.0 150.0
Allocation on Agriculture ([email protected]).
in the Lower
Chattachoochee River Basin.
Alabama \6\........................... Flood Damage Prevention J.F. Cruise UAH..................... 150.0 100.0 100.0
using Remotely-sensed Data ([email protected]).
and a Mesoscale
Atmospheric Model.
Arizona \6\........................... Agriculture Applications Chuck Hutchinson Univ. of AZ............. 200.0 140.0 200.0
Research. ([email protected]).
Arizona \6\........................... Space/Land Grant Geospatial Barron Orr Univ. of AZ............. 150.0 100.0 150.0
Technology Extension. ([email protected]).
California \6\........................ Pest Control in Precision Nahum Gat ([email protected]). OKSI.................... 300.0 300.0 .......
Farming using
Hyperspectral Imaging.
California \6\........................ Agriculture Industry- James Tatoian R&D Laboratories........ 300.0 300.0 300.0
Oriented EOCAP-SAR Study. ([email protected]).
California \6\........................ Hyperspectral Detection of Lee Johnson CSU Monterey Bay........ 200.0 204.5 .......
Nitrogen Stress in ([email protected]
Vegetable Crops: A Case v).
Study in the Salinas
Valley of Monterey County,
California.
California \6\........................ Commercial Utilization of Jan Svejkpovsky Ocean Imaging........... 251.1 252.2 174.1
SAR Data for High- ([email protected]).
Frequency Coastal Zone
Monitoring with Multi-user
Application.
California \6\........................ Improving Understanding Jack Estes UCSB.................... 500.0 390.0 390.0
Role of ESE Data by Public ([email protected]).
and Private Applications
Researchers, Potential
Commercial Applications of
ESE Data; Remote Sensing
Curricula Development.
California \6\........................ State and Local Chris Lee CSU, Dominguez Hills.... 100.0 150.0 150.0
Applications Workforce ([email protected]).
Development.
California \6\........................ Flood Plain Modeling Based Van Zyl JPL..................... 100.0 100.0 100.0
on Data Fusion of ([email protected]
Polarimetric SAR ov).
Interferometry and Laser
Altimetry.
California \6\........................ Thermal IR Remote Sensing Sabins..................... Bing Yen & Assoc........ 100.0 100.0 100.0
for Reducing Landslide
Hazards in Southern
California.
California \6\........................ InSAR Measurements of Mariana Eneva Maxwell Technologies 100.0 100.0 100.0
Crustal Deformation from ([email protected]). Sys. Div.
Large Rockbursts in Mines.
California \6\........................ Development of a Fully Donnellan.................. JPL..................... 190.0 190.0 190.0
Three-Dimensional Model of
Interacting Fault Systems
for Interpretation of GPS
and InSAR Observations.
California \6\........................ CASSANDRA: A Storm Based William Dietrich UC Berkeley............. 110.0 110.0 110.0
Model for Forecasting the ([email protected]
Initiation and Runout of u).
Debris Flows.
Colorado \6\.......................... EOCAP-SAR: Land Cover Russ Cowart I3-Information, 299.8 299.4 300.0
Classification and DEM's ([email protected]). Integration & Imaging.
for Telecommunication
Tower Siting.
Colorado \6\.......................... Application of Airborne Phoebe Hauff ([email protected]) Spectral International 275.0 300.0 .......
Hyperspectral Data to Inc.
Characterization of Mined
Lands and Analysis of
Associated Watersheds and
Impacts for Environmental
Management.
Colorado \6\.......................... SARMap GIS Information David Cohen Vexcel Corp............. 299.3 299.8 297.8
Package. ([email protected]).
District of Columbia \6\.............. Interagency Research Nancy Maynard NASA/GSFC............... 250.0 ....... .......
Program in Environmental (seawifs.gsfc.nasa.gov).
Health.
District of Columbia \6\.............. Landslide Modeling and Bulmer Smithsonian Institu- 87.0 96.0 72.0
Forecasting Utilizing ([email protected]). tion.
Remotely Sensed Data
(LANDMOD).
Indiana \6\........................... Increasing Public Benefits Bernie Engel Purdue University....... 100.0 60.0 100.0
of Existing NASA Earth ([email protected]).
Sciences Data:
Multipurpose Applications
in an Agricultural
Watershed.
Kansas \6\............................ Development of Agriculture, Kevin Price (k- Univ. of KS............. 150.0 150.0 150.0
Land Use Mapping and [email protected]).
Monitoring Protocol for
the Great Plains.
Kansas \6\............................ The Great Plains Regional Edward Martinko (e- Univ. of KS............. \5\1,550. ....... .......
Earth Science Applications [email protected]). 0
Center (GP-RESAC): A
Consortium to Transfer
Remotes Sensing Products
and Technology to Support
the Great Plains
Agroecosystem.
Maryland \6\.......................... AVHRR Support to Health Compton J. Tucker NASA/GSFC............... 300.0 200.0 na
Researchers. ([email protected]
.gov).
Maryland \6\.......................... Development of a Health Steve Kempler NASA/GSFC............... 320.0 na na
Archive at the Goddard ([email protected]
Global Change Data Center. v).
Maryland \6\.......................... Baltimore-Washington Tim Foresman UMBC.................... 200.0 130.0 130.0
Corridor Change Detection ([email protected]).
& Development of
Historical Agriculture,
Forestry, LU/LC Study.
Maryland \6\.......................... Direct State and Local Bill Burgess NSGIC................... 100.0 100.0 100.0
Government Participation ([email protected]).
in NASA Outreach and
Applications Activities.
Michigan \6\.......................... Commercial Use of Orbital Craig Dobson EnviSense Corp.......... 299.8 300.0 300.0
SAR for Renewable ([email protected]).
Resources--The Timber
Industry: Product
Development and Market
Assessment.
Michigan \6\.......................... Monitoring and Prediction Darren Miller ERIM Int'l.............. 300.0 300.0 300.0
of Coastal Oceanic (dmiller@erim__int.com).
Processes Utilizing High
Resolution SAR Imagery.
Montana \6\........................... Validation of High- Robert Crabtree Yellowstone Ecosystem 300.0 300.0 .......
Resolution Hyperspectral ([email protected]). Studies.
Data for Stream and
Riparian Habitat Analysis.
Nebraska \6\.......................... Application of Paul Doraiswamy USDA-ARS................ 268.2 275.7 .......
Hyperspectral Data for ([email protected]
Site Specific Farm ).
Management.
New York \6\.......................... Water Quality Monitoring Rulon Simmons Eastman Kodak........... 300.0 300.0 .......
with Hyperspectral Imaging. ([email protected]).
New York \6\.......................... Kodak Earth Imaging: Demand- Elizabeth Frey Eastman Kodak-Commercial 300.0 300.0 300.0
Driven LightSAR Product ([email protected]). & Gov't Systems Div.
Fulfillment.
New York \6\.......................... Landslide Mechanisms and Jeff Weissel Columbia Univ........... 167.0 148.0 145.0
Hazard Assessment in ([email protected]).
Mountain Regions of the
Pacific Rim using SRTM.
North Carolina \6\.................... Exploitation of Mark Karaska Applied Analysis Inc.... 293.3 299.6 .......
Hyperspectral Imagery (mkaraska@discover__aai.co
(AVIRIS) for Water Quality m).
Assessment and Monitoring.
North Dakota \6\...................... Prototype EOSDIS Extension George Seielstad UMAC.................... 1,000.0 650.0 1,000.0
Project: Extend ESE Data ([email protected]).
into Agribusiness, K-12
Education.
North Dakota \6\...................... Northern Great Plains George Seielstad Univ. of North Dakota... \5\ 1,720. ....... .......
Regional Earth Science ([email protected]). 0
Applications Center.
Ohio \6\.............................. Applications of James Riddell MTL Systems Inc......... 299.6 299.8 .......
Hyperspectral Data. ([email protected]).
Texas \6\............................. Commercial Development of Doran Geise Earth Info. Sys. Corp... 292.6 318.9 278.7
Enhanced Products from ([email protected]).
LightSAR Data for the
Wireless and Oil/Gas
Industries.
Texas \6\............................. Development of Surface Ed Biegert Shell Exploration and 100.0 100.0 100.0
Deformation Map Products ([email protected] Production Technology
for Humid, Urban Areas m). Company.
using Radar Interferometry.
Virginia \6\.......................... Development of Surface Ann Carlson NASA/LaRC............... 125.0 125.0 120.0
Solar Energy Data Sets for ([email protected]).
Commercial Applications
for Placement of Solar
Power Facilities.
Washington \6\........................ Ocean Current Measurements David Lai ([email protected]).. NorthWest Res. Assoc. 172.7 237.3 297.2
Using SAR. Inc.
Washington \6\........................ Remote Characterization of Phil Cassady Boeing Info, Space & 300,0 300.0 .......
Agricultural Crop Stress. ([email protected] Defense Sys.
om).
Washington \6\........................ SAR-based Decision Support Kenneth Cobleigh Boeing Info, Space & 300.0 300.0 300.0
of Forestry Operations. (kenneth.a.cobleigh@boeing Defense Sys.
.com).
Wisconsin \6\......................... The Midwest Center for George Diak Univ. of WI............. \5\1,500. ....... .......
Natural Resource ([email protected] 0
Management. ).
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ AG NRA.
\2\ ESIP (Earth Science Information Partnership).
\3\ ESIP and Cooperative Agreements.
\4\ Cooperative Agreements.
\5\ RESAC--Funded in fiscal year 1999 for three years.
\6\ Other.
ADVANCED TECHNOLOGY FUNDING
Question. Please explain how the proposed ATD program, for which
$110.7 million is requested in 2001, is used to support specific
missions and activities anticipated to be funded in the EOS Follow-on
and Earth Probes future missions.
Answer. Three technology programs are involved: the Earth Science
Technology Office (ESTO) Program, the New Millennium Program (NMP), and
the High Performance Computing and Communications Program (HPCC).
Overall program management is accomplished through Enterprise-level
strategic technology planning procedures that include comprehensive
requirements analysis and investment prioritization processes that
fully engage the science and applications communities.
The ESTO project areas are linked to the EOS follow-on missions as
well as the Earth Probes by developing the technologies essential to
enable the future measurements. ESTO requirements are linked to and
approved by the Science and Applications Division Directors. Candidate
missions are identified by scientific emphasis, e.g. Global
Precipitation Mission or Soil Moisture. Specific examples of ESTO-
funded technologies that are directly related to these missions follow:
--Advanced Technology Initiatives.--Global Precipitation Mission
(e.g. high data rate modulator/demodulators, cross-link
components), Tropospheric Winds mission (e.g. convective
cooling), NPP (e.g. components for reconfigurable computing).
Platform technologies to support Ocean Winds (e.g. light
weight, low power electronics, KA-band phased array).
--Instrument Incubator.--Sea Surface Salinity and Soil Moisture (e.g.
thinned array and mesh antenna); Tropospheric Chemistry (e.g.
ozone DIAL, compact hyperspectral sensor), Ocean Topography
(e.g. wide swath altimeter, delay Doppler radar)
--Advanced Information Systems Program.--Global Precipitation Mission
(e.g. high data rate downlinks--Ka-band or optical, inter-
satellite cross-links, Internet like inter-satellite
communications); Landsat Next (on-board processing), Soil
Moisture (e.g. high data rate computational radiation-hard
components, intelligent sensor control); Sea Surface Salinity
(e.g. high data rate communications, on-board processing).
The NMP is successfully implementing new procedures for identifying
and selecting space flight validation missions for critical Earth
Science measurement techniques and operational concepts. The EO-3 is
intended to demonstrate EOS type measurements from geostationary orbit
and it will be launched in 2005. Future NMP demonstrations will be
essential as ESE moves to more sophisticated instruments, intelligent
spacecraft, complex sensor constellations, and explore new vantage
points for space-based Earth observations.
The HPCC has as its program objective to develop supercomputers and
associated software tools to increase the ability of scientists to
model the Earth's climate and geophysical infrastructure and predict
global environment trends. This is accomplished by using high capacity
and speed among distributed modeling facilities and thus enables the
integration and interoperability of multi-disciplinary models. A goal
is to integrate improved model fidelity and interoperability into
multi-disciplinary models and to validate results with outputs from
satellite sensor data sets from all science missions. Advanced data
visualization techniques are also developed through HPCC. Unraveling
most of the more complex science questions and applying this knowledge
to practical problems will rely on the capabilities enabled through the
HPCC investments.
ATD COMPETITION
Question. Please describe the ratio of intramural/extramural
funding for all funds identified in the new ``Technology Infusion''
earth science budget activity in 1999 and 2000, including allocations
to all NASA Centers made without the benefit of competition. Please
also provide the number of civil servants/JPL contract officials who
are involved in earth science ATD activities.
Answer. It should be noted that Technology Infusion is not new
scope since it was moved to a new place in the budget structure. The
Technology Infusion earth science budget activity includes three major
program areas: the New Millennium Program, the High Performance
Computing and Communications Program, and the set of project areas
grouped under the Earth Science Technology office at GSFC. All three
program areas rely heavily on the competitive process to solicit
projects. Partnerships and cooperation among industry, academia, and
government research labs, including those at NASA, is encouraged in all
solicitations. Many of the fiscal year 1999 and 2000 awards included
such partnerships. In fact, NASA Centers are often partners with others
from outside the agency and significant portions of the funds for such
projects go to the non-NASA partners. For definitional purposes
`intramural' means that the funds are primarily obtained by a NASA
Center through competition for expenditure. With this definition, the
percentages of `intramural' as a ratio of total technology budget
amounts to approximately 11 percent of the total budget for fiscal
years 1999 and 2000. Even so, much of the work conducted at the Center
through the `intramural' investment is done with previously competed
contract support and agreements with universities. The remaining 89
percent for FYs 1999 and 2000 is awarded to universities, industry and
other federal labs, consistent with their technical expertise and
technologies they have to offer to meet ESE's strategic objectives
through open solicitation and peer review process. The FTEs including
JPL staff involved in earth science ATD activities are about 150 and
120, respectively, for fiscal years 1999 and 2000.
ATD COMPETITION
Question. Does Code Y support the directive that 75 percent of all
ATD funds should be competed? Please explain.
Answer. As part of a larger effort the Agency is reviewing the
methods by which it identifies and solicits advanced technologies
especially those at very low Technology Readiness Levels (TRLs). With
regard to its own funded technology programs, which tend to focus on
higher TRLs to meet ESE's strategic objectives, the Office of Earth
Science supports and is implementing the directive that 75 percent of
all ATD funds should be competed.
Specifically, under the designation of Technology Infusion, the
Earth Science Enterprise conducts its New Millennium, Advanced
Technology Initiatives, Instrument Incubator, Advanced Information
Systems, and the High Performance Computing and Communications project
activities through a higher level of competition than the 75 percent
goal established in legislation. Following the first initial years of
their existence, the Advanced Technology Initiatives and the Instrument
Incubator will increase their level of competition to the fullest
extent during fiscal year 2000, bringing the total level of competition
for Earth Science advanced technology activities to about 90 percent.
A description of the processes presently in place for conducting
the technology infusion competitions is provided below. This broad
level of competition helps to ensure that the most applicable
competencies and capabilities have ample opportunity to participate in
the program through the proposal review process. Utilizing this high
level of broad announcements helps to ensure that there is a clear and
wide distribution of information regarding the opportunities for
participation and a clear communication of the expectations of the
types of contributions that are needed to help achieve the objectives
of the Enterprise's Strategic Plan. Therefore the applicable core
competencies at the NASA Centers have clear information on the
opportunities that exist along with ample opportunity to participate in
the Earth Science technology infusion activities through the
competitive process.
The New Millennium Program (NMP) managed by JPL selects ESE flight
projects using a two-step competition. The current EO-3 competition is
using this process. The first step is a NRA calling for ``measurement
concepts'' aligned with a technology focus identified by the Associate
Administrator for Earth Science (AA). Of the submitted proposals a
small number of measurement concepts are recommended by peer review for
further study. The AA then selects those to be awarded study funding.
For EO-3, four concepts were selected. During the study phase, the
study teams are offered the opportunity to identify ``enabling
technologies'' for their concepts. Another competition is conducted to
select technology sources for these enabling technologies the winners
of which are added to the study teams. At the end of the study phase
(usually 6 months), Step 2 takes place when the Step 1 Study Reports
are evaluated by Peer-review panels for management and programmatics,
science and technology suitability, and cost realism. The AA selects
one that then enters a mission development phase.
The 5 percent of the funding that is ``assigned'' to a specific
Center under the New Millennium program is sent to the Jet Propulsion
Laboratory to cover the costs of JPL's management expertise for this
program effort. It also supports studies that define the most useful
technologies to be pursued by the Enterprise to meet its science
objectives. Similar to employing JPL expertise in advanced technology
for New Millennium, the Earth Science Technology Office (ESTO) at the
Goddard Space Flight Center is responsible for the development of the
Enterprise's technology strategy. Such expertise also provides
management of the Advanced Technology Initiatives, Instrument
Incubator, and Advanced Information Systems Technology activities,
which are described in the following paragraphs.
For fiscal year 1999 the Advanced Technology Initiatives (ATI)
project area managed by the Earth Science Technology Office at GSFC
directed the funding to LaRC to invest in ongoing component technology
developments. Funding for ATI in fiscal year 1999 was a transition year
for projects formerly in the Cross-Enterprise technology development
program managed by OSS. Half of that program was competed and half was
directed work at the NASA field Centers. The ATI project area for
fiscal year 2000 has been competed at 100 percent. Contracts lasting up
to three-year based on annual progress will be awarded for instrument
component technologies. The plan for the ATI project area is to reissue
competitive NRAs every other year in targeted sensors and sensor web
technologies.
The Instrument Incubator Program was competed as a NRA in fiscal
year 1999, with up to three year contracts to industry, academia and
government agencies. Project success will be based on annual progress
reviews. The intention is to compete these instrument systems
investments every other year.
For fiscal year 1999 the Advanced Information Systems Technologies
funds originated in the Prototype line in the EOSDIS Program. Prior to
becoming part of the ESTO Program this prototype line was originally
competed through requests for white papers then evaluated using peer
review. This project area will be a major component of technology
investment in the future. A formal NRA was released in early fiscal
year 2000 resulting in 27 awards to teams from industry, academia, NASA
Centers, and other government agencies. The Enterprise's approach for
developing unique and critical aspects of a distributed systems
architecture for information systems will be obtained through this
competitive area.
Beginning in fiscal year 2000 the High Performance Computing and
Communications Program is using the NASA Cooperative Agreement Notice
to select Grand Challenge Applications and Principal Investigators.
This is a competitive process. Part of this program (about 25 percent)
will be directed at extremely unique opportunities and to fund
operation of the computing infrastructure.
SUBCOMMITTEE RECESS
Senator Bond. So with that, the hearing is recessed.
[Whereupon, at 11:22 a.m., Tuesday, April 13, 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 2001
----------
THURSDAY, MAY 4, 2000
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:34 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond and Mikulski.
NATIONAL SCIENCE FOUNDATION
STATEMENT OF DR. RITA COLWELL, DIRECTOR
OFFICE OF SCIENCE AND TECHNOLOGY POLICY
STATEMENT OF NEAL LANE, DIRECTOR
NATIONAL SCIENCE BOARD
STATEMENT OF DR. EAMON KELLY, CHAIRMAN
OPENING 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 last but
not the least important budget hearing for the subcommittee.
It's one which the Ranking Member and I have very great
interest.
We're here today to review the fiscal year 2001 budget
request of the Office of Science and Technology Policy and the
National Science Foundation. We welcome Dr. Neal Lane, who is
the President's chief science adviser and Director of OSTP.
Also we welcome Dr. Rita Colwell, Director of NSF and Dr. Eamon
Kelly, Chairman of the National Science Board.
You and your agencies have been critical to the success of
Federal basic scientific research in this country, and we
commend you for your vision, for your work, and we look forward
to even bigger and better things from you in the future.
As we convene this hearing, we celebrate the Foundation's
50th anniversary this month. Both Senator Mikulski and I, along
with other members of the subcommittee, have been strong
supporters of the Federal commitment to basic science. It is
clear that the Federal investment in research and development
has been very positive, it's been critical for the economic and
intellectual growth and well-being of our nation.
Since its creation in 1950 with the support of a fellow
Missourian, President Harry Truman, NSF has been responsible
for numerous important scientific and technological advances
that have benefited our society. NSF-funded research has helped
us better understand the origins of the universe, developed
what we call the Internet today, which NSF can legitimately
claim the fatherhood of, and led to important medical advances
such as the MRI.
With this subcommittee's support, NSF has also pushed the
boundaries of information technology and biotechnology, two of
the fastest growing industries in this country. I am intrigued
by the administration's new proposal to invest in
nanotechnology. From what I've heard, even though I don't
understand it, this new area may lead to innovations that only
science fiction writers can imagine.
As many of you know, I have a particular interest in the
Federal investment in biotechnology, especially plant
biotechnology. I strongly believe that biotechnology and mainly
the plane genome research that we've worked on in this
committee is imperative in maintaining the long-term
sustainability and competitiveness of U.S. agriculture.
Further, plant genome research has exciting possibilities for
improving human health and nutrition, lessening the impact of
damaging chemicals on the environment and meeting the truly
human compelling needs of children and families in the less
developed countries in the world.
The sad reality, unfortunately, is that hysteria and fear
instead of reason seem to be driving the debate surrounding
biotechnology. The most recent example is a large potato
processor in Idaho, forced no longer to use genetically
modified potatoes. It was deeply troubling to me to read that
the Idaho company decided to stop using genetically modified
potatoes despite their belief that ``biotechnology is important
for agriculture and providing affordable food.'' This looks
like another case where decisions are being driven by
misinformation in reaction to hysteria instead of facts.
As I've said before and I'll continue to say over and over
again, it's absolutely critical that we educate the public
about biotechnology. Many in the public have legitimate
questions about biotechnology, and we need to answer those
clearly and in readily understandable terms. It is important
that the public understands that genetically modified foods are
the most heavily reviewed and tested of our food products, and
are subjected to thorough scientific review.
In the words of Dr. Jane Henney, Commissioner of Food and
Drugs, ``FDA's scientific review continues to show that all
bioengineered foods sold here in the United States are as safe
as their non-bioengineered counterparts.'' Let me repeat: They
are as safe as non-bioengineered counterparts, and that is a
message that has been lost on the American public.
Working together with other policymakers, media, academic
leaders, and advocates for the needy, we need you, the three of
you there and the people that work with you, to ensure that
people have the information to separate fact from fiction. Dr.
Lane, Dr. Colwell, Dr. Kelly, you and your colleagues within
the administration must provide a unified voice on the science
on which biotechnology is based. I ask your assurances that you
will help us in reducing consumer confusion about
biotechnology.
We need people to understand that through biotechnology
real world problems of sickness, hunger, and resource depletion
are being solved. With your active involvement, I trust that
reason and not hype will prevail in the debate.
Now to the budget. NSF is requesting a $675 million or 17.3
percent increase in its budget for fiscal year 2001. If enacted
and if we can find the money, this would raise NSF's budget
from $3.9 billion to almost $4.6 billion. And there's nothing
I'd rather do. I appreciate the administration's support for
the Foundation and congratulate NSF for receiving such a large
budget increase.
Personally I intend to work with my colleagues in the
Senate to ensure that they understand the importance of NSF
research and hopefully, we can convince them that NSF deserves
a strong budget.
That said, the reality is that this will be a very
difficult year for the subcommittee. As the Ranking Member and
I have suggested, where we stand right now is an impossible
situation. We have major funding needs that are priorities and
need to be balanced, ranging from medical care for veterans to
housing for low-income Americans to emergency assistance for
Americans affected by natural disasters, as well as providing
vitally needed and important increases in the funding of basic
science.
We have a balanced budget for the second year in a row
after many years of deficit spending. And any surplus must
first be dedicated to the reform of Social Security. I think we
all understand that. But we also have the situation where we
have advised the chairman of the full committee, and I trust
the ranking member of the full committee, that we do not have
an allocation that will enable us to do what we must do; and we
are going to continue to work over the coming weeks to make
sure that we are able to get a budget that can be passed and we
hope that it will include enough resources to provide the kind
of increase that we personally feel is vastly needed and would
be very well spent in NSF.
Notwithstanding the budgetary issues, I have some questions
about the Foundation's capacity to handle such a large budget
increase, and a number of new complex program responsibilities.
Auditors who have looked at your books have not identified
any significant financial or management problems with NSF, but
I'm concerned with NSF taking on more responsibilities when its
staffing resources have remained flat over the past several
years. In NSF's own budget justification, it notes that the
level of funding requested for salaries and expenses
``essentially covers existing FTEs and operations and has not
kept pace with the growth in program activities.'' That's a
flashing light that we need to be discussing more with you.
Count me as skeptical also about the efficacy and
effectiveness of multi-agency initiatives. While I support the
Information Technology Initiative, I remain concerned that the
Foundation may be trying to take on more than it may be able to
handle under current circumstances. Like the IT initiative, NSF
would be the lead agency for the nanotechnology initiative. I
need to hear how NSF is handling current multi-agency
initiatives such as IT, and how IT would be able to handle the
additional ones it has proposed in this year's budget.
I also have questions about the large budget allocation for
the nano initiative. NSF's budget for this research area would
be increased by 123 percent over the fiscal year 2000 spending
level. Given that the administration described nanotechnology
and nanosciences as newly emerging fields, why did the
administration request such a large funding increase? How was
this increase determined, and the administration's long-term
funding plan for this initiative. Especially compared to what
we know are the compelling needs in the existing areas of
research, which many people feel are not yet being met.
It's also unclear to me how the administration plans to
implement the nanotechnology initiative; how it would be
managed, how it would be overseen, what performance measures
will be used to judge its success, how will the duplication be
avoided among the various agencies, and how will Federal
nanoactivities be coordinated with similar private sector
activities? Especially I would like to hear what role OSTP will
play in the nanotechnology initiative and how it will resolve
conflicts between agencies.
Let me be clear on this: before I can support the nano
initiative, I will need to be convinced that NSF has been able,
effectively to manage the multi-agency initiatives it's
currently involved in, especially the IT program; and the
administration has a clear and cohesive implementation plan in
place.
