    [Senate Hearing 107-442]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 107-442

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2002

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

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                          ONE HUNDRED SEVENTH CONGRESS

                                 FIRST SESSION

                                       on

                               H.R. 2620/S. 1216

     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, 2002, AND FOR OTHER PURPOSES

                                   __________

                 Corporation for National and Community Service
                  Department of Housing and Urban Development
                         Department of Veterans Affairs
                        Environmental Protection Agency
                      Federal Emergency Management Agency
                 National Aeronautics and Space Administration
                          National Science Foundation
                     Neighborhood Reinvestment Corporation
                           Nondepartmental witnesses

                                   __________

             Printed for the use of the Committee on Appropriations

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

                        U.S. GOVERNMENT PRINTING OFFICE
    70-873                       WASHINGTON : 2002
    ____________________________________________________________________________
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                        COMMITTEE ON APPROPRIATIONS \1\

                         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
    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 L. DORGAN, North Dakota
    LARRY CRAIG, Idaho                   DIANNE FEINSTEIN, California
    KAY BAILEY HUTCHISON, Texas          RICHARD J. DURBIN, Illinois
    MIKE DeWINE, Ohio                    TIM JOHNSON, South Dakota
                                         MARY L. LANDRIEU, Louisiana
                       Steven J. Cortese, Staff Director
                     Lisa Sutherland, Deputy Staff Director
                  Terrence E. Sauvain, Minority Staff Director
                                     ------

               Subcommittee on VA, HUD, and Independent Agencies

                    CHRISTOPHER S. BOND, Missouri, Chairman
    CONRAD BURNS, Montana                BARBARA A. MIKULSKI, Maryland
    RICHARD C. SHELBY, Alabama           PATRICK J. LEAHY, Vermont
    LARRY CRAIG, Idaho                   TOM HARKIN, Iowa
    PETE V. DOMENICI, New Mexico         ROBERT C. BYRD, West Virginia
    MIKE DeWINE, Ohio                    HERB KOHL, Wisconsin
    TED STEVENS, Alaska (ex officio)     TIM JOHNSON, South Dakota

                               Professional Staff

                                  Jon Kamarck
                              Carolyn E. Apostolou
                                    Cheh Kim
                            Paul Carliner (Minority)
                         Gabrielle A. Batkin (Minority)

                             Administrative Support

                                  Isaac Green
                           Nancy Olkewicz (Minority)

        \1\ Committee and subcommittee memberships--January 25, 2001 to
    June 6, 2001.

        Note.--From January 3 to January 20, 2001 the Democrats held the
    majority, thanks to the deciding vote of outgoing Democratic Vice
    President Al Gore. Senator Thomas A. Daschle became majority leader at
    that time. Starting January 20, 2001, the incoming Republican Vice
    President Richard Cheney held the deciding vote, giving the majority to
    the Republicans. Senator Trent Lott resumed his position as majority
    leader. On May 24, 2001, Senator James Jeffords of Vermont announced
    his switch from Republican to Independent status, effective June 6,
    2001. Jeffords announced that he would caucus with the Democrats,
    changing control of the evenly divided Senate from the Republicans to
    the Democrats. Senator Thomas A. Daschle became majority leader once
    again on June 6, 2001.

                        COMMITTEE ON APPROPRIATIONS \2\

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

               Subcommittee on VA, HUD, and Independent Agencies

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

                               Professional Staff

                                 Paul Carliner
                              Gabrielle A. Batkin
                             Jon Kamarck (Minority)
                              Cheh Kim (Minority)

                               Professional Staff

                                 Nancy Olkewicz
                             Isaac Green (Minority)

        \2\ Committee and subcommittee memberships--June 6, 2001 to July
    10, 2001.

        Note.--From January 3 to January 20, 2001 the Democrats held the
    majority, thanks to the deciding vote of outgoing Democratic Vice
    President Al Gore. Senator Thomas A. Daschle became majority leader at
    that time. Starting January 20, 2001, the incoming Republican Vice
    President Richard Cheney held the deciding vote, giving the majority to
    the Republicans. Senator Trent Lott resumed his position as majority
    leader. On May 24, 2001, Senator James Jeffords of Vermont announced
    his switch from Republican to Independent status, effective June 6,
    2001. Jeffords announced that he would caucus with the Democrats,
    changing control of the evenly divided Senate from the Republicans to
    the Democrats. Senator Thomas A. Daschle became majority leader once
    again on June 6, 2001.

                                C O N T E N T S

                                  ----------
                                                                       Page

                           Wednesday, April 25, 2001

    Corporation for National and Community Service...................     1
    Neighborhood Reinvestment Corporation............................    43

                             Wednesday, May 2, 2001

    Department of Veterans Affairs...................................    65

                             Wednesday, May 9, 2001

    National Aeronautics and Space Administration....................   179

                            Wednesday, May 16, 2001

    Federal Emergency Management Agency..............................   237

                            Wednesday, June 6, 2001

    National Science Foundation......................................   275

                            Wednesday, June 13, 2001

    Environmental Protection Agency..................................   357

                            Wednesday, June 14, 2001

    Department of Housing and Urban Development......................   449

                           NONDEPARTMENTAL WITNESSES

    Department of Housing and Urban Development......................   553
    Environmental Protection Agency..................................   493
    National Science Foundation......................................   581
    National Aeronautics and Space Administration....................   627
    Department of Veterans Affairs...................................   637

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2002

                                  ----------

                           WEDNESDAY, APRIL 25, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:15 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Christopher S. Bond (chairman)
    presiding.
        Present: Senators Bond, Mikulski, and Johnson.

                 CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

    STATEMENT OF WENDY ZENKER, ACTING CHIEF EXECUTIVE
                OFFICER
    ACCOMPANIED BY:
            WILLIAM ANDERSON, DEPUTY CHIEF FINANCIAL OFFICER
            GARY KOWALCZYK, COORDINATOR, NATIONAL SERVICE PROGRAMS

                opening statement of senator christopher s. bond

        Senator Bond. Good morning. The Subcommittee of VA, HUD,
    and Independent Agencies will come to order.
        This morning, our subcommittee will begin its first hearing
    of the fiscal year 2002 budget. We begin with two independent
    agencies, the Corporation for National and Community Service
    and the Neighborhood Reinvestment Corporation. We will hear,
    first, from the Corporation's Acting Executive Officer and
    Chief Operating Officer, Ms. Wendy Zenker. The subcommittee
    will then hear from the NRC.
        We are beginning a new era under a new Administration. And
    with a new Administration, there are new and different spending
    and policy priorities. However, despite a balanced budget and
    the availability of surplus funds, there are many demands on
    the amount of funds that are available for discretionary
    spending under the Federal budget. Moreover, the VA/HUD
    Subcommittee, in particular, expects to face another year of
    difficult budget decisions due to the continually growing
    funding needs for VA medical care, Section 8 housing assistance
    contract renewals, and FEMA disaster assistance.
        For the Corporation for National and Community Service, the
    President has requested a slight decrease of funding.
    Specifically, $416.5 million has been requested, which is a
    decrease of $46 million from the $462.5 million provided in
    fiscal year 2001. The decrease is mainly due to a reduction in
    needed funds for the National Service Trust Fund due to surplus
    funds accumulated from previously appropriated funds.
        Under the President's budget request, the Corporation's
    AmeriCorps program would be maintained at its current
    membership level of 50,000 participants. In addition, the
    President has proposed two new initiatives under the AmeriCorps
    program to expand service to senior citizens and veterans.
    Further, the President expects the Corporation to be heavily
    involved with his new faith-based initiative.
        Before I delve into the policy and program issues, I
    commend the Corporation for turning the corner on its long-
    standing management problems. The Corporation received its
    first clean opinion on its fiscal year 2000 financial
    statements and reduced its material weaknesses from six to two.
    The former head of the Corporation, our former colleague,
    Harris Wofford, and you, Ms. Zenker, and the rest of the
    management team deserve a great deal of credit.
        We have criticized to you in the past, and now I think it
    is appropriate that we commend you for your success. Further, I
    would be remiss in--in not mentioning the vigilance and hard
    work of the Inspector General, Ms. Luise Jordan, and her
    auditing team, including Ms. Karyn Molnar of KPMG. I do not
    think that all of this could have happened without your good
    work. And we sincerely appreciate your efforts.
        Before we declare victory, however, we need to ensure that
    the Corporation continues its management reform efforts under
    the new Administration. This means ensuring that the
    Administration select a new CEO and CFO, who are truly
    sensitive to the Corporation's management history and capable
    of resolving, fully, its systemic problems.
        I remain concerned about the Corporation's grant management
    system that continues to be identified as a material weakness.
    I understand that a lot of progress in the area has been made,
    but clearly more needs to be done. Accountability for the use
    of funds is critical to the future credibility and viability of
    the Corporation. I look forward to working with and assisting
    the new leadership on this important matter.
        Now, in regards to policy matters, the President's budget
    proposal includes a more significant role for the Corporation
    in the President's faith-based initiative. As part of this
    effort, President Bush has asked Stephen Goldsmith to serve on
    the Corporation's board. I had the pleasure of discussing some
    issues yesterday with Mr. Goldsmith, and I am interested in
    learning more about the faith-based initiative as the details
    are developed.
        As we mentioned earlier, the President's budget also
    includes two new tutoring and mentoring programs. The new
    seniors program, called Silver Scholarships, would be funded at
    $10 million per year with an additional $10 million annually to
    pay for volunteer support.
        The second initiative would fund a new Veterans program
    to--at the tune of $15 million per year.
        While both of these programs have merit, I need to know
    more about how they would be administered by the Corporation
    and what sort of outcomes the Corporation expects from these
    programs. I strongly support the Corporation's current efforts,
    such as America Reads to promote literacy and mentoring
    programs. I would like to learn how these new initiatives
    complement existing programs. Also, as a new member of the
    authorizing committee for the Corporation, I will be interested
    in how these programs are handled through the reauthorization
    of the Corporation.
        I believe that child literacy should be a major function of
    the Corporation, and I was very troubled to read the results of
    the 2000 National Assessment of Educational Progress, known as
    the ``Nation's report card,'' which showed that the reading
    performance of fourth graders in our country have not improved
    significantly. I was disturbed to learn, also, the gap in
    reading scores between the highest-and lowest-achieving
    students grew in many States, including my home State of
    Missouri.
        I appreciate the efforts of the Corporation to improve
    child literacy. More needs to be done, because failure to
    ensure the literacy of our children exacts a staggering cost,
    not only for the child who is unable to read or read well, but
    for the community and our entire society. In this country 21
    percent of the adult population--more than 40 million Americans
    over the age of 16--have only rudimentary reading and writing
    skills. Children who cannot read become adults who cannot read.
        Soon I will be introducing a bill I call VITAL--Volunteers
    Interested in Taking Action for Literacy, a proposal aimed at
    increasing the involvement of parents, youth, and communities
    in locally driven literacy initiatives. Organizations, such as
    the Girl Scouts, the local Y, 4-H clubs, and Parents as
    Teachers, would have access to resources from the Corporation
    to assist in youth-to-youth mentoring activities and the
    Parents as Teachers National Literacy initiative.
        I would note, parenthetically, that as bad as the scores
    are for fourth grade reading in my State of Missouri, where
    200,000 children, age zero to three, are in the Parents as
    Teachers program, our literacy failure rate is 12 percent below
    the national average. And I think that working with those
    children at an early level has probably had a great deal to do
    with it.
        Now, it is a pleasure to 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. First
    of all, it is wonderful that we are starting our hearings. I
    know it is April 25, but it was the best that we could do,
    given the transition, which I felt was a very excellent
    transition in the Administration. And--but I feel like I am
    going to burst into that old cowboy/cowgirl song, ``Back in the
    Saddle, Again.''
        Senator Bond. Oh, please, I will play drums, if you want to
    sing. I will accompany you.
        Senator Mikulski. And we will look forward, once again, to
    working with you in the tradition of bipartisanship that this
    subcommittee has enjoyed, because I do believe that we will be
    facing budgetary challenges as we go through this.
        I want to also note that we are joined by a new member of
    our subcommittee, Mr. Tim Johnson. And Senator Johnson we
    really welcome you and look forward to your participation.
        I want to, moving on to the hearing, welcome Wendy Zenker,
    the Acting CEO of National Service and look forward to her
    testimony as we move ahead.
        My priorities, both in the hearing and also as we work on
    our appropriations, are two-fold. One, I want to ensure that we
    keep National Service strong, and that we continue to be
    committed to that as we, perhaps, even take a step back and
    look at where we are and where we should go, so we can continue
    to create the habits of the heart in young people, help them
    reduce their student debt, and yet provide very vital services
    at the local level.
        I am sorry that we do not have a new CEO, but I believe
    that the President will give us a good person. And we think you
    have been doing a very good job in the interim.
        The appointment of Mr. Goldsmith to the board, I think, is
    also going to give us a very refreshing member, with his
    background; first of all, hands-on as a mayor, and I
    understand, quite a reformer in Indianapolis, and at the same
    time, we will be taking the initiative on faith-based
    organizations.
        But we want to keep National Service strong. And the other
    is--two specific aspects I will be looking at is how National
    Service will participate with education and other programs to
    ensure that we do not have a digital divide in this country,
    meaning not only access to technology, but access to those who
    know how to teach technology.
        I am not looking for National Service to provide
    technology, but I am looking for National Service to see how we
    can play an important role in communities, in constituencies
    left out and left behind on how to move them ahead.
        The other will be the integration of faith-based
    organizations into the work of National Service. I have been a
    long-time supporter of faith-based organizations. At one point
    in my career, I worked for one, Associated Catholic Charities.
    I know, in our work with HUD and others, that faith-based
    linkages with the Federal Government can meet constitutional
    compliance and at the same time bring a great deal of
    compassionate service to our communities.
        So, Mr. Chairman, I mean, we can--I am going to ask
    unanimous consent that my full statement be placed in the
    record, but a couple of flashing yellow lights. When we look at
    keeping National Service strong, we need to make sure that we
    maintain--I know that the Bush Administration does not want to
    expand the number of volunteers. For the purposes of this year,
    I am not going to challenge that assumption. I think what we
    need to do is be able to stay the course, examine the new
    programs and also perhaps see how we could expand the others.
        But I am concerned that in order to keep National Service
    strong, that there are certain budget shifts going on within
    AmeriCorps, itself, that could weaken it. And I will have
    specific questions for you in that, Ms. Zenker.
        In terms of the E-Corps, last year I did an earmark
    encouraging National Service to really look at how we could
    establish an E-Corps or digital opportunity funding to be able
    to go into our communities.
        I want to hear more about it. I note that President Bush's
    budget eliminated that as an earmark. Well, I do not know if we
    will do an earmark or not, but I do not want to eliminate the
    concept, because I think every private sector person I meet
    talks about a worker shortage. I do not believe we have a
    worker shortage. I believe we have a skill shortage and an
    opportunity shortage in teaching young people, and even
    retraining adults, for the digital world.
        Faith-based initiative, I have already said, my commitment
    to really working with the President in this. As long as we
    meet constitutional compliance and do not have mission creep
    over into evangelism, I think we are going to be fine, and look
    forward to hearing more about it.
        But today I came not to listen to myself talk, but Ms.
    Zenker.
        Senator Bond. And I assure you that when we and Congress
    have legitimate needs that need to be designated, I do not
    necessarily agree with the Administration that Congress has no
    role in determining appropriate objects for spending or
    particular programs that need to be included.
        So, we will--we will--I expect we will be working on that
    one. And we will----
        Senator Mikulski. Well, I need your commitment to digital
    opportunity.
        Senator Bond. Yes. And we are going to--we are going to
    make sure that we provide appropriate guidance where it is
    necessary.
        I join with you in welcoming Senator Johnson. And we are
    delighted to have you with us. And I call on you for any
    opening remarks that you wish to make, Senator.

                        statement of senator tim johnson

        Senator Johnson. Thank you, Mr. Chairman. Just--very
    briefly, as a new member of the committee, it is an
    extraordinary honor for me to have this opportunity to serve on
    this subcommittee. And I cannot think of two better people than
    Senator Bond and Senator Mikulski to have leading this
    subcommittee.
        My role as a new member is primarily one of learning and
    listening, but I do appreciate this opportunity to participate
    in the deliberations. I look forward to the testimony from Ms.
    Zenker.
        Obviously, the Corporation for National Service has a
    constructive and positive consequence in every State in the
    Nation. Although a lot of the attention has been given to
    volunteerism and youth--in my State--the Corporation for
    National Service is best known for its senior service programs;
    particularly RSVP.
        I am looking forward to the analysis from the
    Administration and the leadership here. It is my understanding
    that the budget requests for 2002 involves a decrease in
    funding of about $46 million below 2001, yet with two new
    initiatives being proposed at a cost of around $35 million.
        I look forward to the discussion here today about how that
    works and what trade-offs are entailed. I also look forward to
    discussion on the faith-based aspects. Again, we have a number
    of organizations in this Nation that have long provided quality
    social services, partnering with the Federal Government. I want
    to see that continue. And there may be ways that we can expand
    on that foundation, but yet, at the same time, obviously,
    within the restrictions of the church and State divisions
    mandated by our Constitution.
        So, I look forward to that discussion, and look forward to
    working very closely with the leadership of this subcommittee.
        Thank you, Mr. Chairman.
        Senator Bond. Thank you very much, Senator.
        And now, I would call on Ms. Zenker. As you know, as our
    normal practice, we will make your full statement a part of the
    record and ask that you summarize those parts of it which you
    think are--are appropriate and ask that you keep that summary
    to about 10 minutes.

                           statement of wendy zenker

        Ms. Zenker. Good morning. Thank you, Mr. Chairman, Senator
    Mikulski, and Senator Johnson.
        My name is Wendy Zenker. And I am now the Acting Chief
    Executive Officer of the Corporation for National Service. It
    is my honor to testify before you today on the Administration's
    budget request for the Corporation and the programs authorized
    under the National and Community Service Act. As you know, Mr.
    Chairman, I previously appeared before this subcommittee in my
    capacity as the Corporation's Chief Operating Officer.
        Thank you for placing my written statement into the record.
        Appearing with me today are Gary Kowalczyk, who is the
    Coordinator for National Service Programs, and Bill Anderson,
    who is the Corporation's Deputy Chief Financial Officer.
        Mr. Chairman, in this budget, President Bush has affirmed
    this Nation's long commitment to helping individuals, families,
    and communities. Volunteerism and service have played a vital
    role in defining America. And the President has made the
    promotion of volunteerism and service one of the fundamental
    goals of his Administration. This budget request supports the
    Corporation's important contributions towards this goal.
        The President has announced his intention to expand the
    role of faith-based and small community organizations in
    addressing the Nation's needs. The Corporation has a long
    history of working with faith-based organizations. Of the
    50,000 AmeriCorps members who are now serving, more than 6,000
    are serving with faith-based organizations.
        Whether it's the 600 AmeriCorps members that made it
    possible for Habitat for Humanity to build 2,000 more houses
    than it otherwise could, or the 2,000 AmeriCorps members that
    recruited 35,000 volunteers for organizations affiliated with
    the Catholic Network of Volunteer Service, AmeriCorps members
    help expand the capacity and effectiveness of these groups in
    meeting critical needs in their communities.
        Mr. Chairman, I know you have a special interest in
    literacy. You will be pleased to know that literacy is the
    number one focus of AmeriCorps. We estimate that we will
    provide a total of $85 million under the AmeriCorps State and
    National Program for direct tutoring.
        An independent evaluation attached to my written statement
    documents the effectiveness of AmeriCorps tutoring programs in
    helping children learn to read. We look forward to continuing
    our work with you on this issue.
        On another front, AmeriCorps is bridging the digital
    divide. In fiscal year 2000----
        Senator Mikulski. How can I follow your testimony? I mean--
    --
        Ms. Zenker. I'm sorry.
        Senator Mikulski. No. Please, I just wonder--and I am glad
    we submitted it all, but I do not know how to follow the
    testimony.
        Ms. Zenker. I have--if I may, I can provide, right now, a
    copy of my oral statement for you. I think we can grab enough
    copies----
        Senator Mikulski. It would be easier for me----
        Ms. Zenker [continuing]. For everyone.
        Senator Mikulski [continuing]. Than trying to go through
    this to figure it out. I do not mean to be abrupt, but I am
    thumbing through. We all have revised and extended----
        Ms. Zenker. Sure.
        Senator Mikulski [continuing]. Ms. Zenker----
        Ms. Zenker. Thank you. And my apologies, Senator.
        Senator Mikulski. Please. I am sorry if I interrupted.
        Ms. Zenker. Okay. Thank you.
        On another front, AmeriCorps is bridging the digital
    divide. In fiscal 2000, we made $12.5 million in grants to over
    30 organizations as a down payment on Senator Mikulski's E-
    Corps. This year, we will be awarding up to $25 million to
    support computer technology initiatives, and the budget request
    for 2002 continues this commitment.
        As our programs have continued their successes, our
    organization has grown stronger. For the first time, the
    Corporation has received an unqualified or clean opinion on its
    fiscal 2000 audit. This subcommittee has supported our
    management reforms through appropriations over the past several
    years, making this success possible. And we thank you for that
    support.
        As we move forward, the Corporation continues its strong
    commitment to management improvement. We are using technology
    to improve our systems and better serve our members and
    grantees. We are currently developing a new integrated grants
    management system that will provide comprehensive management
    information for all grants and cooperative agreements.
        The budget request before this subcommittee totals more
    than $411 million. This funding level, while $46 million below
    the fiscal 2001 budget, will allow the Corporation to maintain
    its current program commitments and support two new
    initiatives.
        The budget supports 50,000 AmeriCorps members by providing
    nearly $237 million for the AmeriCorps State and National Grant
    Program and $21 million for their National Civilian Community
    Corps. The Learn and Serve Program that effectively links
    education and service is continued at $43 million.
        The overall budget reduction results from the fact that we
    do not need new resources in the National Service Trust to
    support the next class of AmeriCorps members.
        Two new initiatives in the budget request were announced by
    President Bush during the campaign, and will expand service
    opportunities for America's seniors. There is $20 million for a
    Silver Scholarships Program to expand the involvement of
    seniors in tutoring and mentoring. In exchange for 500 hours of
    service, seniors will receive a scholarship that they can
    transfer to a child, grandchild, or other deserving young
    person.
        The second initiative is a $15 million program called the
    Veterans' Mission for Youth, and it is aimed at tapping the
    vast experience of America's veterans as mentors and tutors.
        The budget also continues support for the Points of Light
    Foundation and America's Promise. We have very successful
    partnerships with these two organizations and will continue
    these efforts in the future.

                               prepared statement

        Mr. Chairman, again, I would like to thank you and the
    subcommittee for your support of the Corporation for National
    Service and our programs. We are available to answer your
    questions.
        [The statement follows:]

                       Prepared Statement of Wendy Zenker

                                  introduction
        Mr. Chairman, Ranking Member Mikulski, members of the Subcommittee,
    my name is Wendy Zenker and I am the Acting Chief Executive Officer of
    the Corporation for National Service. Thank you very much for inviting
    us to testify on the President's fiscal year 2002 budget request for
    the Corporation for National Service and the programs funded by this
    Subcommittee: AmeriCorps, including the National Civilian Community
    Corps (NCCC), the service-learning activities supported under Learn and
    Serve America, and two new senior initiatives that we will discuss
    today. As you know, I have appeared before the Committee previously in
    my role as Chief Operating Officer for the Corporation. Joining me on
    the panel today are William Anderson, the Corporation's Acting Chief
    Financial Officer, and Gary Kowalczyk, the Coordinator of National
    Service Programs for the Corporation.
        The President's Budget Blueprint reaffirms our nation's long and
    honorable commitment to helping individuals, families, and communities
    that have not fully shared in America's prosperity. Volunteerism is an
    integral part of this commitment and the President has made the
    promotion of volunteerism one of the fundamental goals of his
    Administration. The Blueprint notes:
        ``Volunteerism and community service have been a strong and
    important tradition in America ever since its founding. Across the
    country, faith-based groups, national and local nonprofit organizations
    are on the front lines, working to improve lives in some of the hardest
    pressed communities in America.''
        The President's commitment to promoting volunteerism and national
    service goes back to his time as Governor of Texas. As governor, the
    President supported the Texas Commission on Volunteerism and Community
    Service, the state agency responsible for administering the
    AmeriCorps*State grants in Texas. He also joined 48 of his fellow
    governors and the governors of three U.S. territories in signing a
    letter in support of the reauthorization of the National and Community
    Service Act and the Domestic Volunteer Service Act, the authorizing
    legislation for the Corporation for National Service. Governor Marc
    Racicot of Montana, a member of our Board of Directors and recently
    appointed Chairman of the Board of Directors of America's Promise,
    spearheaded the governors' letter effort. The governors' letter is
    attached.
        The President has indicated his support for service and
    volunteerism not only in terms of the budget and his experience as
    governor, but also by the recent nomination of Stephen Goldsmith,
    former Mayor of Indianapolis, to the Corporation's Board of Directors.
    Mr. Goldsmith was the President's domestic policy advisor during the
    campaign. As Mayor, Mr. Goldsmith instituted the ``Front Porch
    Alliance'' initiative, a cooperative effort among city government,
    churches, synagogues and neighborhood organizations to enhance the
    community building work of these organizations. The Alliance is still
    at work in Indianapolis. A community outreach team was created as part
    of this initiative. The team met with local pastors, neighborhood
    leaders, and residents to determine how private and public resources
    could be matched with program needs. He has already met with many
    members of the national service community and we look forward to having
    the benefit of his experience on our Board of Directors once he is
    confirmed.
        The Congress knows that, as part of his overall agenda, President
    Bush has announced plans to support the role of faith-based and
    community groups in their efforts to save and change lives. These
    organizations are making positive changes from the bottom up--one
    person, one family, one neighborhood at a time. Under this vision,
    these organizations will not replace Government, but will partner with
    government to make life better for those in need.
        The Corporation supports this larger agenda through all of our
    programs, including those funded by this Subcommittee. We already have
    extensive experience working with faith-based organizations such as
    Habitat for Humanity, Lutheran Services in America, the Catholic
    Network for Volunteer Services, and the National Jewish Coalition for
    Literacy. In the days preceding this hearing, we brought together
    faith-based organizations--some currently receiving Corporation funding
    and some that are not--to discuss their relationships with the
    Corporation and how the Corporation can do a better job reaching those
    organizations that don't currently participate in national service. We
    look forward to continuing our work with the faith community as an
    integral part of the Administration's initiative.
        Mr. Chairman, the Corporation and the national service programs
    under this Subcommittee's jurisdiction continue to meet the four
    strategic goals set by our bipartisan Board of Directors--solving the
    nation's critical needs, strengthening communities through service,
    improving the lives of those who serve through their experience, and
    developing a sound innovative organization that strengthens the service
    field. I'd like to highlight several accomplishments in these areas
    over the last year, all of which have been verified by independent
    reviews.
        Solving critical needs.--AmeriCorps members are contributing to
    solving the critical need for literacy. A just-completed independent
    evaluation of AmeriCorps by Abt Associates found that the tutoring
    efforts supported by AmeriCorps members resulted in improved test
    scores for the tutored students. We are making the complete study
    available to the Subcommittee.
        Strengthening communities through service.--According to an
    independent study, AmeriCorps members are helping strengthen
    communities by providing needed services, strengthening nonprofit
    organizations, and getting children, families, and others more involved
    in solving local problems. Several weeks ago, NCCC members helped lead
    2,000 student volunteers during spring break working on Habitat for
    Humanity Collegiate Challenge projects building homes for low-income
    families. AmeriCorps Promise Fellows, a special leadership cadre of
    talented AmeriCorps members, have provided leadership in hundreds of
    communities' efforts to expand, enhance, and improve the delivery of
    the resources needed by all young people as identified at the
    Presidents' Summit for America's Future in April 1997.
        Improving the lives of service participants.--Evaluations of our
    Learn and Serve program continue to demonstrate the positive benefits
    of service-learning on students. All Learn and Serve America programs--
    K-12 school- and community-based and higher education--integrate
    community service with academic curriculum or with out-of-school time
    and extracurricular learning opportunities. Student participants in
    these programs have demonstrated increased civic responsibility and
    academic achievement when their programs effectively link theoretical
    with practical knowledge to serve the educational, public safety,
    environmental and other human needs in their communities. The programs
    in which students serve over an extended period of time and in which
    effective connections are made to classroom curriculum have the
    greatest positive effects on student outcomes. In addition, Learn and
    Serve America programs encourage and foster collaboration among key
    societal sectors--schools, community-based organizations, institutions
    of higher education, and others--to meet community needs and to
    strengthen the fabric of local communities.
        Creating a sound and innovative organization that strengthens the
    service field.--Mr. Chairman, I am also pleased to report that in March
    of this year the Corporation received an unqualified, or ``clean''
    opinion on its fiscal year 2000 financial statement audit. We also
    reduced the number of material weaknesses from five to one. This is a
    tremendous accomplishment, the product of sustained management
    attention on the improvement of operational systems and the successful
    implementation of new technologies.
        This Subcommittee has supported the Corporation's efforts in
    achieving a clean opinion, and I would like publicly to thank the
    Chairman, Senator Mikulski and all of the Members for the consistent,
    strong support that you and your staffs have given us as we worked to
    achieve this goal. The Subcommittee provided crucial funding for the
    Corporation's program administration budget during the past three years
    that was instrumental in producing the good result that we are sharing
    with you today.
        I also want to acknowledge Harris Wofford, the Corporation's former
    Chief Executive Officer (CEO), and the contribution of his vision and
    leadership, and Tony Musick, our former Chief Financial Officer, who
    brought his extensive financial expertise to the Corporation and
    actively led our management improvement initiative. Our Board of
    Directors took an active role in monitoring our progress and advising
    us on where to focus our energies. The Corporation's Inspector General,
    Luise Jordan, and the outside auditors, KPMG, worked closely with us in
    achieving this result. Most of all, the credit for our success goes to
    the Corporation's staff whose hard work and dedication brought us to
    our goal. With the clean opinion, the Corporation is on sound footing
    to support future national service opportunities and the priorities
    outlined in our budget request.
                             budget request summary
        The 2002 budget request for the programs and administration
    authorized under the National and Community Service Act totals
    $411,480,000; this represents a decrease of $46,011,000 below the
    comparable level in 2001. In addition, the budget includes a $5 million
    request for the Corporation's Office of the Inspector General.
        Two new presidential initiatives totaling $35 million are also
    contained in this request, the Silver Scholarship Program and the
    Veterans' Mission for Youth Initiative. Reductions in funding from
    fiscal year 2001 are shown under: the National Service Trust,
    reflecting the fact that we do not need new budget authority to cover
    the education award costs of members supported by the 2002 budget; and
    the elimination of earmarks in the 2001 bill.
        In total, the fiscal year 2002 budget supports 50,000 AmeriCorps
    members, including the members funded through AmeriCorps*VISTA. We also
    continue support for service-learning activities under the Learn and
    Serve America Program. Additional details are provided below.
    New Initiatives to Expand Senior Service
        The budget requests $35 million in funding for two new programs to
    expand service by our nation's seniors: the Silver Scholarship program
    and the Veterans' Mission for Youth program. These new presidential
    initiatives will further the contribution of older Americans to
    national service.
                Silver Scholarships
        Under the Silver Scholarship program, seniors age 55 and older, who
    participate in 500 hours of service in a year will be eligible to
    receive a $1,000 scholarship that can be deposited in an education
    savings account for use by their children, grandchildren, or another
    child in need. The scholarship could only be used to pay tuition and
    fees and will be tax exempt. We have submitted the appropriations
    language necessary to establish the transferability and the tax-exempt
    status of the scholarship.
        The Silver Scholarships will expand senior service opportunities
    for the rapidly growing population of older adults. With the aging of
    the baby boomers, the number of people aged 65 or older is estimated to
    double. The baby-boomers represent the best-educated, wealthiest, and
    healthiest group of older adults in history. Many will explore
    challenging opportunities following retirement, including volunteer
    service opportunities. Silver Scholarships will harness this resource
    in our efforts to solve pressing community needs.
        The Corporation has extensive experience with senior service.
    Through the National Senior Service Corps we have seen the results of
    senior service demonstration programs funded by the Corporation and
    other organizations that provide strong evidence that seniors in
    retirement will commit to serving ten hours per week in well-run, well-
    structured projects that are getting important things done in
    communities. The demonstrations have also found that modest incentives
    to cover out-of-pocket costs work as an incentive for seniors to serve.
    The Silver Scholarship Program will build on these experiences and
    successes.
        We anticipate making approximately 60 grants of approximately
    $325,000 each (including the funds reserved for the scholarships) for
    this purpose. It is anticipated that these grantees will make subgrants
    to local groups. A wide variety of organizations will be eligible to
    receive these grants, including consortia of small and faith-based
    nonprofit groups; national organizations, including faith-based groups,
    that operate in multiple states; and Indian Tribes and Territories. All
    organizations currently participating in any of our streams of service,
    including those currently funded through the Corporation's National
    Senior Service Corps, will be eligible to compete for these funds so
    long as they meet the requirements of the Silver Scholarship Program.
        The budget request makes $20 million available for the program: $10
    million will be appropriated to the National Service Trust to cover the
    cost of the scholarships, and $10 million for grants to cover the
    support costs for the volunteers. I have attached a more detailed
    description of the Silver Scholarships Program.
                Veterans' Mission for Youth Program
        The budget request also contains $15 million for a new program that
    will provide matching grants to community organizations that connect
    veterans and retired military personnel with America's youth through
    mentoring and tutoring programs. Approximately 15,000 veterans and
    retired military personnel will participate annually under the program
    to tutor and mentor about 50,000 youth.
        Mr. Chairman, you have had an active interest in veterans' issues
    for quite some time. You know what veterans have to offer young people
    considering their experience in serving their country. Service in the
    armed forces can instill discipline, respect for others, a sense of the
    importance of teamwork, and comradeship. All of these qualities make
    veterans excellent mentors. Further, the Department of Defense supports
    significant community service opportunities for active duty personnel,
    and extending such opportunities to individuals after they leave
    military service will take advantage of their well-developed skills and
    interests.
        In fiscal year 2002, the Corporation anticipates making
    approximately 100 grants, averaging approximately $150,000 for the
    Veterans' Mission for Youth program. The Corporation anticipates making
    these grants on a competitive basis to consortia of organizations
    within states, including consortia of small, faith-based, and veteran
    nonprofit groups; national nonprofit organizations, including veterans
    organizations, that operate in multiple states; and Indian Tribes and
    Territories.
        The Veterans' Mission for Youth program is consistent with the
    Corporation's current program authority. We have discussed this
    initiative with officials at the Veterans' Administration and they are
    supportive of the Corporation's efforts. We have even begun to do
    outreach to nonprofit organizations that work with veterans and
    veterans' organizations for their input on recruiting and program
    design.
    The Faith Community and National Service
        Americans have often turned to their churches, synagogues, temples,
    and mosques for spiritual guidance, leadership, fellowship, and a
    helping hand during good times and bad in our nation's history. Across
    the country, faith-based and small community-based organizations are on
    the front lines working to improve lives in places that face tremendous
    social and economic difficulty. They are often dealing with these
    crises in innovative and creative ways.
        President Bush proposes to use federal resources as a means to
    bring the commitment, creativity and innovation of community-based and
    faith-based organizations to scale. Mr. Chairman, AmeriCorps members
    and volunteers funded through the Corporation for National Service have
    been putting this model to work in some of the hardest pressed
    communities in our country. The National and Community Service Act
    (NCSA) broadly defines eligible grantees to include private nonprofit
    organizations, and explicitly defines a private nonprofit organization
    to include ``a church or religious entity.'' Of the 50,000 AmeriCorps
    member positions in the current program year, more than 6,000 serve or
    will serve in faith-based organizations. In the 2000-2001 Program Year,
    AmeriCorps members, including AmeriCorps*VISTA and AmeriCorps*Promise
    Fellows, worked in 214 faith-based organizations--an investment of more
    than $27 million. This service hasn't replaced the important work of
    local volunteer efforts. AmeriCorps service enhances these efforts.