The last point I raise is the Foundation's support for the
institutions and groups that do not receive adequate financial
assistance; namely, smaller research institutions.
Let me be blunt: It was disappointing to me that the
administration did not request funds for the Office of
Innovation Partnerships, which is an important initiative not
just to me but to this committee and to Congress, and it was
included in last year's appropriations. It is also troubling
that NSF's or OMB's decision was to flat-fund the Experimental
Program to Stimulate Cooperative Research, or EPSCoR.
Both of these programs are important in assisting those
schools that do not have the same clout or private endowment
support as the larger schools have. The Federal Government must
be an active supporter to help level the playing field and
ensure that these smaller schools and their students are not
left behind.
We're talking about capacity and capacity building. Where
is the capacity? In some instances, it appears that the rich
get richer, and the indirect costs build the capacity of those
institutions that are clearly the ``have'' institutions. Is
this a smart way to go? Should we continue to move certain
schools far ahead of the pack? Should we be providing on a
systematic basis capacity for other institutions which could
attract the capable scientists and the engineers if they had
the infrastructure in place to do so, so that we would broaden
the opportunities for more and more areas, particularly more
students to participate in and become the leaders we need in
science, engineering, and technology for the future. This is
something that we're going to have to talk about a good bit,
and we need your guidance on this.
Last, I applaud NSF's proposal to assist Tribal Colleges,
but I am bothered by the level funding for other minority-
serving programs. Frankly, given the budget that's submitted to
us, I question the characterization of the president's budget
for NSF as ``something for everyone.'' We look forward to
working on this program and these problems, with your support,
Dr. Colwell and Dr. Lane.
Now having given you all the bad news, let me turn to my
distinguished ranking member, Senator Mikulski, for her
comments and questions.
Senator Mikulski.
STATEMENT OF SENATOR BARBARA A. MIKULSKI
Senator Mikulski. Thank you very much, Mr. Chairman, and I
found your opening statement quite interesting. First of all,
your passion for science. We're compatible in many ways; the
suspicion of bigger bureaucracy and less results, kind of
entropic situations come to government. But at the same time,
you've been a really wonderful and passionate supporter of
science and look forward to working with you in our
appropriations.
I really want to welcome Dr. Lane, Dr. Colwell, Dr. Kelly
and welcome you with enormous warmth and respect for your
contribution to the nation. I just wish our wallet could match
our warmth, because I think we could have a quick hearing and
move right into discovery and innovation.
One of the I think aspects that I've enjoyed serving on
this committee is that Presidents of the United States have not
politicized their appointments of both their science advisor
and the head of the Science Foundation, as well as the chairman
of the board. That whether it was Ronald Reagan, but I worked
particularly closely with George H. Bush and now with President
Clinton to really know that science is about ideas and not
about ideology, and therefore has chosen you to lead this. And
I want to thank you for your service to the nation.
Dr. Lane, I knew you as both the head of the National
Science Foundation and now working with you in the President's
capacity. Dr. Colwell, we go back. Senator Bond, I first met
Dr. Colwell when we were working in marine biology in Maryland,
and she talked to me about those little germs that could eat
litter and clean up the Chesapeake Bay; and I wondered what
happened to the germs after they ate that air; would I be
having one in my gas tank.
Dr. Colwell was my advisor to hold my very first hearing,
on a topic called the Oceans and the Future, and she has been a
colleague and an adviser ever since.
Dr. Kelly, your stewardship as the president has been
appreciated because if you get all of those scientists, 24
scientists in a room, you're going to get 48 opinions, 96
papers and 200 people who want to be the peer review people.
So we really thank you for your leadership and your
stewardship.
I think we are so enthusiastic about the work of both the
OSTP as well as the NSF, because the science of today will
really be the economic engine of the future. Senator Bond has
talked about the request that you've made, and also President
Clinton's desire to increase $675 million over last year. This
will be really I think significant and also fitting, as NSF
celebrates its 50th anniversary.
Fifty years ago Congress debated ``how should we have--
should we have a national science foundation, and also what
should it look like? Vannevar Bush outlined his idea, but he
ran into a group in Congress who wanted more applied research.
Dr. Bush wanted to make sure this was kind of a national
endowment for scientific research.
Congress, in the midst of the cold war and Sputnik, those
apprehensions that we were facing, made it specific applied,
almost Manhattan-like projects. The National Science Foundation
was defeated 5 years in a row in the Congress because of the
arbitrary arguments between basic and applied. That argument
still continues. One recalls when I call for a strategy
research that I was vilified in the scientific community
because of my desire to have us have national goals.
Again, I think those are artificial distinctions; and when
one looks at science, I want the continuum. And we see now on
the multi-agencies like nanotechnology, it will go to the basic
of the basic, and then as well goes into the ideas, Dr. Lane,
that you've talked about that in a sugar-cube like thing we
could put the entire Library of Congress or a supercomputer the
size of a teardrop, or the fact that we could have these
biosensors in our body, particularly if you have high risk
situations where you could go about your work and the doctor
could go about monitoring you.
This is really the fabulous potential. So we look forward
to the National Science Foundation continuing its really robust
and much-needed mission, and not having the continual
discussions over basic and applied; but how can we achieve
these national goals?
When we began the last century we began with an industrial
revolution, and it changed the face of America and it changed
the face of the world with America leading the way. We ended
this century with the information technology. And again,
America has lead the way. So at the start of the 21st century,
we need to again focus on what will be the technologies of the
new century.
I am particularly interested in the focused initiatives
that the NSF has put forth, as well and really very focused on
the nanotechnology. My colleague has raised very important
issues related to coordination, making highest and best use of
each agency and therefore highest and best use of both our
intellectual talent and the taxpayer's dollars.
Those issues must be addressed, but I do believe that at
this point we need to not rest on our microchips, but really
look ahead to the next century and what is the technology that
will affect every one of our scientific areas. I believe that
truly nanotechnology, it will be the basic tool, like infotec
is now a kind of a, if I could, the spinal cord and nervous
system for whether it's NIH, NASA, NOAA, whether we're studying
inner space, outer space, the mind, the brain, or the heart and
soul of what makes our planet and universe tick.
So I'm very interested in advocating nanotechnology, with
taking into and answering Senator Bond's concerns.
NSF, though, is the backbone and we cannot--well, we look
forward to new and dazzling initiatives, mesmerizing
initiatives. We have to remember that NSF is the backbone of
science, math, and engineering teaching. Now, we don't have a
workforce shortage in this country; we have a skill shortage.
And if it had not been the steadfast troubadoring of the
Science Foundation on the need for science, math, engineering,
we could not now even be filling the many jobs that science has
created.
We even want to note the fine role that NSF has played in
teacher training, because it's not only in training the Ph.D.'s
and the postdocs, but how we get into a classroom K through 12
to make sure that we have the teachers that are trained and
excite them about science.
There are many issues that ride before us, and I prefer to
explore them in the questions and answers, but again, Dr. Lane,
or Dr. Gibbons or the excellent people that President Bush gave
us, Dr. Colwell, you and your predecessors, Dr. Colwell. We
really I think have had an excellent relationship, but what we
want now is the relationship where we helped you get the
resources, and you help us get the results. So with that I
thank you and look forward to your testimony.
Senator Bond. Thank you, Senator Mikulski, and now I will
ask Dr. Colwell to begin.
Dr. Colwell. Mr. Chairman and Senator Mikulski, I thank you
very much for allowing me the opportunity to testify on the NSF
budget for fiscal year 2001, and I'm just delighted with the
commitment and the passion that both of you share for science,
for the potential of technology, biotechnology, information
technology, and especially nanotechnology.
I really want to thank you and the subcommittee for your
consistent bipartisan support for NSF science and engineering
activities. Before I begin my testimony, let me first turn to
Dr. Eamon Kelly, Chairman of the National Science Board, for
his comments on the NSF Budget Request for fiscal year 2001.
Dr. Kelly.
STATEMENT OF EAMON KELLY
Dr. Kelly. I thank you, Dr. Colwell.
Mr. Chairman, Ranking Member Mikulski, I wish to start off
by simply expressing my strong support for the Foundation's
request of $4.6 billion for fiscal year 2001. In prior
testimony to the committee I have cautioned that the nation
commits a fundamental error by underinvesting in fundamental
research.
The proposed budget for NSF is a significant step towards
remedying this underinvestment. The 21st Century Research Fund
reflects the Administration's continuing recognition that
research is the keystone of our $8.8 trillion economy and the
route to an enhanced quality of life for all of our citizens.
The 17 percent requested increase in NSF is a wise
investment in the lifeblood of science and engineering. It
should be a priority in budget function 250, and indeed in the
whole Federal budget.
Knowledge and inventions emerging today are a tribute to
research investment made in past years in a bipartisan spirit.
Few predicted the magnitude of impact from the revolutions in
genetics and telecommunications, but the ability of our nation
to understand, harness and distribute the fruits of knowledge
once again reminds us that science and engineering are long-
term, high risk investments, with very high payoffs.
As an economist, I must point out that even in the face of
the demonstrably high returns on the basic research investment,
conservatively 30 percent, U.S. public and private sectors are
underinvesting in basic research. Universal acclaim for the
benefits realized from federally-supported basic research has
not yet generated commensurate public investment.
In an $8.8 trillion knowledge-based economy, more than 2.8
percent of the nation's GDP should be devoted to R&D. But more
significantly, the Federal contribution as a proportion of the
U.S. investment is shrinking. Today the Federal Government
provides about a third of total R&D funding. A decade ago the
Federal share was 46 percent. Three decades ago it was 60
percent.
As for basic research, the research with the highest
payoff, the $20 billion proposed investment is less than one-
quarter of total Federal R&D, a minuscule proportion of the
total Federal budget. It's a nanoscale investment in basic
research.
Back then to the budget request for the National Science
Foundation. It represents less than 4 percent of annual Federal
spending on R&D and amounts to only 15 percent of the Federal
basic research budget.
Mr. Chairman, Director Colwell will highlight priorities in
the NSF budget. I would observe that one-half of the budget
request is for core support to grow the knowledge base. This
takes time and resources competitively awarded across a
spectrum of disciplines, problems and universities. The
Foundation is determined to increase the average dollar amount
and the duration of research grants. This will bring both
greater efficiencies and needed continuity in investigator's
research programs and support of students.
The other half of the Foundation's request identifies
specific priorities within a 20 percent increase within the
Foundation's Research and Related Activities account. This is
an appropriately bold increase in an investment budget. I note
that Information Technology Research, Nanoscale Science and
Engineering, and Biocomplexity in the Environment are
Administration, multi-agency initiatives that NSF will lead.
In particular, the Board's just-issued report,
Environmental Science and Engineering for the 21st Century,
calls for enhanced support for environmental research,
education, assessment, and infrastructure.
Mr. Chairman, I have tried to put the fiscal year 2001 R&D
budget request into perspective. Investments in basic science
and technology underlie the relationship between productivity
and higher standards of living. This makes NSF a major partner
in the nation's economic growth.
The long-term high risk, high payoff strategy of the
National Science Foundation must be preserved as a catalyst in
the Federal R&D budget. The fiscal year 2001 investment budget
proposal restores some essential balance to that investment
portfolio.
PREPARED STATEMENT
In closing, I wish to commend my colleague, NSF Director
Rita Colwell, for her energetic and visionary leadership, and
to thank the committee for its support of research and
education, especially at the National Science Foundation. I
would be pleased to answer any questions after Director Colwell
talks.
[The statement follows:]
PREPARED STATEMENT OF EAMON M. KELLY
Mr. Chairman, Ranking Member Mikulski, and members of the
Subcommittee, I appreciate the opportunity to testify before you. I am
Eamon Kelly, Chairman of the National Science Board and President
Emeritus and Professor in the Payson Center for International
Development & Technology Transfer at Tulane University.
Since the founding of NSF in 1950, the National Science Board has
two roles--governing board of the National Science Foundation (NSF) and
national policy body. The latter role operates within a framework of
policy guidance established by the Congress and the Administration.
As part of NSF's annual long-range planning and budget process, the
Board conducts an intensive review. The Board's approval of the
proposed budget seeks to assure the health of the human, disciplinary,
and infrastructure base for science and technology; to support new
opportunities for the advancement of knowledge; and to make the process
of priority-setting responsive to such opportunities. Earlier this year
the Board commented on and approved the Foundation's fiscal year 2000-
2005 GPRA Strategic Plan.
I appear today, on behalf of the National Science Board, to thank
the Subcommittee for its commitment to long-term investments such as
those epitomized by NSF's programs in research and education. Today, I
would like to comment on how short-term prospects, as represented by
the NSF budget request, are vital to our Nation's future.
A TRUE INVESTMENT BUDGET
First, I want to express my support for the Foundation's request of
$4.6 billion for fiscal year 2001. The last two years in testimony to
the Committee I have cautioned--as an economist--that the Nation
commits a fundamental error by underinvesting in fundamental research.
The proposed budget for NSF is a significant step in remedying that
underinvestment. The 21st Century Research Fund reflects the
Administration's continuing recognition that research is the keystone
of our $8.5 trillion economy and the route to an enhanced quality of
life for all our citizens.
A 17 percent increase in NSF is an investment in the lifeblood of
science, engineering, and technology. It should be a priority in budget
function 250, and indeed, in the whole Federal budget.
Knowledge and inventions emerging today are a tribute to research
investments made years or generations ago in a spirit of
bipartisanship. As the President noted at the National Medal of Science
award ceremony in March:
``We should all remember that, like the Internet, supercomputers
and so many other scientific advances, our ability to read our genetic
alphabet grew from decades of research that began with government
funding. Every American . . . should be proud of their investment in
this and other frontiers of science.''
The magnitude of impacts from the revolutions in genetics and
telecommunications has always been hard to measure. But the ability of
our Nation--not just scientists and engineers--to understand, harness,
and distribute the fruits of knowledge once again reminds us that
science and engineering are long-term, high-risk investments, with high
payoffs. It is with this same sense of anticipation that I would like
to comment on the priorities in the NSF budget request.
NSF BUDGET PRIORITIES
Fully one-half of the Foundation's budget request is for ``core
support'' to grow the knowledge base. This takes time and requires a
distribution of resources across a spectrum of disciplines,
opportunities, and performing institutions. The Foundation continues to
seek ways to increase the average dollar amount and duration of
research grants. This would bring needed continuity to investigators'
research programs and the support of graduate students.
The other half of the request identifies specific priorities
representing a 20 percent increase within the Foundation's research and
related activities account and a 48 percent increase in major research
equipment. These increases are appropriately bold for an ``investment''
budget:
--Information Technology Research will push the frontiers of high-end
computing to expand our computer architecture, storage and
retrieval, and network. The Terascale Computing System program
will make supercomputing accessible to scientists and engineers
across the Nation. And to better understand the social effects
of those technologies, a research agenda on ethical, legal,
education, and workforce issues will be supported across
disciplines and cultures, including the use of technology in
marketing goods and services in the global economy.
--Like Information Technology Research, Nanoscale Science and
Engineering is an Administration multi-agency initiative that
NSF will lead. Nanometer scale--that is, one billionth of a
meter to several hundred billionths--enables us to work at the
atomic and molecular levels. Such manipulations create
boundless possibilities for design of materials, manufacturing,
electronics, computer simulations and processes in the
environment are virtually boundless. The National
Nanofabrication Users Network, university-based research hubs,
and small business will all participate in the nanotechnology
revolution.
--Biocomplexity in the Environment is an ambitious program to
integrate our understanding of dynamic systems ranging from
simple organisms to whole ecosystems, from the transmission of
waterborne contaminants to global climate change. Construction
of a National Ecological Observatory Network, or NEON, will
advance exploration of the biology of the planet pole-to-pole.
I am proud to add that the Board recently issued a report on
Environmental Science and Engineering for the 21st Century
that calls for a significant increase in
resources for environmental research, education, assessment, and
infrastructure. The President's Committee of Advisors on Science and
Technology and the National Science and Technology Council has endorsed
the report. The intellectual maturity of environmental research makes
the timing right to ramp up and sustain a programmatic thrust across
agencies. In the Board's view, the environmental arena warrants a five-
year growth plan that would more than double NSF's current portfolio.
The fiscal year 2001 budget request begins this quest.
NSF-supported Major Research Equipment not cited above includes
facilities and instruments ranging from earthquake observational
equipment, to the South Pole Station, the Large Hadron Collider and the
Millimeter Array. These tools enable research and education to coalesce
in networks and centers of excellence. They are the infrastructure for
knowledge production and transfer, shared with NSF's partners across
disciplines, sectors, and national boundaries.
Finally, new ideas and revolutionary tools require educated and
trained people. NSF's 21st Century Workforce initiative addresses the
need for developing human resources at all levels of education--formal
and informal, in schools, homes, and communities. The importance of
teachers and teaching, rigorous content, the use of information
technologies, and research on learning are all priorities in the NSF
request.
I am convinced that the Foundation understands the role of the
Federal Government in K-12 mathematics and science education. The
transitions between education milestones and preparation for entry into
high-tech workplaces will determine the participation of all Americans
in science and technology.
There is no greater challenge than renewal of a skilled workforce.
Citizens must be able to use knowledge of science and mathematics in
their daily lives. Therefore, a more seamless approach to education K
through 16, and especially the role of systemic reform, are continuing
policy concerns for the Board. They are discussed in our 1999 report
Preparing Our Children: Math and Science Education in the National
Interest.
TRENDS AND OPPORTUNITIES
Mr. Chairman, as we view the fiscal year 2001 R&D budget proposal,
let's keep the requested increases in perspective. In an $8.8 trillion
knowledge-based economy, one can argue that more than 2.8 percent of
the Nation's GDP should be devoted to R&D. But the reality is that the
Federal contribution as a proportion of the U.S. investment is
shrinking.
Universal acclaim for the benefits realized from federally
supported research has not yet generated commensurate public
investment. Even in the face of the demonstrably high return on basic
research investment--conservatively 30 percent--the U.S. public and
private sectors are underinvesting in research. The $20 billion
proposed investment in Federal basic research represents less than one-
quarter of the $85 billion total. This minuscule proportion of the
total Federal budget devoted to research indicates a mismatch between
our interpretation of the past and our commitment to the future.
I am heartened, however, by recurring headlines in our newspapers
linking productivity and the economy. As business investment builds on
advances particularly in computing and information processing, the link
between productivity and higher standards of living becomes more
transparent. Behind the causal relationship lie investments in
fundamental science and technology.
As this Committee well recognizes, NSF is a major partner to
national productivity and economic growth. Yet its budget represents
less than 4 percent of annual Federal spending on R&D. According to the
American Association for the Advancement of Science, the NSF request
amounts to only 15 percent of the Federal basic research budget. Yet
almost one-quarter of all Federal support for basic research conducted
at academic institutions comes from NSF, as does one-half of nonmedical
research funding.
While more than two-thirds of the national R&D investment today is
industry-funded, universities and colleges are the ``center of
gravity'' in producing knowledge, innovation, and trained personnel for
our workforce. Without hesitation, all of us here today would
acknowledge that research universities have become not only incubators
of innovation, but also partners in developing and commercializing
products that generate income and hold value for other sectors of the
Nation's economy.
PROSPECTS
Mr. Chairman, I cannot stress enough that the long-term, high-risk,
high-payoff strategy of the National Science Foundation must be
preserved as a catalyst in the Federal R&D portfolio. The fiscal year
2001 budget proposal restores some balance to that portfolio. It is
truly an ``investment'' budget. It is overdue--and needed--but just a
start.
I can also assure you that the National Science Board will continue
to monitor the Foundation's investments and priority-setting in science
and technology to ensure stewardship at its best--fairness, timeliness,
and responsiveness to national needs. NSF's first GPRA performance
report, Accountability Report fiscal year 1999, provides some important
measures of outcome and progress toward goals. In addition, the Board's
Science and Engineering Indicators--2000 report, to be released next
month, will provide, among other insights, an analytical perspective on
how R&D is propelling the productivity now observed in the Nation's
economic and employment statistics.
In closing, I wish to commend my colleague, NSF Director Rita
Colwell, for her energetic and visionary leadership, and to thank the
Committee for its support and oversight of excellence in research and
education, especially at the National Science Foundation. I look
forward to our future discussions.
______
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 supports educational
programs, and helps guide national policy. In 1998, Kelly was elected
chairman of the National Science Board. February 2000
STATEMENT OF RITA COLWELL
Senator Bond. Thank you, Dr. Kelly, and we'll now restart
the clock for Dr. Colwell.
Dr. Colwell. Thank you, Mr. Chairman.
The fiscal year 2001 Budget Request for the National
Science Foundation, if it's enacted, will help set the stage
for a new century of progress through learning and discovery.
As you know, it is so important for the nation.
For the coming fiscal year, the request for $4.57 billion
represents a very much needed increase, 17.3 percent overall.
And over $675 million above the current level. It's all about
keeping the United States at the leading edge of learning and
discovery. And the headliners in NSF's 2001 request are
focused; they are multi-disciplinary initiatives. In fact,
they're really national priorities. Information Technology
Research, Biocomplexity, a 21st Century Skilled Force (instead
of just ``work force'' ), and the emerging National Nanoscale
Science and Engineering Initiative.
NSF'S FISCAL YEAR 2001 INITIATIVES
Each of the initiatives integrate research across the
disciplines of science, engineering and mathematics; and aim at
solving many of the challenges facing our society. It is going
to require more than individual discoveries. It's going to
require integration of knowledge from all disciplines.
Let's take biocomplexity. It seeks no less than a more
complete understanding of our complex world and its
interactions--physical, biological and social. In fact,
describing those interactions, I am reminded of the words of a
naturalist, John Muir, who wrote in the 1840s: ``When we try to
pick out anything by itself, we find it hitched to everything
else in the Universe.''
One especially promising area in biocomplexity is the study
of the earth's crust as a habitat for microorganisms. To
illustrate this, I'd like to take us on a very, very brief
journey by video to the depths of a sea floor. I am going to
show some footage. It was taken with an IMAX camera from inside
the submersible, the submarine Alvin.
NSF has long supported Alvin, and we also helped support
this filming, part of our public understanding and outreach.
It's not yet been seen by the public. The footage was shot at
about 30,000 meters in water at a deep sea vent called 9
degrees North, beneath the Pacific Ocean south of Mexico.
The footage will bring the astonishing life of the vents to
millions of people who will never be able to descend in a
submarine. We'll see features called black smokers, the
mineralized chimneys that tower above the communities of life
at hydrothermal vents.
The mouths of the vents spew forth boiling water full of
chemicals. These conditions are obviously toxic to humans and
to most other life forms. We discovered these communities of
living beings some two decades ago, but we're only just
beginning to unlock their secrets. And the list of described
species inhabiting the vents now is greater than 300, all
living in the depths without photosynthesis.
Instead of using the sun's energy, they employ
chemosynthesis to oxidize the hydrogen sulfide emerging from
the vents. From some of these microorganisms have come enzymes
that are now used in the polymerase chain reaction, PCR, and
this is a reaction that's used in criminology, it's used in
public health, it's used in a variety of ways. These enzymes
came from some of these microorganisms around these vents.
Let's visit the vents very briefly.
[A video was shown.]
THE BEGINNING OF NSF
Dr. Colwell. To me, the black smokers we've just seen are
not only metaphorical, but they're literal wellsprings of
discovery. There are even suggestions now that these springs
could have been the birthplace of all life on earth.
But back on the surface, I'd like to move to another topic,
the beginning of NSF. Fifty years ago this month, May 10, 1950
in Pocatello, Idaho, a Missourian, Harry Truman, President
Truman, signed Senate bill 247, the act that established the
National Science Foundation.
Our nation's commitment to science, engineering and
education can be seen from the very beginning of the republic.
The motto on America's first coin, for example, minted in 1792,
read: Liberty, parent of science and industry.
Now that motto has just as much meaning today in the 21st
Century as it did in 1792 in an era before the advent of the
steam engine. Individual scientists and engineers, supported by
NSF and other Federal agencies, are using their talent and
their freedom to create, discover and innovate; and now many of
these scientists and engineers are moving from the universities
into the private sector.
This transfer to the private sector of people, researchers
and students, first supported by NSF and universities, should
be viewed as the ultimate success of technology transfer. These
talented scientists and engineers are part of the new wave of
entrepreneurs creating enormous wealth in areas like
information technology, biotechnology, and now we will see in
the future, in nanotechnology.
BIOTECHNOLOGY
In biotechnology, for example, the next generation of plant
scientists are being educated at universities across the
nation. This is made possible through NSF's significant
investment in plant genome research. These young scientists,
both graduate and undergraduate, are also working closely with
industry, enabling U.S. world leadership in plant science. And
for fiscal year 2001, our request for the plant genome research
will total $102 million. This represents an increase of over
$22 million, or 25 percent over fiscal year 2000.
NANOTECHNOLOGY
Nanotechnology, Mr. Chairman, is a newly emerging field
where scientists and engineers are beginning to manipulate
matter at the atomic level, literally moving atoms around. This
Lilliputian technology has the potential to revolutionize
nearly every facet of our economy and our lives.
Just some of the things that researchers envision:
molecular computers. Yes, Senator Mikulski, the size of a
teardrop with the power of today's fastest supercomputers.
Nanochips that simulate the electrical activity of a normal
nerve synapse, holding great promise for developing better
prosthetic devices for artificial limbs. In fact, we may even
see a ``spinal bypass'' from the brain to below the spine where
a lesion occurs, so that Christopher Reeve can walk again.
We see micromachined needles with very sharp tips of less
than a micrometer across. Such tiny needle tips can pierce the
skin easily and without pain, another new method of drug
delivery.
Industry as well as other Federal agencies will be looking
to our universities for the scientists and the engineers
skilled in nanotechnology, and that's why I cannot overstate
the importance of the NSF investment in the education of future
nano-scale scientists and engineers.
Now that trend has not gone unnoticed by industry. Leaders
like Alfred Berkley, President of the NASDAQ stock exchange;
CEOs like Norm Augustine of Lockheed, and 47 members of the
Council on Competitiveness have all issued statements about the
importance of the NSF investments in basic research. I've
attached copies for the record.