    AmeriCorps members provide value-added service to faith-based community
    assistance programs.
        Let me illustrate with two examples. More than 600 AmeriCorps
    members, including VISTA, work with Habitat for Humanity to help build
    homes for low-income families across the nation. These members provide
    leadership on building projects, serving 1.3 million hours directly
    supervising 241,000 Habitat volunteers and helping recruit additional
    volunteers. Service by these AmeriCorps members multiplies what Habitat
    can do. They have made it possible for Habitat to build more than 2,000
    additional houses that otherwise would not have been built.
        Last year the Catholic Network for Volunteer Service placed over
    2,000 AmeriCorps members through 120 national, state, and local faith-
    based organizations, including Jesuit Volunteer Corps, the Christian
    Appalachian Project, Lutheran Volunteer Corps, and Holy Cross
    Associates. These AmeriCorps members recruited an additional 35,000
    volunteers, assisted over 30,000 homeless people, taught and/or tutored
    thousands of school children, and helped more than 8,000 low-income
    pregnant women access pre-natal care and other services. In many cases,
    these members worked in small organizations that have limited
    resources. With AmeriCorps assistance, a small church or community-
    based organization can make those limited resources go farther.
        In all of our service activities with faith-based organizations,
    AmeriCorps members may not get involved in any religious activities.
    The National and Community Service Act recognizes a distinction between
    the religious activities of a faith-based organization and a non-
    religious national service program operated by such an organization. To
    ensure that Federal aid is not used impermissibly to advance religion,
    the law prohibits the use of Corporation assistance for religious
    instruction, worship service, or any form of proselytization.
    AmeriCorps members may not give religious instruction, conduct worship
    services, provide instruction as part of a program that includes
    mandatory religious education or worship, proselytize, or construct or
    operate facilities devoted to religious instruction or worship. In
    addition, national service programs operated by faith-based
    organizations must be open to participants regardless of their
    religion.
        Mr. Chairman, AmeriCorps and the Corporation for National Service
    figured prominently in the President's faith-based initiative
    announcement. We have experience with a model that works. We are
    looking forward to continuing our work with the faith community and
    local community-based organizations.
    AmeriCorps*State/National
        Since 1993, more than 200,000 Americans have joined AmeriCorps
    serving with local, community-based nonprofit organizations in a
    variety of ways, from tutoring children to serving in community
    policing projects to building or rehabilitating housing for the
    homeless. Members receive a living allowance and are eligible to
    receive an education award for the successful completion of their
    service.
        For fiscal year 2002, the Administration is requesting nearly $237
    million for the AmeriCorps*State/National grant program, an increase of
    $6.5 million. The AmeriCorps*State program which provides grants to
    governor-appointed State Commissions will receive $190 million and $47
    million will go to national nonprofit organizations conducting service
    programs in more than one state.
                Literacy
        Mr. Chairman, we appreciate that literacy has been an important
    issue to you and you have been a leader in Congress in this area. With
    the recent media attention on the education issue and knowing of your
    interest, the Corporation contracted with Abt Associates for a
    comprehensive study of the AmeriCorps*State/National program and its
    efforts in literacy. The study had two parts and was conducted between
    the spring of 1998 and the summer of 2000. The first phase of this
    project was a Descriptive Study of what was going on among our
    grantees. We knew that a large number of AmeriCorps members were
    serving in educational programs, but the Descriptive Study would give
    us a much more detailed picture of this activity. The second phase was
    a Reading Outcomes Study to measure what impact AmeriCorps service was
    having on those receiving the service.
        The Descriptive Study made some very important findings about the
    size and scope of our commitment to literacy. Of the 961 total State/
    National programs, more than half (517 programs) were education-related
    programs, the majority of which (360 programs) involved direct literacy
    and tutoring. Sixty-one percent of the sponsoring agencies were
    community-based organization and 29 percent of the sponsors were
    educational institutions. The study also found that firmly established
    and experienced agencies are sponsoring AmeriCorps programs. The vast
    majority, 83 percent, have been operating for five or more years. The
    Descriptive Study also found that:
      --AmeriCorps literacy service reached 260,000 individuals; 90 percent
            were children from infants and toddlers to elementary and high
            school children. Across all programs nationwide, the majority
            of students receiving literacy services were concentrated in
            grades 1 through 6.
      --Over 10,000 AmeriCorps members were involved in literacy and they
            had recruited 40,000 volunteers to help provide literacy
            service.
      --Almost all literacy programs provided training to members and
            volunteers in literacy instruction and in working with
            children. Typically, about 16 hours of training were provided
            before, and 20 hours were provided during, the delivery of
            literacy services.
        AmeriCorps members in the 360 literacy and tutoring programs
    identified in the Descriptive Study are conducting a wide range of
    activities with their students, encompassing the full range of reading
    subskills: reading aloud, reading comprehension, and vocabulary
    development. Almost half of the tutoring programs used well-known and
    widely used instructional models. And most of the tutoring programs
    incorporated some of what educators and researchers believe are the
    most valuable strategies for achieving positive reading outcomes such
    as coordinating tutoring with classroom curricula; allowing adequate
    time for tutoring (1.5 hours/week); and providing training to tutors.
    These strategies helped produce improvements in test scores found in
    the follow-up Reading Outcomes Study.
        After receiving the results of the Descriptive Study, the
    Corporation commissioned Abt to conduct a Reading Outcomes Study to
    measure the effect of AmeriCorps on student reading skills as measured
    by the Woodcock-Johnson Tests of Achievement. Data for the study were
    collected pre-test in the fall of 1999 and early winter of 2000, and
    post-test during the spring of 2000. The study found that students in
    AmeriCorps tutoring programs made impressive gains:
      --The tutored students at all grade levels improved their reading
            performance from pre-test to post-test more than the gain
            expected for the typical child at their grade level.
      --Reading comprehension and reading skills started out below grade
            level; by year's end students closed the gap and were reading
            at or near the grade-level expectation.
        Mr. Chairman, the Abt studies confirm that AmeriCorps' literacy and
    tutoring programs are working, improving the reading abilities of
    children. I have attached the full Descriptive Study and the Reading
    Outcomes Study.
                Digital Divide
        In September 2000, the Corporation made grants to 32 programs
    designed to bridge the digital divide. This was a down payment on the
    E-Corps, Senator Mikulski's initiative to expand the digital knowledge
    of teachers and their students. More than 1,100 AmeriCorps members are
    working for a diverse range of local and national community based
    organizations, schools, community centers, and YMCA's helping children
    and adults succeed and thrive in the digital age. Most of these grant
    awards were only recently finalized and these programs are just
    beginning to get going with their projects.
        We have received a number of very innovative digital divide grant
    proposals for the 2001 appropriations. The proposals have ranged from
    those using AmeriCorps members to assist in delivering technology
    access to low-income individuals and families or helping to train
    school teachers and staff in community organizations so that they will
    become adept at using technology in their work with young people, to
    programs that build the technology skills of those Americans,
    especially children, who have not yet been exposed to computers and
    programs that use technology to meet the needs of communities. We will
    devote up to $25 million to this emphasis area under the
    AmeriCorps*State and National activity.
        In addition to these grants, the Corporation has a number of
    partnerships with leading technology companies and nonprofits such as
    America Online, IBM, the United Way, and America's Promise to bring
    these resources to bear on the problem. Our recent public service
    announcement campaign focuses on the digital divide.
                Education Awards Program and AmeriCorps*Promise Fellows
        In 2002, for the first time, the State/National grants budget
    request includes the costs of the Education Awards program and the
    AmeriCorps*Promise Fellows program. These programs, previously funded
    under Subtitle H of the Act, are proposed to be funded under Subtitle C
    in order to integrate the funding of all AmeriCorps activities and to
    continue to increase the types of programs and organizations in which
    AmeriCorps members serve while minimizing the cost to the Corporation.
    We have proposed appropriations language to accomplish this transfer,
    including provisions that exempt grantee organizations from the
    administration cost, matching requirements, and participant benefit
    requirements that do not exist under subtitle H of the National and
    Community Service Act. These requirements have never been part of the
    Education Awards program or the Promise Fellows program. The new
    language will ensure that the Promise Fellows and the Education Awards
    program will maintain their current structures.
        The Education Awards program has played a key role in reducing the
    Corporation's per member costs to below $15,000, as called for by
    agreement with Congress. Under this initiative, the Corporation
    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. Up to $7 million to support
    15,000 slots will be available for Education Awards program under the
    budget request.
        The Promise Fellows is a major joint initiative with 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. 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 serve with and
    are selected and administered by national, state, and local nonprofit
    organizations that are developing and coordinating large-scale
    activities intended to support children and youth. They do not serve
    with the America's Promise organization. The budget request makes up to
    $7 million available for the Promise Fellows program.
                National Service Trust
        The budget request for fiscal year 2002 will support an additional
    50,000 AmeriCorps members; of which approximately 48,000 will enroll in
    the Trust. In preparing this year's budget for the Trust, we have
    determined that no new budget authority is required for the Trust Fund
    costs associated with the new AmeriCorps members. The $10 million
    included in the Trust supports the scholarship portion of the Silver
    Scholarships initiative. This determination reflects several factors,
    including: a change in estimating procedures to recognize future
    interest earnings in determining current, as opposed to future, budget
    requirements; and a program budget that is based on a static number of
    AmeriCorps members in 2002 and beyond. As in previous years, the
    appropriations request contains language allowing the Corporation to
    use up to $7.5 million for the President's Student Service Scholarship
    Program. The addition of 50,000 new members added by this budget will
    bring the total Trust enrollments to more than 335,000 since the
    beginning of the AmeriCorps program.
                AmeriCorps*NCCC
        The administration's budget submission requests $21 million for the
    NCCC, the same funding level as in fiscal year 2001, to support 1,100
    NCCC members. NCCC is a residential service program. Members live on
    five campuses nationwide and are deployed to areas of greatest need.
    Each year, the Corporation routinely receives approximately four
    applications for each available NCCC position.
        In addition to addressing pressing community needs in the areas of
    education, public safety, and the environment, NCCC members provide
    assistance to the Red Cross and the Federal Emergency Management Agency
    in locations struck by natural disasters. Approximately 16 percent of
    NCCC members have been certified to provide fire-fighting support to
    the U.S. Forest Services and Parks Services and 50 members (the largest
    deployment ever) served on initial attack fire fighting teams in the
    western states in August and September 2000. In fiscal year 2000, NCCC
    responded to 34 disasters.
        For fiscal year 2001, Congress increased the NCCC appropriation by
    $3 million to increase NCCC enrollment by 10 percent and to cover the
    costs of moving the San Diego Campus from its present site, a former
    Naval Training Center. The Department of the Navy is conveying the site
    to the City of San Diego, which plans to redevelop the area. Plans for
    the site change are moving forward. We recently completed a temporary
    move to the naval facility across the street from the current campus to
    allow the class to graduate in San Diego in July. The next phase of the
    move will either be a local move to another site in San Diego or to a
    new location. The final decision will be made in May 2001 and the move
    should occur in August. The move will result in certain leasing cost
    increases, and one-time moving and staff relocation costs
                Learn and Serve America
        The budget requests level funding, $43 million, for the Learn and
    Serve America program in fiscal year 2002. Mr. Chairman, the use of
    service-learning continues to grow as more and more school systems
    adopt this innovative strategy that combines community service with
    academic and civic education. In 1984, nine percent of all schools
    offered service-learning. By 1999, that figured had jumped to 32
    percent of schools, including half of all high schools. Learn and Serve
    America programs engaged 1.18 million students in service-learning
    activities in 2000.
        Service-learning offers tremendous benefits to students, schools,
    and communities. It gives students the opportunity to be active,
    positive contributors to society and contributes to greater civic
    engagement by students. Students become more active in school and
    develop greater beliefs in their ability to make a difference in their
    communities. Studies have found that service-learning contributes to
    increases in core GPA and in Math. Students in service-learning are
    less likely to engage in risky behaviors than their peers and
    contribute more than twice as many volunteer hours in the community
    than students who are not part of service-learning do.
        Schools benefit from service-learning through greater integration
    with community-based organizations, energized curriculums, and by
    expanding connections between students and school personnel. Ninety-
    five percent of teachers believe students should be encouraged to
    participate in service. Finally, service-learning forges partnerships
    between schools or colleges and community organizations and
    institutions, providing additional resources to meet shared community
    and neighborhood challenges.
        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. And Learn and Serve America encourages sustainability
    and growth of service-learning through its funding match requirements.
    All school- and community-based grantees must demonstrate an increasing
    level of matching funds to qualify for continued federal support,
    rising to dollar-for-dollar by year four. Higher education grantees
    must provide a dollar-for-dollar match from outset of the grant.
        While most often service-learning is sponsored by schools and
    colleges, it also takes place in community organizations such as 4-H,
    YMCA, as well as through the governor-appointed State Commissions on
    service that administer AmeriCorps grants. Community organizations and
    nonprofits must develop programs with civic or academic knowledge links
    to the service in order to qualify for Corporation funds
                Innovation, Demonstration, And Assistance Activities
        The fiscal year 2002 budget request for the Innovation and
    Demonstration activities authorized under Subtitle H of the National
    and Community Service Act is $22 million, a reduction of $6.4 million
    below last year. Most of the reduction represents a transfer from
    Subtitle H to the AmeriCorps*State/National grants under Subtitle C of
    the costs of the Education Awards and the AmeriCorps*Promise Fellows
    programs. This funding level will allow the Corporation to continue its
    mission under Subtitle H to build the ethic of service among all
    Americans, provide training and technical support to the national
    service field, and to foster high quality programs with real community
    impacts. The Corporation also funds a number of special initiatives in
    its Innovation and Demonstration authority, including:
        Recruitment.--The Corporation recently went on-line with our new
    web-based recruitment system at www.americorps.org to help us reach our
    goal of recruiting 50,000 new AmeriCorps members. The Corporation
    developed and implemented this new web-based recruiting system in
    fiscal year 2001 to assist State Commissions and local nonprofits with
    recruiting members. The system provides information on service
    opportunities, and permits a person to search for those opportunities
    that meet his or her interests and qualifications. You can then apply
    on-line directly to the nonprofit or faith-based organization. Whether
    a service opportunity is across state lines, or merely around the
    corner, putting the program in touch with the applicant is the first
    step that ultimately results in a member signing up to provide service
    in a community and help to solve critical needs. The recruitment
    system, found at www.americorps.org, has already generated 8,000
    applications to programs.
        Disability Programs.--In fiscal year 2002, organizations that were
    granted funds to provide outreach and recruitment activities to people
    with disabilities for national service programs will complete their
    two-year grant. Grantees will present their accomplishments and best
    practices at the 2002 National and Community Service Conference. Based
    on the information learned from these grant activities, the Corporation
    will hold discussions with the grantee organizations, State
    Commissions, programs, and the Training and Technical Assistance
    provider to determine the best use of new disability grants.
        The President's Student Service Challenge.--In 2002, the
    Corporation expects to award 15,000 matched President's Student Service
    Scholarships and 50,000 President's Student Service Awards to reward
    outstanding service by young people.
        Dr. Martin Luther King, Jr. Day.--This initiative is authorized
    under the National and Community Service Act and is intended to make
    this day an opportunity for all Americans to provide service to their
    community in honor of the legacy of Dr. King.
                Evaluation
        The budget request for the Corporation's evaluation activities for
    fiscal year 2002 is level funded at $5 million. Evaluations determine
    the impact of Corporation programs in achieving the goals set forth in
    the National and Community Service Act. They also help the Corporation
    identify successful service activities and best practices that can
    serve as models for future program development.
        In fiscal year 2002, the Corporation will support a variety of
    studies and activities designed to track the performance of our
    programs, as required by the Government Performance and Results Act,
    and to provide customer feedback. Those activities include customer
    satisfaction surveys, and accomplishments tracking. Long-term studies
    will continue to absorb a significant proportion of the evaluation
    budget in fiscal year 2002. The Corporation now anticipates having to
    fund the first follow-up of the member longitudinal study from the
    fiscal year 2002 appropriation. We will also begin planning for the
    establishment of program outcome standards at the grantee and
    subgrantee level. Working in cooperation with the AmeriCorps program
    staff and State Commissions, Evaluation staff will design and implement
    a system of quantitative standards for grantee and sub-grantee
    performance in the areas of member enrollment, retention, and
    completion.
                Program Administration
        The budget request contains $31 million for program administration
    in fiscal year 2002, essentially level funding from the previous year.
    Consistent with the Act, the Corporation's overall program
    administration funding includes a 40 percent allocation of $12.4
    million to State Commissions to fund their fiscal management and
    program support activities. The remaining $18.6 million will be used
    for the Corporation's direct program administration expenses, including
    the technology enhancements that were so critical to the Corporation's
    ability to obtain a clean opinion on its financial statements. Although
    the cost of supporting even a level program activity level will include
    increased program support costs due to inflation and cost of living
    increases, the Corporation is not requesting an increase in its 2002
    Program Administration funding levels. The current request level will
    enable the Corporation to maintain its 2001 FTE level and to staff
    critical program positions.
                             fiscal year 2000 audit
        The Corporation is pleased to report that for the first time it has
    received an unqualified, or ``clean'' opinion on its fiscal year 2000
    financial statements. Operational areas deemed materially weak were
    reduced from five in fiscal year 1999 to one for fiscal year 2000.
        These achievements were the result of a concerted effort to reduce
    the number of material weaknesses and reportable conditions identified
    in the audits, beginning in fiscal year 1996 when ten operational areas
    were deemed materially weak. We reduced our material weaknesses by
    developing a comprehensive Action Plan that identified tasks that
    needed to be accomplished to improve management and to control material
    weaknesses. We continually updated the Plan to incorporate new tasks,
    including those identified by the Office of the Inspector General, and
    documented the Corporation's progress toward completing existing tasks.
        In the past two years, as part of the Action Plan, the Corporation
    implemented a new financial management system, created a web-based
    reporting system for the National Service Trust that improved record
    keeping and accuracy of Trust data, and put in place numerous
    improvements to our control environment, fiscal management, and
    information technology. As the full impact of these systems began to be
    felt throughout our organization, our audit results improved as
    illustrated below.

               CORPORATION AUDIT RESULTS--FISCAL 1996 THROUGH 2000
    ------------------------------------------------------------------------
               Type of Opinion              1996   1997   1998   1999   2000
    ------------------------------------------------------------------------
    Unqualified..........................                                  X
    Unqualified Balance Sheet only \1\...                    X      X
    Qualified Balance Sheet only \2\.....             X
    Financial Statements Not Auditable...      X
    ------------------------------------------------------------------------
    \1\ The financial statements were fully auditable, the auditors issued
      an unqualified opinion on the Statement of Financial Position and
      disclaimed on the Statement of Operations and Statement of Cash Flows.

    \2\ Only the Statement of Financial Position was auditable.

                       continued management improvements
        The Corporation continues to emphasize financial and grants
    management improvements. The Subcommittee's Conference Report for the
    current fiscal year instructed the Corporation to implement a cost
    accounting system, an integrated grants management system, and to
    establish a central archive for Corporation grant records. Funding was
    provided for these activities. The Subcommittee also instructed the
    Corporation to report on our procedures for handling ``troubled''
    grantees. I would like to report on these areas.
    Cost Accounting System
        We will use our new financial management system, Momentum, to
    report costs in statements, so the system infrastructure for the cost
    accounting system is currently in place. Utilizing Momentum, we are
    developing a cost model to allocate expenses by program according to an
    appropriate cost driver in accordance with federal accounting
    standards. We plan to contract with an independent public accounting
    firm this year to assess our cost model. Our goal is to be able to
    generate comparative information on costs between programs and to link
    costs to program outcomes.
    Grants Management System
        The work on the integrated grants management system began in fiscal
    year 2000. This long-term project is going very well, and we expect to
    begin to implement the system next April. The design work on the system
    was completed in December 2000, and is now undergoing final review
    prior to the actual programming work. When completed, we will have an
    integrated grants management system that provides comprehensive
    financial management information for all grants and cooperative
    agreements. The design meets the Grants Financial System Requirements
    of the JFMIP and the requirements of the Government Paperwork
    Elimination Act and the Federal Financial Assistance Management
    Improvement Act. On February 2, the Corporation provided the design
    documentation, including functional hierarchies, entity diagrams, and
    initial mock-ups of all forms and reports to the Inspector General for
    comment.
        We are very excited about the potential of this new grants system.
    Like our web-based reporting system for the National Service Trust, the
    grants system will use the Internet for many functions. Potential
    grantees will be able to apply for Corporation grants, using a common
    electronic form 424 on the Internet. The Corporation will also be able
    to perform peer reviews of grant proposals over the Internet. All
    employees of the Corporation will be able to do their assigned tasks in
    one system. Both financial and progress reporting will be done over the
    Internet. The system will be linked to the Corporation's Momentum
    financial management system so that all financial data will be in sync.
    Much of the current labor intensive tracking and notifying will be
    automated. And all of the Corporation's grant activity, with
    appropriate audit trails, will be done in one place.
    Central Records Archive
        The Corporation plans to consolidate its grant and program files in
    a central archive for grants issued from the Corporation's
    headquarters. Files for grants issued by our five service centers will
    remain at the location servicing the grant.
        As part of this effort, the Corporation will close out expired
    grants and send the files to the Federal Records Center. We will also
    contract with a qualified vendor to perform grant file reviews, grant
    award reconciliations, and perform an analysis of financial and related
    reports to determine that all requirements have been met. The
    Corporation issued a notice of the contract for this work on February
    5, 2001. We expect that a contractor will begin work on the project
    soon.
        In the longer term, the Corporation believes that the archive will
    not be needed. As previously discussed, the Corporation is building a
    new grants management system that will handle all aspects the of the
    grant process from accepting applications, to peer review, to award and
    eventual close out. We estimate that within five years the entire grant
    process will be paperless eliminating the need for an archive.
    Improving Grantee Performance
        The Fiscal Year 2001 Conference Report also instructed the
    Corporation to examine the use of receivership in addressing
    ``troubled'' grantees. Our primary tool for monitoring State
    Commissions is our State Administrative Standards project. Under the
    Standards, a review team spends five days on site assessing the
    Commissions in five statute-based areas: (1) proper grant processes,
    (2) monitoring of service programs, (3) member record keeping, (4)
    filing of Corporation reports, and (5) financial management. In
    addition, the Standards evaluate the Commissions' planning and
    assessment processes, personnel management, systems for training and
    technical assistance, as well as service promotion within states. To
    date, Corporation staff has performed 15 State Commissions site visits
    using the Standards and has issued 11 final reports. An additional 14
    site visits will be conducted in fiscal year 2001.
        In addition to visiting State Commissions, as part of the Standards
    review process, Corporation staff also conducts site visits to
    individual program sites that are receiving funding from Commissions to
    ensure that the Commissions are conducting proper program oversight.
    State Commissions are instructed to obtain technical assistance and
    training to correct any deficiencies identified by the Standards and
    must establish policies and procedures to remedy the problems.
        The Corporation has ample authority under current law to impose
    sanctions on troubled grantees. These sanctions include requiring
    reimbursement for misused funds, the suspension or termination of
    assistance, or the automatic recovery of disallowed Federal grant funds
    through administrative offset of other Federal funds. Unlike the
    Department of Housing and Urban Development, the Corporation does not
    have authority to appoint a receiver to step in and run a State
    Commission. Given the wide range of currently available sanctions, such
    authority does not appear to be necessary. So far, we have not found
    any Commissions with problems so significant that we would need to
    resort to such a remedy. The current sanctions are effective tools for
    insuring proper State Commission management.
    Program Administration--Additional Priorities
        Mr. Chairman, Senator Mikulski, as I mentioned previously, this
    Subcommittee has been very supportive of the Corporation as we have
    used our funding to improve our operational and financial systems.
    While we worked to improve our systems, the responsibilities and
    activity of the Corporation have grown substantially. The addition of
    50,000 new members added by this budget will bring the total Trust
    enrollments to more than 335,000 since the beginning of the AmeriCorps
    program. There are more than 3,000 programs, sponsors, and sites that
    receive Corporation support and assistance.
        All of this growth has placed greater demands on the National
    Service Trust and its staff. All member information from when they
    enroll in AmeriCorps or AmeriCorps*VISTA to when they exit is recorded
    in the Trust. If information about the member changes--change of
    address, change of program site--during the course of a member's
    service, that change is also kept by Trust data. Indeed after a member
    successfully completes his or her service, the Trust is responsible for
    receiving and processing requests for payment of education awards. As
    the Trust's on-going responsibilities have grown with each group of new
    members, there has been an increased workload of continuing inquiries
    from this increasing member population. The Trust is actively using
    technology to assist in the management of this workload, but it is
    important to recognize that this is a growing workload and that
    continuing improvements are needed to the Trust's capacity to respond
    to member requirements in a timely manner.
                           points of light foundation
        The Corporation has enjoyed successful collaborations with the
    Points of Light Foundation and America's Promise--the Alliance for
    Youth. These organizations bring special expertise and resources to the
    national service field. Both organizations, along with the Corporation,
    are the co-hosts and primary organizers of the National Community
    Service Conference. Last year's conference brought more than 5,000
    members of the national service field together to exchange ideas and
    best practices for delivering service.
        The budget request for the Points of Light Foundation is sustained
    at last year's level of $10 million. The funding will be used by the
    Foundation to carry out its fundamental purposes:
      --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 2002, the Foundation will develop programming and support
    institutions that offer volunteer opportunities and resources to low-
    income people. The Foundation has expanded its programming to reach and
    serve more communities of faith and family-based volunteer initiatives,
    two key strategies to strengthen communities. The Foundation will also
    work to build the capacity, visibility, and sustainability of a unified
    nationwide network of local Volunteer Centers.
                               america's promise
        In April 1997, America's Promise was launched at an unprecedented
    gathering in Philadelphia called the Presidents' Summit for America's
    Future. In Philadelphia every living President, with Former First Lady
    Nancy Reagan representing President Reagan, along with 38 Governors,
    100 Mayors, and delegations of Americans representing 140 communities
    joined together behind an overall mission of building and strengthening
    the character and competence of today's youth.
        At that gathering, a set of five basic promises was made to every
    child in America. To point them in the right direction, to help them
    grow up strong and ready to take their place as successful adults,
    these five promises must be fulfilled for all children and young
    people:
      --An ongoing relationship with a caring adult--parent, mentor, tutor
            or coach.
      --A safe place with structured activities during non-school hours.
      --A healthy start.
      --A marketable skill through effective education.
      --An opportunity to give back through community service.
        The fiscal year 2002 budget proposes $7.5 million as a second grant
    to America's Promise for the purpose of fulfilling its mission. The
    grant will support the operational costs of the organization, as well
    as activities consistent with the mission described above. It is
    anticipated that these funds will supplement other ongoing activities
    and contributions toward the goals and objectives of America's Promise.
        In 2002, America's Promise will continue to support programs and
    partnerships that develop the character and competence of the nation's
    youth. A key priority will be the development of collaborations across
    the public, private, and independent sectors around the common mission
    of fulfilling the Five Promises. These collaborations make the best use
    of scarce resources and ensure more young people are reached. Another
    priority will be the generation of resources, including in-kind
    contributions in the form of the time and talent of individuals and
    their employers, as well as donation of funds to support positive youth
    development activities in communities. Resources can be combined and
    delivered to children where they live, learn, and play through `Sites
    of Promise' such as schools, public housing, libraries, and
    recreational facilities. These ultimately culminate in the full-scale
    mobilization of Communities of Promise.
                                   conclusion
        Mr. Chairman, Americans can be proud of the work of Corporation for
    National Service. They see the change that individuals bring to
    communities with pressing needs. As we look to the future, we are not
    resting on our accomplishments. Over the next year the Corporation will
    continue to review and improve its operations and programs. We will
    also seek to identify innovative ways to strengthen the Corporation's
    contributions to the Administration's overall agenda to support faith-
    based service groups and the efforts of communities and families in
    providing vigorous and thorough support for those in need, while
    preserving the dignity of the individual and fostering personal
    responsibility. This Subcommittee has been tremendously supportive of
    our work and we look forward to your continued support.

                        AMERICORPS LITERACY ACHIEVEMENTS

        Senator Bond. Thank you very much, Ms. Zenker. Let me now
    turn to questions.
        Speaking on the literacy front, and I appreciate your
    comments about it, how much funding support currently goes to
    the Corporation's literacy initiatives? What kinds of results
    are we seeing? And how do you envision this Silver Scholarship
    and Veterans' Mission complementing the Corporation's current
    literacy activities?
        Ms. Zenker. We are estimating about $85 million this year
    will go towards our literacy efforts. One of the things we did
    over the past 2 years was contract for an evaluation assessment
    of our literacy efforts. And we have an evaluation report that
    was prepared by Abt Associates, which has been attached to my
    fuller statement, and which we can talk about, briefly.
        That report is both a descriptive study of AmeriCorps
    literacy efforts, as well as an evaluation outcome of the
    results that we are getting. What we are seeing, in terms of
    results, is that AmeriCorps members are making a difference in
    the communities that they serve; that grades are going up by
    more than would--reading levels, excuse me, are going up by
    more than would be expected if the AmeriCorps members were not
    there tutoring.
        What we do, in terms of tutoring, are several different
    kinds of activities. We do tutor directly, as well as have
    AmeriCorps members who recruit tutors to come into the schools.
        Our two new initiatives, both the Silver Scholarship
    Program and the Veterans' Mission for Youth, both draw on this
    literacy expertise and seek to have more volunteers helping
    more young people learn to read.
        Senator Bond. Well, one of the things that--that I am
    interested in is how we can make the--how we can expand the--
    the reach and the effectiveness by making sure that we
    emphasize the wholesale nature, rather than retail.
        I know that if we have an AmeriCorps volunteer tutoring a
    student, that student probably is going to do better and
    increase his or her reading level. But if we have the--that
    AmeriCorps volunteer who is mobilizing a group of 10 or 15 or
    20 mentors, then we--then we can hope that we get 10 or 15 or
    20 more students involved, and--and raise them up.
        So, I very much want to see us multiplying that effort, and
    using the resources of the Corporation to the extent possible
    to get as many non-Corporation volunteers in the field. And I
    hope that that will work.
        How will the Silver Scholarship/Veterans' Mission work with
    the literacy efforts?
        Ms. Zenker. Both of those programs are directed towards
    mentoring/tutoring young people. The Silver Scholarships will
    permit seniors 55 and older, who provide 500 hours of service,
    to receive a $1,000 scholarship that they can pass on to a
    child, a grandchild, or another person in need, including the
    person they are tutoring or mentoring.
        The Veteran's Mission for Youth is a very similar program.
    It seeks to take veterans, retired military personnel, and have
    them tutor and mentor within their communities.

                     GRANTS MANAGEMENT AND COST ACCOUNTING

        Senator Bond. All right. The Corporation's Inspector
    General and KPMG have reported most of the Corporation's
    financial problems have been cleared up, but they continue to
    report deficiencies in grants management, including systems
    deficiency and problems in day-to-day management and oversight.
        We provided the Corporation $2 million targeted for the
    acquisition of a cost accounting system, a grants management
    system, and the establishment of central archives.
        What--what is being done to address these deficiencies? Who
    is responsible for correcting them? What progress have we seen
    to date? And do you expect any additional funds needed to
    complete the effort?
        Ms. Zenker. First, let me say thank you. We really
    appreciate the $2 million that we received in 2001 that was
    specifically focused on where we see our current top internal
    management priority, which is to improve our grants management
    system.
        Where we stand with the grants management initiative--and
    if I may speak about that first, simply because it is taking
    the largest portion of that money. We have awarded a contract--
    we have done the systems analysis. We have done the
    requirements definition. We have a contractor on board. And we
    are actually starting, right now, to program the system. We
    expect that it will be initially operational in April of 2002;
    this time next year.
        With respect to the cost accounting system, we have a new
    accounting system that has a cost accounting module. In our
    annual report this year, we did our first cost accounting
    allocation module method. What we want to do is bring in a
    public accounting firm, right now, to take a look at what we
    did and see if they have recommendations on how we can do it
    better. And we are also following your advice, in terms of
    getting and putting in place a central archive for our
    headquarters grants.
        Senator Bond. I would like to ask the Inspector General,
    Ms. Jordan, to come forward. Do you have any comments on this
    or any suggestions on--on this general area?
        Ms. Jordan. The grants management?
        Senator Bond. Yes.
        Ms. Jordan. The systems part----
        Senator Bond. You might pull that mic over.
        Ms. Jordan. The Corporation's plans to improve the system
    go a long way toward working out some of the recording
    problems, but the problems are also in the day-to-day oversight
    of the grants.
        We--I testified approximately 2 years ago that we were
    going to be doing work at the State Commissions. And Senator
    Mikulski, you asked us to issue reports after we did each.
        In each of the reports, we have made recommendations, as
    far as improving the oversight and the monitoring of the grants
    at the sub-sites and where the members are doing the service.
        There are a number of issues that remain to be resolved in
    those areas. A system will not address those problems. Those
    are management issues. And that is where emphasis has to be
    placed.
        There was some cost accounting done for the financial
    statements, but the Corporation, in my mind, still cannot cost-
    out its programs, including what it costs to put a member down
    on the ground and how much a specific program, itself, costs.
    That will require getting some information from the grantees.
    And I am not aware that the Corporation has made efforts to get
    that specific actual information from the grantees, rather than
    using budget, as it has in the past.
        And I am not aware, as far as the archiving, of a great
    deal of progress that has been made in the area. We still have
    issues finding documents.
        Senator Bond. Do you think the Corporation needs more funds
    to complete the grants management system?
        Ms. Jordan. I----
        Senator Bond. That is just a management challenge.
        Ms. Jordan. I am not aware that acquisition of the system
    will require more funds than they have now. I believe that what
    we need is more emphasis on management.

                               GRANTEE OVERSIGHT

        Senator Bond. Well, this is one--and I was going to turn
    for my--turn back to Ms. Zenker and let her comment on that.
    But I wanted to follow-up on the grantee oversight, because we
    have seen the--the questions raised and the Inspector General
    has--as--it says that in its grantee surveys, very few State
    Commissions have good systems for tracking grants.
        And what actions does the Corporation take when it finds a
    grantee is troubled or not performing? And what actions has the
    Corporation taken when the IG reports problems with a grantee?
        Ms. Zenker. We have got a couple of different mechanisms
    that we use. One, the Inspector General is indeed conducting
    pre-audit surveys, at, I believe, now, about 37 of our State
    Commissions. Reports are issued with recommendations. And we
    follow-up with the State Commission to make sure that those
    recommendations that they agree with are implemented. We have
    our program staff that are working very closely with State
    Commissions to make sure that they put improvements in place.
        We also have what I would describe as our own internal
    monitoring program, which is referred to as the State
    Commission Administrative Standards. And this is a series of 11
    standards, where we send a team out for a 5-day period,
    composed of both Federal and non-Federal experts, to go in,
    take a look at what State Commissions are doing in terms of
    their recordkeeping and program management, and provide a
    report back to us, again, with recommendations on where there
    are weaknesses and other areas where they need improvement.
        So, we follow-up when we know that there are weaknesses.
    Generally, though, we think that the State Commissions are
    doing an adequate job. And there are many that are doing a good
    to excellent job. I think we need to keep that in mind, as we
    talk about some of the problems in some of the State
    Commissions that have weaknesses.
        I do not want us to lose sight of the fact that, by far,
    almost all Commissions are running good programs. Again, almost
    all Commissions can probably make improvements, but for the
    most part, we believe that they are performing what we would
    consider to be a minimal and even adequate level of attention
    and oversight to their grant programs.
        You asked whether or not--and I know that there were
    several questions, and I am sorry if I do not get to all of
    them, but one that is serious to us, of course, is always the
    money question; whether we would continue to need money in
    fiscal 2002 for these improvements. And I have to say that we
    do.
        As we build systems, we have, minimally, the cost to
    maintain them, to do the next version, to make improvements, to
    make it better, and to expand its scope, in terms of the
    activities that it performs.
        We are bringing up, initially, the system in 2002. We will
    have a continuing work in 2003.
        Finally, there was a question on whether or not we know the
    actual cost of AmeriCorps members on the street. And that is
    information that we do not, right now, know the actual cost. We
    do talk to you, in terms of budgeted costs, and what we are
    aware of, in terms of what is going on out there.
        We have every intention, and we will try, over the next
    year or two, to comply with the requirement to have actual
    costs for members, but that is going to be driven by putting
    these systems in place that will bring the data forward and
    permit us to report it back to you on an actual basis.
        Senator Bond. Well, thank you very much, Ms. Zenker. I will
    submit the rest of my questions for the record.
        I now turn to Senator Mikulski for her questions.

                   ADEQUACY OF NATIONAL SERVICE TRUST FUNDING

        Senator Mikulski. Thank you very much, Mr. Chairman.
        Well, this is one of the first, at an Appropriations
    hearing, Ms. Zenker, when I refer to page five of your oral
    testimony, in which you say, ``The overall budget reductions
    result from the fact we don't need new resources in the
    National Service Trust to support the next class of AmeriCorps,
    and also the two new initiatives proposed by the President.''
        Could you tell me why that is so?
        Ms. Zenker. I think, in terms of looking at the Trust, I--I
    talk about three different issues. One, there is a change in
    what our future estimates are, in terms of growth of the
    AmeriCorps Program.
        As you mentioned in your opening remarks, Senator, we are
    looking, right now, at level funding for 2002, and we, at some
    point, will engage with our new CEO and the President, in terms
    of discussions for 2003, but right now, we are looking at level
    funding and level growth within the AmeriCorps Program in the
    out years. So, that has a significant impact on what we would
    request for the Trust.
        The second issue is, as has been discussed with this
    committee in years past, there is somewhat of a reserve that is
    in the Trust right now, and we would use that reserve. It is--
    it is not the number that I know has been floated around.
        Senator Mikulski. Why do we have a reserve?
        Ms. Zenker. We have a reserve because we have estimates as
    to what kind of usage we are going to have of the education
    awards. How many members enroll? How many members complete
    service? Of those members who complete service, how many use
    it?
        Senator Mikulski. I want to come back to that, then----
        Ms. Zenker. Okay.
        Senator Mikulski [continuing]. Because I want to move my
    questions along.
        First of all, one, I am pleased to hear your analysis. And
    we wanted to hear both from you and the very important issues
    raised by the IG.
        Here is where we are: One, we have--Senator Bond and I have
    really big challenges ahead for all of the agencies facing us.
    Stay the course in National Service and really use this to get
    our act together and get volunteers into the community. That is
    my goal and some new thinking.
        But we have a reauthorization to do, as well as a new CEO.
    When we get to the reauthorization in the Jeffords-Kennedy
    committee, they are going to turn to us to--about whether this
    program means anything to--at the local level and at what cost,
    which goes to the IG question about the per capita. It is not
    the proper word, but just for linguistic purposes here.
        So, one, we really do need to know--first of all, we
    acknowledge this for this year, but it could be very important
    when we show our benefits both to our colleagues in
    approprations and also in the reauthorization, it could be
    conceivable that the Bush Administration would want to expand a
    program.
        So, I take no position on what is the further view of the
    President. I presume the President, knowing him, just
    beginning, as I do, he is a results-oriented guy. And he is
    going to want to know what have been our results, at what
    price, for there to be an administrative--Administration
    policy, which then goes to this: Could you--first of all, I
    really want to insist that there be a sense of urgency in
    identifying how much does it cost to place a volunteer in the
    community. We are depending on the community. It might be the
    Conservation Corps is a different price for public safety, than
    ongoing tutors. So, even if we have a range, I think it is very
    important, so we know what does it cost to put a volunteer in
    the community.

                       USE OF AMERICORPS EDUCATION AWARDS

        Second, can you tell me what is--how--what has been the use
    of the stipend? Now, because the whole thing was to get--when
    we were going through the me-generation and all of that, the
    whole idea of National Service was help kids reduce student
    debt, which is pretty considerable, with hands-on experience.
        And then at the end of it, they would--it reduce their
    student debt or homeowners--and then come back and that we
    would have Alumni Associations. So, I want to know: Have we
    really used the stipend or--and number two, have you formed
    Alumni Associations, and what have those--been those results?
    So, that they would keep on keeping on; that this was kind of a
    pump primer, not for money, but a pump primer for being
    involved in the community?
        Ms. Zenker. In terms of those who have completed service
    and earned an education award, 50-56 percent of them are using
    it to pay for their education out on a future basis. Thirty-
    four percent have used it to pay off their student loans. And 9
    percent use it for a combination of both of those activities.
        Senator Mikulski. So, some use it for student debt and
    others use it to continue education.
        Ms. Zenker. Yes.
        Senator Mikulski. So, that--so, it is working.
        Ms. Zenker. Yes. Absolutely.
        Senator Mikulski. Okay.

                         AMERICORPS ALUMNI ORGANIZATION

        Ms. Zenker. Absolutely. And with respect to an Alumni
    Association, there is an independent--not a Corporation
    activity, but an independent Alumni Association that has been
    formed of AmeriCorps members. And it is headed by an
    individual, Mike Meneer, who is its Executive Director. And it
    seeks to stay in touch with and broaden the involvement of
    AmeriCorps members after their service, in continuing to give
    back to their community.
        Senator Mikulski. Like the Peace Corps Volunteer----
        Ms. Zenker. Absolutely.
        Senator Mikulski [continuing]. Association?
        Ms. Zenker. Just like it.
        Senator Mikulski. It is modeled on that.
        Ms. Zenker. It is--it is modeled on that, but it is much
    smaller. And it is seeking and trying to reach out to
    AmeriCorps----
        Senator Mikulski. Why do not--why does not--why does not
    National Service help be the organizers of that?
        Ms. Zenker. We have done--we have tried to do a little bit
    of work this year in helping to pump up that association.
        Senator Mikulski. Well, I would like to hear more about
    that.
        Ms. Zenker. Okay.
        Senator Mikulski. I am sure we will be talking more, but
    what--again, what we are looking for is value. Value to the
    taxpayer. And that the value continue long after you have left
    the program; that this was not a Government agency, where we
    are not creating a bureaucracy.
        You know, having worked in social agencies, I mean, we talk
    to guys and gals who have been in the Marines. They say, ``Once
    a Marine, a Marine Corps forever.'' Talk to a Peace Corps
    volunteer. Many in our own office. Jim Walsh, our counterpart,
    in the House, ``Once a Peace Corps volunteer, a Peace Corps
    volunteer forever.'' They talk about it. They wear buttons.
    They want to be part of an ongoing organization. Just like our
    veterans.
        This is what we wanted from National Service, and that
    there would be a continuation of this. And so, I am going to be
    looking for that.