[The information follows:]
[From the Washington Post, April 30, 2000]
Test Shows Students Can't Do The Math; 64 Percent Fail Final Exam After
Montgomery Standardizes Grades
(By Brigid Schulte)
Almost two-thirds of all Montgomery County high school students
flunked the final Algebra I exam in January, the first time the school
system imposed a standard grading scale for the test.
The failure rate is more than double last year's, when passing
scores varied wildly from school to school and, some officials said,
masked the real problems in the ``world class'' system that for years
had allowed schools to set their own grading scales on the test.
Based on a new uniform scale that set 60 as the minimum passing
grade, a full 64 percent of all students taking the first semester
Algebra I final exam in January flunked. The failure rates were higher
for African American and Latino students: 80 percent of students in
each group flunked the test, reflecting a ``pattern of
underachievement,'' Superintendent Jerry D. Weast wrote in a memo to
board members.
Fifty percent of white students failed the test, as did 54 percent
of Asian American students.
Weast said the results, while disappointing, ``tell me exactly what
I anticipated: They didn't do well. This is the truth.'' The
explanations, he said, are that teachers don't have enough training,
students aren't properly prepared in middle and elementary school and
the math curriculum is a problem.
Because Montgomery's Algebra I exam is modeled on the upcoming
state high school graduation tests, the high failure rates raise
questions about county students' prospects for passing the tough new
state exams.
``I'm obviously alarmed and unhappy,'' said board member Reginald
M. Felton (Northeastern County). ``Eighty percent failure rates say
that we, as a system, are failing our students. That's unacceptable. We
can't simply raise standards without investing to support these
classrooms.''
Last year, when the countywide Algebra I final exams were graded on
a curve, as they had been for years, the cut-off score for a passing D
grade varied among high schools--from a low of 33 at Kennedy High
School to a high of 58 at Wootton. Only 29 percent of county students
failed the final exam.
This year, although 64 percent of the students failed the Algebra I
final exam, 79 percent actually passed the course because the exam
counts for only one-fourth of the total grade.
``This is really startling,'' said board member Mona M. Signer
(Rockville-Potomac). ``I expected the failure rate to be higher with
the new standard, but not this high. This really points to the need for
remediation.''
Last year, school board members were shocked to learn that for
nearly 20 years, the school system had allowed individual schools to
determine their own grading scales. As a result, an A at one school was
a D at another.
Concerned about rampant grade inflation, board members called for a
uniform grading standard across the county for the exam. The variance
in scores, many said, may have made the system look good, but it masked
what was really going on. ``We were camouflaging our performance,''
Felton said.
To address the high failure rates, Weast had proposed spending
almost $650,000 on teacher training, a three-week summer school program
and six algebra master teachers to work with staff. But those programs
were cut from Weast's budget proposal by County Executive Douglas M.
Duncan (D).
Weast and board members are lobbying the County Council to restore
funding for these and about $16 million worth of other programs before
the budget is finalized in May.
``This is a solveable issue,'' Weast said. ``I'm not blaming the
principals, and I'm not blaming the schools. But clearly we've got to
help the classroom teacher.''
Weast did take issue with the so-called Algebra Initiative of a
year ago that lowered class-size ratio to 1 to 20.
``You can't just give someone a lower class size, pat them on the
head and say, `Go.' There was no training, there was no defined
curriculum or defined testing.''
To that end, board members have contracted with education
consultants Phi Delta Kappa to audit the math curriculum. Out of
frustration, Weast said, he moved money around to pay for the audit
this year instead of next year.
``We couldn't wait for another year of failure as we get closer to
2005, when kids have got to pass the Algebra I exam to graduate from
high school,'' Weast said.
Perhaps the most troubling test results come from Einstein High, a
diverse Silver Spring school where 90 percent of the 256 students
taking the final exam failed it. For Hispanic students, the failure
rate was 99 percent, compared with 48 percent last year.
``This is outrageous,'' said Hector Lazo, who formed Latinos Unidos
to fight for the uniform standards on the exam. ``It makes me feel like
I've worked for nothing. If 90 percent of the students are failing, the
teachers aren't doing their work.''
Einstein Principal Richard L. Towers said he has hired bilingual
aides to work with students who don't speak English well or who have
had interrupted educations but added that teachers need more training
and some students need extra help. The high failure rates show where
the need is, he said.
``We need to know what the situation is, and not disguise it, by
having everyone on a consistent grading scale,'' he said. ``Now we're
at least better able to describe the problem.''
FAILURE RATE SOARS
Montgomery County high school students' failure rate on the
countywide Algebra I exams skyrocketed this year--the first time that
the public schools imposed a standard grading scale for the tests.
Under the new scale, students must get at least 60 percent of the
questions correct to pass the exam. In previous years, individual
schools set their own passing grades. Countywide, 80 percent of all
black and Hispanic students, 50 percent of whites and 54 percent of
Asian American students failed.
------------------------------------------------------------------------
Percentage
--------------------------
1999
High school Algebra 1999 2000
I failure failure
passing rate rate
scores
------------------------------------------------------------------------
Bethesda-Chevy Chase......................... 56 40 65
Montgomery Blair............................. 48 58 84
James Hubert ``Eubie'' Blake................. 48 37 78
Winston Churchill............................ 57 11 24
Damascus..................................... 58 30 41
Albert Einstein.............................. 35 43 90
Gaithersburg................................. 49 22 69
Walter Johnson............................... 49 19 61
John F. Kennedy.............................. 33 28 72
Col. Zadok Magruder.......................... 54 22 49
Richard Montgomery........................... 50 94 62
Northwest (ninth grade)...................... 46 19 78
Paint Branch................................. 50 23 40
Poolesville.................................. 47 29 55
Quince Orchard............................... 46 26 58
Rockville.................................... 50 27 73
Seneca Valley................................ 50 47 85
Sherwood..................................... 40 19 74
Springbrook.................................. 45 36 71
Watkins Mill (ninth grade)................... 52 25 61
Wheaton (ninth grade)........................ 41 34 81
Walt Whitman................................. 55 17 29
Thomas S. Wootton............................ 58 15 29
------------------------------------------------------------------------
SOURCE: Montgomery County Public Schools.
______
Prepared Statement of Alfred R. Berkeley, III, President, Nasdaq Stock
Market, Inc.
Increasing funding for the National Science Foundation is one of
the most important components of the Administration's campaign to
ensure America's continued economic growth. Historically, we have seen
that discoveries made in the science and engineering arenas have
propelled our economy forward by paving the way for breakthroughs in
technology that in turn spawn entirely new industries.
A relatively small government agency, the National Science
Foundation played a key role in setting the stage for today's economic
expansion that has created millions of jobs and improved the quality of
life of many Americans. Research carried out 10, 20, even 30 years ago
in the areas of biotechnology and telecommunications, to name a few,
laid the foundation for the most vibrant sectors of the economy today-
the same ones that have propelled the dramatic growth of The Nasdaq
Stock Market.
As much as history has demonstrated the important role science
research plays in our continued economic success, the fact is, Federal
support for such programs has declined precipitously in recent years.
The Administration's new proposal seeks to reestablish such research as
a national priority and the Foundation will put these new funds where
they will be most beneficial to the public-at the frontiers of science
and engineering research.
______
Prepared Statement of Norman R. Augustine, Chairman, Executive
Committee, Lockheed Martin Corporation Board of Directors
The Administration's proposal to increase funding for the National
Science Foundation comes not a moment too soon. Scientists and
engineers in almost every field are close to new discoveries that could
transform the way we live and work, and sustain our current prosperity
well into the future. We should seize this opportunity to strengthen
U.S. leadership in science and technology.
There can be little doubt that advances in science and technology
have fueled the current economic expansion. Over the years, the
National Science Foundation's public investments in basic research--
cross all disciplines in science, engineering and mathematics--have
laid the foundation for the most dynamic and innovative science and
technology enterprise in the world.
Investing in people is just as important as investing in ideas. The
National Science Foundation has supported generation after generation
of the young scientists and engineers who train in our university and
college research laboratories. Increased funding would boost this
support and help build the highly skilled workforce required in the new
knowledge-based economy.
If the recent past is a guide, some of these young scientists and
engineers will assure that America's established companies remain
strong. Others will launch the start-up companies that will help fire
economic progress well into the future. And some will be the Nobel
laureates of the 21st Century. That's a winning proposition for the
Nation--one we can be proud of and one that deserves our support.
______
Council on Competitiveness Urges Congressional Leaders to Increase
Federal Funding for Science & Technology in fiscal year 2001
47 members of the Council on Competitiveness, including CEOs of
some of America's largest corporations, presidents of major U.S.
universities, and prominent labor leaders, signed a letter to
Congressional leaders advocating long-term investments in America's
science and technology enterprise that will strengthen U.S.
competitiveness and assure future economic prosperity.
The attached letter was delivered to Senate Majority Leader Trent
Lott, Senate Minority Leader Thomas A. Daschle, Speaker of the House J.
Dennis Hastert and House Minority Leader Richard A. Gephardt.
Letter From the Council on Competitiveness
March 22, 2000.
Hon. Trent Lott,
U.S. Senate Majority Leader.
Hon. J. Dennis Hastert,
Speaker of the House of Representatives.
Hon. Thomas A. Daschle,
U.S. Senate Minority Leader.
Hon. Richard A. Gephardt,
U.S. House of Representatives.
As you and your colleagues shape America's budget priorities for
2001, the undersigned members of the Council on Competitiveness urge
you to strengthen America's science and technology enterprise.
Decades of bipartisan congressional investments have contributed
decisively to the current U.S. economic boom. These investments created
the advances in knowledge as well as the pool of technical talent that
underpin America's competitive advantage in information technology,
biotechnology, health science, new materials, and many other critical
enablers.
Nevertheless, public-sector investments in frontier research have
declined sharply relative to the size of the economy. An additional
$100 billion would have been invested if the Federal share of such
research had been maintained at its 1980 level. Physical sciences,
math, and engineering have been particularly affected. The recent ramp
up of private sector investment in R&D, while vitally important, is no
substitute for the Federal role in creating next generation knowledge
and technology.
We are also training fewer and fewer American scientists,
engineers, and mathematicians despite soaring demand for these skills.
Education and training of scientists and engineers are tied to
federally sponsored research performed in the nation's laboratories and
universities. When Federal R&D commitments shrink, so too does the pool
of technically trained talent, forcing industry and academia to look
abroad for skilled knowledge workers.
In this time of prosperity, we ask that you use this year's budget
resolution, authorization and appropriations process to start America
down the path toward significantly higher long-term investments in our
national science and technology enterprise. Your commitment to
continued U.S. technological leadership will generate high-wage jobs,
economic growth, and a better quality of life for all Americans for
decades to come.
Sincerely,
Raymond V. Gilmartin,
Chairman, Council on
Competitiveness,
Chairman, President &
CEO, Merck & Co., Inc.
F. Duane Ackerman,
Industry Vice Chairman,
Council on
Competitiveness,
Chairman & CEO,
BellSouth Corporation.
Charles M. Vest,
University Vice Chairman,
Council on
Competitiveness,
President, Massachusetts
Inst. of Technology.
Jack Sheinkman,
Labor Vice Chairman, Council
on Competitiveness, Vice
Chairman, Amalgamated
Bank of New York.
John Young,
Founder, Council on
Competitiveness.
Roger Ackerman,
Chairman and CEO, Corning
Incorporated.
Paul A. Allaire,
Chairman, Xerox Corporation.
Richard C. Atkinson,
President, University of
California.
David Baltimore,
President, California
Institute of Technology.
Edward W. Barnholt,
President and CEO, Agilent
Technologies, Inc.
Craig R. Barrett,
President and CEO, Intel
Corporation.
Alfred R. Berkeley, III,
President, The Nasdaq Stock
Market Inc.
Molly Corbett Broad,
President, University of
North Carolina.
William R. Brody,
President, Johns Hopkins
University.
Richard H. Brown,
Chairman and CEO, Electronic
Data Systems
Corporation.
G. Wayne Clough,
President, Georgia Institute
of Technology.
Vance D. Coffman,
Chairman and CEO, Lockheed
Martin Corporation.
Jared Cohon,
President, Carnegie Mellon
University.
Philip M. Condit,
Chairman and CEO, The Boeing
Company.
L. D. DeSimone,
Chairman of the Board & CEO,
3M Company.
Gary T. DiCamillo,
Chairman and CEO, Polaroid
Corporation.
Sandra Feldman,
President, American
Federation of Teachers,
AFL-CIO.
Carleton S. Fiorina,
President and CEO, Hewlett-
Packard Company.
George M.C. Fisher,
Chairman of the Board,
Eastman Kodak Company.
Louis V. Gerstner, Jr.,
Chairman and CEO, IBM
Corporation.
Joseph T. Gorman,
Chairman and CEO, TRW Inc.
William R. Hambrecht,
President, W.R. Hambrecht &
Co., LLC.
Charles O. Holliday, Jr.,
President & CEO, E.I. du
Pont de Nemours &
Company.
Shirley Ann Jackson,
President, Rensselaer
Polytechnic Institute.
Irwin M. Jacobs,
Chairman & CEO, QUALCOMM,
Inc.
Durk I. Jager,
Chairman, President & CEO,
The Procter & Gamble
Company.
Jerry J. Jasinowski,
President, National
Association of
Manufacturers.
Peter Likins,
President, University of
Arizona.
Richard A. McGinn,
Chairman and CEO, Lucent
Technologies, Inc.
Patrick J. McGovern,
Chairman of the Board,
International Data Group
Inc.
Henry A. McKinnell,
President and CEO, Pfizer
Inc.
Mario Morino,
Chairman and CEO, Morino
Group.
Michael E. Porter,
Professor, Harvard
University.
Heinz C. Prechter,
Chairman, ASC Incorporated.
Eric Schmidt,
Chairman and CEO, Novell.
David E. Shaw,
Chairman, D. E. Shaw & Co.,
LP.
Frederick W. Smith,
Chairman. President & CEO,
FDX Corporation.
Michael T. Smith,
Chairman and CEO, Hughes
Electronics Corporation.
Ray Stata,
Chairman of the Board,
Analog Devices, Inc.
Gary L. Tooker,
Vice Chairman of the Board,
Motorola Inc.
G. Richard Wagoner, Jr.,
President & CEO, General
Motors Corporation.
Mark Wrighton,
Chancellor, Washington
University.
Dr. Colwell. Mr. Chairman, I've mentioned headliners. In
NSF's 2001 request, there are four focused initiatives, but
nearly half our requested increase, as pointed out by Chairman
Kelly, $320 million will support what we call the core
activities. It will help us with our biggest challenge;
strengthen the core disciplines of science and engineering,
while moving forward in the interdisciplinary focus priority
areas.
NSF'S EDUCATIONAL FOCUS
I mentioned earlier NSF's role in helping educate the
future scientists and engineers. But that's just part of the
story. If all of our efforts depend on work force, a skill
force that is literate in science and technology, we must
address science and mathematics education for all students at
all levels, pre-K to graduate and beyond.
And it's no secret that our schools are not preparing
children adequately in science and math. No region of the
nation is immune. I was dismayed to read in last Sunday's
Washington Post that 64 percent of the high school students in
Montgomery County failed the standard Algebra 1 exam. This
cannot continue if the United States seeks to maintain world
leadership in science and technology.
If you are commonly driven by knowledge and ideas, how you
prepare a work force, a skill force is paramount. NSF is
committed to providing leadership in this critical area.
NSF'S INVESTMENT IN NEW TOOLS
Mr. Chairman, let me just mention very briefly two new
stocks in our investment in tools. In the Major Research
Equipment account, we will add $45 million for two new starts,
and to provide increases to ongoing projects. One is NEON, the
National Ecological Observatory Network, and this is a pole to
pole network, arctic to antarctic, with the state of the art
infrastructure of platforms and equipment, to enable 21st
Century science and engineering based ecology and biocomplexity
research.
Another new start is EarthScope, which is an array of
instruments that will allow scientists to observe earthquake
and other earth processes like volcanic eruptions, at a much
higher resolution with greater predictability.
NSF'S ADMINISTRATION AND MANAGEMENT REQUEST
Finally, we also mention our requested investment in
excellent, high quality staff, and the cutting-edge technology
that's needed to keep NSF's internal operation strong and
responsive.
Through our request for Administration and Management, we
are confident that the Foundation can continue its commitment
to scientific excellence and to the sound stewardship of the
public's resources.
CLOSING REMARKS OF DR. COLWELL
Mr. Chairman, since its founding 50 years ago, the National
Science Foundation has been a very important and vital catalyst
for discovery and innovation. Our 2001 budget request reflects
the lessons of this history. It focuses on national priorities,
as it should, but it also recognizes that one of our highest
national priorities must always be to remain at the leading
edge of science and engineering research and education across
the board.
PREPARED STATEMENT
So the requested increase of over 17 percent provides
investment that is clearly in keeping with the wealth of
opportunity that science and engineering provides society. In
addition, it positions America to remain a world leader in the
knowledge-based economy of the 21st Century. 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 NSF's budget request
for fiscal year 2001. I want to begin by thanking you and the
subcommittee for your consistent, bipartisan support for NSF's science
and engineering activities.
The fiscal year 2001 budget request for the National Science
Foundation if enacted, would provide the largest dollar increase the
Foundation has ever received. This investment will help set the stage
for a new century of progress through learning and discovery.
For the coming fiscal year, the NSF requests $4.57 billion dollars.
This represents a much needed increase--17.3 percent overall--over $675
million above the current level. This investment is part of the
President's 21st Century Research Fund for America, and it is all about
keeping the United States at the leading edge of learning and
discovery.
The headliners in NSF's 2001 request are four focused,
multidisciplinary initiatives. In fact, they are really national
priorities: Information Technology Research, Biocomplexity, 21st
Century Workforce and the emergent National Nanoscale Science and
Engineering Initiative.
Each initiative integrates research across the disciplines of
science, engineering and mathematics. Solving many of the challenges
facing our society will require more than individual discoveries. It
will require the integration of knowledge from all disciplines.
Biocomplexity--for example--seeks no less than a more complete
understanding of our complex world and its interactions--physical,
biological and social.
In describing these interactions, I am reminded of the words of the
naturalist John Muir. He wrote: ``When we try to pick out anything by
itself, we find it hitched to everything else in the universe.''
Up to now, we have sought understanding by taking things apart into
their components. Now, at last, we begin to map out the interplay
between the parts of complex systems.
One especially promising area in Biocomplexity is the study of the
Earth's crust as a habitat for micro-organisms.
To illustrate this I would like take us on a very brief journey by
video to the depths of the sea floor.
The footage we will see was taken with an IMAX camera from inside
the submersible Alvin. NSF has long supported Alvin, and we also helped
to support this filming.
Not yet seen by the public, this footage is part of a proposed film
about deep-sea hydrothermal vents being produced by Stephen Low
Productions in collaboration with the Rutgers Institute of Marine and
Coastal Sciences and Woods Hole Oceanographic Institution.
It was shot at a deep-sea vent called ``9 Degrees North'' in the
Pacific Ocean south of Mexico. The film will bring the astonishing life
of the vents to millions of people who will never be able to descend in
a submarine.
We will see features called ``black smokers''--the mineralized
chimneys that tower above the communities of life at hydrothermal
vents.
The mouths of the vents spew forth boiling water full of chemicals.
Such conditions are obviously toxic to humans and to most other life-
forms.
We first discovered these communities some two decades ago but we
are only beginning to unlock their secrets. The list of described
species inhabiting vents now tops 300. All living in the depths without
photosynthesis.
Instead of using the sun's energy, they employ chemosynthesis to
oxidize the hydrogen sulfide emerging from the vents. [black smoker
footage]
To me the black smokers we have just seen are not only metaphorical
but literal wellsprings of discovery. There are even suggestions that
these springs could have been the birthplace of all life on Earth.
Back at the Earth's surface, I'd like to move to another origin,
the beginning of NSF. Fifty years ago this month--May 10th, 1950 to be
exact--President Truman signed S. 247--the act that established the
NSF.
Our nation's commitment to science, engineering and education did
not begin in 1950. This commitment can be seen from the very beginning
of the nation. The motto on America's first coin for example--minted in
1792--read: Liberty: Parent of Science and Industry.
That motto has just as much meaning today--in the 21st century--as
it did in 1792, in an era before the advent of the steam engine.
Individual scientists and engineers--supported by NSF and other federal
agencies--are using their talent and their freedom to create, discover,
and innovate.
Increasingly these scientists and engineers, and perhaps even more
important their students--are also making the jump to the private
sector.
This transfer to the private sector of people--first supported by
NSF at universities--should be viewed as the ultimate success of
technology transfer. These talented scientists and engineers are part
of the new wave of entrepreneurs creating enormous wealth in areas like
information technology, biotechnology, and now in nanotechnology.
Nanotechnology--Mr. Chairman--is a new, emerging field where
scientists and engineers are beginning to manipulate matter at the
atomic level. Taking a cue from biology, researchers across disciplines
are beginning to create nanostructures smaller than human cells.
This ``Lilliputian'' technology has the potential to revolutionize
nearly every facet of our economy and our lives. For example:
--Researchers envision building electronic circuits from the bottom-
up, starting at the molecular level. In the future researchers
may be building molecular computers the size of a tear drop
with the power of today's fastest supercomputers.
--Combining microelectronics and neural research holds great promise
for developing prosthetic devices for artificial limbs.
Researchers are creating nanochips where nerve axons can regrow
through the tiny grate in the center a silicon membrane. These
chips then modify and distribute the nerve impulses, simulating
the electrical activity of a normal nerve synapse.
--Researchers are already developing micromachined needles with sharp
tips of less than a micrometer across. Such tiny needle tips
can pierce the skin easily and without pain--a novel new method
of drug delivery.
There are many more innovations--most occurring in the past year or
so. We are also already seeing a substantial amount of industry-
university partnerships in nanoscale science and engineering. Industry,
as well as other federal agencies like NASA, DoE and DOD will be
looking to our universities for the scientists and engineers skilled in
nanotechnology. That is why I cannot overstate the importance of NSF's
investment in the education of future nanoscale scientists and
engineers.
The transfer of scientists and engineers to the private sector can
probably best be seen in the Information Technology sector. Everyday we
read a news story touting the latest Internet whiz kid or biotechnology
IPO. David Ignatius--in a recent column in the Washington Post--wrote
about a 27-year old Stanford graduate student with a smart business
plan and a hot Internet search engine with the strange name of Google.
The offbeat name is actually a reference to the complex math--
actually a series of mathematical algorithms--that makes the search
engine work. It involves over half a billion variables in its complex
calculations. The mathematical term googol represents 10 to the 100th
power.
Google the company is an excellent example of knowledge transfer
from NSF investments in people. Both of the company's two founders were
computer science grad students at Stanford who studied under an NSF-
funded faculty member. One of the founders received an NSF Graduate
Research Fellowship. Google's Vice President of Engineering is a
computer science professor at the University of California at Santa
Barbara and recipient of a prestigious NSF CAREER award.
Google is a great example of how fundamental research in an area
like mathematics acts as the lifeblood of the IT revolution. It also
shows how the unparalleled innovation system in the U.S. can quickly
exploit new ideas developed in university labs and bring them to
market.
This example is really just the latest in a string of NSF
successes. The underlying technology for nearly all major search
engines found on the web today--including Lycos, Excite, Infoseek,
Inktomi and specialized search engines like Congress's own THOMAS--all
were begun created through NSF-funded research at universities.
This trend hasn't gone unnoticed by industry. Now leaders like
Alfred Berkeley, the President of the NASDAQ Stock Market and CEO's
like Norm Augustine of Lockheed talk about the importance of the NSF's
investments in basic research. I've included as an attachment
statements they made earlier this year on the importance of NSF's
investments to industry. I've also attached the recent statement by the
Council on Competitiveness, which was co-signed by CEO's and other
industry executives.
Mr. Chairman, NSF has recently developed a strategic plan that
reflect our role in the innovation process. The investments proposed in
our fiscal year 2001 budget were crafted to address three strategic
goals for the Foundation. They are:
Ideas.--This includes research at and across the frontier of
science and engineering, and connections to its use in service of
society.
People.--We've always said that every NSF dollar is an investment
in people. We cover kindergarten to career development to continuous
learning.
Tools--These are the databases, the platforms, and the facilities
that keep us at the leading edge. There are some new starts in here
that I will highlight in a moment.
I've already mentioned the initiatives within the fiscal year 2001
budget request. I would also like to note that nearly half our
requested increase--$320 million--will support what we call the core
activities. It will help us with our biggest challenge: to strengthen
the core disciplines of science and engineering while moving forward in
interdisciplinary areas.
NSF's investments in cutting-edge mathematics and statistics are a
perfect example of how investing in core disciplines will sustain new
fundamental discoveries and make interdisciplinary activities run on
all cylinders.
The story of Google shows how mathematics has become increasingly
important in ITR. We are also seeing impressive contributions to the
new and emerging fields of bioinformatics and nano-scale manufacturing.
The greatest insights into AIDS have come from mathematical models of
disease.
Mr. Chairman, within our core activities, NSF support for plant
genome research will increase by $22.5 million to total $102 million in
fiscal year 2001. This investment--long championed by you Mr. Chairman
and this subcommittee--will help continue US world leadership in plant
genomics.
Our investment in the EPSCoR program will increase slightly to $73
million in fiscal year 2001. This includes funding from both the EHR
and RRA accounts. NSF has long sought to enable EPSCoR researchers to
participate more fully in NSF research activities. Consequently, up to
$25 million will be made available from the NSF research account for
co-funding.
Mr. Chairman, all of our advances in science and engineering depend
upon a workforce that is literate in science and technology. When we
talk about the equation for science and society, this is a critical
part.
Our request for programs specifically addressing NSF's strategic
goal of investing in People--spanning both the EHR and Research
Accounts--will increase by 10.8 percent over fiscal year 2000. Within
this broader investment, our request for Education and Human Resources
represents a 5.5 percent increase over the fiscal year 2000 level.
Highlights include:
--Funding for the Graduate Teaching Fellows in K-12 Education (GK-12)
program more than double to $28 million. The GK-12 program
supports graduate and advanced undergraduate students in
science, math and engineering to be content resources for K-12
teachers.