                                 DIGITAL DIVIDE

        I--can you talk to me about digital--what you have done
    with the digital money?
        Ms. Zenker. First of all, as I said, we made a down
    payment. We did $12.5 million in digital divide----
        Senator Mikulski. Tell me what you bought for it and what
    you hope to buy for it.
        Ms. Zenker. Oh, we have--what we are----
        Senator Mikulski. In other words, what did the money buy
    for people?
        Ms. Zenker. What it is buying? One, it is buying is--is
    teacher training. Teaching teachers how to use technology in
    the classrooms. There are also some direct tutoring activities
    that go on in terms of teaching children or--or people of all
    ages how to use the computer, how to access the Internet.
        We build computer labs. We help refurbish old computers, so
    that they can be used by new people. I think you know, many
    people throw computers out when they go and buy a new one. So,
    what we want to do is take that old computer, help refurbish
    it, and put it into an active environment for--for many more
    years.
        Our activities are varied. We help set up technology
    centers in communities, so that low income children can be
    exposed to the digital divide activities.
        We have also, if I may, just--our public service
    announcement this year was focused on the digital divide. And
    we have had some great play on that public service
    announcement. Over 18,000 stations have chosen to air it,
    giving us----
        Senator Mikulski. What was--what was the point of the
    public service announcement?
        Ms. Zenker. The public service announcement, it is our
    recruitment tool. We try to get the fact that AmeriCorps is out
    there; that people have an opportunity to serve; and to draw
    them to our website, so they can learn about service
    opportunities around the country.
        Senator Mikulski. Well, that is terrific, because that is
    what our intent was. But you need to know, it was not to
    provide actual--it was to train the trainers and to upgrade two
    constituencies; one, teachers, but the other is often the--the
    Executive Director of a Boys and Girls Club in a neighborhood
    might be great with the kids, but themselves, have never had
    these opportunities. And so, that was that.
        The other--but here is the last question: can you
    specialize in E-Corps, or is it that so many of our volunteers
    are so computer or technology--beyond computer--technology
    proficient that every AmeriCorps volunteer is a potential E-
    Corps person?
        Ms. Zenker. They--these members who were funded in
    technology activities are working in technology programs. Many
    of our members, as you say, do become----
        Senator Mikulski. Is there an E-Corps within AmeriCorps?
        Ms. Zenker. There--there is----
        Senator Mikulski. Is there a subset Corps?
        Ms. Zenker. There is not something that we call an E-Corps,
    but there are members whose activities are completely focused
    on digital divide--on digital divide efforts and technology
    improvement efforts, but they do not call themselves an E-
    Corps, no.
        Senator Mikulski. Why not?
        Ms. Zenker. One of the reasons, I--and--and it becomes a
    difficult issue for us, but it is in terms of letting people
    know what it is that is out there. It is a challenge to get
    people to know what AmeriCorps is and to want to volunteer to
    come and be AmeriCorps members and know something about the
    program.
        We have tried to limit it the--the--the different ways that
    we talk about AmeriCorps, so that we can get our words----
        Senator Mikulski. Sure.
        Ms. Zenker [continuing]. To the most numbers of people.
        Senator Mikulski. Well, that is helpful to understand that.
    I would like to know--again, we will be talking more about
    that. I know we want to move on to Senator Johnson and to--and
    to our testimony on Neighborhood Reinvestment.
        But first of all, I am pleased that it got started. I am
    just pleased that it got started and that we are making wise
    use of these funds. We will be looking forward to seeing what
    the next half will be, and then Senator Bond and I will be
    discussing, you know, how best to promote these digital--
    because we are looking for digital opportunity.
        Mr. Chairman, one other comment, just to you.
        Senator Bond. Yes, ma'am.

                        SILVER SCHOLARSHIP TAX EXEMPTION

        Senator Mikulski. This goes to the Silver--the Silver
    Service----
        Ms. Zenker. Silver Scholarships.
        Senator Mikulski. Silver Scholarships. No. The Silver
    Service, I think, is on display at the Metropolitan, with
    Jackie, so--the----
        Senator Bond. Is that not the one that disappeared from Air
    Force One?
        Senator Mikulski. No. Come on, now.
        Senator Bond. Okay.
        Senator Mikulski. Under what Administration?
        I note that the Administration wants that to be tax exempt,
    and is, in a sense, trying to set up an--I am concerned that we
    are going to get involved with the Finance Committee. And I
    would like for us to perhaps have our own conversation about
    that.
        I know what the President is doing--and I think we are all
    in alignment--which is to really use seniors in a way that is
    creative and that their sweat equity translate into value for
    another generation.
        So, I think that is exciting. We have got an--we have got a
    group in Baltimore called Experience Corps, which is a subset
    of AmeriCorps. So, I would like to work with you.
        Senator Bond. Sure.
        Senator Mikulski. But I would like to avoid the Finance
    Committee on this one. Okay?
        Senator Bond. Yes. Do not tell them that we are--we will
    see if we can just slip by them.
        If you will not tell them, we will not. Okay?
        Senator Mikulski. And then we are going to be members of
    the Intelligence Committee, as well. So----
        Senator Bond. Right.
        Senator Mikulski. Thank you very much. And look forward to
    further comments.
        Senator Bond. Thank you, Senator Mikulski.
        Senator Johnson.
        Senator Johnson. Well, thank you, Mr. Chairman.
        Just a couple of brief observations and one question. One
    is that I share Senator Bond's enthusiasm for trying to ramp up
    the tutorial access and activity that goes on in the country.
    We have the ESEA on the floor of the Senate, perhaps, this
    week. And one of the components is likely to be under the
    Department of Education is an effort to expand opportunities
    for tutoring. And I would hope, at some point, that there might
    be a linkage of some sort between our volunteer efforts and
    what we are trying to do through the Department of Education.
        Second, on the digital divide issues that Senator Mikulski
    has brought up, I applaud the work that you are doing. It does
    come to mind that there are a number of States, no doubt,
    including my home State of South Dakota, where there is a
    teacher training program and there is a program going on.
        And I do have some interest in whether there is any effort
    ever to coordinate these efforts, relative to computer
    capabilities. And that is a question that comes to mind.
        The larger question--is--and Senator Mikulski alluded to
    it. I am new to this subcommittee, new to the committee, and I
    may be a little slow here, but I need a little bit of a walk-
    through here. Your budget was reduced by $46 million.
        You have another $35 million committed to two new programs,
    for a total of $81 million. We are being told that is of no
    consequence, because of the zero growth in the out-years, and
    you are going to draw down on reserved trust dollars.
        I need you to walk through it in a little more detail what
    it is that is being done with the $81 million. And
    particularly, enlighten me a little bit about the nature of
    this reserve fund. I also have a little bit of--a red flag goes
    up in the back of my mind when people talk about drawing down
    reserve funds.
        In some cases, that might be a very appropriate and
    necessary thing to do, but in others, it is sort of a short-
    term stopgap funding strategy that may not be of long-term
    wisdom.
        And so, I would like you to walk through a little bit more
    for me, as a new member, why it is that we can take an $81
    million drain out of your Corps programs and--have no
    consequence.

                  DETAILED EXPLANATION OF TRUST FUND FINANCING

        Ms. Zenker. First, I do want to provide some additional
    detail, but may I also offer that we will come up and brief you
    and your staff, and--as well as Senator Mikulski and Bond, in
    terms of the details of this.
        We have a lot of data that supports the proposal that we
    are making in this budget. And it backs up the number of
    members that we have and who have served--completed servers who
    are drawing down their award. And we now have 6 or 7 years of
    history that permit us to make some better estimates going
    forward, but that's my first offer.
        We would very much appreciate the opportunity to come up
    and share with you, in detail, what these numbers look like.
    But in terms of a little bit more information, right now, the
    Congress has appropriated, in years past, money that
    specifically goes into a trust fund. And that trust fund pays
    for the education awards of AmeriCorps members who complete
    their term of service, and then have 7 years after the end of
    their term of service to draw down that education money.
        Many--most--you know, 78 percent of them, we expect, will
    use that money that they have earned through their AmeriCorps
    service, but there are a percentage that will not use that
    money. At some point, we will have a full 7-year history of
    that first class, and then we will have the 7-year history of
    the second class, that will permit us to much more accurately
    give you a final number that says, ``We expect 78 percent or 79
    percent or 75 percent of members to use their education award
    money.''
        But based on that final actual number, there is somewhat of
    a reserve that exists in the trust that says, you know, if it
    is 92 percent that use it, versus 70 percent, we can have a
    swing that goes this way or that way. So, that reserve is one
    piece of the estimate.
        The second piece is, indeed, this change and what our out-
    year projections look like. Right now, we are looking at 50,000
    members for the next 10-year period. That is how the budget is
    built. In years past, we have come before you and we have been
    proposing a 62,000 corps size, leading up to and 85,000 corps
    size, to ultimately 100,000 members per year. That change in
    future growth patterns has an impact on our needs.
        There is a third aspect, and that is how we credit the
    interest that would be earned on that principal amount that is
    in the trust. In years past, we credited that interest that
    would be earned in the year in which we were going to come to
    you and ask for an appropriation.
        In looking closely at the trust this past year, we went to
    OMB, and we asked them to look at our methodology and we asked
    them to look at our model, and they came back and told us that
    there was a better way for us to do that and a more appropriate
    way. And that is to say that the interest on monies that you
    have already appropriated to us, should be credited in the
    current year, so that if we were to earn $10 million in
    interest on an appropriated amount, already appropriated,
    instead of popping that $10 million into each of the out-years,
    we are grabbing it all now and putting it into this current
    year, which is why we do not need a new--for those three
    reasons, why we do not need new appropriations this year.
        When we come to you next year, and if the President is
    proposing an AmeriCorps program next year, in the 2003 budget,
    of whatever size, we will be asking for a new appropriation for
    the trust at that time. This is not--this is a correction that
    we are making now, but not one that would continue, obviously,
    for years into the future.
        So, next year, if we come with AmeriCorps members, we will
    be asking for an appropriation for the trust.
        I do--I know that there is a lot of information there. And
    I am not, by far, the best person to necessarily explain it,
    but we are more than happy to come up with the data that backs
    up these statements and share it with you.
        Senator Johnson. I appreciate those observations and I look
    forward to working with you and your staff. And I am on a steep
    learning curve in my own part and so is my staff. We look
    forward to working with you on your budget numbers.
        Thank you.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Bond. Thank you very much, Senator Johnson. And
    thank you, Ms. Zenker. And we will now move to the second
    panel.
        Ms. Zenker. Thank you, Senator Bond.
        [The following questions were not asked at the hearing, but
    were submitted to the Corporation for response subsequent to
    the hearing:]

               Questions Submitted by Senator Christopher S. Bond

                     coordination with other organizations
        Question. The Corporation funds a number of different organizations
    that serve at-risk youth. I am concerned, however, that there may be
    some duplication and would like to hear any thoughts you may have on
    how to better coordinate these activities and how we can address this
    issue in appropriations and the reauthorization process.
        Answer. Within the Corporation programs in each state, we do not
    believe that there is any overlap. The National and Community Service
    Act of 1993 that authorized the Corporation for National Service gave
    it a decentralized and devolved structure for administering the
    AmeriCorps program. In the AmeriCorps*State program, governor-appointed
    state commissions select local nonprofits and small community-based
    organizations, including faith-based organizations, for participation
    in AmeriCorps. This structure allows states to target AmeriCorps
    resources to the areas of greatest need in the state or to select the
    best organizations in the state to receive funding. A state commission
    stands in a better position to make that determination than a Federal
    agency in Washington.
        The commission structure ensures against the duplication of efforts
    in program selection. States face so many demands in a number of areas
    that can be addressed by AmeriCorps service that as a commission
    reviews applications, it is often in the state's best interest to
    spread Corporation resources to address as many community needs as
    possible. Commissions often choose one organization statewide to
    provide at-risk youth mentoring and another organization to focus on
    literacy.
        Commissions also have the flexibility to target resources at one
    particular community need. A governor may decide to make helping at-
    risk youth the focus of AmeriCorps in the state. The state commission
    would choose a number of nonprofits in the state to provide those
    services as part of AmeriCorps, but it can distribute those
    organizations throughout the state so that no organizations overlap in
    the same city or geographical region of the state. We have found that
    the commission structure has successfully avoided the duplication of
    efforts across a state.
        The Corporation also has the National Direct grant program that
    provides funding to national nonprofits to operate AmeriCorps programs
    in more than one state. These national nonprofits, such as Habitat for
    Humanity, the American Red Cross, and the United States Veterans
    Initiative have the expertise and the ability to administer large
    service projects.
        National Direct grantees, like state commissions, work to avoid
    duplication of efforts as well. For example, the Habitat for Humanity
    parent organization is a National Direct grantee, sending AmeriCorps
    members to Habitat projects in more than one state. At the same time,
    local or state-based Habitat affiliates may receive AmeriCorps*State
    funding through a state commission. The parent organization does not
    operate sites in states where the state commissions have given a grant
    to a local Habitat affiliate. And, National Direct applicants are
    required to share their applications with the state commissions in
    which they are planning to operate. This gives the state commissions
    notice about what National Direct grantee affiliates will not need
    AmeriCorps*State funding.
        Again, the Corporation's structure and internal procedures help to
    avoid duplication of programmatic efforts for grantees in a given
    state. If the question is more concerned with the programs affecting
    at-risk youth across the federal government, we would be happy to enter
    into a dialogue with the Subcommittee about any perceived overlap and
    duplication. In general, we are the only federal agency funding service
    activities, as authorized under national service legislation, that
    involve at-risk youth. Other federal funding is often provided to these
    nonprofit and public organizations for other purposes.
                             national service trust
        Question. In the past, the Corporation has argued against proposals
    to rescind funds from the National Service Trust. Now the Corporation
    is stating that no new authority is needed to fund Trust Fund costs
    associated with new AmeriCorps members.
        What assumptions is the Corporation using to request funding on an
    annual basis and what is their reliability? Has there been an
    independent review of these assumptions? Have the auditors looked at
    these assumptions?
        Answer. In the past, the Corporation's budget request for the
    National Service Trust, and the AmeriCorps program as a whole,
    reflected a proposal for significant growth in the number of members,
    both in the year of the budget request and in the succeeding fiscal
    years. The current budget proposal supports the same level as in the
    prior year. There is no anticipated growth in the out years.
        In determining annual funding requirements for the Trust, the
    Corporation reviews and considers:
      --The size of the AmeriCorps program approved by Congress in prior
            years and the program request in the current budget year.
      --The anticipated enrollment levels in the programs in which
            AmeriCorps members serve.
      --The anticipated completion rates of members who enroll.
      --The anticipated education award amounts earned by members who
            complete service.
      --The anticipated amounts used by members who earned awards.
        In addition to these program data, the Corporation reviews the
    balances in the Trust and the anticipated interest earnings in the
    Trust over the period during which members may use earned awards.
        These data, and other information, are incorporated into a model
    that examines the impact of these variables on Trust Fund requirements.
    The data used to produce the estimates for these variables are based on
    historical experience. For many of these variables--specifically
    enrollment, completion rates, and amounts earned--the historical
    experience has proven to be reliable for estimating future
    requirements. The Corporation reports on these historical data in its
    annual performance report as required by the Government Performance and
    Results Act. For example, in the latest performance report the
    Corporation showed historical data over a six-year period concerning
    enrollments, completion rates, and amounts earned by members. Further,
    total outlays projected in the model have been very consistent with
    actual experience. In general, interest earnings have also tracked well
    with estimates.
        There is one major factor used in developing estimates for which
    the historical experience is incomplete. AmeriCorps members have seven
    years from completion of service in which to use their award. All
    members in the first class have yet to complete this seven-year period;
    in fact, the first class will not complete this period until the end of
    fiscal year 2002. Therefore, the Corporation's estimates of amounts
    used are based on behavior over a five-year period and assumptions of
    future behavior in years six and seven. The Corporation has estimated
    that an additional ten percent of awards earned will be used in years
    six and seven beyond the period of service, bringing the total usage of
    awards earned by the first class to 78 percent. The original estimates
    of use for years 1 through 5 have proven reliable. There is also
    remarkable consistency in actual usage in the initial years across
    several classes of AmeriCorps members. Nevertheless, the unique nature
    of the AmeriCorps program and the period of availability of the award
    means that the estimates for years six and seven may well require
    changing once we have the benefit of an additional two years of actual
    experience.
        Occasionally, the Corporation performs sensitivity analyses to
    determine the impact on the Trust in behaviors that vary from the
    estimates in the model. The results of these sensitivity analyses show
    that the variable with the largest impact on Trust Fund requirements is
    the amount of the earned awards that is used by members for education
    purposes. Other variables, such as enrollments, completion rates, and
    interest rates, have less of an impact.
        Concerning an independent review of the model, last year we asked
    staff in the Office of Management and Budget (OMB) to review the model
    and the basis for developing budget requirements under the National
    Service Trust. After conducting that review, OMB staff suggested a
    change to the budgeting approach. They recommended that the Corporation
    include future interest earnings over the period when the education
    award will be used by members to determine the requirements for new
    budget authority to cover the cost of members included in the program
    budget for fiscal year 2002. This is done by estimating the amount to
    be paid out in each of the seven years the award is available and
    discounting it to its net present value. In the past, the Corporation
    had applied those future interest earnings to program requirements in
    future years. The Corporation made this change, as recommended by the
    Office of Management and Budget, in determining requirements for the
    fiscal year 2002 budget. This change is another reason the estimates of
    need are reduced from the estimates made in prior years.
        In addition, the auditors have reviewed the Trust Fund on an annual
    basis for purposes related to the audit of the Corporation's financial
    statements. Included in those statements is the liability associated
    with anticipated amounts earned and used by members who have either
    completed or entered service. This liability estimate is determined
    using the same variables and estimating model that are used for
    estimating future budget needs. The auditors have opined that the
    Corporation's liability estimate is fairly stated for the past three
    fiscal years. To the best of our knowledge the auditors have not
    reviewed these factors from the perspective of setting future budget
    requirements for the National Service Trust. The Committee has asked
    the Office of the Inspector General to conduct such a review and to
    report back to the Committee.
        We will continue to update the historical information used to
    estimate future requirements for the Trust. We also welcome independent
    reviews that will help strengthen the ability to predict requirements.
        We have reviewed our requirements for 2002 and have determined that
    no new authority is needed for the class of AmeriCorps members that is
    being supported in the 2002 program budget. Future Trust Fund
    appropriations will be needed in fiscal year 2003 and beyond, but exact
    amounts are dependent on Congressional and Executive Branch decisions
    about the size of the AmeriCorps program and further adjustments to the
    data in the model resulting from additional year(s) of historical
    experience.
                                new initiatives
        Question. The new Silver Scholarships and Veterans Mission for
    Youth programs would be administered by the Corporation as competitive
    grants.
        Do you have the program capacity to run these two new programs on
    top of the Corporation's current responsibilities? What sort of outcome
    measures will the Corporation establish to ensure that these programs
    are performing?
        Answer. The addition of approximately 150 new grants will be easily
    managed. When compared to the total grants and agreements managed by
    the Corporation, these 150 new grants represent an increase of less
    than five percent. The task will be further facilitated by the new
    grants management system scheduled to be launched in the spring of
    2002. The new grants management system will allow the Corporation to
    review and award grants online, significantly enhancing the
    administration of all grants.
        Consistent with all of its programmatic activities, the Corporation
    has established preliminary outcome indicators to serve as measures of
    success for the Silver Scholarships and the Veterans' Mission for Youth
    Program. The Corporation will monitor its progress toward these outcome
    measures, and the results will be reported to the Congress as part of
    the Corporation's annual Performance Plan, as required by the
    Government Performance and Results Act (GPRA), beginning in 2002.
        The outcome measures as proposed in the Corporation's fiscal year
    2002 Budget Proposal are as follows:
    Silver Scholarship Program
        Indicator 1: The number of senior volunteers earning scholarships.
    Target: 10,000 senior volunteers.
        Indicator 2: Number of Silver Scholarship grants funded. Target: 60
    grants.
        Indicator 3: Benefits to children tutored and mentored, in improved
    reading skills and reductions in risk behaviors. Target: To plan a
    research agenda focused on measuring these benefits to children.
    Veteran's Mission for Youth Program
        Indicator 1: The number of veterans or retired military personnel
    enrolled. Target: 15,000 veterans or retired military personnel.
        Indicator 2: Number of Veteran's Mission for Youth Program grants
    funded. Target: 100 grants.
        Indicator 3: Benefits to children tutored and mentored, in improved
    reading skills and reductions in risk behaviors. Target: To plan a
    research agenda focused on measuring these benefits to children.
        In addition, the Corporation may adopt short-term accomplishment
    measures that could include the following: (A) Number of children
    tutored and/or mentored; (C) Number of Silver Scholarships earned; (D)
    Number of schools, community-based organizations, or other service
    agencies able to expand resources available to help children through
    the Silver Scholarship and Veteran's Mission for Youth Programs.
                             faith-based initiative
        Question. President Bush has emphasized a vision of government
    where this Administration will expand opportunities to faith-based
    organizations, charities and community groups to help people in need.
    National Service already looks to these types of organizations to
    partner with in helping people in states and localities.
        Are you looking to further emphasize partnering with faith-based
    organizations and in what way?
        Answer. Since its inception, the Corporation for National Service
    has partnered with faith-based organizations, charities and community
    groups to help people in need. In response to the President's vision,
    the Corporation is exploring ways to expand its outreach to faith-based
    and small community-based organizations informing them of the existing
    resources and opportunities available. The Corporation recently held a
    focus-group discussion with 16 diverse leaders of faith-based and small
    community-based organizations from across the country to identify
    existing barriers and to facilitate access to Corporation resources.
        In the next 90 days, the Corporation plans to create a technical
    assistance/resource capacity designed to provide support to faith-based
    and community-based organizations seeking resources to meet community
    needs. The Corporation further anticipates that state and local
    entities that receive Corporation funds will continue to partner with
    and involve small community and faith-based organizations in helping to
    meet needs in local communities, and that these entities will pursue
    opportunities to expand such involvement. We intend to help promote
    these developments.
                    reporting the full cost of cncs programs
        Question. GAO reports have indicated that the Corporation lacks
    reliable cost information for some of its programs which hampers
    analysis of the true cost of its programs.
        Do the Corporation's efforts in developing cost accounting
    information extend to gathering the information from its grantees that
    would provide reliable expenditure and cost data for all of its
    programs and operations?
        Answer. Momentum Financials, the financial management system
    implemented at the end of fiscal 1999 and in use by the Corporation,
    has the capability to capture information on the full cost of
    Corporation programs, including grantee information by program. During
    fiscal 2000, the Corporation developed a cost accounting application
    that is integrated with Momentum in order to utilize Momentum data to
    determine the full cost of its major programs.
        The Corporation oversees three national service programs:
      --AmeriCorps is the national service program that engages thousands
            of Americans of all ages and backgrounds in full-time and
            sustained part-time community service and provides education
            awards in return for such service.
      --The National Senior Service Corps is a network of more than 500,000
            people age 55 and older who participate in the Foster
            Grandparent Program, the Senior Companion Program, and the
            Retired and Senior Volunteer Program. These programs tap the
            experience, skills, talents, and creativity of America's
            seniors.
      --Service-Learning supports and promotes service learning in schools,
            universities, and communities. Through structured service
            activities that help meet community needs, more than 750,000
            students improve their academic learning, develop personal
            skills, and practice responsible citizenship.
        In accordance with federal cost accounting standards, these
    programs have been designated as the Corporation's ``responsibility
    segments.'' Cost information by grantee for each of the above programs
    is captured through the use of individual grant numbers and grantee
    names and codes. Every Momentum cost entry by grantee (whether based on
    a financial status report or an electronic drawdown through the Health
    and Human Services Payment Management System) includes the program or
    purpose of the expenditure; this information is captured through the
    use of three digit purpose codes. This information, coupled with a
    reasonable allocation of program operation costs, allows the
    Corporation to provide the full cost by major program. Beginning with
    fiscal 2000, information on cost by major program is included in the
    Corporation's annual report.
        We believe that the new grants system, when fully developed, will
    facilitate the reporting of financial information from grantees for all
    programs.
        In addition to these expenditure data, the Corporation provides
    information on an ongoing basis to the Congress on the budgeted costs
    of members in all national service programs, including AmeriCorps. The
    General Accounting Office has reviewed and verified these data, and
    reported them most recently to the Congress in a February 2000 report
    entitled ``National Service Programs Two AmeriCorps Programs' Funding
    and Benefits.'' In that report, the General Accounting Office reported
    the Corporation's budgeted funds per AmeriCorps*State National
    Participant for Program Year 1998-99 as $14,857 (p. 9). The report also
    noted that ``Job Corps CCC Is More Costly Than AmeriCorps*NCCC'' (p.
    11), and that ``military enlistees receive higher benefits than
    AmeriCorps participants'' (p. 13).
        In the Corporation's response to that report, we noted that the
    General Accounting Office documented reductions in budgeted funds per
    participant. GAO further found that the budgeted cost per member in the
    state and national programs to be in line with, and indeed ahead of,
    the schedule to meet an overall AmeriCorps target of $15,000 in average
    budgeted cost for the program year 1999-2000. Since that report, the
    Corporation has met the target established for fiscal year 1999.
                             performance reporting
        Question. The Corporation's GPRA report includes an impressive
    amount of data. Your report indicates that the Corporation has a
    strategy for monitoring coverage that includes site visits, program
    evaluations and audits.
        I am curious to know, however, how reliable this information is at
    this point. Please provide additional information on your strategy and
    what was done in fiscal year 2000 to ensure that the information was
    reliable.
        Answer. The monitoring strategy employed by the Corporation has
    four components: (1) the State Administrative Standards Project, (2) a
    national monitoring plan and procedures followed by the program office,
    (3) pre-audit surveys of State Commissions by the Office of the
    Inspector General, and (4) reviews of additional information sources.
    State Standards Project
        In fiscal 2000, the Corporation continued and expanded its
    initiative to set administrative standards for state commissions on
    service. The State Administrative Standards Project helps the
    Corporation assess and expand the capacity of state commissions to
    administer federal funds in a responsible manner. The Corporation
    awards funds to state commissions for developing and supporting
    national service within the state. The state commissions must
    administer statewide grant processes, monitor programs, provide
    training and technical assistance, and serve as liaison between the
    Corporation and the local programs. The State Administrative Standards
    seek to communicate what the Corporation expects of state commissions.
    The standards were developed to serve as an effective and consistent
    tool for the Corporation to assess state commission administrative
    systems.
        The first four of the 11 standards cover issues related to
    monitoring of sub-grantees: 1. Conducts proper grant processes; 2.
    properly monitors programs and ensures compliance; 3. properly monitors
    member records; and 4. reports properly to the Corporation for National
    Service.
        The standards review process has three stages. First, a state
    commission completes a self-assessment using the Standards tool. The
    self-assessment helps the commission gain a realistic view of its own
    administrative systems. Second, a six-person review team spends one
    week at the commission conducting the formal standards assessment. When
    the review is complete, there are two products. One product is a
    technical assistance plan created in collaboration with the state
    commission and supported with financial resources from the Corporation.
    The plan will help the state commission meet any standards it has not
    yet met. The second product is an assessment by Corporation staff that,
    along with other considerations, determines eligibility for competitive
    and special initiative money and similar discretionary resources.
        To date Corporation staff have performed 15 State Commission site
    visits using the State Administrative Standards and have issued 11
    final reports. The current schedule calls for 14 reviews in fiscal
    2001. Over the next two years, the remaining states will participate in
    a State Administrative Standards assessment. The Corporation is
    committed to helping all state commissions reach the level of operation
    described in the State Administrative Standards. The Standards will
    help the Corporation devolve more of the implementation of national
    service to the state level as the administrative capacity of state
    commissions increases.
    National Monitoring Plan and Procedures
        The AmeriCorps*State and National program office developed a formal
    monitoring plan for program year 1999-2000 (corresponds approximately
    to fiscal 2000) to apply to national direct grantees and state
    commissions. The plan consists of a risk assessment based on previous
    experiences with the grantees and certain risk factors. Priorities are
    assigned based on the risk assessment assigned to each grantee. The
    formal plan is an extensively detailed document. We welcome the
    opportunity to brief Subcommittee staff on this material.
    Pre-Audit Surveys of State Commissions by the Office of the Inspector
            General
        To date, the Corporation's Office of the Inspector General has
    conducted 37 pre-audit surveys of the state commissions. These pre-
    audits cover the Commissions' systems for administering their
    AmeriCorps grants, including these factors: (a) the process followed
    for selecting subgrantees, (b) control processes for administering
    grant funds, (c) controls for monitoring and evaluating subgrantees,
    and (d) controls on training and technical assistance. The results of
    these audits are shared with the CEO, the head of AmeriCorps, and the
    state commission.
    Review of Additional Information Sources
        In addition to the Standards Assessments and monitoring visits, the
    program office reviews grantee progress reports and financial status
    reports on a regular basis, noting anomalies and conditions that might
    result in the assessed risk of a grantee. Also, program officers are to
    be alerted by the Corporation's technical assistance providers and
    evaluation research contractors if they identify cases of waste, fraud,
    or abuse during the conduct of their work assisting and researching the
    AmeriCorps programs.
        Question. Just what does it mean (and how reliable are the numbers)
    when the Corporation reports
      --that close to 500,000 students were taught? Taught what and for how
            long--hours, days, a full year? [See page 13 of the CNS fiscal
            year 2000 Performance Report]
      --that the NCCC assisted 55,000 veterans and senior citizens?
            Assisted how? [page 25]
        Answer.
    500,000 Students
        The Corporation collects information about program activities and
    results from a variety of sources, using many methodologies. The
    statistic ``500,000 students were taught'' comes from the 1999-2000
    Annual Accomplishments Review of AmeriCorps State/National. The
    response rate to the survey is 80 percent.
        Accomplishment review data are self-report data collected by the
    local AmeriCorps programs during the course of their program year and,
    in 1999-2000, reported to the Corporation via either paper or
    electronic forms. The programs are provided with lists of potential
    accomplishments from which they select those that best describe their
    effort during the program year. For each accomplishment category, the
    program indicates the beneficiary and the accomplishment type (for
    example, students taught, students tutored, adults provided job
    counseling, etc.) and provides a quantitative measure of their
    activity.
        Over the four AmeriCorps issue areas there are about 125 separate
    categories of accomplishments, including open-ended categories that
    permit programs to report accomplishments not currently enumerated.
    Regarding direct services in education, for example, the form
    distinguishes between student taught, students tutored, students
    mentored, students counseled, students provided other enrichment
    activities, and several others. Consequently, programs are able to
    report a type of accomplishment that accurately describes their
    efforts.
        An independent research firm, under contract to the Corporation,
    reviews the data. Once report forms are received they are subjected to
    a variety of data checks to determine that the data reported are within
    reasonable ranges, for example, that the number of AmeriCorps members
    serving could have reasonably provided the extent of services being
    reported. Programs that report out-of-range data are contacted and the
    contractor assists the program in reporting their information more
    accurately. Typically, mathematical and typographic errors account for
    out-of-range reports.
        Requesting details of all the accomplishments reported would
    constitute an unreasonable reporting burden in the Corporation's view.
    In the case of the accomplishment to which the Senator referred, we
    have the following additional details. Two-hundred twenty-two
    AmeriCorps State/National programs reported teaching in kindergarten,
    Head Start, or grades 1-12. This category is distinct from tutoring.
    About 80 percent of responses indicated teaching in multiple grade
    levels, although two-thirds reported some teaching in kindergarten and
    Head Start.
        About one-third of those reporting indicated the subject matter
    they taught. Multiple subject matter responses were permitted. Of those
    reporting, 45 percent reported teaching reading, almost a third
    indicated mathematics instruction and roughly a fifth, science. Other
    subjects taught included music, art, social studies, and the
    environment. Details regarding the intensity or duration of instruction
    were not requested.
        Beginning in 2000-2001, accomplishment data will no longer be
    collected via a separate data collection, but will be incorporated into
    the semi-annual progress reports provided electronically by the
    Corporation's grantees. This revision to the data collection process
    should permit the agency to determine further details about specific
    accomplishments from particular grantees.
    AmeriCorps*NCCC assisted 55,000 veterans and senior citizens
        Every project completed by AmeriCorps*NCCC teams has a Project
    Completion Report, which is signed by the NCCC Campus Director and the
    project sponsor, who is usually a community member associated with the
    organization sponsoring the service activity with NCCC. The Project
    Completion Report details the work accomplished in the course of the
    project. This report is filed with headquarters in hardcopy at the same
    time that the campus enters the accomplishment data into the
    AmeriCorps*NCCC Project Database. Aggregate statistics on
    accomplishments are prepared in Washington. The database has a coding
    system that permits the quantification of every area of service in
    which NCCC members engage. In the case of the assistance to 55,000
    veterans and senior citizens, this datum was the aggregate results of
    19 service projects in fiscal 2000. The members painted and made other
    repairs to senior citizens' homes and other senior service facilities.
    They also distributed clothing and meals and provided job training,
    medical care, and other services to homeless veterans.
        Question. What are the five most important performance measures
    that the Corporation reports?
        Answer. Taking into consideration that we have several components
    in our performance measuring system, we can address your question in
    two ways.
        First, the Corporation believes and states in its annual
    performance report that the most important measures of program
    performance are those determined through independent program
    evaluations and through our accomplishment reports. It is through these
    studies that the results of service by AmeriCorps members in terms of
    benefits to the American people are being documented. In 2000, we have
    learned that:
      --Students participating in AmeriCorps tutoring programs improved
            their reading performance from pretest to post-test more than
            the gain expected for the typical child at their grade level.
            The executive summary of this report is attached (Abt
            Associates 2001).
      --AmeriCorps members (1) recruited or trained 32,900 tutors, (2)
            placed 14,000 homeless people in transitional or permanent
            housing, (3) engaged 72,200 students in violence avoidance
            activities after school (Aguirre International 2000).
        Second, looking only at the performance indicator portion of our
    performance measurement system, we would identify the following as the
    ``most important'' indicators for fiscal 2000:
        1. Number of members enrolled in AmeriCorps*State and National.--
    This measure shows enrollment levels in the largest component of
    AmeriCorps, the State and National Program. In program year 1999, which
    corresponds generally with fiscal 2000, AmeriCorps*State and National
    programs enrolled 35,319 members.
        2. Percent of [AmeriCorps*State and National Members] members who
    complete a term of service and become eligible to receive an education
    award.--This measure shows how AmeriCorps is expanding educational
    opportunity. It is the rate at which members successfully earn the
    education award. Three out of four members ending their term of service
    in fiscal 2000, 75.4 percent, qualified for an education award; thus
    the Corporation's 75 percent goal was met. In the six years of full
    program operation, 1995-2000, the completion rates for AmeriCorps*State
    and National have ranged between 74 percent and 78 percent.
        3. Number of State Commissions reviewed for compliance with the
    national state administrative standards.--This measure is discussed
    earlier, in the response to the question concerning monitoring
    strategies.
        4. Number of students in projects supported by Learn and Serve
    America.--In fiscal 2000, the Corporation funded 106 school-based and
    community-based programs and 68 higher education programs. Service-
    learning programs supported by the Corporation with the fiscal 1999
    appropriation enrolled approximately 1,188,000 participants in fiscal
    2000.
        5. Audit opinion for fiscal year financial statements.--Fiscal 2000
    was a landmark year for the Corporation--for the first time it received
    an unqualified opinion on its consolidated financial statements. This
    achievement resulted from a commitment to strong management control and
    accountability for financial resources.
                                  procurement
        Question. In the past, the Inspector General has added an
    additional material weakness to the list when she has testified before
    this Subcommittee. It is my understanding that once again in fiscal
    year 2000, the OIG assessed the Corporation's procurement operations
    and concluded that they remained materially weak and vulnerable to
    fraud and mismanagement.
        What actions has the Corporation taken to correct this situation?
    Who is being held accountable for the lack of progress is resolving
    these conditions?
        Answer. In June 2000, the OIG completed work on a follow-up audit
    of the Corporation's Procurement Operations. The report noted that many
    improvements had been made in the Corporation's procurement operations,
    but also identified several instances where an error had been made in
    some aspect of the procurement process. While these types of procedural
    errors are not unusual in procurement offices that must deal with over
    1,500 pages of guidance in the Federal Acquisition Regulation (FAR)
    alone, they are neither egregious nor indicative of fraud, waste, or
    abuse. They are, simply, mistakes. None of the errors found, taken
    alone or in the aggregate, could result in a material loss to the
    Corporation. It is also important to note that the auditors found no
    instances of fraud, waste, or abuse.
        The Corporation agrees that the errors identified in the audit
    report warrant management's attention and corrective action, which it
    has taken action to improve the procurement operation. However, they
    simply do not rise to the level of significance that the procurement
    operation should be deemed materially weak.
                                     ______