--The request for the HBCU-Undergraduate Program (HBCU-UP) in fiscal
year 2001 is $11 million, an increase of $1.60 million or 17
percent. This reflects a contribution from NSF's research
account of $3 million. The fiscal year 2001 request for HBCU-UP
will provide continuing support for 14 existing projects and
support for up to 4 new awards in fiscal year 2001.
--The request for Advanced Technological Education Program (ATE)--
NSF's flagship program for 2-year institutions and championed
by the subcommittee--is $39 million, an increase of $10 million
or over 33 percent. The ATE program seeks to strengthen the
science and math preparation of students in technical fields.
This will enable them to better compete in the high-performance
workplace in areas such as Information Technology and
Manufacturing.
Our nation is in the midst of one of the greatest eras of
technological change in human history. In an economy driven by
knowledge and ideas, how we prepare our workforce is paramount. NSF is
committed to providing leadership in this critical area.
Finally, I mentioned earlier that we have two new starts in our
investments in Tools.
One is NEON--the National Ecological Observatory Network: a pole-
to-pole network--Arctic to Antarctic--with a state-of-the-art
infrastructure of platforms and equipment to enable 21st Century
science and engineering-based ecological and biocomplexity research.
The MRE request for NEON is $12 million in fiscal year 2001.
The other new start is EarthScope, which is an array of instruments
that will allow scientists to observe earthquake and other earth
processes like volcanic eruptions at much higher resolution. $17
million is requested for EarthScope in fiscal year 2001.
Mr. Chairman, since its founding fifty years ago the National
Science Foundation has been an important and vital catalyst for
discovery and innovation. From the information technology revolution to
the genomic revolution and everything in between--MRIs, lasers, the
Internet, Doppler radar, and countless other innovations--NSF-supported
fundamental research has advanced our society.
NSF's fiscal year 2001 budget reflects the lessons of history. It
focuses on national priorities, as it should. But it also recognizes
that one of our highest national priorities must always be to stay at
the leading-edge of science and engineering research and education
across the board. Over half of the increased funding is just for that.
The entire NSF investment portfolio sets the stage for a 21st
Century research and education enterprise that is focused on national
priorities. Guiding all of these activities is the Foundation's
longstanding commitment to merit-based investments in learning and
discovery that adhere to the highest standards of excellence.
This request marks a significant step forward for U.S. science and
engineering. The requested increase of over 17 percent provides a level
of investment that is clearly in keeping with the wealth of opportunity
that science and engineering provide society. It positions America to
remain a world leader in the knowledge-based economy of the 21st
Century.
Thank you.
STATEMENT OF NEAL LANE
Senator Bond. Thank you very much, Dr. Colwell. Dr. Lane.
Dr. Lane. Chairman Bond, Senator Mikulski, I am very
pleased to appear before you today. I ask that my written
testimony, which describes OSTP's budget and the highlights of
the administration's fiscal year 2001 R&D budget request be
included for the record.
The President and Vice-President have proposed an historic
science and technology budget for fiscal year 2001, a budget
that is balanced across all important fields of science,
engineering and technology. And I cannot emphasize enough how
dedicated the administration is to working with you to see this
R&D budget enacted.
Bipartisan support for this budget would put our R&D
portfolio on an optimum investment trajectory, one that
increases research in the core disciplines of science and
engineering, technology, across the board, providing balance
among the disciplines, and continued prosperity for the 21st
Century.
Mr. Chairman and Senator Mikulski, I very much appreciate
your passion for science and technology and the strong support
that you and others on your committee have given to the Federal
R&D programs; and I know that you and I share a commitment to
keeping America the world leader in science and technology.
I hope you agree OSTP plays a vital role in leveraging the
government science and technology investments for broad
national goals.
Within the balanced R&D portfolio, we're coordinating some
very important interagency initiatives. In the area of energy,
there's a new focus on biofuels, on developing clean, efficient
energy technologies for burgeoning international markets, and
on strong support for research to improve our domestic housing
and clean cars. We have a targeted effort to understand
solutions for environmental policy challenges such as hypoxia,
harmful algal blooms and biodiversity loss. We are moving our
robust global change research program into understanding carbon
uptake and storage, and terrestrial systems, and to take stock
of what a changing hydrological cycle might mean for the
planet.
We've continued our strong support for education research,
and among our efforts to address 21st Century threats, we've
proposed a new institute for information infrastructure
protection, which is a new partnership with industry.
And as you know, Mr. Chairman, we continue to coordinate
efforts in the area of the planned genome, and food safety as
well as many others.
I want to highlight just two of our initiatives this
morning. The information technology R&D initiative responds to
last year's wake-up call from the congressionally-chartered
President's Information Technology Advisory Committee, we call
PITAC.
OSTP was instrumental in getting the committee established.
We also work closely with the committee to make sure that its
work would be useful to the Federal agencies while still
challenging those agencies to think outside the box about their
responsibilities and possibilities in information technology
research.
Once we had the PITAC recommendations, OSTP pulled together
the Federal agencies to develop a response. We ultimately
concluded that information technology is so important that we
proposed and you funded new Federal R&D investments. This year
we build upon that effort by taking your advice, Mr. Chairman,
and the recommendation of PITAC by presenting a single
integrated information technology R&D portfolio, which includes
the base high performance computing communication programs,
including next generation Internet, the new activities
established by last year's information technology for the 21st
Century Initiative, and the Department of Energy's ASCI
program, Accelerated Strategic Computer Initiative.
This year the president has requested $2.315 billion for
information technology R&D. That's 35 percent above and beyond
our ongoing research programs. Out of this increase, Mr.
Chairman, $279 million, nearly half of the initiative, comes
through your subcommittee. I hope we can continue to count on
your support.
I would also like to highlight OSTP's work on the new
initiative in nanotechnology research. OSTP, through the
auspices of the National Science and Technology Council,
convened an interagency working group to look into the
feasibility of a nanotechnology initiative. After the working
group finished its work, OSTP recommended that the president's
advisory committee, PCAST, convene a panel to review the
recommendations of the government body and to advise OSTP and
others in the administration on how best to implement their
findings.
This effort culminated in the national nanotechnology
initiative, which will provide an $225 million increase in the
emerging fields of nanoscience and nanoengineering, to nearly
double the current Federal investment. Once again, nearly half
of this increase will come through this subcommittee. Roughly
70 percent of the new funding proposed under the National
Nanotechnology Initiative will go to university-based research.
These investments will help meet the growing demand for workers
with nanoscale science and engineering skills.
The administration believes that nanotechnology will have a
profound impact on our economy and society in the early 21st
Century. Perhaps even comparable to that of information
technology, or cellular genetic and molecular biology. And
that's in part because nanotechnology advances will support all
of these areas as well as many, many other areas of potential
application.
I ask today for your continued support for OSTP's role in
coordinating science and technology policy for the Executive
Branch, and for our nation at large. OSTP's budget request of
$5.2 million and 40 FTEs for fiscal year 2001 represents no
increase in FTE level and an increase in budget authority of
less than two percent. These additional resources are essential
to continue to provide the highest quality of work across the
broad spectrum of responsibilities.
Mr. Chairman, Senator Mikulski, Members of the Committee, I
hope that this brief overview, combined with my written
statement, convey 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,
nonprofit organizations and all levels of government to advance
knowledge, promote education, strengthen institutions and
develop a human potential. And to put our support for science
and technology from all these sectors on the trajectory that we
need to have for the future of the country.
I ask not only your support for OSTP's fiscal year 2001
budget request, but also want you to know how much I appreciate
the long-standing bipartisan support of the committee for OSTP
and for science and technology research as an enterprise.
I enjoyed the video on the Alvin. I had the very great
pleasure to go down in the Alvin with Congressman Jerry Lewis
when he was chair of the VA, HUD subcommittee on the House
side, and we were down for five hours looking at the wonders
underneath the ocean. And if that's not bipartisan, it's an
extraordinary experience--I highly recommend this experience.
PREPARED STATEMENT
That concludes my statement. I'd be very happy to answer
any questions you might have.
[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 2001.
I very much welcome, and am encouraged by the continued 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.
I believe that the President's S&T budget, with your help, will
generate the bipartisan momentum to put our R&D portfolio on an optimum
investment trajectory that will continue to deliver strong returns on
our investment, far into the future. This budget plots a bold course of
strategic growth and prosperity through discovery. I look forward to
working with Congress on a bipartisan basis to see it successfully
enacted.
Mr. Chairman, it has been a remarkable year for science. All of the
millennial lists produced by the popular press listed advances in
science and technology as some of the top achievements during the last
century. Time magazine named Albert Einstein ``Man of the Century.''
And this budget, which proposes a bold Science and Technology
Initiative, could be one of the President's--and this Congress's--most
important gifts to future generations.
As we turn-the-corner on the new 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 weapons of mass destruction.
S&T--THE ENGINE OF OUR ECONOMIC GROWTH
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 improved 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. Science and technology have
become the engine of our economic growth.
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, eighty percent higher than the average job. Alan
Greenspan recently stated that rapid technological change has greatly
contributed to nine years of record peacetime expansion, with
information innovation lying at the root of productivity and economic
growth, 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.
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.--Federal support of computing and
communications research, leveraged by industry and academia, has led to
technical advances that are transforming the American economy.
Commercialization and expanded use of the new information tools created
through these innovative partnerships--which include everything from
high speed supercomputing to the Internet--have unleashed spectacular
economic growth and job creation. Over 800,000 new jobs were created in
information technology sectors in the past year alone. These sectors
are growing at double the rate of the overall economy and will soon
account for 10 percent of the economy.
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.
Commercial Space Activities.--The U.S. commercial launch rate has
tripled since the first half of the 1990s. Revenues from U.S.
commercial space launch activities have grown rapidly from $635 million
in 1996, to over $1 billion in 1998.
Aerospace.--Aerospace led all other industry sectors in 1999 with
$41 billion in net exports. The latest figures show the total aerospace
industry sales for 1999 to be $155 billion, employing over 837,000
people. The U.S. Aircraft industry shipped over $54 billion worth of
commercial aircraft, up 46 percent from 1997 levels.
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. The
environmental technology export market nearly doubled from $9.3 billion
in 1993 to $18.9 billion in 1998, directly generating more than 130,000
new jobs in the United States.
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 United States, 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 1999, which included:
--Genomics speeds ahead.--The feverish pace of discovery in genomics
begun in 1998 with the publication of the Caenorhabditis
elegans nematode genome continued unabated this year. The big
story was the first successful sequencing of a human
chromosome, and the first two chromosomes of a flowering plant.
In addition, researchers polished off the genomes of the fruit
fly, Chlamydia pneumoniae (microbe which causes respiratory
infections), Campylobacter jejuni (food-borne pathogen),
Mycobacterium tuberculosis (a virulent strain of TB), and two
chromosomes of Plasmodium falciparum (malaria parasite).
Progress on sequencing has fueled similar efforts on new
technologies to exploit the new information, including DNA
chips, microarray gene analyzers, and advanced data processing.
--Rice of life.--Genetically engineered crops have long held promise
as a way to feed the world's 800 million people who are either
hungry or undernourished. Last summer scientists unveiled
strains of biotech rice that contain high levels of iron and
beta-carotene, a vitamin A precursor. Vitamin A deficiency
afflicts 400 million people worldwide, leaving them vulnerable
to infections and blindness. Iron deficiency afflicts up to 3.7
billion people, causing anemia and impaired mental function in
children. The rice sequence data is being made freely available
to the public.
--We are not unique.--Once we wondered, but now we know: At least one
solar system beyond our own revolves around a sun-like star.
Earlier this year researchers discovered a system of at least
three planets around the star Upsilon Andromedae, which is 44
light-years away. The giant planets circle around their sun
within the distance of our Mars' orbit--providing new clues
about how solar systems may form.
--Plentiful planets.--Following only four years after the discovery
of the first planet found outside of our solar system,
astronomers have raised the total to nearly 30 with a steady
stream of new discoveries all year.
--Making memories.--Using a new laser microscope technique,
researchers have watched the complex, molecular processes that
underlie memories in the brain. These studies have identified
the function of key receptors in the synapses that modify the
connections between neurons and thereby affect how they will
behave in the future. Separate, supporting research showed that
genetic modification of these receptors resulted in ``smart
mice'' that were better able to learn mazes.
--New light on photonics.--Several dramatic developments were made in
the effort to make devices that manipulate light or photons the
way semiconductor devices manipulate electrons. Based on custom
made ``photonic'' crystals, researchers developed bandgap
mirrors, high intensity light guides, and the first photonic
crystal laser. The optical counterpart to conventional
integrated circuits would result from combining the photonic
waveguides and lasers in a single crystal, for possible use as
telecommunications circuits and ultra-fast computers.
--Tracking distant ancestors.--Geochemists extracted and identified
chemical residues from ancient microbes in rocks 2.7 billion
years old. These chemical remains from a primitive cell are
nearly a billion years older than the oldest undisputed fossil
remains.
--Brain power.--Scientists had thought that human brain cells, unlike
other biological cells, do not renew themselves as they die
off. But researchers have discovered that brain cells do
regenerate--and do so continuously throughout a person's life.
The finding opens the possibility of treating disorders such as
Parkinson's or Alzheimer's with cells taken from a patient's
own brain.
--Stem cells.--The late 1998 discovery that embryonic cells could be
maintained as undifferentiated stem cells, with the potential
to become virtually any type of cell in the body, was followed
up this year by more than a dozen landmark papers describing
their remarkable capabilities. This dramatic work has
tremendous therapeutic potential for people suffering from
Parkinson's, diabetes, and many other diseases. Stem cells
could eventually be induced to grow everything from blood to
organs. Doctors, for example, could grow tissue from stem cells
and then transplant it into the same person to avoid rejection.
--Tissue regeneration.--Scientists discovered a new type of stem cell
when they isolated the mesenchymal cell in bone marrow. What's
more, they were able to induce these cells to grow into
specific types of connective tissue, such as cartilage, bone,
or fat cells. Other potential applications include new muscles
and tendons for sports injuries, and fat tissue for implants.
PRESIDENT CLINTON'S FISCAL YEAR 2001 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.
Fiscal year 2001 is the eighth year in a row that the President has
proposed increased investments in civilian research and development.
The civilian R&D request is $43.3 billion, an increase of 6 percent
($2.5 billion) over fiscal year 2000. The civilian R&D request now
constitutes 51 percent of the overall R&D budget of $85.3 billion.
The request boosts funding for basic research to $20.3 billion, an
increase of 7 percent ($1.3 billion) over fiscal year 2000. The budget
also strengthens university-based research, which increases by 8
percent ($1.3 billion) over fiscal year 2000. Substantial increases for
several agencies help to restore balance between biomedical research
and other scientific disciplines. The budget provides increases for
research in the core disciplines of science and technology across the
board. As the President has said, ``We have to have a balanced research
portfolio, because the research enterprise is increasingly
interdependent.'' He got it exactly right, and his deeds match his
words.
SCIENCE & TECHNOLOGY INITIATIVE
The budget request includes a $2.9 billion Science and Technology
Initiative directed towards national goals such as world leadership in
science and technology and long-term economic growth and prosperity.
This S&T Initiative is contained within the 21st Century Research Fund,
which ensures effective integration of our science and technology
investments. The Research Fund grows by 7 percent in fiscal year 2001,
to a total of $42.9 billion.
These investments will ensure that science and technology will
continue to fuel economic growth and allow Americans to lead longer,
healthier lives. These investments also will enable America to continue
to lead in the 21st century by increasing support in all scientific and
engineering disciplines, including biomedical research, nanotechnology,
information technology, clean energy, and university-based research.
Specifically, this infusion of funds will enable researchers to tackle
important scientific and technological challenges, and will lead to:
--American prosperity in the 21st Century.--With rapid growth,
increased productivity and rising standards of living, the U.S.
economy is thriving, in large part because of our technological
leadership. Science and technology have become the engine of
America's economic growth: information technology alone
accounts for \1/3\ of U.S. economic growth, and is creating
jobs that pay almost 80 percent more than the average private-
sector wage. Many of the technologies (such as the Internet)
that are fueling today's economy are the result of government
investments in the 1960's and 1970's.
--Longer, healthier lives for all Americans.--In the last 100 years,
the life expectancy of the average American has increased by
almost 30 years, as a result of breakthroughs such as
antibiotics. Today, we are on the verge of even greater
scientific advances, and continued investment in health-related
research could lead to greater life expectancies and better
quality of life.
--Educating America's high-tech workforce.--The President's
investment in university-based research will help spur
innovations in new technologies and treatment, while preparing
the next generation of leaders in science, engineering and
technology.
--Cleaner energy for a cleaner environment.-- Research can help
America create cleaner sources of energy and energy-efficient
technologies, such as fuel cells that emit only water, cars
that get 80 miles per gallon, and bioenergy derived from new
cash crops.
--New insights into the world around us.--Increases in funding for
science-based research can lead to amazing breakthroughs in our
understanding of the world around us and beyond.
HIGHLIGHTS OF THE R&D BUDGET
The proposed R&D investments will enable the S&T agencies to
achieve the President's goals for science and technology: promoting
long-term economic growth that creates high-wage jobs; sustain a
healthy, educated citizenry; harnessing information technology;
improving environmental quality; enhancing national security and global
stability; and maintaining world leadership in science, engineering,
and mathematics. For example:
--National Institutes of Health (NIH).--The budget provides a $1
billion increase (6 percent) in biomedical research at the NIH
that will support research in areas such as diabetes, brain
disorders, cancer, genetic medicine, disease prevention
strategies, and development of an AIDS vaccine.
--National Science Foundation (NSF).--The budget provides a $675
million increase (17 percent) in the National Science
Foundation--double the largest dollar increase in NSF's
history. This increase will boost university-based research and
ensure balanced support for all science and engineering
disciplines. NSF funds half of all non-health related
university-based research.
--Department of Energy (DOE).--The budget provides $4.2 billion (a 15
percent increase) for DOE's programs in the 21st Century
Research Fund. The budget includes a 13 percent increase for
basic science programs as well as continued support for
construction and operation of large scientific user facilities,
including the Spallation Neutron Source.
--Department of Defense (DOD).--The budget provides $1.2 billion in
basic research (a 4.3 percent increase), and $3.1 billion in
applied research. Research on counter-terrorism and on
improvements in the safety and security of the Nation's
physical infrastructure and information and communications
systems receive targeted increases.
--National Aeronautics and Space Administration (NASA).--The budget
provides $5.2 billion (a 6 percent increase) for NASA's
programs in the 21st Century Research Fund, including $2.4
billion for Space Science (a 9.4 percent increase), and $290
million (a 48 percent increase) for a $4.5 billion five-year
space launch initiative.
--Department of Commerce (DOC).--The budget includes $862 million for
DOC programs in the 21st Century Research Fund. It provides
$176 million (a 23 percent increase) for NIST's Advanced
Technology Program to promote competitive, cost-shared R&D
partnerships, and $50 million to create an Institute for
Information Infrastructure Protection.
--Department of Agriculture (USDA).--The budget provides $894 million
(an 8 percent increase) for the Agricultural Research Service.
The budget also includes $469 million for research and
education activities through the Cooperative State Research,
Education and Extension Service, including $150 million (a 26
percent increase) for the National Research Initiative (NRI).
The NRI provides competitive grants in areas of national
concern such as food safety, the environment, plant and animal
research, and human nutrition.
--Department of Transportation (DOT).--The budget provides $899
million (a 39 percent increase) for DOT's programs in the 21st
Century Research Fund. The budget includes $338 million for the
Intelligent Transportation System initiative aimed at enhancing
the safety and efficiency of the surface transportation
infrastructure.
--Department of the Interior (DOI).--The budget provides $895 million
(a 10 percent increase) to USGS for science that supports
natural resource and environmental decision-making. The budget
also supports research and technical assistance on the
scientific needs of land managers and local land use planners.
--Environmental Protection Agency (EPA).--The budget provides $758
million (a 14 percent increase) for EPA's programs in the 21st
Century Research Fund. The EPA budget funds research that
provides a sound scientific and technical foundation for
environmental policy and regulatory decision-making.
--Department of Education (DOEd).--The budget provides $379 million
(a 19 percent increase) for Ed's programs in the 21st Century
Research Fund. The budget provides $20 million to support a
collaborative research effort with NSF and NICHD on large-
scale, interdisciplinary research focused on understanding how
promising practices and research on how children learn can be
scaled up and applied in complex and diverse classroom
settings.
INTERAGENCY INITIATIVES
The budget increases funding for a number of priority research
areas that require multi-agency efforts. High priority interagency
programs identified by the National Science and Technology Council for
special emphasis in fiscal year 2001 received the following increases:
--National Nanotechnology Initiative.--This new $495 million
initiative in nanotechnology--the ability to selectively move
individual atoms and molecules--could revolutionize the 21st
century in the same way that the transistor and the Internet
led to the Information Age. Increased investments in
nanotechnology could lead to breakthroughs such as molecular
computers that can store the contents of the Library of
Congress in a device the size of a sugar cube, and new
materials ten times as strong as steel at a fraction of the
weight.
--Information Technology Research.--A nearly $600 million increase in
information technology research (35 percent) could lead to
advances such as high-speed wireless networks that can bring
distance learning and telemedicine to isolated rural areas; and
supercomputers that can more accurately predict tornadoes and
hurricanes, and more rapidly develop life-saving drugs. This
funding continues the funding for fundamental, long-term
research, advanced applications, and research on the economic
and social implications of information technology begun last
year.
--Climate Change Technology Initiative.--The budget provides a 30
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 efficient technologies.
--U.S. Global Change Research Program.--The budget provides $1.74
billion 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 $255 million (a 13 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.
--Aviation Safety, Security, Efficiency, and Environmental
Compatibility Initiative.--The budget provides over $1.3
billion for FAA, NASA, and DOD to develop technology to help
ensure that the nation's air transportation system will support
the economic growth created by information technology and the
E-commerce revolution and will
--Countering 21st Century Threats.--The President's budget provides
$590 million, a $56 million (10 percent) increase, for Weapons
of Mass Destruction R&D to enhance our research and development
efforts in preventing, detecting, and responding to the release
of weapons of mass destruction, and to more effectively manage
the health, environmental, and law enforcement consequences of
such an incident should one ever occur. Furthermore, the budget
includes $606 million, a $145 million (31 percent) increase,
for Critical Infrastructure Protection R&D to improve the
safety and security of our nation's critical infrastructures--
the power, communications, information, transportation, and
other systems on which our economy, national security, and
quality of life depend. achieve the President's goal of
reducing the aviation accident rate by 80 percent within 10
years.
--Interagency Education Research Initiative.--The budget provides $50
million ($25 million at NSF, $20 million at ED, and $5 million
at NICHD) to support large-scale, interdisciplinary research
focused on understanding what educational strategies work and
why in two key areas:early learning of foundational skills; and
transitions to learning increasingly complex science and
mathematics.
--National Plant Genome Initiative.--The budget provides $87 million
for the National Plant Genome Initiative (NSF, USDA, DOE, and
NIH) to unravel the complex genomes of economically important
plants.
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 2001
represents an increase in budget authority of less than 2 percent and
no increase in the FTE level. This request will allow OSTP to fulfill
its coordination and advisory responsibilities.
The requested fiscal year 2001 budget will support the Director and
up to four Associate Directors plus a staff of seasoned professionals
with diverse training and experience. Our requested small 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 2001 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 among 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 determining 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 1999.)
THE PRESIDENT'S COMMITTEE OF ADVISORS ON SCIENCE AND TECHNOLOGY
As Assistant to the President for Science and Technology, I co-
chair 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, 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 1999). 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 seven 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 2001 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--NSTC REPORTS AND PUBLICATIONS
Bioinformatics in the 21st Century (January 1999)
Research Involving Persons with Mental Disorders That May Affect
Decisionmaking Capacity (March 1999)
The Role of Monitoring Networks in the Management of the Nation's
Air Quality (March 1999)
Renewing the Federal Government-University Research Partnership for
the 21st Century (April 1999)
Transportation Strategic Research Plan (May 1999)
Transportation Science and Technology Strategy (May 1999)
National Transportation Science and Technology Strategy (May 1999)
Program Guide to Federally Funded Environment and Natural Resources
R&D (May 1999)
Our Changing Planet (June 1999)
Improving Federal Laboratories to Meet the Challenges of the 21st
Century (July 1999)
Federal Food Safety Research: Current Programs and Future
Priorities (July 1999)
Nanostructure Science and Technology, A Worldwide Study (August
1999)
Comparison of International Transportation R&D Expenditures and
Priorities (September 1999)
Accessibility for Aging and Transportation-Disadvantaged
Populations (September 1999)
Nanotechnology Research Directions: IWGN Workshop Report (September
1999)
Nanotechnology: Shaping the World Atom by Atom (September 1999)
National R&D Plan for Aviation Safety, Security, Efficiency, and
Environmental Compatibility (November 1999)
These documents can be viewed at the NSTC Publications and
Testimony Web page: http://www.whitehouse.gov/WH/EOP/OSTP/NSTC/html/
nst__pubs.html
______
APPENDIX B
ACTIVITIES OF THE PRESIDENT'S COMMITTEE OF ADVISORS ON SCIENCE AND
TECHNOLOGY (PCAST)
In 1999 PCAST provided the following report: Powerful Partnerships:
The Federal Role in International Cooperation on Energy Innovation
(June 1999). It is in our fundamental national interest to greatly
strengthen international cooperation in energy innovation. The PCAST
concluded that continuing our current energy trajectory would be
``problem plagued and potentially disastrous.'' Unless innovation to
increase energy end-use efficiency and to improve energy supply
technologies is both rapid and global, world energy demand is likely to
soar in the next century to four times today's level, entailing higher
consumer costs for energy, greater oil import dependence, worse local
and regional air pollution, more pronounced climate disruption from
greenhouse gases, and bigger nuclear energy risks than today. And if
the U.S. abdicates leadership in international cooperation on energy
technology while others forge ahead, it will cost U.S. firms dearly in
their share of the multi-hundred-billion-dollar per-year global market
in energy-supply technologies, most of which is and will remain
overseas. As the world heads into the next millennium, however, there
is a window of opportunity--open now, but closing fast--to move the
world off this troublesome path. The choices the U.S. makes today will
influence the evolution of the global energy system for many decades to
come. The United States has strong stakes in the future economic,
national security, and environmental course of world energy
development.