               Questions Submitted by Senator Barbara A. Mikulski

          keeping national service strong under the new administration
        Question. Please explain the rationale for not maintaining the
    previous Administration's goal of 100,000 AmeriCorps slots per year by
    2004?
        Answer. Among the 15 priorities listed in the President's Budget,
    as described in A Blueprint for New Beginnings, is the promotion of
    service and volunteerism. The President has allocated additional
    resources in support of this goal, particularly to promote additional
    opportunities for service by the Nation's seniors.
        With respect to AmeriCorps, the budget maintains support for 50,000
    members, the same level as in the prior year. We believe this to be a
    significant commitment to national service, continuing a level approved
    by Congress on a bipartisan basis in fiscal years 2000 and 2001.
        The President's overall budget for fiscal year 2002 does set limits
    on the growth of overall discretionary spending. Growth is moderated
    from the recent trend of more than six percent to four percent. It is
    within that context that the budget for AmeriCorps was determined.
    Decisions on the size of AmeriCorps in subsequent years will be
    determined in future budgets.
        Question. How can the 2002 AmeriCorps request, which is only $7
    million above last year's level, maintain the commitment to existing
    AmeriCorps State and National programs while also funding Education
    Award Grants and AmeriCorps Promise Fellowships at $14 million as
    proposed in the budget request?
        Answer. The AmeriCorps grants budget is a $7 million increase above
    the prior year level. As you point out, that amount includes the
    transfer of two programs from the Innovation and Assistance category--
    Education Award grants and AmeriCorps Promise Fellowships. We are
    proposing these transfers because these programs are part of
    AmeriCorps, and the transfer will enable state commissions and national
    direct organizations to make decisions about which component of
    AmeriCorps works best for them. Under the current arrangement, where
    components of AmeriCorps are funded under different activities, the
    Corporation must restrict the ability of state commissions and national
    direct organizations to choose among the different components of
    AmeriCorps.
        A critical part of the budget is the appropriations language that
    will permit the transfer of these programs while continuing the
    flexibility necessary to carry them out. Specifically, the
    appropriations language transfers the authority of these programs to
    subtitle C of the National and Community Service Act without subjecting
    organizations to the administration cost, matching fund, and
    participant benefit requirements of this subtitle. AmeriCorps Promise
    Fellows and Education Award programs will continue to operate exactly
    as they do today.
        We are currently spending approximately $11 million in those
    programs--$6 million for Promise Fellows and $5 million for the
    Education Award program. Our 2002 budget proposes up to $14 million,
    because we thought it important to give states and communities some
    flexibility in which part of AmeriCorps they wish to use. For example,
    under this approach a state commission will be able to allocate
    additional funds for the Education Award program while reducing amounts
    requested in the other components.
        You are right when you say that we are only transferring
    approximately $7 million to cover the costs of these two programs while
    we are currently spending about $11 million. However, we think that the
    national service field can absorb about $4 million between fiscal
    years. Each year some programs do not spend up to their full budget
    amount, and that carry-over is available in the next year. We believe
    that the $4 million will be available from carry-over, and therefore
    there will not be any negative program impact.
        Question. Will this require cut-backs in existing AmeriCorps
    programs?
        Answer. No. Cut-backs in existing AmeriCorps programs are not
    required.
        Question. If so, does the Corporation intend for these cuts to be
    in State or National programs?
        Answer. As noted above, we do not believe that any cut-backs in
    existing AmeriCorps programs are required under the President's Budget.
    In total, the President's Budget for fiscal year 2002 will support
    50,000 AmeriCorps members, the same level as in the prior fiscal year.
                             digital divide/e-corps
        Question. How will the Corporation spend the $25 million provided
    in fiscal year 2001 for E-Corps?
        Answer. The Corporation has not yet concluded its grant cycles for
    fiscal year 2001 and would be pleased to provide a full report once all
    grant decisions have been made. To date, the competitive grants
    submitted by state commissions resulted in $10 million being approved
    for activities to address the digital divide. This amount does not
    include AmeriCorps*State formula submissions and AmeriCorps*National
    Direct grants, which are under review. We expect all three categories
    of grants to support activities to address the digital divide.
        The following represent some of the current activities being
    conducted to address the digital divide:
      --Train teachers on the identification, integration and use of
            technology in their curriculum, and provide technical
            assistance to teachers in the classroom.
      --Train youth in computer skills and Internet usage for education,
            communication, and career development.
      --Train adults and community residents in technology so that they may
            find employment.
      --Assist in developing technology plans for schools and community
            centers.
      --Provide training and technical support to nonprofit organizations
            in the use of technology.
        In addition to these activities and those supported under Learn and
    Serve America, Corporation resources in support of activities to
    address the digital divide include:
      --AmeriCorps*VISTA.--Involved in assessing technology needs,
            developing and implementing technology plans, mobilizing and
            securing resources, designing training programs, and providing
            technical assistance. Projects include Team TECH, Next Day,
            NetDay, LATTICE, and PowerUP. With the exception of NetDay,
            most of the projects are community-based.
      --AmeriCorps*NCCC.--The NCCC is currently working in schools, YMCAs,
            and Boys and Girls Clubs across the country performing tasks
            related to bridging the digital divide. NCCC support includes
            assisting in the wiring and rehabilitation of sites for the use
            of computers, teaching students how to use computers,
            contributing to the technology training of teachers, tutoring
            students in various subjects on computers, and conducting
            outreach for volunteers in the community to assist the program
            following the departure of the team. NCCC is able to adjust its
            schedule to meet the needs of the community and can provide
            assistance before and after school, during school hours and on
            the weekends.
      --Senior Corps.--Senior Corps programs are engaged in assisting other
            older adults with understanding and using technology; helping
            projects build their capacity to utilize technology, e.g.,
            listservs; and training volunteers on computers to help
            children.
      --DigitalConnections.--DigitalConnections is a cross-stream national
            service discussion forum for programs addressing and narrowing
            the digital divide. It is provided to this new and growing
            category of programs to enable their staff and members to share
            information and seek advice from their peers. The purpose of
            this listserv is to exchange ideas, information, and resources
            related to implementing technology-based service projects.
        Question. Can the Corporation quantify how many volunteers we've
    had in digital divide programs?
        Answer. Once the fiscal year 2001 grant cycles are completed, we
    will be able to identify the number of AmeriCorps members supporting
    digital divide activities. We will also be able to determine the number
    of uncompensated community volunteers recruited by the AmeriCorps
    members to assist in digital divide activities. Under Learn and Serve
    America, for grants made specifically for that purpose, we will
    quantify the number of student volunteers.
        In fiscal year 2000 the Corporation conducted a specific Notice of
    Funds Availability (NOFA) for digital divide programs and funded 30
    AmeriCorps*State and National programs at an aggregate of $9 million to
    support over 1,100 members. Learn and Serve America made eight grants
    totaling approximately $2,925,000 for K-12 School-based digital divide
    grants awards from fiscal year 1999 and fiscal year 2000 grant funds.
    At the time of award, the 8 Learn and Serve America applicants planned
    to make 41 subgrants that would involve 4,603 student participants. We
    will have the totals for fiscal year 2001 grants by September of this
    year.
        Question. Can the Corporation quantify digital divide awards and
    what they usually pay for--teacher training, student training,
    equipment, etc? How much in each category?
        Answer. Grantees have identified the primary activities they will
    undertake in order to address the digital divide. They are not
    required, however, to report financial information against each
    individual activity.
        Once the fiscal year 2001 grant cycles are completed, we will
    analyze the activities and budgets and estimate amounts by category, if
    feasible.
        Question. What criteria does the Corporation use when deciding
    which digital divide programs to fund?
        Answer. The Corporation uses the criteria adopted by its Board of
    Directors that has three major categories: Program Design,
    Organizational Capacity, and Budget/Cost-Effectiveness. Under Program
    Design, the criteria include getting things done, strengthening
    communities, and member development. Detailed expectations are provided
    under each of these subcategories. The NOFA also provided explanatory
    language and examples of activities.
        Question. Does the Corporation place a high emphasis on programs
    that teach teachers technology, specifically those that will
    ``institutionalize'' technology, so that we are creating a legacy of
    technology empowerment that lasts long after E-Corps members move on?
        Answer. A major component of all national service programming is
    institutionalization and sustainability. This is an explicit criteria
    used to evaluate applications, and it is of major importance in our
    digital divide programming. There are many ways to accomplish
    sustainability; one of them is the teaching of technology to teachers,
    and that is part of our programming strategy.
        Question. What percentage of digital divide proposals submitted to
    the Corporation are: actually funded? are worthy of support but are
    declined due to lack of funds?
        Answer. In fiscal year 2000, we received 44 applications for
    AmeriCorps*State/National and 23 applications for Learn and Serve
    requesting over $27 million in funds. Thirty AmeriCorps*State/National
    programs and 8 Learn and Serve programs received funding, totaling $12
    million. Hence, we funded 57 percent of the organizations requesting
    funds and 44 percent of the amounts requested.
        In general, throughout our history, including the digital divide
    competitions, we are unable to fund all programs worthy of support. It
    is not possible, however, to provide a specific percentage of
    applicants that are worthy of funding but are declined due to lack of
    funds. In some cases, the Corporation does not receive an application
    because the state commission has responsibility to select programs
    competitively within available resources provided on a formula basis.
    Under Learn and Serve America, State education agencies receive funds
    in part on a formula basis and determine which applicants within the
    state are funded.
        For fiscal year 2001, we are currently in the midst of the
    AmeriCorps grant cycle. Most grantees are in the second or third year
    of a three-year grant. With available funds, Learn and Serve America
    cannot make new grants in any category, including bridging the digital
    divide, in 2001 and 2002. Fiscal year 2000 grants and activities are
    expected to continue for three years.
        Question. Can the Corporation quantify the ``success rate'' of the
    Corporation's digital divide programs? How many teachers have been
    trained? How many students have become computer-literate as a result of
    these programs?
        Answer. It is still too early in the implementation of these
    programs to provide such specificity. Most of the digital divide
    programs approved at the end of fiscal year 2000 have just begun. We
    will have better accomplishment data later this fall. As with other
    national service programming, it is our intent to evaluate the success
    of these programs in meeting their objectives. Evaluation of these
    programs will require determining the nature of their outputs, that is,
    what service was performed, as well as determining what, if any,
    changes in service recipients occurred as a consequence of the service
    provided. Typically we will begin to collect descriptive data about
    programs' outputs after their first year of operation, and we will have
    data about many of these programs at the end of the current program
    year. Standards for data reporting vary somewhat between programs,
    which increases the challenge of collecting these data across all
    program streams.
        Insights about the effect of programs are generally best captured
    after they have been operating for several grant cycles. Frequently, so
    much is learned by both grantee and grantor during the first
    operational year that program changes occur. Once the programs have
    stabilized their service model, evaluation of outcomes can begin. Based
    on experience, we would anticipate beginning to conduct outcome
    evaluation of the digital divide programs in the 2001-2002 program
    year. Even at that time, we will devote considerable attention to
    questions of implementation. By 2002-2003 we can be confident that
    outcome research will reflect a relatively mature program and its
    effects.
        We will assess outcomes using a combination of quantitative survey
    research and qualitative case studies to assess how the programs were
    implemented, how successfully they have been able to deliver services,
    what occurred as a consequence of their service, and what changes have
    occurred.
        Question. The National Science Foundation is also a major player in
    teacher training in math and science. Is the Corporation aware of what
    NSF is doing in this area?
        Answer. We have worked closely with the Department of Education on
    a number of initiatives, but to date have not had conversations with
    the National Science Foundation about their activities. The Corporation
    will begin discussions with the National Science Foundation to see what
    activities they support, what they have learned, and how we can
    coordinate our support.
        Question. Have AmeriCorps and NSF cooperated on the digital divide
    issue?
        Answer. The Corporation researched a number of sources and
    contacted numerous organizations prior to beginning the digital divide
    programming. However, we had not contacted the National Science
    Foundation, and will do so in the immediate future.
                            faith-based initiatives
        Question. Is the Administration relying on the experience and
    expertise of the Corporation as the White House Office on Faith-Based
    Initiatives develops its plans?
        Answer. The White House Office of Faith-based and Community
    Initiatives has consulted with the Corporation on our experience with
    faith-based and other community-based organizations. Under the
    leadership of newly appointed Corporation Board member and Board Chair-
    elect Stephen Goldsmith, the Corporation will continue to explore ways
    to build upon its on-going work with faith-based and other community-
    based organizations.
        Question. Is the Corporation providing guidance to the White House
    on how it maintains important safeguards to protect against
    discrimination with government funds?
        Answer. Since its inception, the Corporation for National Service
    has provided a level playing field to all eligible applicant
    organizations, including faith-based organizations. We have also
    applied the safeguards included in the national service legislation to
    ensure that federal funds are not used to support religious worship,
    religious instruction, or religious proselytization. We have provided
    information about these safeguards to the White House Office of Faith-
    based and Community Initiatives.
        Question. To what extent have the agencies that are establishing
    centers for faith-based programs (HUD, HHS, Education, Justice, and
    Labor), as directed by President Bush's executive order, reached out to
    the Corporation's staff for advice?
        Answer. At this time, there has been no formal communication
    between the Corporation for National Service and the centers for faith-
    based programs established by five agencies (HUD, HHS, Education,
    Justice, Labor) under Executive Order 13198. The White House Office of
    Faith-based and Community Initiatives has consulted with the
    Corporation and we would welcome the opportunity to provide any
    assistance to the faith-based centers at the other Federal agencies.
        Question. Is the Corporation regularly consulted by the White House
    and the other agencies so that you can give them the benefit of your
    experiences in this issue?
        Answer. Through Board member Stephen Goldsmith, the Corporation
    continues to update the White House on its activities. We welcome the
    opportunity to consult with other agencies about our experience with
    small community-based and faith-based organizations.
        Question. What guidelines are followed when the Corporation, or
    State Commissions, make decisions between competing proposals,
    particularly when there are competing proposals that seem to be equally
    responsive to the program's objectives--and one application is from a
    faith-based group and one is from a secular group?
        Answer. The Corporation for National Service and the State
    Commissions operate under clear guidelines in making decisions on
    competing proposals. Upon review of proposals, decisions are made on
    the merits of the organization's ability to meet the programmatic
    guidelines regardless of the secular or faith-based nature of the
    organization.
        Question. Does the Corporation consult with outside experts
    consisting of both religious and secular organizational representatives
    to give staff advice on the most promising proposals?
        Answer. Reviewers are selected based on their expertise, work
    experience, education, and knowledge of national service, volunteerism,
    nonprofit management, grants management and specific technical subject
    areas. These reviewers are representative of the national service field
    and include both secular and faith-based organizations to review
    proposals.
                              silver scholarships
        Question. Why did the Corporation decide to award these new
    scholarships to individuals who are age 55 and older, as opposed to
    those who are eligible to receive Social Security benefits (age 62 and
    older)?
        Answer. Eligibility at age 55 is consistent with existing or
    proposed law for the three existing senior service programs
    administered by the Corporation: the Retired and Senior Volunteer
    Program (RSVP), the Senior Companion Program, and the Foster
    Grandparent Program. These programs receive their appropriations
    through the Labor-HHS Subcommittee. RSVP currently enrolls persons aged
    55 and older. Previous reauthorization proposals called for lowering
    the eligibility from 60 to 55 for the Foster Grandparent and Senior
    Companion Programs.
        Question. Are any other scholarships or educational awards made by
    the Corporation tax free?
        Answer. No.
        Question. If not, why the special treatment for the Silver
    Scholarships?
        Answer. We do not believe that this constitutes special treatment.
    There are a number of other comparable scholarships that are supported
    by federal and state governments that are treated for tax purposes in a
    similar fashion. The tax treatment of other benefits provided by the
    Corporation, including education awards, is an issue that can be
    explored along with other legislative proposals for the Corporation.
        Question. Why should senior volunteers receive a benefit that
    younger volunteers don't?
        Answer. The scholarship will give the healthiest and best-educated
    generation of seniors in history an incentive to volunteer as tutors
    and mentors. And while the scholarship is based on the service of
    senior volunteers, they must transfer it to a child who will in turn
    use it for educational purposes. The tax treatment of the education
    awards for the Corporation's other programs can be addressed as part of
    the larger reauthorization of national service legislation.
                           baltimore experience corps
        Question. Has the Corporation evaluated this demonstration program
    to determine its effectiveness?
        Answer. No, the Corporation has not evaluated the Baltimore
    Experience Corps specifically. However, we have evaluated other
    Experience Corps and Seniors for Schools projects that are similar to
    the Baltimore Experience Corps. Evaluation reports reflect that all
    projects have been very successful, had a positive impact on students'
    reading abilities, and had a positive impact on schools. For example,
    ninety-two percent of students' pre- and post-tested in the Seniors for
    Schools program demonstrated improved reading skills during the project
    year.
        Question. If the data shows that the program has had a positive
    impact, should it be expanded?
        Answer. The data shows that the Experience Corps and Seniors for
    Schools programs have been very successful. However, in fiscal year
    2000, the Congress, in the Consolidated Appropriations Act, directed
    the Corporation to end the payment of monetary incentives to
    individuals not meeting income guidelines as prescribed in the Domestic
    Volunteer Service Act. The Experience Corps projects provide monetary
    incentives to all volunteers serving fifteen or more hours a week
    regardless of income. Therefore, the Corporation is no longer able to
    fund Experience Corps and Senior for Schools Demonstration projects
    under appropriations provided for the Domestic Volunteer Service Act
    through the Subcommittee on Labor, Health and Human Services,
    Education, and Related Agencies.
                     NEIGHBORHOOD REINVESTMENT CORPORATION

    STATEMENT OF ELLEN LAZAR, EXECUTIVE DIRECTOR
    ACCOMPANIED BY:
            MARGARET H. KELLY, DEPUTY EXECUTIVE DIRECTOR
            CLARENCE J. SNUGS, DEPUTY EXECUTIVE DIRECTOR/TREASURER

                    STATEMENT OF SENATOR CHRISTOPHER S. BOND

        Senator Bond. Welcome, Ms. Lazar. And we will now hear
    from--we will now hear from the Neighborhood Reinvestment
    Corporation. It has been about 5 years since we last had an NRC
    hearing. So, I am very pleased to welcome Ms. Ellen Lazar, who,
    ironically, is no stranger to the subcommittee. We welcomed her
    here last year as head of CDFI. And I am very happy to see that
    Ms. Lazar has made a smooth transition from the previous
    Administration. Welcome.
        The Administration's budget request for the NRC is for an
    increase of $5 million; from $90 million for fiscal year 2001
    to $95 million for fiscal year 2002.
        Neighborhood Reinvestment and its network of local
    Neighborhood Housing Services have performed a number of very
    valuable housing and economic development activities that I
    think really do not get enough recognition and credit.
        In my home State of Missouri, affiliates in St. Louis and
    Kansas City have been working in some of the most distressed
    communities, and have been instrumental in revitalizing these
    neighborhoods. I am very proud of the work they do. And I say
    here, publicly, a sincere thanks to you and to all of the--the
    people throughout the country who are working in Neighborhood
    Housing Services.
        We welcome you here, and now would be glad to have your
    testimony to hear about NRC's activities, and especially the
    Affordable Housing Programs.
        I--this is a high priority for me to stimulate the
    production of more affordable housing. And I am also interested
    to hear how NRC has been involved in helping HUD dispose of its
    single-family assets and administer its new Section 8 Home
    Ownership Program.
        So, we have lots--lots of questions. And we look forward to
    having your testimony.

                            STATEMENT OF ELLEN LAZAR

        Ms. Lazar. Thank you, Senator--Chairman Bond, Ranking
    Member Mikulski, Senator Johnson, and members of the
    subcommittee.
        I am Ellen Lazar. I joined Neighborhood Reinvestment as its
    Executive Director in October of 2000.
        It is a pleasure to be here today to testify on behalf of
    the Neighborhood Reinvestment Corporation and the 215 members
    of its NeighborWorks network.
        Our Board Vice Chair, Governor Edward Gramlich is in the
    audience today. I would like to acknowledge the Governor.
        I am joined today by our two Deputy Directors, Margo Kelly
    and Clarence Snuggs.
        I would like to request that my full testimony be included
    for the record today.
        Senator Bond. Without objection, it will be so included.
        Ms. Lazar. Thank you. As the new Executive Director of
    Neighborhood Reinvestment, it has been gratifying to learn of
    the great dedication to improving distressed communities in
    America this subcommittee has shown through its support of our
    work.
        I thank the subcommittee for supporting Neighborhood
    Reinvestment through the fiscal year 2001 budget appropriation
    of $90 million.

                        FISCAL YEAR 2002 BUDGET REQUEST

        Neighborhood Reinvestment's fiscal year 2002 budget
    justification outlines proposed activities at a $95 million
    budget level. This includes a core budget level of $85 million,
    to continue our community revitalization efforts in urban,
    suburban, and rural communities, and $10 million to expand a
    groundbreaking pilot effort to utilize the HUD Section 8
    program in support of home ownership for low income families.
        I would now like to discuss a few of the proven successes
    of the NeighborWorks network, and touch on a couple
    of new initiatives now being undertaken that keep the
    Corporation and the NeighborWorks network at the
    cutting edge of changes and improvements in community
    revitalization.

                          CAMPAIGN FOR HOME OWNERSHIP

        The Campaign for Home Ownership was launched by
    Neighborhood Reinvestment and members of the
    NeighborWorks network to increase home ownership
    rates in their communities, particularly among families of
    modest means.
        The outcomes of the first campaign greatly exceeded
    expectations. Over 15,000 families purchased homes and more
    than $1.1 billion in total investment was generated. The
    NeighborWorks Campaign for Home Ownership 2002 has
    passed its mid-point, and is on-target to surpass all of its
    goals for production and leveraged investment.
        Since the campaign began in January 1998, nearly 27,000
    families have purchased homes in their communities for a total
    of $2.3 billion. Of the families assisted, more than 95 percent
    of them are first-time home buyers; 90 percent have low or
    moderate incomes; 52 percent are minorities; and 41 percent are
    female-headed households.
        In addition, more than 161,000 families have received
    homebuyer education and counseling services and are on the path
    to home ownership.