PCAST also advised the President on the following topics:
Establishment of a Laboratory for National Information
Infrastructure Protection. (December 1998)
Review of Proposed National Nanotechnology Initiative (November
1999)
Review of the NSB Report on Environmental Science and Engineering
for the 21st Century (December 1999)
Letter to the President regarding fiscal year 2001 Budget
Priorities (December 1999)
Letter to the President to Endorse the Proposed National
Nanotechnology Initiative (December 1999)
NEED FOR NSF VISION
Senator Bond. Thank you very much, Dr. Lane. Let us begin
now with questions.
You state a broad proposition and ask for relatively brief
responses, and this is something we want to work with you
later.
Dr. Colwell, I've been surprised to find, as I've talked
with leaders in the scientific community in Missouri, including
medical doctors, who ask me with a puzzled look on their face,
``Congress is committed to doubling the NIH budget, but NSF
continues to fall farther and farther behind.'' And some,
including Dr. Bill Danforth pointed out that so many of the
medical advances, so many of the vitally important discoveries
that have helped heal the many, many diseases come from work
from the NSF. ``Why aren't you putting more into NSF, the kind
of basic science research in physics and engineering and
information that really support and enhance the work that is
being done in the strictly medical field.''
It's a good question, and I certainly have an enthusiasm
for it, but my enthusiasm might get us two or three votes on
the floor. That's not what we need. We need from you a vision.
I'm enthusiastic about your publicly stated goal of doubling
the budget in 5 years, but the rest of the Congress seems to be
taking a ``show-me'' attitude. What are you going to get for
it? What policy goals would the Foundation pursue? What
specific areas of research and education?
You've got to give us something that we can take to our
colleagues who may not be focused on--we're all ready to sell;
there's nobody better than my colleague from Maryland to go out
and sell it. But what are you selling?
Dr. Colwell. First of all, I think there's a need for an
understanding that you have to have a parallel movement
followed with progress. That is, the investment in NIH is
terrific, but basic research and physics, math, engineering and
chemistry really are the underpinning for the NIH discoveries.
Let me just give you an example. Magnetic Resonance Imaging
comes really from basic research in physics. Laser surgery for
cataracts comes from discoveries made in physics and chemistry
and computer science. That is not understood. So we really need
to make it very clear that it's--I don't know how to put it,
but maybe it's like parallel lines on a railroad track; you've
got to move it along together because they are, in effect, both
needed and necessary.
The future moves with advances made in the basic sciences,
along with biomedical applications. Now what do you get for the
money? You get enormous contributions to the economy, and also
the investments that we're making for the future include a new
way of looking at learning and teaching.
We're hoping to establish Centers for Learning and
Teaching; in other words bring together the interdisciplinary
knowledge from medical research with our understanding of how
the brain functions and tying that to improve methods of
teaching. And thereby bringing teachers together to be able to
learn new ways of being more effective with their pupils, and
linking this to the information technology revolution so that
we can, in fact, tailor education to individual students.
We also must pursue nanotechnology. It's interdisciplinary.
And the future truly is interdisciplinary. When I arrived at
the National Science Foundation, I said my biggest challenge
will be to keep the strengths of the disciplines but at the
same time pursue the opportunities of interdisciplinary
research. And nanotechnology is a perfect example, because it's
the interface of engineering, mathematics, chemistry, physics,
and biology.
It brings it together in a way that provides an entirely
new, revolutionizing future in miniaturization. Coupling
miniaturization to nanoscale, which is a billionth of a meter,
sort of a magical scale, to tera-scale computing----
Senator Bond. Before the time expires, let me just ask Dr.
Lane and Dr. Kelly if they want to add anything briefly on
this.
We really would like to work with you to develop a plan,
because I want to sell it. But I need to know what I'm selling;
I need to be able to understand what I'm selling so I can I
hope explain it to others. That's your toughest challenge.
NEED TO SUPPORT BASIC RESEARCH
Dr. Lane. Mr. Chairman, there's no way I could say it
better than Dr. Colwell just said, so let me just add: The
funding for NIH, which is the body that funds biomedical
research in this country, I think that trajectory is about
right. That trajectory of funding pretty well tracks the GDP
for this country. If we're going to fall below the GDP in
investments in science and technology when we know that the
returns are so substantial for our public, then we really need
to understand why.
Our problem is that all of the supporting sciences--
physical sciences, engineering, that Dr. Colwell referred to,
are being substantially underfunded, and Harold Varmus, former
director of the National Institutes of Health said it many
times; that unless you support the basic chemistry and physics,
computer science, mathematics, various fields of engineering,
then you're not going to have the tools necessary to do
biomedical research or anything else, for that matter.
So half of our economic growth in the past half century has
come from innovation through investments in science and
technology, most of that from the Federal Government. They
didn't all come from biomedical research; in fact, it didn't
primarily come from biomedical research; it came from
investment in these other fields of study.
So I agree with you, Mr. Chairman, we do need to do a
better job to help you get the message across, and we'll work
with you on that.
OUTCOMES OF BASIC RESEARCH
Senator Bond. Dr. Kelly.
Dr. Kelly. The message I would get across is on two levels;
one, the economy, the other is the quality of life. Our entire
economic growth during this decade has been based on
information technology and other scientific developments that
are founded in basic research.
In terms of the quality of life, the health quality of
life, environmental quality of life, what improvements we've
seen educationally--all of the impacts in terms of the quality
of life have also been based on basic research.
In terms of the economic growth of this country and the
derivative resources to improve the quality of life, as well as
the scientific basis of it is all, every bit of it has been
based in fundamental research.
Senator Bond. Thank you very much.
Senator Mikulski.
NSF'S ROLE IN EDUCATION
Senator Mikulski. Thank you, Senator Bond.
In the second phase of my questions I am going to come back
to ``the vision'' thing. But you know, we can't do research
unless we have the people who have been well educated; K
through 12 and then throughout higher education programs.
My questions will go to the role of NSF; and Dr. Lane, Dr.
Kelly and your value-added comments. Because so many of our
students that are well-educated at the undergraduate level come
from other kinds of schools. And I was recently at the
dedication of the new science building in Baltimore, of Notre
Dame of Maryland College. It is the oldest Catholic women's
college in the United States of America.
I helped get them some money for the building, but they--I
saw the equipment that NSF paid for in this new facility, of
which two-thirds came from State and private sector funds.
Actually, more than two-thirds.
But then I talked to the young women, premed,
bioengineering and a relationship between Notre Dame where they
needed to spend the first 2 or 3 years in an all-women's
environment, and then over at Hopkins. Bioengineering, biotech.
But they were all going to start at this small college, of
which NSF bought the scientific equipment.
Here goes to my question. And also, everywhere I go, every
college wants to be a university and every university tells me
they want to be a Santa Maria and a flagship in research. But I
worry about the Ninas and the Pintas. Or the Arks and the Dove,
Dr. Colwell.
So here is my question. In this budget that we're talking
about, what do you see are the resources that are contained in
your budget, and where we need to focus on are really what you
think about in terms of not only our great land grant schools
like the University of Maryland and the University of Michigan
and so on.
But in these other schools, they produce so many people
that will either go on say premed or physics or other
scientific careers; or be our science teachers. Some of the
young women that I spoke to were going to go into the
classroom.
GRADUATE FELLOWSHIPS IN K-12 EDUCATION
Dr. Colwell. You touch on a very, very important point,
because 40 percent, actually, of the undergraduates are
enrolled in 2 year colleges. This is a major contribution to
the work force.
One of the things we have done in this past year is
initiate what we call our GK12 fellowships; and that is to link
the school system with graduate students. The students--we've
now expanded it to undergraduate students as well as graduate
students--receive tuition and fees and a stipend; they spend 20
hours a week working with a teacher in an elementary, middle,
or high school, working together, with the principal
investigators being a basic scientist or engineer from the
college or university and a teacher--not an administrator or
principal, but a first class teacher.
And the two co-principal investigators--and the students
provide the excitement and information about the science----
Senator Mikulski. Tell me the name of the program and how
much--I think I understand the concept.
Dr. Colwell. It's the GK12 program, and I believe it is
about $28 million for----
Senator Mikulski. And about how many stipends and teachers
is this?
Dr. Colwell. We started about half that, and we had about
100 some graduate students who came to the NSF for a meeting of
first year grantees and associated graduate students. They
haven't quite completed their first year. I don't know the
exact number, but it's several hundred, and I'll get that
information to you.
[The information follows:]
GRADUATE TEACHING FELLOWS IN K-12 EDUCATION
The Graduate Teaching Fellows in K-12 Education (GK-12) program was
initiated in fiscal year 1999. This program supports fellowships and
associated training that will enable graduate students and advanced
undergraduates in the sciences, mathematics, engineering, and
technology to serve in K-12 schools as resources knowledgeable about
both the content and applications of science, mathematics, engineering,
and technology. Funding in fiscal year 1999 supported 31 projects,
which collectively proposed to involve approximately 280 graduate
students and approximately 120 undergraduates.
FACILITIES AND EQUIPMENT FOR SMALL SCHOOLS
Senator Mikulski. Now, let's then go to the need for both
facilities and equipment at these smaller schools. Where do we
stand on that?
Dr. Colwell. We of course do not build buildings, but we do
provide equipment, and that is very important. And we have
programs for the 4 year colleges for equipment.
Senator Mikulski. And how much is that, and how much do you
think you need related to the requests that you get?
Dr. Colwell. Well, I'll give you the number, but I'll tell
you we need twice as much.
Senator Mikulski. Let's hear it.
Dr. Colwell. Well, I will give--where's the executive----
Senator Mikulski. You can turn to your very able staff;
this is not a quiz, Dr. Colwell.
Dr. Colwell. It's about $50 million for the facilities and
equipment, and----
UNFUNDED PROPOSALS
Senator Mikulski. And about how many requests do you think
you get at NSF that your team rate as a satisfactory. In other
words, that they would be very capable of using the funds?
Dr. Colwell. Actually, we've just done a study of the
rankings and we can fund most of the excellent, and some of the
very good, but not all; and there's--underfunding of
outstanding research.
Dr. Pitts, would you like to comment on that?
Senator Mikulski. I know my time is up.
Could you come to the microphone so you could be part of
the record as well?
Senator Bond. And can I have your name, please?
Dr. Pitts. Dr. Nathaniel Pitts. We have just finished our
merit review report for 1999, and when we look at our data that
talks about the rankings that peer reviewers give to proposals,
and our ranking is a five scale ranking from poor to excellent,
a very good being the second rating down, that many of our--
actually about 7,200 of our proposals are in the very good
range and are not paid.
Senator Mikulski. But how many are they? In other words,
are they ten or are they a hundred, or a thousand?
Dr. Pitts. Well, I'm now talking about reviewers rankings,
but NSF as you know funds about 10,000 proposals a year,
declines about 20,000 proposals a year, and you're talking
about a substantial number in this range.
Senator Mikulski. And if the chairman would allow me for
one question, the very goods and the excellents, are these big
schools where the schools are what I call the Golden Rolodex
meaning the prestigious schools? Hopkins would be cranky when I
say that, but Hopkins really has a whole team to pursue grants
and they win Nobel prizes. But again, I'm the St. Mary's
College and the Notre Dames.
Dr. Pitts. The particular data I'm talking about is not
disaggregated like that; but in this range, these will be all
types of institutions.
Dr. Colwell. Let me add, Senator, NSF limits proposals to
three per school for Major Research Instrumentation Program for
the reason that you've enunciated. And that is to give a level
playing field for the smaller colleges. So the bigger
institutions can't flood us with large number of proposals.
Senator Mikulski. As you know, I'm very interested in the
smaller, liberal arts schools that produce people with basic
science who either then go to science careers or into science
education. And as we talk further, let's get a breakout of
whether it's the big schools, or where we stand. And I'll come
back to that.
Dr. Colwell. Let me just add a point here; it has been
shown that the 4 year liberal arts colleges produce more
scientists and engineers, physicians and professionals than the
other schools do.
Senator Bond. Senator Mikulski, I appreciate your bravery.
I've got to go back to a reunion later this month at one of
those schools that's one of the ``haves''; so I hope there's
nobody here----
Senator Mikulski. I went to a small Catholic womens college
that merged with a Jesuit college, so it continues to be a
Jesuit college.
But it is these small liberal arts schools. And Mr.
Chairman, they've also been really an incubator for women,
minorities--not that the big schools haven't; this isn't
either/or, but it's to make sure one whole category is not left
out.
You went to a big school, is that right?
Senator Bond. I think--I believe they probably do okay in
the funding, but we won't mention that here.
Dr. Colwell. I did teach at Georgetown University for 7
years before going to the University of Maryland. So I've had
the flavor of both.
PUBLIC MISUNDERSTANDING OF BIOTECHNOLOGY
Senator Bond. All right, moving off of biographical
sketches.
Dr. Lane, I'm very much concerned, as you and I discussed
yesterday about the fear and hysteria surrounding
biotechnology. And I've asked the administration to mobilize to
combat these fears and inject reason and facts in the public
debate.
Last year we directed OSTP to convene a working group of
the agency, to come up with strategy and recommendations. The
administration yesterday announced its plan; and in connection
with the plan's release as I mentioned earlier, Dr. Henney of
FDA stated that FDA's scientific review continues to show that
all bioengineered food sold here in the United States today is
as safe as the non-bioengineered counterparts.
I'd like you to comment on that, and also, could you
describe the recommendations, very briefly, of the working
group's plan and how will this plan address the misinformation
on biotechnology that's being spread through the media?
Dr. Lane. Thank you, Mr. Chairman. This is a very serious
matter which the administration is quite focused on and will
comment on a plan that was rolled out very recently.
But let me say at the outset, I think we all need to keep
in mind, and we need to make sure the public understands the
enormous promise that these technologies hold for the future;
the future of our own people, the future of people around the
world.
And I know the National Science Foundation yesterday
evening presented an award to Dr. Normal Borlog, who is a great
champion and has done wonderful things in this area--and maybe
Dr. Colwell could comment on that in a minute.
Even the first generation products like pest-resistant
plants that have come out of these technologies and allow in
many cases farmers to use much, much less pesticide material--
which we know is damaging. I mean, talk about killing
caterpillars and butterflies, you do in fact do a lot of harm
to otherwise good insects inadvertently through the methods
that we have been using so far.
We have an opportunity to get around that and to protect
our environment at the same time, we deliver all the benefits
of these technologies. Second generation products that will
come out of biotechnology that provide enormous environmental
benefits as well as direct benefits to consumers through
improved nutrition. Foods that improve people's health
generally. Foods that can be made allergy-free that prior to
that so many people in our population couldn't touch at all.
And in fact in some cases, endangered their lives. And many,
many other examples.
The United States' system for regulatory oversight for
products of agricultural biotechnology is based on science, not
on politics, not on superstition, not on hysteria. Therefore as
the science advances we need to make sure that our regulatory
agencies are continuing to ask the right questions. These
technologies change very fast, so it's important that the
agencies look closely at what the implications are. But we have
to remember, we have 10 years of experience or more, in
science-based regulatory oversight of these biotechnology
products. We have the safest system of food in the world.
Now we've seen in recent months the impacts of incomplete
science on public opinion, and the Monarch butterfly research
was a good example of that. The research that showed in a
laboratory environment that the BT toxin that appeared on
milkweed surrounding corn crops harms Monarch caterpillars. But
if you feed a caterpillar a poison to the caterpillar, then the
caterpillar at least gets sick, and dies.
But if you look at realistic, much more complex
environments in the real world, and that research is going on,
what we find is that the effect is much, much less than had
been suggested; it's even negligible.
Could I quickly say what the parts of the President's
announcement are?
AGRICULTURAL BIOTECHNOLOGY
Senator Bond. And I just want to ask you one other thing.
We discussed yesterday the NAS-USDA field test of Bt corn
showing that the much lower rate of cancer-causing mycotoxin.
If you could explain that and very briefly in layman's terms, I
think we talked about it yesterday.
Dr. Lane. Can I give that one to Dr. Colwell?
Dr. Colwell. Two points. It's very important. One of the
many reasons for the biocomplexity initiative is that we have
over the last 30 years, 40 years invested heavily--as we should
have done, as a nation, in molecular biology, biotechnology,
genetic engineering. We now have these wonderful opportunities
ahead of us.
We did not, concomitantly, invest in understanding the
environment. And it's the scientific and engineering
underpinning of how complex systems of the environment work,
i.e., biocomplexity. If we did understand that, we would then
be in a position to be able to make predictions and sound
scientific judgments; so we need to gather information on
biocomplexity; that will allow us to utilize these
opportunities.
Let me also mention Dr. Borlog. An 83-year old gentleman
who, by using classical techniques of plant selection and
breeding, was able, single-handedly to save more lives, through
good nutrition via the crops he produced, than any other living
human being.
Last night he gave an impassioned plea, which was much in
the vein of your introductory statement, Senator, for the value
and importance of the new agricultural biotechnology for the
benefit of the world populations to provide nutrition and food.
It was an extraordinary opportunity to hear this gentleman,
a man who really knows what he's talking about.
Third point I'd like to make--I'm sorry about that.
Senator Bond. That's all right.
Entirely appropriate shodding, one I accept most
generously. Thank you.
Dr. Colwell. Well, the point was that a man who has won
many, many prizes for his research----
Senator Bond. What you meant was, he knows what he's
talking about. That's what you meant, you said it, and----.
Dr. Colwell. The point that is really important here is
that the classical techniques of breeding are imprecise. And
what one does is actually move genes around with bits of extra
DNA hanging on them. But with genetic engineering and
``enzymatic scissors'', very precisely we can make these kinds
of transfers. So that we know what we're doing in a way that
we've never been able to do before.
This allows us, with great precision, to provide the
benefits of improved crops and the benefits of biotechnology.
With respect to comparison of the techniques of classical
fertilized and chemically-treated crops, with the bioengineered
crops there is no question that you have much less need both
for fertilizer and for chemical treatment to reduce pests and
other infestations. And also you will remove those organisms
which do produce toxins when crops are harvested, such as
peanuts for example, and a fungus that will grow in association
with the peanuts, produces aflatoxin, which is one of the most
powerful toxins. In fact, fortunately the FDA does regulate and
test, require testing for aflatoxin in peanut butter, since
this is one of the most important foods for our children in the
United States.
So if we are able to produce a crop that's aflatoxin-free,
this then has an enormous advantage. And we can do this with
biotechnology.
EXPLANATION OF GENETIC ENGINEERING
Senator Bond. With the indulgence of my ranking member, may
I check the scientific authenticity of the statement I used to
explain to people like me who are not very scientifically
knowledgeable, that the old-fashioned methods of hybridization
and crossbreeding can let you cross a pit bull and a greyhound
and get a dog that can't run and won't fight. But with genetic
engineering, you can do a much better job of selecting those.
Is that a reasonable scientific approximation?
Dr. Colwell. It is florid, but fundamentally accurate.
Senator Bond. Senator Mikulski.
Senator Mikulski. I'm mesmerized by you, Senator. You know,
I remember when you took the committee over in 1994 and now
they come to this best hearing of the fiscal 2001, and you're
talking about crossbreeding and hybridization and--I think
someone ought to give me an honorary doctorate.
Senator Bond. I've got a couple of those, and the only
thing it does, they turn your name over to the development
office and they ask you to contribute for alumni giving, so
I've kind of turned them down after that.
COORDINATION OF THE NANOTECHNOLOGY INITIATIVE
Senator Mikulski. I'd like to come back to the
nanotechnology issue for kind of our wrap-up question, because
we're heading off to the allocation meeting where we're going
to put our flag on the ground jointly. So if we're going to
meet America's compelling human needs today and the science
needs to lay the groundwork for the future, we really need a
greater allocation.
So know that we would be working jointly to be able to do
that.
But coming back to the nanotechnology initiative, I'm going
to start with you, Dr. Lane, even though ostensibly NSF is to
be in charge. I share a very keen interest in this new
initiative because of a cornucopia of opportunity. I also share
Senator Bond's concern about multi-agency initiatives, because
I believe that a multi-agency initiative is what this is all
about; but it usually means multiple meetings, and those that
got power are going to keep it, and I just really wonder: What
do you see as the organizational mechanism. This is not to say
NSF shouldn't do it or whatever. But as you know that within
the science budget there are whales, there are dolphins, and
there are even minnows.
My question is, where would there be the kind of muscular
way of coordinating this so everybody gets in in sync of really
having those windows. Do you think it should be with NSF, do
you think it should be with the President's science advisor
with NSF playing the very key high profile role? You know what
I'm saying. We have some excellent heads of our Federal
agencies, but still, bureaucracy and turf often win out over
science and advancement.
Dr. Lane. Thank you, Senator. We want to be sure we have a
science-based coordination process as opposed to a bureaucracy-
laden one.
I believe the National Science Technology Council is a very
good mechanism, and I hope it will continue as a way to
coordinate those activities involving the Federal agencies that
need coordination; everything doesn't. But those that do, you
need a mechanism to do that.
We've said before that the nanotechnology initiative was
originally developed by an interagency working group. The
people with the most knowledge at NSF and other agencies coming
together, and yes they did have some meetings, but they were
substantive meetings. They talked about what's underneath
science and engineering at the nanoscale and what the
opportunities are; and then I talked about the way in which we
reviewed their ideas, and put it all together.
Right now we're working on an implementation plan for the
coordination itself. We're talking about the possibility of a
small coordination office, as we have in the case of global
change research and as we have in the case of information
technology----
Senator Mikulski. Would that be under you?
Dr. Lane. It would be an office funded through one or
another of the agency's budgets, but it would be an office that
essentially provides the staff support for coordinating this
particular initiative.
Senator Mikulski. Where would it be located and who would
it report to?
Dr. Lane. Physically it could be located in NSF, for
example, as one of the coordination offices is now. It would
report to whoever in government is chairing the committee of
higher level government officials that oversee this activity.
In the case of information technology, that's Dr. Ru----
Senator Mikulski. But I'm talking specifically about nano.
Dr. Lane. In the case of nanotechnology, we would expect a
similar kind of an arrangement to be set up, and we're simply
working with the agencies now to put together then the
implementation strategy.
So the staff in this office would report to the interagency
committee. We would be involved in that committee, but it would
be chaired by a member of the staff of either NSF, likely as
the lead agency, or one of the other agencies.
NEED TO PUBLICIZE NANOTECHNOLOGY INITIATIVE
Senator Mikulski. Well, I'd like to come back to something
that Senator Bond said earlier about what we need to
communicate to the Congress and to the American community.
First of all, I want to acknowledge the excellent work that
the interagency task force has already done. I also would like
to compliment Dr. Roco at the NSF, because it is really those
primary documents that I've read and pursued and took me on my
own interest on this, in this field and in this topic.
But right now I feel it's like our little secret, about
what this is. And it's well known in the scientific community
and so on, but our colleagues don't know about it yet, and my
concern is that if we follow this mechanism, and maybe it is
the right mechanism, but we're going to hide out right under
the bushel, and then the initiative is going to be buried under
other bushels.
Also, even going to what Senator Bond is talking about with
the plant genomes and also the whole biological revolution that
has truly been part of, it's been a two-track revolution in our
society, the biological and the infotec, that's moved
everything forward, everything in our society and science.
So what I'm looking for is for perhaps on this and then who
knows--that really have high visibility. And I don't want a
Manhattan Project motto where we're throwing money at it and so
on, because this isn't about throwing money about it, it is
about spotlighting one that our agencies do in addition to NIH,
not in new Roth. And in fact, NIH will be one of the crucial
beneficiaries of the biological work, the nanowork, the infotec
initiatives.
So would you please ponder that in talking with our
colleagues, because I think we need visibility. Because I think
from what I've read on the interagency, Dr. Kelly, is that the
vision is there but it's not visible. And a vision that doesn't
have visibility would be eclipsed by others who will meet to
fund the crisis of the week or maybe a compelling disease
that's emerged, et cetera. And yet you and I know that this is
going to point to better diagnostics, better treatment. You
talk about a spinal cord injury, just think about our little
kids with cerebral palsy. We could go on and on.
Hopkins is working on an electronic eye. An electronic eye.
Can you imagine? I can't even imagine it. But those are the
kinds of things so that we need the right mechanism to be sure
it's not bureaucracy, but we don't want the vision to be
invisible. And I think we need to think about how we elevate it
to make highest and best use of your ideas, and then we can get
our colleagues to embrace the basic nature of science.
Senator Bond. Thank you very much, Senator Mikulski. If you
want to start off and go plant the first flag, I want to ask
just as couple of quick questions and then I will be over there
as quickly as I can to join the battle.
Senator Mikulski. Well, we'll let those of you from the
Santa Maria come, but we've got our Ninas and Pintas over
there. And I believe we landed first anyway. So thank you, and
I look forward to an ongoing relationship.
NSF'S RESPONSE TO THE PITAC REPORT
Senator Bond. Thank you, Senator.
Last year, Dr. Colwell, we directed the NSF to support
research projects in information technology research,
recommended by the PITAC report, such as software, scalable
information infrastructure, privacy, the impact of information
technology advances on areas of societal, economical and
ethical importance, and encourage the NSF to provide increased
ratio of grants at higher funding levels for longer durations.
Could you comment on how the Foundation has responded to
it? Could you give us a flavor of the type of proposals being
submitted, and are you seeing risky, innovative proposals that
we contemplated, or are they just more of the same? If you
could answer that.
Dr. Colwell. Yes; I'll try to be very brief.
With respect to the ITR program solicitation, we received
something like 900 preproposals and about 130 were encouraged
to write full proposals. And we got these proposals reviewed by
making sure that we sent letters to every department in the
relevant area. We received 290 very, very select, expert
panelists from a database of 1,700 volunteers who were well-
qualified.
So we have been able to select proposals, through this
panel approach, and we've encouraged innovation and Dr. Bajcsy,
who is here, went to every single panel meeting, and she has
made a point of reading the preproposals as well. So we've been
able to select--really, we'll be selecting very innovative
proposals. And the numbers have been huge and the quality has
been extraordinary.
So we feel very comfortable with the approach that we're
taking.
NSF'S ABILITY TO FUND NUCLEAR-RELATED RESEARCH
Senator Bond. Thank you.
I call on Dr. Lane. It's my understanding that there's a
statutory limitation or requirement on NSF's ability to fund
nuclear-related research as it regards national security
issues.
Number one, is the statutory restriction, which I
understand dates from the 1950's, an impediment to what you
would regard as necessary research at NSF? I know also work is
done in collaboration with the Department of Energy and we are
concerned that that research may focus too heavily just on
power generators.
Are you able to and are we getting the kind of research in
nuclear medicine and the many related fields of nuclear science
that we should, or do you need to have that restriction lifted?
Dr. Colwell. At the moment we're doing very well, because
the NSF--one of the key roles is to support small groups of
university researchers who use nuclear physics facilities in
the United States and around the world. And also to educate the
next generation of nuclear physicists.
So we do the basic physics research on structure, atomic
studies, energetic beams of protons, light ions that are used
by medical and nuclear scientists. We do that kind of research,
so we don't really have an impediment, and we do collaborate
extremely well with the Department of Energy. But I'll ask Neal
to comment further on that.
Dr. Lane. I think it is true that a considerable amount of
research in the area of nuclear energy goes on in the
Department of Energy. And the Department of Energy supports
activities all the way from the fundamental end where a good
partnership with NSF assures that there's not an overlap of,
not double funding of anything, to a much more applied
activities in nuclear power. But also in issues of radiology
and the impact of radiation exposure on humans.
In fact, that's what got the Department of Energy into the
human genome project, which that department actually initiated,
was their interest in genetic effects of radiation.
So it's a very broad program in the Department of Energy,
and I think with the cooperation between the National Science
Foundation and the Department of Energy, we can assure that
there aren't any holes in the process.
Dr. Colwell. Actually, CAT scans, NMR, PET scans, positron
emission tomography; these are techniques that have come out of
the basic NSF research. So the impediments are not there for
basic research.
FUNDING FOR EPSCOR AND THE OFFICE OF INNOVATION PARTNERSHIPS
Senator Bond. Final quick question; the Office of
Innovation Partnerships was created to build capacity at
smaller research institutions, recognizing that the prestigious
schools like Stanford, M.I.T., and Michigan are getting lots of
dollars.
It's disappointing to me that the 2001 budget doesn't
request any additional funds for the office; flat-funds EPSCoR
and flat-funds a number of other programs designed to assist
minority-serving institutions. I was kind of scratching my
head, why we're going up in the budget and the point I raised
earlier about the ``haves'' having more and the ``nots''
getting left out.
Dr. Colwell. What we're doing is, the funding--co-funding,
with the research directorates, in other words, we're
leveraging money. So we will end up with total EPSCoR funding,
including co-funding from the research accounts to be about $73
million.
We feel that we can help institutions by providing the
EPSCoR funding, and then when projects come up that are
fundable but the money isn't sufficient to fund in the research
accounts, we can match them and, therefore, we can leverage the
research accounts. This is also an important mechanism for
bringing along those EPSCoR institutions that are beginning to
do very, very well, even being competitive, because this is an
experimental program. It's been running for a number of years,
but it's a program to help leverage these institutions. This is
one way to bring them up to their competition.
So we are working very hard to leverage the money in a way
that we can actually increase the effectiveness of EPSCoR.
Senator Bond. Well, as I've said, I have many more
questions; we'd like to continue this discussion; but if we're
going to have any money at all to do these things we're talking
about, I'd better go fight for the allocation.
So thank you very much. We'll leave the record open for
questions from other members of the committee. I've asked that
you give us further detail on several questions; we'll continue
to work with you.
Dr. Lane.
Dr. Lane. Senator Bond, we didn't have time for me to lay
out the approach to biotechnology the administration used.
Could I submit something for the record?
Senator Bond. If you would, submit it. And I appreciated
your briefing on it.
[The information follows:]
CLINTON ADMINISTRATION AGENCIES ANNOUNCE FOOD AND AGRICULTURAL
BIOTECHNOLOGY INITIATIVES: STRENGTHENING SCIENCE-BASED REGULATION AND
CONSUMER ACCESS TO INFORMATION
Agricultural biotechnology holds enormous promise for improving the
productivity and environmental sustainability of food and fiber
production. In order to secure that bright future, the Clinton
Administration is taking steps today to further our long-standing goal
of sound science regulation and improved access to information. These
steps are intended to build consumer confidence, ensure that
regulations keep pace with the latest scientific and market
developments and ensure that voluntary product claims, such as labels,
relating to biotechnology are truthful and not misleading.
The Federal Government Has a Strong Regulatory System for
Agricultural Biotechnology, a Sector That Holds Enormous Economic and
Environmental Promise. The U.S. regulatory approach to agricultural
biotechnology applies principles of sound science to ensure that there
are no unacceptable human health and environmental risks associated
with the use of these crops and that they are safe to enter into
commerce. This system, encompassing the food safety and environmental
regulations of the Department of Agriculture, Food and Drug
Administration, and Environmental Protection Agency, has resulted in
rigorous scientific review of products, while providing a predictable
regulatory environment that fosters scientific advancement and product
innovation.
The Administration's Actions Today Will Strengthen our Science-
Based Regulatory System and Facilitate Reliable, Voluntary Labeling
Practices. The Administration's actions today will ensure that science
remains the cornerstone of our nation's regulatory system--keeping up
with recent advances in genetics, ecology, and health--and that Federal
oversight of these products remains strong. In addition, they will
facilitate voluntary efforts by producers to differentiate non-
bioengineered commodities through the development of accurate and
reliable testing and quality assurance procedures and through guidance
for the content of product labels.
The Clinton Administration announces steps to:
Reinforce the Strength & Transparency of Science-Based Regulation
The Council on Environmental Quality (CEQ) and the Office of
Science and Technology Policy (OSTP) will conduct a 6 month interagency
assessment of Federal environmental regulations pertaining to
agricultural biotechnology and, if appropriate, make recommendations to
improve them.
The Food and Drug Administration (FDA) will take steps to ensure
that it is informed at least 120 days before new agricultural
biotechnology crops or products are introduced into the food supply and
will propose that submitted information and the agency's conclusion be
made available to the public.
The U.S. Dept. of Agriculture (USDA), FDA, and the Environmental
Protection Agency (EPA) will support an expanded program of
competitively awarded, peer-reviewed research focusing on current &
future safety issues.
Enhance Information for Consumers and Farmers
FDA will develop guidelines for voluntary efforts to label food
products under their authority as containing or not containing
bioengineered ingredients in a truthful and not misleading manner,
consistent with the requirements of the Federal Food, Drug, and
Cosmetic Act.
USDA will work with farmers and industry to facilitate the creation
of reliable testing procedures and quality assurance programs for
differentiating non-bioengineered commodities to better meet the needs
of the market.
USDA, FDA, EPA, and the State Department will enhance domestic and
foreign public education and outreach activities to improve
understanding of the nature and strength of our regulatory process.
USDA will provide farmers with reliable information on markets to
inform their planting decisions and with best farming practices for new
crop varieties.
These Initiatives Reaffirm our Science-Based Regulatory Approach
and Improve Public Access to Information. These initiatives reaffirm
the Federal government's confidence in its independent, science-based
regulatory approach to agricultural biotechnology. They also reflect
that, as science and industry advance and consumer interest grows, it
is appropriate to maintain the strength of our regulatory framework and
ensure that information available to the public about the technology
and to consumers about food products is balanced and accurate. In so
doing, Americans will be in a better position to realize fully the
enormous promise of this technology.
DETAILS OF ADMINISTRATION INITIATIVES
Reinforcing the Strength of Science-Based Regulation
The Council on Environmental Quality (CEQ) and the Office of
Science and Technology Policy (OSTP) will conduct a 6 month interagency
assessment of Federal environmental regulations pertaining to
agricultural biotechnology and, where appropriate, make recommendations
to improve them.
--CEQ and OSTP will conduct an interagency assessment of
environmental biotechnology regulations by preparing case
studies to identify strengths and potential areas for
improvement in the existing regulatory structure. The following
agencies will participate in the assessment: Food and Drug
Administration (FDA), Environmental Protection Agency (EPA),
U.S. Department of Agriculture (USDA), and the Department of
the Interior as well as other agencies as appropriate. The
focus of this study will be in domestic environmental issues.
The FDA will take steps to ensure that it is informed at least 120
days before new agricultural biotechnology crops or products are
introduced into the food supply.
--The FDA will develop a proposed rule to require companies to notify
FDA of their intent to market a new food derived from
biotechnology. This new rule would replace the current
voluntary, but widely adhered to, practice of consultations
with the agency. After reviewing the company's submission, FDA
will issue a letter to the firm describing its conclusion about
the safety and regulatory status of the food or animal feed.
The U.S. Department of Agriculture (USDA), FDA, and the
Environmental Protection Agency (EPA) will support an expanded program
of competitively awarded, peer-reviewed research focusing on current
and future safety issues to expand the existing body of independent
science on biotechnology derived foods.
--These three agencies will coordinate their research programs
related to risk assessment of agricultural biotechnology and
expand these programs, consistent with available resources, in
a way that maintains a strong science-based regulatory program.
In particular, USDA's research, funded under the Initiative for
Future Agriculture and Food Systems, should provide a strong
core of competitively funded risk assessment research.
Enhancing Information for Consumers and Farmers
FDA will engage in a process to develop guidelines for voluntary
efforts to label food products under their authority as containing or
not containing bioengineered ingredients in a truthful and not
misleading manner, consistent with the requirements of the Federal
Food, Drug, and Cosmetic Act.
--FDA will develop guidelines to help ensure product label claims
concerning the biotechnology status of foods are truthful and
not misleading. The guidelines will help manufacturers design
labeling that is truthful and informative, rather than
confusing. The agency will develop draft labeling guidelines
with the use of focus groups, and will publish them for comment
so as to receive maximum consumer input.
USDA will work with farmers and industry to facilitate the creation
of reliable testing procedures and quality assurance programs for
differentiating non-bioengineered commodities to better meet the needs
of the market.
--USDA will develop an Advanced Notice of Proposed Rulemaking (ANPR)
to seek input from consumers, industry, and scientists on how
best to meet the needs of evolving markets. The ANPR will seek
input on current market practice. In addition, it will seek
input on the feasibility and desirability of quality assurance
programs.
USDA, FDA, EPA, and the State Department will enhance domestic and
foreign public education and outreach activities to improve
understanding of the nature and strength of our regulatory process.
--Using a variety of outreach mechanisms at their disposal, agencies
will proactively engage the public on how their foods are
regulated and why these regulations protect the environment and
human health. This is important both domestically and
internationally where U.S. agricultural products are now facing
increasing restrictions to some markets, in part due to the
lack of shared understanding and information.
USDA will work closely with the State Department to ensure
collection of timely information on overseas markets, and will provide
farmers with reliable information on markets to inform their planting
decisions and with best farming practices for new crop varieties.
--One of the most difficult choices a farmer faces each year is what
to plant--what type of crops and what specific varieties.
Farmers need better market data to better inform their choices.
In some cases the current uncertainty in overseas markets
concerning biotech crops has made their selections even more
difficult. USDA will provide' farmers with better information
on changes in market access.
CONCLUSION OF HEARINGS
Senator Bond. Thank you very much, the hearing is recessed.
[Whereupon, at 11:04 a.m., Thursday, May 4, the hearings
were concluded, and the subcommittee was recessed, to reconvene
subject to the call of the Chair.]
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2001
----------
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 2001 budget
request. Those statements submitted by the chairman follow:]
INDEPENDENT AGENCIES
Department of Health and Human Services
Agency for Toxic Substances and Disease Registry
Prepared Statement of Dr. Henry Falk, Assistant Administrator
Mr. Chairman and Committee Members, thank you for the opportunity
to provide you with written testimony on the Agency for Toxic
Substances and Disease Registry's (ATSDR) budget for fiscal year 2001.
As you know, under the Superfund legislation, ATSDR was given the
important mission of protecting the public's health related to exposure
to toxic substances. Our mandate includes 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. We
are also charged with the critical task of determining the relationship
between exposure to toxic substances and adverse health effects.
To fulfill our mission, Congress appropriated $76 million to ATSDR
in fiscal year 1999, and $70 million in fiscal year 2000. The
President's budget for fiscal year 2001 calls for an appropriation of
$64 million to fund ATSDR's activities.
In this testimony we would like to focus on three areas which have
major budgetary implications--for both current and future program
activities.
--We have a substantial and continuing Superfund workload of
increasing complexity. ATSDR provides critical health
information and services at these sites to community members,
EPA and state decision-makers, and health care providers.
--Health concerns continue long after clean up because health
conditions often manifest only long after exposure.
--New, significant health problems continue to emerge that need to be
addressed. Current cases of lung cancer and other lung
impairments at Libby, MT, are a striking example of this.
Providing critical health information and services: Site Evaluations
The volume of ATSDR's workload at sites continues to be
substantial. In the last fiscal year alone, ATSDR and our partners
produced 1,569 health consultations, 108 public health assessments, and
32 exposure investigations. ATSDR has a staff of a little more than
400. To meet the workload demands, we supplement our own staff by
funding 28 state health departments to work with us.
ATSDR's site health evaluation and consultation efforts are the
starting point for all of the agency's site-specific health activities.
Further site activities include epidemiologic health studies, health
education and health promotion.
The breadth of ATSDR's activities at sites is matched by the
breadth of the kinds of sites we routinely work on. Early in our
program the focus was primarily on EPA's National Priorities List (NPL)
sites. With time, however, our workload has shifted to a wider array of
Superfund-covered sites including emergency removals, petitioned sites,
and federal facilities. Examples of the kinds of sites we have worked
on recently include:
--NPL Sites.--As mentioned, ATSDR is heavily involved at NPL sites.
Among recent examples are Bunker Hill, Idaho; Keil Chemical
Manufacturing, Indiana; Brick Township and Toms River, New
Jersey; AMOCO Sugar Creek in Kansas City, Missouri; and the
Monsanto/Solutia site in Anniston, Alabama.
--Federal Facilities.--Current examples of ATSDR involvement at
federal sites are the Hanford Nuclear Facility in Washington;
the Kelly U.S. Air Force Base in Texas; Camp LeJeune military
base in North Carolina; the Otis Air Force Base in
Massachusetts; and the Valley Forge National Historic Park near
Philadelphia, Pennsylvania. Our work at federal facilities is
funded by the affected federal agencies.
--Emergency Response/Immediate Removal Sites.--Examples of ATSDR
emergency assistance is our responses to the Texarkana,
Arkansas extensive mercury exposures; the Rhode Island concerns
of PCB contamination in the Woonasquatucket River; and the
Mississippi, Alabama, Louisiana, Tennessee, Arkansas, Texas,
and Illinois methyl parathion exposures.
--Petitioned Sites.--Environmental public health expertise also is
frequently requested or ``petitioned'' by concerned citizens.
Among the areas where ATSDR has responded to petitions are the
U.S. Navy bombing range on Vieques Island, Puerto Rico; the
Santa Susana Field Laboratory in Ventura County, California;
and the Fresh Kills Landfill in New York.
--Resource Conservation and Recovery Act (RCRA) regulated sites.--
ATSDR is currently working with EPA to strengthen our support
of their RCRA program. Some examples of RCRA sites at which
ATSDR has been active include General Electric in Pittsfield,
Massachusetts; Bovoni Landfill in St. Thomas, Virgin Islands;
Iowa Beef Processing in South Dakota and Nebraska; Pacific Gas
and Electric Company in Hinkley, California; and Trinity Foam
Processing plant in Archdale, North Carolina.
--Brownfields Re-development Sites.--ATSDR has funded public health
activities at Brownfields sites in Baltimore, Maryland; Lowell,
Massachusetts; Portland, Oregon; Chicago, Illinois; Rhode
Island; and Seattle-King County, Washington.
ATSDR's health consultations, public health assessments and
exposure investigations at sites are critical in assisting EPA and
state officials on clean-up decisions, addressing community health
concerns, and in investigating possible increases in disease rates. The
following are a few examples of ATSDR's public health activities around
the country where our work has clearly made a difference:
--Concerned about possible exposures, this past year EPA asked ATSDR
to review data on the Hudson Oil Refinery site in Cushing,
Oklahoma for its public health implications. Based on a site
visit and review of the data, ATSDR determined that the site
posed an urgent public health hazard and released a public
health advisory to that effect on March 4, 1999. In April, EPA
successfully used that public health advisory to help them list
the site on the National Priorities List which gave them access
to necessary funds to continue their removal actions without
interruption.
--In conjunction with our state cooperative agreement partner, ATSDR
assessed the health concerns of the community living around an
inactive metal-plating facility in Vincent, Alabama this past
year. The health consultation indicated that there was an
urgent health threat posed by deteriorating vats and buildings
and chemical hazards on site; and a possible health threat from
nearby potentially contaminated water. After Alabama and ATSDR
advised the public and EPA of the hazards, EPA took immediate
action to fence the site, post warning signs around the
perimeter of the site, and sample on-site and off-site areas to
better determine the extent of contamination.
The public was extremely responsive as well. The community worked
with Alabama's health department and ATSDR to educate residents
about the hazards posed by the site through community meetings,
a newsletter, and a door-to-door campaign to stop children from
playing on or near the site. Preliminary evaluation of these
efforts show that 90 percent of the residents correctly
understood the hazards and risks associated with the site.
--Planned incineration of dioxin and other hazardous wastes from
Times Beach and other Eastern Missouri contaminated sites
created community concerns about potential exposures to these
substances. To address these concerns, ATSDR, working with the
affected communities and EPA, designed a study to measure blood
levels of dioxin and related compounds before, during and after
incineration to test the effects of incineration. Results of
the ATSDR investigation utilizing blood samples analyzed by the
CDC's environmental health lab showed that levels of dioxin and
other contaminants in study participants decreased
significantly from pre-incineration to mid- and through post-
incineration. Because of extensive citizen input and
involvement throughout the study, there was wide acceptance of
these findings and a very successful test of the efficacy of
incineration as a clean-up methodology.
Providing critical health information and services: Health Education
ATSDR's health education and promotion programs focus on educating
individuals, communities, and health-care providers about the health
effects of hazardous substances in the environment. ATSDR works with
affected communities to develop and promote public health strategies to
mitigate the health impact of hazardous substances. To ensure effective
health care services, our targeted continuing education programs and
physician-related partnerships have enabled local physicians, nurses,
and other health care providers to better diagnose and treat their
patients exposed to toxic substances.
As a result of site-specific lessons, ATSDR has become the leading
resource within HHS for educating communities, the general public, and
environmental health professionals about the medical and public health
impact of toxic chemicals. ATSDR's toxicological profiles, case studies
in environmental medicine, and medical management guidelines have
become information source of choice for a wide range of audiences--from
the lay public to the academician. Our website and toll-free
information number provide user friendly access to this information
literally hundreds of times per day.
To expand the reach and application of health education and
promotion activities, ATSDR has established many partnerships with
national organizations of health professionals. ATSDR's partners
include the American Academy of Pediatrics, American College of Medical
Toxicologists, Association of State and Territorial Health Officials,
National Alliance of Hispanic Health, the Migrant Clinicians Network,
and the National Environmental Health Association. Partnerships with
state and local health departments are particularly critical to
accomplishing public health activities at the most local levels.
Following are a few examples of health education and promotion
activities that ATSDR has conducted directly and with partner
organizations.
--A significant effort to educate health care providers was initiated
in the Agricultural Street Landfill (ASL) community in
Louisiana. ASL is a 95 acre former municipal landfill that was
developed, in part, for residential use. In order to address
the residents health and wellness concerns, ATSDR distributed
environmental health information to all 462 health care
providers who serve that community. In addition, we provided a
training seminar that 165 of these health care providers
attended--a group who collectively serves more that 90 percent
of the community.
--The agency is working with the Association of Occupational and
Environmental Clinics (AOEC). The AOEC 65-clinic network and
300 individual members work with ATSDR to provide responses to
health concerns associated with exposure to hazardous
substances for local health care providers and community
members. This relationship enabled ATSDR to better respond to
the community in and around Alberton, Montana, the site of a
railroad derailment-caused chlorine spill. ATSDR and an AOEC
physician worked with community members to develop criteria for
evaluation of a range of health concerns. Thirty-eight
residents received health evaluations and several were further
referred for pulmonary and neuropsychiatric testing as a result
of their exposure.
--The Tar Creek Superfund site is located in the northeastern corner
of Oklahoma. Years of mining in the Tri-State Mining District
(located at the juncture of Oklahoma, Kansas, and Missouri) has
resulted in the accumulation of a large volume of tailings and
other mine wastes. Children who live or play near mine tailing
piles may ingest or inhale lead-contaminated dust. These piles
have also been used by riders of off-road vehicles, and houses
have been built on these tailings.
ATSDR, along with the Ottawa County Health Department, has put
together a health promotion campaign which includes health care
provider and community education, as well as outreach and blood
lead testing in nearby communities. Intervention through a
mobile blood-testing unit has resulted in seven educational
sessions reaching about 400 preschool/kindergarten children. In
coordination with Women, Infant and Children's (WIC) services,
the county health department has checked for childhood anemia
in over 100 blood lead level tests and offered blood lead
screening to all pregnant women. A database was created to
track blood lead levels and interventions and to provide
information to EPA for pathway analysis and cleanup, when
necessary. Additionally, parents of children identified with
elevated blood lead levels receive proper referrals, education
and are entered in the database for follow-up. Plans are to
expand the blood-lead screening to each Head Start and
kindergarten throughout the county's seven school districts in
the 2000 school year.
The fiscal year 2001 budget, which is $6 million below the fiscal
year 2000 budget, will support such efforts at selected sites, but some
reductions will have to be made. (See Program Output Table for more
detail.)
ATSDR PROGRAM OUTPUT TABLE
------------------------------------------------------------------------
$70 million $64 million
$76 million fiscal year fiscal year
Program fiscal year 2000 2001
1999 actual estimated projected
------------------------------------------------------------------------
Cooperative Agreement States..... 28 28 21
Sites Addressed.................. 500 500 400
Public Health Assessment 108 78 60
Documents.......................
Health Consultations............. 1,569 1,900 1,400
Exposure Investigations.......... 32 45 30
Site-Specific Environmental 8 10 7
Health Intervention.............
Priority Health Conditions, 35 30 25
Epidemiologic, and Health
Studies.........................
Site-Specific Surveillance....... 3 3 ...........
State-Based Surveillance......... 6 6 6
Hazardous Substances Emergency 15 14 12
Event Surveillance
(participating states)..........
Toxicological Profiles........... 20 14 10
Pediatric Environmental Health 6 10 5
Specialty Units.................
------------------------------------------------------------------------
Public health problems persist even after clean-up
There is an almost universally held perception that once a site is
cleaned up no health problem exists. Unfortunately that is not the
case. For many of the toxic substances found at Superfund sites, there
is a long latency period before health conditions manifest themselves.
For example, many cancers can take 20 or 30 years after exposure before
diagnosis.
This issue has recently been a point of discussion in consideration
of the reauthorization of Superfund. In June 1999, Congressman John
Dingell's office contacted ATSDR to request that the agency provide
information on adverse health effects associated with the top 50
substances on the Priority List with latency periods of six years or
greater. In response, ATSDR reviewed and compiled the information
available in our existing toxicological profiles. Our report noted that
vinyl chloride, benzene, PCBs, trichloroethylene, hexavalent chromium,
lead, arsenic, creosote, and benzidine are classified as ``known to
cause cancer in humans'' or ``probable human carcinogens,'' and have a
latency period of at least six years, usually 10 to 20 years or more.
In addition, a number of other substances on the list are classified as
``reasonably anticipated to cause cancer in humans,'' based on limited
evidence in humans, but sufficient evidence in animals. These
substances include cadmium, chlordane, beryllium, carbon tetrachloride,
and cobalt.
The consultation also summarized the potential for developmental or
neurologic effects with a latency of at least six years. Substances
associated with these adverse health effects include organochlorine
pesticides (e.g., DDT, aldrin, chlordane), some metals (mercury, lead,
cadmium), arsenic, and trichloroethylene (TCE).
ATSDR health studies and registry findings lend further evidence of
the often lengthy time it takes before health effects are apparent in
people exposed to toxic substances at Superfund sites. For example:
--Two ATSDR studies found that people exposed to lead (a common
contaminant found at one-third of sites) during the 1970s at
the Bunker Hill NPL site in Idaho, continue to have long-term
health effects. As a result of exposures as children and young
adults more than 25 years ago, this population is at risk for
manifesting health problems such as neurologic disease,
infertility, high blood pressure, and early onset of menopause.
--Analyses of self-reported data from the ATSDR Exposure Registry has
indicated excesses of a number of health effects. Data from the
registrants on the Dioxin Subregistry (which includes
registrants from four Missouri NPL sites) and information from
the nearly 10,000 people on ATSDR's subregistries on volatile
organic compounds of TCE, TCA and benzene show an excess in
reports of a variety of illnesses including anemia and
respiratory problems.. Further studies are underway to validate
these reported health effects.
--A follow-up study of people living near the Caldwell Systems, Inc.,
a former hazardous waste incinerator in North Carolina, found
that residents initially found to have respiratory symptoms in
an earlier study, continued to have a higher prevalence of
respiratory symptoms two years later.
In addition, all of the following specific health conditions have
been associated with exposures to hazardous substances--defective
reproductive outcomes, cancer, immune abnormalities, and
neurobehavioral effects. Several ATSDR studies have found associations
between living near hazardous waste sites or drinking contaminated
drinking water and low birth weight in infants. Associations have also
been found between exposures and various birth defects, including
cardiac, neural tube and oral cleft defects.
It is critical that ATSDR not only continue its study of the
relationship between exposure to toxic substances and resulting
disease--but also that we have funding to intervene with early
diagnosis and referral wherever possible. Such interventions can and do
save lives. A good example of this is the Drake Chemical Site in
Pennsylvania:
--In 1986, ATSDR successfully implemented a screening program for
former workers exposed to a human bladder carcinogen at the
Drake Chemical site in Pennsylvania. These former workers had
been exposed to betanaphthylamine a known human carcinogen,
specifically linked to bladder cancer. A total of 364 workers
were initially eligible for screening; 82 percent of whom chose
to participate. Compliance was high; participation rates ranged
between 82 percent to 92 percent. Of the workers screened in
the first phase, 50 were referred for the second phase which
included a laboratory diagnostic work-up (a cystoscopy). As of
1997, two workers have been diagnosed as having early stage
cancer, another 13 were diagnosed with varying degrees of
dysplasia, and 25 had some type of bladder abnormality
diagnosed. This program has clearly been of benefit for
detection and treatment of disease for these workers, and has
been so successful that it now is continued by the State of
Pennsylvania.
Continually emerging health problems at Superfund sites
The health screening activities begun at the Drake Chemical site
more than a decade ago and continuing even today, underscore the need
for long-term public health attention and intervention. Currently,
ATSDR is involved in a number of sites where the long latency of
diseases potentially associated with exposure to toxic substances have
appeared. The situation in Libby, Montana, offers a dramatic example of
past exposure resulting in serious disease.
Commercial vermiculite mining and processing facilities operated
for more than 60 years (until 1990) in and near the city of Libby,
Montana. Recent reports have documented cases of non-occupational
asbestosis-related pulmonary impairment among family members of former
mine employees and others in the community with no connection to the
mining operations. They are suffering (or dying) from asbestosis,
mesothelioma, and lung cancers related to their asbestos exposure.
Finding non-occupational asbestos-related pulmonary disease is
extremely unusual and suggests that dangerous levels of asbestos
exposure have occurred within the Libby community. Once these reports
became known to EPA at the end of last year, they requested ATSDR's
assistance in responding to the very real concerns of the community. In
the course of the last couple of months ATSDR has designed a medical
testing program to address the public health implications of past human
exposure to tremolite asbestos in Libby.
--The principal goal of the medical testing program is to identify
asbestos-related health effects among people exposed to
asbestos from the Libby vermiculite mine and refer them for
additional evaluation and treatment.
--Another important goal of the testing program is to assess the
prevalence of asbestos-related conditions in the study area as
a whole. This will be performed in order to: (a) identify the
types of illnesses experienced by these exposed people and
better educate local physicians; (b) provide the local medical
community with an estimate of the additional medical care the
community will need over the next 10-20 years, and; (c) provide
the EPA with information needed to identify and eliminate
current exposures to asbestos in the community.
The first phase of the medical testing program involving both chest
x-rays and pulmonary function tests will be directed at the 3,000-5,000
people currently living in Libby who were potentially exposed. The cost
of this first phase is approximately $4.5 million--an amount that could
not be funded within ATSDR's fiscal year 2000 budget. Because EPA
recognized the extreme importance of this medical testing program, they
have allocated the $4.5 million to reimburse ATSDR to carry out this
work.
As this medical testing program progresses, it may well need to be
expanded to former residents of Libby who now reside in other parts of
the country. EPA also is investigating scores of other sites throughout
the United States that have utilized vermiculite from Libby. As EPA
investigates these sites, public health actions at other sites with
significant exposure patterns--including replicating the medical
testing program--may be necessary. Epidemiologic studies to investigate
the linkage of different exposure patterns to the development of
disease may also be needed.
Another emerging health problem is the increase in brain cancer in
children nationwide. In 1997, ATSDR 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. Funding for this effort, and similar
investigations at other sites, will be curtailed in fiscal year 2001.
Finally, there is some suspicion that increased liver cancers in
the Southwest and increased cases of multiple sclerosis may be linked
to exposures to toxic chemicals. The cost of investigating these
illnesses is not included in our budget.
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.
Mr. Chairman and Committee members we would be happy to respond to
any questions you might have about our testimony or any of our program
activities. Please direct your questions to ATSDR's Assistant
Administrator, Dr. Henry Falk, by writing him at MS E-28, 1600 Clifton
Road, Atlanta, GA 30333, or phoning (404) 639-0700.
______
Department of Defense--Civil
Department of the Army
Cemeterial Expenses
Prepared Statement of Dr. Joseph W. Westphal, Assistant Secretary of
the Army for Civil Works
INTRODUCTION
I appreciate the opportunity to provide written testimony to the
subcommittee in support of the fiscal year 2001 appropriation request
for Cemeterial Expenses, Department of the Army. The Secretary of the
Army, 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. 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 2001 BUDGET OVERVIEW
The request for fiscal year 2001 is $15,949,000, an increase of
$3,476,000 over the fiscal year 2000 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 Soldiers' 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.
First, the budget includes $717,000 to design the next increment of
the Columbarium Complex.
Second, $500,000 is included to design relocation of existing
utilities along one of the major thoroughfare's traversing the
cemetery, taking advantage of economies of scale and providing
additional burial capacity.
Third, $400,000 to continue preparation of a concept land
utilization plan for lands contiguous to Arlington National Cemetery
under the jurisdiction of the Department of Defense. This continues
with the President's goal of ensuring that the cemetery remains open to
initial burials through the end of the 21st century.
Fourth, $800,000 is included to study the repairs required at the
Kennedy gravesites and the reception building at the Memorial
Amphitheater.
Fifth, $100,000 is budgeted to continue developing a ten-year
capital investment plan. We initiated this effort in accordance with
guidance from the Office of Management and Budget (OMB) requiring a
multi-year plan for financing construction projects.
Sixth, $900,000 continues an initiative started in fiscal year 1996
to expand contracts for enhancing the appearance of the cemetery, while
reducing the overall 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, $11,535,000, 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 95 of the cemeteries' total 101 Full
Time Equivalent Work-years (FTEW's).
Contractual services as part of Operation and Maintenance total
$5,389,000, including: $1.7 million for grounds maintenance; $900,000
for information guide services; $1,590,000 for tree and shrub
maintenance; and $130,000 custodial services. Custodial services
previously cost about $210,000. However, competition resulted in a much
lower bidder receiving this contract, leading to significant savings
since fiscal year 1998. This contractor has now worked during the
busiest season at Arlington, and performed adequately.
Administrative Program
The Administration Program, $967,000, 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, $3,447,000, is for ongoing construction
projects.
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 $100,000 included in the fiscal year 2001 budget to continue
developing a multi-year plan for financing projects, consistent with
the OMB guidance requiring full funding of capital investments in the
most technically and financially efficient manner.
Other construction projects include: $400,000 to continue
preparation of concept utilization plans for developing contiguous
lands; $717,000 to design the next increment of the Columbarium
Complex; $500,000 to design the relocation of existing utilities;
$500,000 to study the repairs required at the Kennedy gravesites;
$300,000 to study the repairs required at the Memorial Amphitheater
reception building; $200,000 to repair the roof at the visitors center;
$200,000 to perform road repairs throughout the cemetery; $100,000 to
inspect the existing sewer lines for needed repairs; $50,000 to remove
an underground storage tank; $30,000 to study repairs required at the
paid parking facility; and $350,000 to continue the graveliner program.
FUNERALS
In fiscal year 1999, there were 3,586 interments and 2,152
inurnments. In fiscal year 2000, we estimate there will be 3,700
interments and 2,200 inurnments, and in fiscal year 2001, we estimate
there will be 3,700 interments and 2,300 inurnments.
CEREMONIES
Thousands of visitors, both foreign and American, visit Arlington
to participate in events. During fiscal year 1999, 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 1999, 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 $100,000 to continue a study, begun in fiscal year 1998, to
develop an estimating procedure and reliable estimates providing more
information on the demographics 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.
CONCLUSION
The funds included in the fiscal year 2001 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 request.
______
General Services Administration
Federal Consumer Information Center
Prepared Statement of Teresa Nasif, Director
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to be here today to present the fiscal year 2001 budget
request of the Federal Consumer Information Center (FCIC). With me
today is Beth Newburger, Associate Administrator of Communications for
the U.S. General Services Administration and Debi Schilling, Director
of Budget for the U.S. General Services Administration.
Today, I appear before you for the first time as the Director of
the newly formed Federal Consumer Information Center. In keeping with
GSA's strategic goal to excel at customer service, GSA Administrator
Dave Barram signed an order on January 28, 2000 transferring the
Federal Information Center (FIC) to the Consumer Information Center
(CIC).
The merger brings together two very popular, highly visible
consumer organizations. The CIC was established by Executive Order in
1970 to work in partnership with Federal departments and agencies to
inform the public about health and safety issues, developments in
federal programs, and the impact and effects of federal research and
regulatory actions. The FIC was established in 1966 and formalized by
Public Law 95-491 in 1978 to provide the public with direct information
about all aspects of Federal programs, regulations, and services. The
FIC simplifies access to the Federal Government by serving as a single,
initial point of contact. To accomplish this mission, FIC uses
contractual services to respond to public inquiries via a nationwide
toll-free telephone call center. The calls cover a myriad of topics
such as Federal benefits, passports, Federal taxes, housing, and
consumer issues.
The merger will facilitate public use of Federal information by
broadening both the variety of information available and the ways
consumers can obtain it. The new Federal Consumer Information Center
combines the nationwide toll-free telephone assistance program and
databases of the FIC with the CIC web site and publication distribution
programs. Bringing together these two organizations will streamline and
enhance the delivery of information services to the American public.
The FCIC will become a one-stop source for citizens to get answers to
questions about government and consumer issues--the consumer's help
desk for everyday life. FCIC will give the answer they can trust and in
the way they want it: in print, on the web, or from a friendly voice on
the phone.
A cornerstone of the FCIC reference library, used by consumers and
information professionals alike, is the Consumer's Resource Handbook.
During fiscal year 1999, we updated both the print and the web version
of the Handbook, recognized as one of the most helpful and popular
Federal resources ever published, and work is underway to release the
new 2000-2001 edition this summer. Earlier this year, we held a series
of focus groups to obtain feedback on the design and to get suggestions
for new content areas. Corporate, education, and government contacts,
as well as consumers and congressional caseworkers, all lauded the
Handbook and encouraged FCIC to continue widespread promotion and
distribution. These discussions led to a decision to rename this
document the Consumer Action Handbook to reflect how the book gives
people the information they need to take action. FCIC's upcoming
television public service advertising campaign will highlight the new
Consumer Action Handbook and encourage consumers to call for a free
copy or to use the electronic edition on the FCIC web site.
Demand for consumer information continued to increase during fiscal
year 1999. Since our web site went up in fiscal year 1995, FCIC has
continuously expanded and improved its content and design, and page
accesses have increased from one million in fiscal year 1995 to 9.5
million in fiscal year 1999. Also in fiscal year 1999, the FIC program
responded to over 2.7 million calls about Federal programs and
services. In total, requests for printed publications, web site page
accesses, and FIC calls are expected to exceed 20 million in fiscal
year 2000.
Not only has consumer demand increased, I'm pleased to report there
is a high level of satisfaction with our services. During fiscal year
1999, the National Partnership for Reinventing Government commissioned
the first-ever comprehensive federal customer satisfaction survey.
Customers of twenty-nine federal agencies were surveyed to determine
how well they felt they were being served. CIC earned a score of 77 out
of a possible 100, ranking well above the average federal agency score
of 68.6 and the average private sector score of 72. With the addition
of the FIC national call center, an expanded and enhanced web site, and
the new edition of the Consumer Action Handbook, I'm confident that
citizens will be increasingly satisfied with FCIC services in the years
ahead. Whether it's explaining government benefit programs, sharing the
results of federal research, or helping consumers solve their
marketplace problems, FCIC will make it easier for citizens to find
trustworthy answers to questions about everyday life.
Mr. Chairman, again I thank you for the privilege of appearing on
behalf of the Federal Consumer Information Center to present its budget
request for fiscal year 2001. I hope that the Committee will agree that
FCIC is a valuable Federal program and that it will look favorably upon
our request.
______
Selective Service System
Prepared Statement of the Gil Coronado, Director
INTRODUCTION
The Selective Service System (SSS) entered Year 2000 without any
Y2K difficulty, continuing its long tradition of service to America,
and with great enthusiasm about new endeavors on its horizon. The
Agency's accomplishments for fiscal year 1999 reflect the
professionalism of its full-time and part-time employees along with the
dedication of its nearly 11,000 part-time civilian volunteers. I am
proud to say that the Selective Service stands ever ready to fulfill
its statutory missions should the President and the Congress authorize
a return to a draft. But, even more exciting are the Agency's new
initiatives, underway and planned, which will enable it to play an even
greater role in direct support of Armed Forces recruiting and
accessions processing. This means that Selective Service will provide
not only America's time-proven defense manpower insurance for war, but
will also contribute to embellish America's national defense needs each
and every day.
Although Selective Service is a small Agency with a modest annual
budget, it does far more than its size and funding level suggest. 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 also is a reminder that, as Americans, every young man is
personally responsible for ``providing for the common defense,'' that
he defend our Nation as his fathers, grandfathers, and great
grandfathers have so gallantly done in the past. And it is through the
SSS structure that every American community plays a positive role in
providing for that common defense. Today, nearly 11,000 volunteer Board
Members are appointed, trained, and standing by in America's counties,
cities, and towns to respond to a national crisis that might mandate a
return to a draft. To ensure fairness and equity, each Board is a
melting pot of civic-minded men and women representing the racial,
cultural and ethnic diversity of the young men in the communities they
serve. And they form the unique bond between grass roots America and
the U.S. Armed Forces.
The President's budget request for fiscal year 2001 proposes
funding the SSS at $24,480,000. This is a slight increase over the
current fiscal year, but is considerably less than actual
appropriations received from fiscal year 1983 through 2000. It has only
been through adjusted fiscal priorities, reduction of full-time
staffing, and the adoption of state-of-the-art information technologies
over the years, that the SSS has been able to perform, enhance and
accomplish its statutory responsibilities without interruption.
Millennium Change Uneventful for Agency Computer Systems
The SSS and its automated systems entered the new millennium
without problems. The challenge faced by the Agency during the last
year of the 20th Century was to ensure the continuous operations of its
systems during the century rollover and plan for likely failure
contingencies. Our computer systems were modified, tested and validated
by an independent contractor to be Y2K compliant. A Business Continuity
and Contingency Plan was also developed to provide direction and
corrective action alternatives in the event of any system failure.
Achieving High Registration Compliance Remains a Challenge
As pointed out previously, ensuring that men who should be
registered do indeed register remains difficult. Overall, our estimate
of national registration compliance rates have eroded an additional
percentage point since last year at this time. Estimated compliance now
stands at 88 percent for 18- through 25-year-old males and 93 percent
for 20- through 25-year-old males. This is frustrating for Selective
Service because although greater numbers of men register each year,
there is an ever increasing male population to reach. Other factors
contributing to the decline include: increases in non-registered
immigrants, and our inability to fund sustained public awareness
activities and programs that promote the registration requirement.
Additionally, the 88 percent statistic is troubling because the public
may justifiably believe that any draft now with less than 90 percent
registration compliance will not be completely fair or equitable.
Expressed in school terms, this program needs to be graded ``A'' or
``A-minus'' when it comes to registration compliance; not ``B'' or ``B-
plus.'' Today, an estimated 12 percent of the men who should be
included in the pool of registrants are not there simply because they
do not know about the requirement. This also means that the men who
have complied with the law are that much more vulnerable to be called
in a future draft.
The Agency is countering this decline with an array of small-cost
registration initiatives which embrace smart business practices, new
technology, partnering with other governmental organizations, and
tailored outreach. Several recent examples stand out. Beginning in June
1999, the SSS implemented convenient telephonic registration.
Additionally, operating hours for on-line registration through the
Internet were expanded. Both services are available six days a week,
including Federal holidays. Additionally, SSS now has volunteer High
School Registrars in over 78 percent of the America's high schools, an
increase from the 53 percent of schools with registrars just three
years ago. The Agency also implemented an innovative policy change to
permit 17-year-old men to submit registration information. Under this
``Early Submission'' program, SSS holds the data on file and processes
it automatically as men reach age 18. Also, SSS has increased its
special mailings program to young men, especially those in major low
compliance areas of California, Texas, Florida, and New York. The
Agency has also increased the number of uncompensated registrars
serving in programs under the Joint Training Partnership Act/Workforce
Investment Act and at Farmworkers Opportunity Program sites. We also
are especially proud of our partnership agreement between SSS and the
Immigration and Naturalization Service (INS) which resulted in the
implementation of a new program just last month. Now, immigrant men
completing an INS Form I-485 for residency status will automatically be
registered with SSS if they are 18 through 25 years old. This new
program, along with Website registration information and posters in
Chinese, English, Korean, Spanish, and Vietnamese, should go a long way
toward increasing registration compliance in our Nation's immigrant
communities.
Currently, 28 states and the Commonwealth of the Northern Mariana
Islands link eligibility for state student financial assistance and
state employment to a man's compliance with the SSS registration
requirement. SSS continues to be responsive to requests for information
relating to these state laws, as well as to inquiries from 51 cities
and counties with parallel ordinances.
Another area of emphasis to ameliorate the downward trend in
registrations is the Agency's brand-new educational outreach
initiative. The concept is simple and powerful. Through it, the
Selective Service is partnering with key organizations that represent
teachers, counselors, principals, curricula developers, and secondary
and post secondary institutions nationally to ``institutionalize''
registration within America's high schools. As part of this effort, the
SSS plans a media event this spring, during which the Director of
Selective Service, the Secretary of Education, and an array of
educational groups will highlight the importance of registration
compliance. Additionally, a new high school video and companion audio
version for school public address systems have been developed as Public
Service Announcements (PSAs) to showcase the Federal registration
requirement. These TV PSAs, made with the participation of lieutenant
governors of the States of California, Texas, and Florida, will help
supplement our registration awareness kits, which include a hot link
diskette to the Selective Service website. A different version of the
video for the rest of the U.S., featuring the Secretary of Education,
will be released this Spring. These materials will help facilitate on-
line registration and are being distributed to all of the nation's high
schools.
Immediate Peacetime Relevance
Aside from its mobilization role, today's SSS is proving its
peacetime relevance through two new exciting and timely initiatives.
The first of these is an approved program in which SSS will directly
support military recruiting. The U.S. Armed Forces are currently
experiencing challenges in recruiting qualified individuals for
military service. In fact, during fiscal year 1999, the Army, Navy, and
Air Force missed their recruiting goals. While the Marine Corps
achieved its recruiting objective, it was not without extraordinary
effort. Recognizing the extremely difficult military recruiting
environment and anticipating that Selective Service can play a positive
supporting role, the SSS and the Department of Defense (DOD) agreed to
form a cooperative interagency partnership for the purpose of
encouraging young men to register and volunteer to serve America
through military enlistments.
Today, both organizations are working together to provide high
quality ``leads'' to military recruiters. Beginning this summer, the
Selective Service System's acknowledgment mailings to all young men who
have recently registered will be revised. The acknowledgment postcard
currently in use, which provides each man with his proof of
registration and official Selective Service number, is being replaced
by a larger card enclosed in a mailing envelope that will include a
promotional recruiting brochure produced by the DOD, and a mail-back
postcard for new registrants to request more information about
voluntary service opportunities in today's Armed Forces (Active Duty,
National Guard, Reserve, and the Reserve Officers Training Corps).
The DOD believes this initiative is so important that the higher
costs of the expanded acknowledgment mailings will be reimbursed to the
SSS by DOD. Currently, nearly two million men reach age 18 in America
every year, so approximately 40,000 pieces of mail from the SSS will be
mailed to young men each week. This should generate a continuous flow
of new leads for follow-up by military recruiters.
This new program provides distinct advantages over other or
previous recruiting mailing programs using commercial lists. Because
SSS mailings will be going directly to newly registered men, the
address lists and birth dates are virtually 100 percent accurate.
Additionally, the SSS envelope will not be confused with ``junk mail''
because it contains an official document important to each man--his
proof of registration needed to obtain student loans, Federal jobs and
job training and the outside of the envelope will be marked
accordingly, so recipients are certain to open and view its contents.
This joint endeavor between the SSS and DOD fully supports the
National Partnership for Reinventing Government's objective by
capitalizing upon interagency resources to make government more
efficient and economical to maximize service to the public.
Longer Range Utilization of Agency Capabilities
An even more ambitious partnership between the SSS and the DOD
Office of Force Management Policy could result in a major realignment
of several organizations involved in the Armed Forces accession
process. Working together, the DOD and the SSS have developed a concept
which, if implemented, will consolidate all military entrance
processing under a single, new, umbrella agency. Some of the benefits
include the elimination of redundant missions and functions, the option
to re-engineer the follow-on structural organization, new opportunities
for civilian employment locally at more than 65 locations across the
country, and the potential for cost-savings and other efficiencies in
the out-years.
Bottom line, the concept recommends merging the resources and
missions of the SSS, the Military Entrance Processing Command
(USMEPCOM), and the DOD Medical Evaluation Review Board (DODMERB) into
one new entity. This initiative is estimated to cover a three-year
transitional period.
In the concept, the proposed new agency is given the working title
of ``Federal Entrance Processing Service,'' or FEPS. As proposed, FEPS
would be an independent Federal agency with missions that include
registering men as they reach age 18, conducting a draft in a crisis if
authorized by the President and the Congress, processing and testing
new recruits entering the Armed Forces in peace and war, and arranging
physical examinations for Military Academy and Reserve Officer Training
Corps cadets. As an independent agency, FEPS would be headed by a
Director who reports to the President, but receives guidance, customer
service standards, and performance criteria from the Secretary of
Defense. Other alternatives are also being explored.
The creation of FEPS also would require passage of authorizing
legislation by the Congress and funding under the annual Defense
Appropriation.
The objectives driving development of this concept include:
preserving peacetime SSS registration and the Agency's capability of
conducting a fair and equitable national draft in a crisis; sustaining
a more economical effectiveness of military entrance processing and
support services, such as the Student Testing Program (ASVAB testing in
the Nation's schools); civilianizing entrance processing so most of the
military billets currently assigned to the three organizations will
revert back to the Military Services for militarily-oriented
reassignments; and consolidating all activities having the potential
for overhead reduction to reduce duplication of efforts.
This concept was developed by an interagency team comprised of
representatives from DOD, USMEPCOM and the Selective Service System. It
has been approved by the Director of Selective Service, the Assistant
Secretary of Defense for Health Affairs, and the Assistant Secretary of
Defense for Force Management Policy. It continues to be staffed within
the DOD.
Summary
Today, Mr. Chairman, the Selective Service System stands prepared
to perform its crucial, time-tested responsibilities. 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
All Volunteer Force continue to be challenging. The Selective Service
System is also determined to contribute to America each and every day.
And its value is two-fold: prepared to respond during a crisis while
aiding the DOD to solve its military recruiting issues. The SSS fiscal
year 2001 appropriation request of $24,480,000 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 fairly, equitably, and
in a timely manner.
Your support of the President's Budget request will ensure that
America maintains the SSS as a low-cost insurance policy against
underestimating the nature and size of future threats our Armed Forces
may face. With the ambitious programs and initiatives already underway,
the Selective Service System is also paying important dividends today
in better service to the Nation's youth, in direct support to the DOD
and the All-Volunteer military, and to the American taxpayer.
Thank you, Mr. Chairman.
______
U.S. Court of Appeals for Veterans Claims
Prepared Statement of Frank Q. Nebeker, Chief Judge
On behalf of the Court, I appreciate the opportunity to present for
your consideration the fiscal year 2001 budget of $12,500,000 for the
United States Court of Appeals for Veterans Claims.
The Court's fiscal year 2001 budget request includes $895,000
requested by the Veterans Consortium Pro Bono Program (Representation
Program). The Representation Program has provided its own supporting
statement for its budget request.
The budget request of $12,500,000 reflects a $1,050,000, or 9
percent, increase over the combined funding for Court and
Representation Program operations initially appropriated for fiscal
year 2000. Initial appropriations to the Court for fiscal year 2000
were $11,450,000, but as a result of the final budget negotiations the
Court incurred a $42,000 rescission.
First, we have budgeted for an increase in personnel compensation
and benefits. The amount budgeted is based on Economic Cost Indicator
(ECI) pay raises and locality pay. The ECI uses as a base an fiscal
year 2000 pay figure reflecting a pay raise of 4.8 percent for
nonjudicial personnel, including the total locality-pay adjustment for
Washington area government employees. The budgeted fiscal year 2001 pay
raise for nonjudicial personnel is 3.7 percent. A pay raise has also
been budgeted for judicial personnel, but no locality pay was included.
During fiscal year 2000, we received funding for 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 permitted the Court
to employ a third law clerk for each judge and an additional staff
attorney in the Central Legal Staff (CLS). Seven of the additional FTE
positions approved with the fiscal year 2000 budget are filled, and the
Court anticipates that the eighth will be filled in May 2000.
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 these additional staff for each
judge and the CLS. The Court expects these new personnel to permit the
Court to keep its backlog at a reasonable level. The growth in backlog
developed as a result of a sustained high level in the number of cases
filed in the Court during the last three years--following a sharp
increase during fiscal year 1997. The Court is monitoring its
experience with the augmented staffing and will determine whether any
adjustment is needed in the case-processing staff in the Court's public
office. The budget estimate for fiscal year 2001 requests full funding
for the eight personnel added during fiscal year 2000 to maintain the
Court's backlog of cases at a reasonable level, in order to keep it
from growing further and causing dramatic delay in the resolution of
veterans' and survivors' claims. Last year, I summarized the Court's
caseload history to provide background. This summary is brought up to
date (through fiscal year 1999) by the following table, which also
appears on page 4 of the Court's fiscal year 2001 Budget Estimate. In
addition, the table provides the number of Board of Veterans' Appeals
(BVA) total denials, and the percentage relationship of the Court's
caseload to BVA total denials:
----------------------------------------------------------------------------------------------------------------
Fiscal year--
--------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996 1997 1998 1999
----------------------------------------------------------------------------------------------------------------
BVA TOTAL DENIALS.............. 25,082 10,946 9,734 6,194 6,407 10,444 15,865 15,360 14,881
APPEALS TO USCAVC.............. 2,223 1,742 1,265 1,142 1,279 1,620 2,229 2,371 2,397
APPEALS AS PERCENT OF DENIALS.. 8.9 15.9 13.0 18.4 20.0 15.0 14.0 15.4 16.1
----------------------------------------------------------------------------------------------------------------
Although the table reports BVA total denials, appeals to the Court
come from the pool of cases in which the BVA has denied some of the
benefits sought by claimants. Because the BVA does not report the
number of its cases in which it denied some, but not all, benefits, the
pool of BVA decisions from which appeals to the Court can arise is
significantly larger than is reflected by the number of BVA total
denials in the above table. Furthermore, since the 1992 enactment of
legislation extending the Equal Access to Justice Act (EAJA) to the
Court, there has been an ever-increasing number of EAJA applications
(in fiscal year 1999, there were more than five times the number of
EAJA applications than in fiscal year 1995). Recently, there has been a
substantial increase in the number of cases where the Secretary is
challenging the application, thus requiring substantially more Court
and chambers effort to resolve EAJA applications.
Another factor affecting the Court's workload is the continued
effect of unrepresented appeals. Unrepresented appeals still pose a
challenge, although the percentage of such appeals dropped in fiscal
year 1999. 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; however, in
fiscal year 1999 that figure dropped to 65 percent. 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 in fiscal year 1999 was reduced to about 42
percent, all unrepresented cases require extra processing attention as
they progress through the development of the record on appeal and
briefing stages.
To move cases expeditiously and with integrity is, and must be, the
Court's goal. I believe that the 88 FTE staffing level will permit us
to reduce an unacceptably high backlog and maintain a reasonable
pending caseload. The delays at the Board level and in the VA General
Counsel's Group VII (the group within the VA General Counsel's staff
that handles litigation before the Court) must not be allowed to occur
at the Court's level of adjudication where the cost of remediation is
relatively small, as compared to that for enhanced staffing at the BVA
and in VA General Counsel Group VII. 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 2001
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 make docket sheets available to the public via
the Court's Internet Website. The fiscal year 2001 budget request also
includes funding to upgrade personal computers and file servers used by
Court personnel to keep pace with the technical requirements of
carrying out the Court's mission.
Finally, over the past three years, I have urged that the
Representation Program be authorized and funded outside the Court's
appropriation. However, the Appropriations Committee's consideration of
the Representation 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 Representation Program's own
supporting statement for its fiscal year 2001 request for $895,000 as
an appendix to the Court's submission and, also consistent with that
direction, is including that amount, without Court evaluation or
comment, in the Court's total fiscal year 2001 budget request.
In conclusion, I appreciate this opportunity to submit this
testimony on the Court's budget request for fiscal year 2001. On behalf
of the judges and staff, I thank you for your past support and request
your continued indulgence.
______
Executive Office of the President
Council on Environmental Quality
Prepared Statement of George T. Frampton, Chair
Mr. Chairman, Senator Mikulski, members of the Subcommittee: I am
pleased to forward to you President Clinton's fiscal year 2001 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 2000--
$3,020,000 and 26 Full Time Equivalent (FTE) staff positions, an
increase of $204,000 over CEQ's enacted fiscal year 2000 budget. The
increased budget request reflects the President's ongoing commitment to
an invigorated 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 marked its 30th year on January 1, 2000. Congress established
the CEQ in 1969 with strong bipartisan support amid growing concern
about the state of our environment. In 1970, Congress passed the
Environmental Quality Improvement Act, establishing the Office of
Environmental Quality (OEQ) to provide professional and administrative
support for the Council. 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. Thirty 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. We played a critical role in formulating the
Administration's climate change policy, which harnesses market forces
to achieve cost-effective reductions in greenhouse gas emissions. We've
expanded our response to the climate change problem by more fully
integrating advanced coal and natural gas technologies into our climate
change program as a climate related investment. The fiscal year 2001
budget includes a total of $232 million (of which $56 million is part
of Climate Change Technology Initiative) to support the Department of
Energy's aggressive R&D effort to develop next generation technologies
for the combustion and use of coal and natural gas. Part of this
response is a request of $19.5 million for carbon sequestration
research, significantly more than the $9.2 million appropriated in the
fiscal year 2000 budget. The Administration's International Clean
Energy Initiative (a $200 million multi-agency effort) will provide new
incentives for clean energy technology innovation and export; advanced
coal generation will help developing countries build a clean energy
future while providing jobs here at home.
CEQ is working to break gridlock and resolve longstanding disputes.
For instance, CEQ has continued to oversee the Administration effort to
resolve the impasse over dredging in the Port of New York and New
Jersey as well as to work with other ports and concerned Members of
Congress on infrastructure needs, permitting issues, and dredge
material disposal.
CEQ is working to formulate comprehensive policy and coordinate the
environmental actions of all federal agencies. For instance, CEQ has
led an inter-agency effort to complete a Supplemental Environmental
Impact Statement to guide the transfer and development of the Homestead
Air Base in a manner consistent with the Administration's commitment to
the economic well-being of the community devastated by Hurricane Andrew
and with the protection of Biscayne and Everglades National Parks. CEQ
is working with federal agencies to promote and improve economic
development and employment opportunities that can be created from
environmental initiatives; and continues to work to improve and
streamline the regulatory processes for interstate gas pipeline
permitting.
CEQ provides an institutional avenue to address special needs and
concerns that cannot be addressed in a timely manner without with
discipline and focus that CEQ can bring to the process. For example,
the successful implementation of the Food Quality Protection Act (FQPA)
requires federal agencies and other stakeholders to work together to
ensure that sound decisions are made that protect public health while
taking into consideration the needs of pesticide users. In order to
help meet the early challenges of FQPA implementation, CEQ worked with
USDA and EPA to help establish the Tolerance Reassessment Advisory
Council (TRAC) to enhance stakeholder input on FQPA implementation.
Through TRAC, agricultural, public health, and pesticide user
communities were provided with an appropriate forum for increased
involvement in the decision making process, and the process has
benefited significantly as a result.
Finally, CEQ is working to restore and preserve precious
environmental values for future generations of Americans. Over the past
year, we have continued to play a critical role in efforts to protect
Yellowstone, the Everglades, and our oceans.
In fiscal year 2000, CEQ has an approved level of 24 FTE positions.
Our staffing level is nearly one-third 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 2001 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 fiscal year 2000, CEQ began to initiate a major new effort to
assist federal departments and agencies in responding to requests from
states, metropolitan and local governments, and businesses for
partnership opportunities. With additional funding in the fiscal year
2001 budget, CEQ will be able to expand this program and continue
responding to these requests: 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 promote, advise and assist in the clean up
and restoration of bays, estuaries, and rivers.
These programs pose new partnership opportunities, as well as
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
include the following: the Natural Communities Conservation Planning
(NCCP) 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; 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
several tribes have asked for federal funding to help states
implement and develop coastal salmon restoration plans. They
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 New England, CEQ has worked closely with the State of Maine, the
Maine Congressional Delegation and other states to support
state efforts to purchase easements protecting the working
forests from development. This initiative would seek to
preserve the quality of rivers and lakes, working forests, open
spaces, promote sustainable economic development, and ensure
public access to recreation for millions of Americans--not only
those of the region but those within a days 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 have
launched this important effort on a limited basis and continue to
believe that with additional resources we can fulfill a bigger need
which will pay countless dividends to state and local governments 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 those projects that we hope to
accomplish in the coming year.
Statutory Integration
CEQ is identifying sites to pilot integration of 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 Habitat Conservation
Plans, can be the building block or the model for more comprehensive
approaches that pilot 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.--Constituents 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 EPA).
--NEPA and the Magnuson-Stevens Act.--Successful coordination between
the eight fisheries management councils established under the
Magnuson-Stevens Act and the responsibilities of the National
Marine Fisheries Service and the Secretary of Commerce to
satisfy NEPA is essential to conserving and protecting our
nation's fisheries and fishing industry. CEQ is leading the
councils and NMFS toward a full and lawful implementation of
NEPA's requirements through the council process that will help
avoid shutdowns of fisheries and support sound decisionmaking.
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, opened 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 offer 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. The Institute is
governed by the Foundation's 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 a non-voting
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 the use of the Institute by
Federal agencies in Federal interagency matters.
CEQ helped in mediating a conflict when the State of Hawaii and the
Island of Maui sought to expand the existing Maui airport to allow an
increase in the number of flights into Maui, and, more importantly,
allow direct flights from outside the Hawaiian Islands to land in Maui
without first stopping at the Honolulu Airport. The Maui airport
expansion was very important to promote the tourist economy. When the
Final EIS on the project was ready to be issued, the National Park
Service voiced serious concerns about the Federal Aviation
Administration's treatment of invasive alien species. To avoid a
potential referral under NEPA, CEQ convened a high-level working group
to review the problems surrounding invasive alien species and worked
with the FAA and the NPS to develop a mitigation plan that would both
allow the airport construction and protect Maui and its parks from
invasions of alien plant and animal species. We continue to work with
the State of Hawaii, the NPS and the FAA to assure that the mitigation
is carried out in a manner that is faithful to the agreement.
CEQ chairs an interagency working group that seeks to find a
solution to a very polarized debate regarding brucellosis and bison in
the greater Yellowstone ecosystem. This issue reached a crisis during
the winter of 1997 when thousands of starving bison, suspected of
carrying the brucellosis disease, left Yellowstone in search of food
and scores were killed by the state. CEQ is working with the agencies,
cattlemen conservationists, and the State of Montana in discussing ways
to ensure that brucellosis is not spread to cattle and that bison
remain a viable part of the Yellowstone ecosystem in order to produce a
final environmental impact statement on bison management. CEQ worked to
secure money from the Land and Water Conservation Fund to finalize the
purchase of additional winter range for wildlife that can be used to
prevent unnecessary slaughter of Yellowstone bison.
CEQ has worked with the Department of Energy, the Department of the
Interior, the Ute Indian Tribe and the State of Utah on the transfer of
lands and minerals in the Naval Oil Shale Reserve Number 2, near Moab,
Utah and the protection of the Green River. The agreement would
transfer certain lands to the Tribe and others to the Department of the
Interior and provide responsibility in the Department of Energy for the
removal of uranium mill tailings.
The CALFED Bay-Delta process is successfully keeping the
stakeholders in the region working together to address the water
supply, water quality, flood control and habitat restoration efforts in
northern California. These issues can and should be resolved at the
regional level; CEQ has worked to resolve interagency disputes when
they arise. Bay-Delta stakeholders--agricultural, industrial and urban
water users and environmental groups--are involved in problem solving
and developing long term solutions to restore fish and wildlife
habitat, to improve flood protection, to provide adequate water supply
to all users, and to ensure clean water. The CALFED Bay-Delta Program
will select a final ``preferred alternative'' to meet the goals of the
program in the summer of 2000 and begin program implementation in 2001.
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.
The Army Corps of Engineers is developing through the NEPA process
a preferred alternative to change the management of the Missouri River
in a manner which provides greater environmental and recreational
benefits along the river while protecting navigation interests. CEQ is
involved in the development of a preferred alternative which balances
the needs of the upstream and downstream states and helps resolve
disagreements among the affected eight states and their constituencies.
CEQ helped to resolve a highly visible and longstanding interagency
conflict that had prevented construction of the Doppler Radar, a
lifesaving weather radar installation for JFK and LaGuardia airports.
The final solution allowed the construction of the radar while
improving the surrounding urban national park.
CEQ has been involved in the resolution of disputes among several
federal agencies regarding a variety of Army Corps of Engineers
projects along the Mississippi River, including the Yazoo Pumps
project, the Big Sunflower maintenance project, the White River
navigation project, and the St. Johns/New Madrid project. CEQ has
reviewed NEPA documents associated with these projects and the
consistency of the projects with wetlands protection goals of the
Administration set forth in the Clean Water Action Plan. CEQ has also
worked with other federal agencies on the development of programs aimed
at providing economic relief to some of the areas affected by these
projects.
CEQ is working across federal agencies to promote and improve
economic development and employment opportunities that can be created
from environmental protection initiatives. For example, CEQ is working
with the Forest Service, the Bureau of Land Management and the U.S.
Fish & Wildlife Service to improve and expand the ``Jobs in the Woods''
program. This program has had a successful beginning in the Pacific
Northwest and can be applied to other regions of the country. It is our
goal to see quality jobs created for local workers while doing needed
restoration work on public lands. CEQ is also working with state,
local, and tribal governments in various regions in the country to
promote and assist in economic development and diversification for
local economies which have been dependent upon the use of natural
resources. Examples of this are Southeast Alaska, the Interior Columbia
Basin, and the Northern Forest region in New England.
In 1999 we made significant progress in furthering the 1996
Administration Everglades Restoration Plan. On July 1, 1999, Vice
President Gore presented to Congress the Army Corps of Engineers
Comprehensive Restoration Plan, then known as the Restudy. CEQ will be
leading the development of legislation to authorize the plan and the
initial suite of restoration projects. In addition, CEQ coordinated the
expenditure of the remainder of the $200 million provided to the
Department of the Interior in the 1996 Farm Bill for the acquisition of
land for restoration purposes, including the Talisman lands in the
Everglades Agricultural Area. CEQ has also helped resolve disputes
among federal agencies involving impacts of the management of water
pending authorization of the Comprehensive Plan on various lands and
interests and upon habitat and federally listed species, such as the
Cape Sable seaside sparrow.
In the period leading up the World Trade Organization (WTO)
Ministerial meeting in December 1999 in Seattle, CEQ co-chaired with
the National Economic Council an interagency staff committee on
International Economic Policy and the Environment. Among the results of
this policy development process was Executive Order 13141 under which
the United States Trade Representative (USTR) will conduct a written
review the environmental issues associated with certain major trade
agreements, including multilateral trade rounds, bilateral or
plurilateral free trade agreements, and certain additional trade
liberalization measures. CEQ and USTR have joint oversight of
implementation of the Executive Order and will co-chair a process to
develop more specific operational guidelines under the order in
consultation with the public and Congress. In addition, CEQ and USTR
oversaw a written environmental analysis of the Accelerated Tariff
Liberalization (ATL) measure in forest products which was forwarded to
the WTO for further negotiation by the Asian Pacific Economic
Cooperation (APEC). Technical work on this analysis was led by the U.S.
Forest Service and the Environmental Protection Agency and agency staff
conducted briefings for Congressional committees and the public during
the process of developing this review.
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.
Since 1997, CEQ has worked actively to implement the National
Environmental Technology Strategy and support the U.S. environmental
technology industry. This industry represents a $200 billion sector of
our economy responsible for more than 1.2 million jobs in 60,000 firms
nationwide. CEQ oversees the Interagency Environmental Technology
Office (IETO) that provides a one-stop-shop for businesses,
universities, NGO's, and state and local government seeking information
on federal environmental technology programs. Over the past year, the
office has helped over 300 businesses connect with federal
environmental technology programs. CEQ is presently developing a
virtual roadmap of all federal environmental technology programs that
will be available on the Web. We have started an initiative on
electronic commerce that will link environmental businesses with
municipal governments seeking innovative solutions to their
environmental problems. On the international front, two events are
planned (for fall 2000) that will bring together U.S. environmental
technology firms with counterparts in Europe and Japan to explore joint
ventures and partnerships across a wide range of technologies.
A Federal advisory committee composed of state and local officials,
business leaders, environmentalists, and others last year completed its
work by issuing its final report and organizing a national conference
known as the National Town Meeting. The May 1999 report, entitled
Towards a Sustainable America, made a series of recommendations for
action to be taken on climate change, environmental management,
metropolitan and rural strategies, and international issues. The
National Town Meeting, which capped six years of work by PCSD,
demonstrated broad support from many sectors and strengthened
bipartisan efforts to address sustainability issues. Over 3,500 people
gathered in Detroit from May 2-5, 1999 to participate in the plenary
sessions, 160 ``learning sessions,'' the extensive exhibit hall, and
other special events. An estimated 120,000 people also participated
through 121 concurrent events around the country, with 60,000 of these
linking to Detroit via satellite. NTM events included top leaders from
all sectors--business, NGO, civic, and government--as well as many
elected officials from both parties. Michigan governor John Engler,
Detroit Mayor Dennis Archer, Wayne County Executive Edward McNamara,
General Motors Vice-Chairman Harry Pierce, and Reverend Joseph Barlow
served on the Host Committee Representatives John Conyers, Joseph
Knollenberg, John Dingell, and Carolyn Kilpatrick of Michigan's
Congressional delegation also participated. Senator Christopher Bond
and Governor Christine Todd Whitman of New Jersey addressed the
conference through prepared videos.
Following the National Ocean Conference in Monterey, California in
June 1998, the federal agencies were charged with producing--within one
year--a national policy for oceans issues. CEQ worked with the
Departments of Commerce, Navy, the Interior, State, Defense, and EPA,
the National Science Foundation and others to formulate this set of
recommendations. Published as a formal report, ``Turning to the Sea''
set forth background issues, concerns and recommendations in twenty-
five different categories, ranging from freedom of navigation to marine
protected areas. Based on the recommendations of the report, an Oceans
Report Task Force was established to implement some of the
recommendations, and this Task Force is co-chaired by CEQ and the
National Security Council. Under the Task Force's guidance, agencies
are now preparing action agendas to move the recommendations forward
into concrete actions.
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
issued Executive Order 13112 on invasive species in 1999. The Order
establishes an interagency Invasive Species 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. In fiscal year
2000, CEQ will be working with the Invasive Species Council to develop
guidance on prevention and control of invasive species and restoration
of native species in the context of the environmental analyses for
projected actions.
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 both in the
day-to-day administration of NEPA and through the more fundamental
implementation of NEPA itself. CEQ worked with several agencies
throughout the year to provide advice and assistance in revising their
NEPA regulations and procedures to make the environmental impact
analysis process more efficient and effective. For example:
--During fiscal year 1999 CEQ reviewed and approved a new NEPA
handbook for the General Services Administration. The handbook
is an excellent integration of NEPA law and policy as applied
to GSA's many functions, and we believe it can serve as a model
for other agencies.
--During fiscal year 1999 and to date in fiscal year 2000, we have
reviewed and approved changes to the National Park Service's
NEPA procedures and to the Department of the Interior's NEPA
manual.
--Additionally, we have reviewed changes to NEPA procedures proposed
by the Bureau of Reclamation, U.S. Army Corps of Engineers, and
the U.S. Fish and Wildlife Service. We will shortly be
reviewing proposed changes to the Department of the Navy's NEPA
procedures. In the coming months we expect the Army to issue
its draft revised regulations for public comment.
--CEQ worked with the Department of Energy to follow up in their
ongoing NEPA reinvention efforts. The 1998 symposium hosted by
the National Association of Public Administrators (NAPA) and
NAPA's final report reviewed those efforts and identified
further opportunities. The final report and follow-up actions
will be the basis of a ``efficient and effective NEPA
practices/lessons learned'' forum for federal agency NEPA
liaisons that will be held in the coming year.
--CEQ issued a Memorandum to Heads of Agencies in the summer of 1999
providing information to all federal agencies of their
responsibility to determine whether appropriate state, local or
tribal agencies are interested in being designated as
``cooperating agencies'' for purposes of preparing
environmental impact statements. The Memorandum clarified the
role of state, local and tribal governments as cooperating
agencies and encourages Federal agencies to include state,
local and tribal agencies as cooperators when they have either
jurisdiction or expertise relevant to the environmental, social
or economic impacts associated with a proposed federal action.
--CEQ continues to work with the Federal Highway Administration,
Federal Transit Authority, and transportation stakeholders to
implement the mandates of the Transportation Efficiency Act
(TEA-21 Act). In particular, we are committed to assisting
federal and state agencies involved in transportation
decisionmaking to better integrate the NEPA process with other
environmental review processes and to identify and resolve
potential problems on issues as early as possible. CEQ is
working with the transportation agencies as they revise their
planning procedures and NEPA procedures to better fit the
requirements of TEA-21, and we expect those procedures to be
published in draft for public review and comment soon. We also
worked with the American Association of State Highway and
Transportation officials to identify and recognize best
practices in environmental partnerships throughout the country.
--CEQ has been working with the National Oceanic and Atmospheric
Administration to integrate the NEPA process into the National
Marine Sanctuaries' management plan revisions. The majority of
the nation's twelve National Marine Sanctuaries are beginning
to revise their management plans. CEQ is working with the
sanctuary managers and NOAA headquarters to establish a
blueprint for moving forward with revisions in an organized,
efficient and timely manner.
--Along with other recommendations regarding the NEPA reinvention
project, CEQ will work with the appropriate agencies to
expedite review of natural gas pipeline projects. CEQ has
supported the Federal Energy Regulatory Commission decision to
modify 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 30 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 forward my statement to the
Subcommittee.
______
Neighborhood Reinvestment Corporation
Prepared Statement of George Knight, Executive Director
Thank you, for the opportunity to submit written testimony to you,
and for your long-time commitment to community revitalization
demonstrated through your many years of support for the Neighborhood
Reinvestment Corporation and its affiliated network of community-based
nonprofit organizations--known as the NeighborWorks network.
I am honored to share with this distinguished panel the exciting
results of fiscal year 1999, update you on our progress to date in
fiscal year 2000, and present the Corporation's fiscal year 2001 budget
request of $90 million.
FISCAL YEAR 1999--HIGHLIGHTS
Fiscal year 1999 represented a milestone year for the Neighborhood
Reinvestment Corporation--once again reaffirming that local folks,
given the resource of a flexible revolving loan fund, and the support
of conventional lenders and insurers, can and will make large positive
differences in their communities. The NeighborWorks system,
now comprised of more than 200 community-based nonprofit organizations,
relies on Neighborhood Reinvestment's ability to provide seed capital
grants for locally managed revolving loan funds, practical technical
assistance, hands-on how-to-do-it training, and an effective secondary
market that can return your appropriations investment many fold in the
form of leveraged private sector investment in our nation's distressed
communities--whether they be rural, small town or densely urban.
In fiscal year 1999 Neighborhood Reinvestment and the
NeighborWorks network used the $90 million appropriation to:
--Leverage more than $1 billion in direct total investment in
distressed neighborhoods ($946 million of which came from
private lenders along with resources provided by local
governments, leveraged by $88 million in local revolving loan
funds);
--Assist 26,000 families to purchase or maintain their homes;
--Manage over 20,000 affordable rental or mutual housing units
(thousands of them formerly vacant and blighted properties);
--Counsel nearly 61,000 potential homebuyers; and
--Sponsor thousands of community revitalization efforts across the
country, such as anti-crime organizing, youth training and
employment, and economic development business loans.
To support these outstanding accomplishments, the Neighborhood
Reinvestment Corporation and Neighborhood Housing Services of America
(NHSA):
--Added 16 new organizations to the NeighborWorks network,
for a total of 202 local partnership organizations serving more
than 1,000 communities--48 percent of which are rural;
--Purchased $46 million in loans through NHSA, replenishing local
NeighborWorks organizations' revolving loan fund
capital;
--Conducted 180 detailed program risk management reviews of local
NeighborWorks organizations;
--Provided 162,000 training contact hours for practitioners and
leaders in community development;
--And, in further evidence of the maturation of the system and the
quality of NeighborWorks lending, Standard & Poor's,
for the first time ever, awarded a ``AA'' rating to a $75
million security backed by non-conventional, affordable,
nationally dispersed, residential mortgages in NHSA's
portfolio.
fiscal year 2000--goals and accomplishments to date
Given the tremendous success of fiscal year 1999, and the powerful
infrastructure that has been built and refined over many years, we
continue to set high standards and goals for fiscal year 2000. Even at
the reduced fiscal year 2000 funding level of $74.7 million, our goal
is to:
--Attract over $1.1 billion in investment to NeighborWorks
communities;
--Assist over 28,000 families to purchase or maintain their homes,
and over 3,400 families to secure long-term mutual and
multifamily rental housing;
--Counsel 67,000 potential homebuyers; and
--Add 12 organizations to the NeighborWorks network,
expanding our reach to 1,100 communities.
In 1998 the NeighborWorks Campaign for Home Ownership
2002 was launched with a goal of putting 25,000 lower-income families
into home ownership. In fiscal year 1999 additional funds were
appropriated to expand that goal by 10,000. The Campaign raised the
goal again in fiscal year 2000 by 5,000--bringing the goal to 40,000
families over a five-year period.
It's with great delight that I can report to you, the Homeownership
Pilot you funded has clearly demonstrated enormous success--and should
continue to be supported.
To summarize the NeighborWorks Campaign for Home
Ownership 2002 progress toward its five year goals:
NEIGHBORWORKS CAMPAIGN FOR HOME OWNERSHIP 2002
------------------------------------------------------------------------
21-MONTH RESULTS (35 percent
GOALS (1998-2002) of the way through the
Campaign)
------------------------------------------------------------------------
Create 40,000 new homeowners.............. Created 13,800 homeowners--
35 percent of goal.
Generate $2.9 billion in investment....... Generated $1.2 billion in
investment--41 percent of
goal.
Counsel 270,000 potential homebuyers...... Counseled 100,726
households--37 percent of
goal.
Establish 50 HomeOwnership Centers........ Opened 23 HomeOwnership
Centers--46 percent of
goal.
------------------------------------------------------------------------
The especially good news is who is being served. The profile of
NeighborWorks homebuyers is markedly significant when
compared to the profile of those served by government-backed loan
programs or by the conventional mortgage market.
DEMOGRAPHIC PROFILE OF NEIGHBORWORKS HOMEBUYERS
[In percent]
----------------------------------------------------------------------------------------------------------------
NeighborWorks Government- Conventional
Characteristics of Homebuyers Loans Backed Loans Loans
----------------------------------------------------------------------------------------------------------------
Minority................................................. 54 31 15
Female head-of-household................................. 41 20 18
Below 80 percent of MSA median........................... 67 45 24
Income of Borrower:
Percent $15,000 or less.............................. 6.7 1.4 1.7
Percent $15,001-$25,000.............................. 31.5 11.8 7.9
Percent $25,001-$35,000.............................. 30.7 23.3 11.8
Percent $35,001 or more.............................. 31.1 63.5 78.6
90-day loan delinquency (as of 9/30/99).................. 1.06 1.55 0.27
----------------------------------------------------------------------------------------------------------------
Additionally it should be noted that 95 percent of the
NeighborWorks clients are first-time buyers, many of them
first generation buyers. And, that for 30 percent of the families,
owning is less or only marginally more costly than renting. Home prices
range from $25,000 in Buffalo, New York to $140,000 in Orange County,
California.
One of the keys to this outstanding success is the locally directed
revolving loan funds operated by NeighborWorks organizations.
One-third of new homeowners were assisted with NeighborWorks