                            SECTION 8 HOME OWNERSHIP

        We continually seek innovative solutions to help transform
    communities through home ownership. In the late 1990's, changes
    to the HUD Section 8 program statute permitted its vouchers to
    be used for the first time toward the costs of home ownership.
    Families served by NeighborWorks organizations under
    the Section 8 homeownership option have incomes as low as 30
    percent of area median income, and we continue to see the
    Federal funds used for this effort leverage private sector
    investments.
        In fiscal year 2000, Congress recognized the
    NeighborWorks network approach to the Section 8
    homeownership option and provided Neighborhood Reinvestment
    with a $5 million set-aside to test it further.
        One of the benefits offered by Neighborhood Reinvestment is
    the ability to bring economies of scale, a diverse testing
    ground, and sound evaluation methods to efforts like the
    Section 8 homeownership option.

                 NEIGHBORWORKS MULTIFAMILY INITIATIVE

        While home ownership is a central strategy toward achieving
    community revitalization, nearly all NeighborWorks
    neighborhoods have multifamily housing needs, as well.
    Currently, NeighborWorks organizations own or manage
    more than 25,000 high-quality multifamily units.
        In response to the growth in multifamily activity,
    Neighborhood Reinvestment launched the NeighborWorks
    Multifamily Initiative in 1999. This initiative has provided 43
    NeighborWorks organizations with technical
    assistance, asset management training, and training in best
    practices in multifamily property development and management,
    thereby positioning them to be at the forefront of efforts to
    strength neighborhoods by providing affordable, well-managed
    rental housing.
        The NeighborWorks network has proven that when
    multifamily properties are financed, built, and managed for the
    long-term benefit of the community, the impact can be broad and
    positive. Well-maintained, these properties help improve the
    physical character of the community and support the values of
    the surrounding properties. Combine physical strength with
    ongoing affordability, and the result is lengthened resident
    tenure and a more stable and positive environment for families.
        One example of a successful multifamily strategy is the
    successful adaptation and expansion of the Mutual Housing
    Association concept from its west European roots. Mutual
    Housing is one of the innovations that continue to produce
    units, as well as creative strategies for developing
    sustainable, affordable housing.
        Initiated in the eighties at the request of Congress,
    Neighborhood Reinvestment engaged in a multiyear demonstration
    of Mutual Housing Associations. This demonstration resulted in
    the creation of 10 Mutual Housing Associations that have
    produced more than 6,400 units of quality housing. The units
    continue to operate in great physical and strong economic
    condition, even after 10 to 20 years.
        With resident leadership actively promoted as part of the
    operating plan, Mutual Housing residents stand out as community
    leaders, both within their own property and within their larger
    neighborhoods.
        Mixing of incomes, ranging from 30 percent of median to 100
    percent of median family income, creates healthy, dynamic
    communities in which the cycle of property is broken. The
    stigma of low income housing is overcome in the eyes of the
    community. And the long-term economic viability of the property
    is improved.
        One of our network members, Rocky Mountain Mutual Housing
    Association in Colorado, has been able to serve very low income
    families by maintaining no or little debt on its properties to
    keep rents affordable. Rocky Mountain Mutual acquired two FHA
    foreclosed properties at little cost, and rehabilitated the
    properties, using, among other sources, two Hope II grants.
        Through resident services, such as a staffed computer lab
    and community center, and through active resident participation
    in management of the properties, residents and neighborhood
    members, alike, consider these properties a neighborhood asset
    and a cornerstone in revitalizing a community on the edge.
        The network and Neighborhood Reinvestment's multifamily
    activities demonstrate sustainable excellence and positive
    impact over an extended period of time.

                               PREDATORY LENDING

        I would like to take a moment to talk about predatory
    lending. Predatory lending is a very real threat to the great
    work NeighborWorks organizations and their lender and
    Government partners have done in distressed communities.
        As predatory lending practices have proliferated and
    affected increasing numbers of families and communities,
    NeighborWorks organizations and others look to
    Neighborhood Reinvestment to provide a forum for discussion and
    a mechanism for coordinating efforts to combat these abusive
    lending practices at the local level.
        In response, Neighborhood Reinvestment has worked to
    understand the impact of predatory lending through sponsorship
    of research symposia and public education.
        In addition, Neighborhood Reinvestment has developed a
    significant partnership with Freddie Mac to develop a loan
    product for families that find themselves with a loan that has
    the hallmarks of a predatory loan. This program, which has an
    extensive counseling requirement, offers an opportunity for
    families to refinance and thereby retain their homes.
        We also believe that financial literacy training and post-
    purchase education are effective strategies to combating the
    proliferation of predatory loans. Neighborhood Reinvestment is
    actively engaged in developing additional tools for this kind
    of training.

                      VISION FOR NEIGHBORHOOD REINVESTMENT

        This year, we are requesting an appropriation of $95
    million, which includes $10 million to further Neighborhood
    Reinvestment's and the NeighborWorks network's
    pioneering efforts in using Section 8 vouchers to purchase a
    home. At this funding level, Neighborhood Reinvestment will be
    able to maintain its current level of services to the
    NeighborWorks network with modest increases to the
    outputs and measures.
        Your support for our efforts has allowed us to play a
    critical role in revitalizing America's communities. Since
    Congress created the Neighborhood Reinvestment Corporation in
    1978, this organization has served as an essential and unique
    laboratory for cutting-edge strategies in the community
    development field.
        Your support has enabled us to make critical initial
    investments in a host of innovative strategies that have
    brought to the table public and private sector interests that
    would never otherwise have been assembled.
        Examples include our Home Ownership Campaign, Multifamily
    Initiative, our Mutual Housing activities, the Apartment
    Improvement Program, the predatory lending pilot with Freddie
    Mac, and more recently, the Section 8 homeownership initiative,
    and a new venture to create an equity assurance program to
    stimulate activity in soft markets.
        Seating these promising ventures with very modest, very
    flexible public funds, combined with intensive facilitation and
    staff support, has made all the difference. The benefits of
    those innovations have touched thousands of families and have
    provided extensive training opportunities and widely
    disseminated winning strategies to benefit the entire community
    development industry.
        This is an exciting and challenging time, as Neighborhood
    Reinvestment and the NeighborWorks network continue
    to build upon the strength of the past, while looking ahead to
    confront the problems and opportunities of the future.

                               PREPARED STATEMENT

        I am very eager to lead this organization along its well-
    chosen route, while scouting ahead for new ways we can be
    successful in our work and add value to the field of community-
    based development.
        Thank you for your time today. And I am happy to entertain
    any questions.
        [The statement follows:]

                       Prepared Statement of Ellen Lazar

        Chairman Bond, Ranking Member Mikulski and Members of the
    Subcommittee: I am Ellen Lazar, and I joined the Neighborhood
    Reinvestment Corporation (Neighborhood Reinvestment) as executive
    director in October 2000. It is a pleasure to be here today to testify
    on behalf of the Neighborhood Reinvestment Corporation and the 215
    members of its NeighborWorksnetwork.
        As the new executive director of Neighborhood Reinvestment, it has
    been gratifying to learn of the great dedication to improving
    distressed communities in America you have shown through your support
    of our work. This level of commitment, evidenced over more than 25
    years, extends beyond funding and can be seen in the involvement and
    interest many of you have shown through your visits to local
    NeighborWorks organizations, where you have witnessed and
    celebrated their successes. This in turn has boosted local partners'
    confidence in being able to achieve our shared mission of stimulating
    reinvestment in communities of great need.
        I thank the Subcommittee for supporting Neighborhood Reinvestment
    through the fiscal year 2001 budget appropriation of $90 million.
    Neighborhood Reinvestment's Fiscal Year 2002 Budget Justification
    outlines proposed activities at a $95 million budget level. This
    includes a core budget level of $85 million to continue our community
    revitalization efforts and $10 million to expand a groundbreaking pilot
    effort to utilize the HUD Section 8 program in support of home
    ownership for low-income families.
        By way of background, the NeighborWorks system comprises:
      --Neighborhood Reinvestment Corporation is a Congressionally
            chartered, public nonprofit corporation, headquartered in
            Washington, D.C., and staffed in nine regional offices.
            Neighborhood Reinvestment:
        --provides funding (that gets leveraged many times over), technical
                assistance, training and other resources to its network
                members and the community-based development industry as a
                whole;
        --coalesces public and private support for local, regional and
                national community reinvestment efforts;
        --contributes to policy decisions concerning housing and other
                means of transforming neighborhoods and improving the lives
                of lower-income families; and
        --monitors changes in the field, assesses the need for new
                approaches, and initiates research or programs to address
                those needs.
      --The NeighborWorks network was founded by Neighborhood
            Reinvestment and has evolved from 34 local pilot organizations
            operating in about a dozen states in the 1970s to an impressive
            215-member network of locally-run nonprofit organizations
            working to expand affordable housing opportunities and support
            neighborhood revitalization in nearly 1,700 communities in 48
            states, the District of Columbia and the Commonwealth of Puerto
            Rico. Network members operate in our nation's largest cities
            and in some of its smallest rural communities. Regardless of
            their target communities, NeighborWorks organizations
            function as partnerships among local residents, business
            leaders and local government representatives, with strategies
            to share, best practices that get replicated and financing
            mechanisms that are flexible.
      --Neighborhood Housing Services of America (NHSA) is a secondary
            market funded by social investors and purchases loans from
            NeighborWorks organizations, thus replenishing their
            revolving loan funds and enabling them to finance even more
            homeownership, rehabilitation and multifamily housing. The
            services NHSA provides benefit lower income borrowers; the
            median borrower income is $24,652.
        The NeighborWorks system is the only coordinated effort
    of its type in the nation. It is unique in that it
      --Provides a national delivery system--built on a national network of
            locally-directed, community-based partnerships;
      --Fosters local and regional leveraging of national resources;
      --Serves as a laboratory for testing creative solutions to problems
            that impede affordable housing production and neighborhood
            revitalization;
      --Provides a strenuous review process in order to be admitted to the
            NeighborWorks network, as well as on-going program
            reviews to improve organizational efficiency while reducing
            programmatic risk; and
      --Facilitates a learning environment for benchmarking and expanding
            best practices in the field.
        Through the guidance of the Corporation's Board of Directors, the
    experience of Neighborhood Reinvestment staff, and the willingness of
    NeighborWorks organizations to share the fruits of their
    labors, the NeighborWorks system will, with your support,
    continue to enhance neighborhoods and improve lives throughout America
    in the year ahead.
        I would now like to discuss:
      --the Shared Vision of the NeighborWorks system;
      --the Proven Successes that have made the Corporation and the network
            the respected institutions they are today;
      --the Exciting New Initiatives now being undertaken that keep the
            Corporation and the network at the cutting edge of changes and
            improvements in the community revitalization field; and
      --the NeighborWorks system's Outcomes and Achievements over
            the last two years and those anticipated for the next fiscal
            year.
           inspired leadership and the neighborworks vision
        One of the most significant changes to the NeighborWorks
    system in fiscal year 2000 was the retirement of Executive Director
    George Knight. For 10 years Mr. Knight shared the network's and
    Neighborhood Reinvestment Corporation's vision of ``Transforming
    Communities Together.'' By encouraging cooperative relationships both
    within and outside the NeighborWorks network, he was able to
    foster an expanded and ever more efficient and effective network. His
    guidance of the Corporation led to significant growth within the
    NeighborWorks network.
        During the past ten years, the number of communities served by the
    network grew from 270 to 1,559--a 477 percent increase. Likewise, the
    number of families who benefited from the network's products and
    services increased 488 percent--from 5,788 families in 1990 to more
    than 34,000 families in 2000. Most importantly, the Neighborhood
    Reinvestment's Congressional appropriation was leveraged very
    successfully by the NeighborWorks network. In 1990, each
    federal dollar leveraged $5.30 from other sources; by 2000, that figure
    had grown to $16.90.
        I have been familiar with the impressive work of Neighborhood
    Reinvestment for many years, and I am fully committed and prepared to
    continue to foster an environment that stimulates innovation and
    creative responses to the needs of families being served by the
    network. The increased productivity of the NeighborWorks
    Campaign for Home Ownership, and our work using Section 8 vouchers for
    home purchase are just two current examples of how the
    NeighborWorks network is providing innovations for the
    community development field. Our work to grow resident leaders, through
    Community Leadership Institutes, continues to reap great benefits for
    communities. Our Training Institute is helping to grow a cadre of
    leaders for the community development field. I look forward to working
    with you, our NeighborWorks network, residents and public and
    private sector partners to further enhance and transform communities.
                                proven successes
        During fiscal year 2000, the NeighborWorks system
    accomplished much through its core programs, which are the foundation
    of the NeighborWorks system. Among these are:
      --Locally-Controlled Revolving Loan Funds.--Locally directed
            revolving loan funds are the basis of much of the success of
            the network. Revolving loan funds are controlled by the local
            NeighborWorks organizations and are used to provide
            flexible funding for community priorities, such as home
            ownership, rehabilitation, multifamily housing, and commercial
            and economic development. The liquidity of the local revolving
            loan fund is in many cases assisted by selling loans to NHSA.
            Neighborhood Reinvestment Corporation supports these revolving
            loan funds through technical expertise, training, and funding.
            Most of the funding for revolving loan funds comes from local
            sources--loans and grants made by banks, insurance companies,
            foundations, local governments and other local investors. Most
            of those who benefit from the revolving loan funds are hard-
            working families who are typically under-served. For example,
            70 percent of loans made through a NeighborWorks
            revolving loan fund are made to very low- or low-income
            households, 63 percent are made to minority-headed households,
            while 43 percent are made to female-headed households.
      --NeighborWorks Campaign for Home Ownership.--In 1993, the
            first NeighborWorks Campaign for Home Ownership was
            launched by Neighborhood Reinvestment and members of the
            network to increase home-ownership rates in their communities,
            particularly among families of modest means. The outcomes of
            the first Campaign greatly exceeded expectations: 15,880
            families purchased homes, and more than $1.1 billion in total
            investment was generated.
        This success led to the Campaign for Home Ownership 2002, which has
    more aggressive goals: to create 40,000 new homeowners, provide housing
    counseling to 270,000 families, and generate $2.9 billion in investment
    in struggling neighborhoods, over a five-year period from 1998 to 2002.
        The NeighborWorks Campaign for Home Ownership 2002 has
    passed its mid-point and is on target to surpass all of its goals for
    production and leveraged investment. Since the Campaign began in
    January 1998, nearly 27,000 families have purchased homes in their
    communities, for a total investment of $2.3 billion. Of the families
    assisted:
      --More than 95 percent are first-time buyers;
      --90 percent have low- or moderate-incomes;
      --52 percent are minorities; and
      --41 percent are female-headed households.
        In addition, more than 161,000 families have received homebuyer
    education and counseling services and are on the path to home-
    ownership.
        In addition to achieving these impressive goals, the Campaign for
    Home Ownership has helped refine and create more effective mechanisms
    for service delivery, raised the degree of professionalism of home-
    ownership activities, and helped increase organizational capacity at
    the local level. Out of the collaborative efforts of the members of the
    Campaign, the NeighborWorks network has developed major
    innovations in the way community residents are assisted, not only to
    become, but to remain, successful homeowners. These innovations
    include:
      --Full-Cycle LendingSM--which provides education and
            counseling that covers needs from pre-purchase credit repair,
            through post-purchase home repair and foreclosure prevention;
      --the creation of 55 NeighborWorks HomeOwnership Centers--
            where assistance on all aspects of buying and maintaining a
            home are provided under one roof;
      --an intensive Homebuyer Education curriculum offered at the
            Neighborhood Reinvestment Training Institute;
      --being on the forefront of identifying predatory lending practices
            and providing a forum for local practitioners to discuss this
            emerging issue;
      --foreclosure-prevention strategies and strategies to address
            predatory lending; and
      --a financial literacy curriculum.
        Neighborhood Reinvestment was recently notified that it has been
    selected as a semi-finalist in the 2001 Innovations in American
    Government Award by the Harvard University's Kennedy School of
    Government and The Ford Foundation for the development of 55
    NeighborWorks HomeOwnership Centers across the nation.
      --The NeighborWorks Multifamily Initiative.--While home
            ownership is a central strategy towards achieving community
            revitalization, nearly all NeighborWorks
            neighborhoods have multifamily housing needs as well.
            Currently, network members own or manage more than 25,000 high-
            quality multifamily units. In response to the growth in
            multifamily activity, Neighborhood Reinvestment launched the
            NeighborWorks Multifamily Initiative in 1999. This
            initiative has provided 43 NeighborWorks
            organizations with technical assistance, asset management
            training, and training in best practices in multifamily
            property development and management, thereby positioning them
            to be at the forefront of efforts to strengthen neighborhoods
            by providing affordable, well-managed rental housing. The goal
            of the Multifamily Initiative is to strengthen neighborhoods by
            promoting multifamily housing that have the following
            characteristics:
      --permanent affordability for low-income families;
      --long-term economic viability;
      --physical soundness--good maintenance, adequate capital replacements
            and improvements; and
      --positive social fabric--a culture of opportunity and leadership
            where school success, homeownership preparation, employment
            advancement, and neighborhood leadership are the norm, while
            drugs, truancy and destructive social behavior are not
            tolerated.
        The network, through its Mutual Housing model and the work of other
    NeighborWorks nonprofits, has proven that when multifamily
    properties are financed, built and managed for the long-term benefit of
    the community, the impact can be broad and positive. Well maintained,
    these properties help improve the physical character of the community
    and support the values of the surrounding properties. Combine physical
    strength with ongoing affordability, and the result is lengthened
    resident tenure and a more stable and positive environment for
    families.
        One strategy used by a number of properties owned by
    NeighborWorks members is to provide on-site computer learning
    centers, which allow residents access to technology, as well as the
    staff resources to ensure that the residents are able to take full
    advantage of this opportunity. We recognize that the end goal of this
    approach to technology is not just providing computers to those with
    limited resources. Technology is viewed as a means to achieving broader
    network and community goals--such as increasing the stability of
    neighborhoods, increasing academic success, expanding employment and
    economic opportunities, and attaining homeownership.
        However, the availability of such housing is dependent upon owners
    who recognize that the ownership of these properties involves the
    stewardship of both the property and the community.
    NeighborWorks organizations view affordable housing in
    exactly this way and have captured their commitment to this approach to
    housing in the NeighborWorks Multifamily Initiative.
        Neighborhood Reinvestment's successful adaptation and expansion of
    the Mutual Housing Association (MHA) concept from its West European
    roots is one of the innovations that continues to produce units as well
    as creative strategies for developing sustainable affordable housing.
    In the 1980s, at the request of Congress, the Corporation engaged in a
    multiyear demonstration of Mutual Housing Associations. The founding
    principles of this model were threefold:
      --Affordable housing is a critical need for many lower-income
            families who are not yet prepared for single family
            homeownership; therefore it should be produced as a perpetual
            asset.
      --Active resident leadership will produce a positive social impact in
            the lives of families, as well as in the operation of the
            properties and the character of neighborhoods. Therefore
            residents should serve on boards and property councils,
            establishing a mutual form of ownership that supports not only
            the social success of the community but also the financial
            success of the property, by improving collections, reducing
            maintenance and security costs, and slowing resident turnover.
      --A financial equity position in the units will enable the
            NeighborWorks organization to be a strong owner, that
            is prepared to continue to produce additional housing to meet
            the need in its market area.
        This Mutual Housing demonstration resulted in ten Mutual Housing
    Associations across the country, that have produced more than 6,400
    units of quality housing. The lessons of this demonstration have been
    dramatic.
      --The units continue to operate in great physical and strong economic
            condition, even after 10 to 20 years.
      --With resident leadership actively promoted as part of the operating
            plan, Mutual Housing Association residents stand out as
            community leaders, both within their own property and within
            their larger neighborhood.
      --Mixing of incomes (ranging from 30 percent median family income to
            100 percent median family income) creates healthy, dynamic
            communities, in which the cycle of poverty is broken, the
            stigma of ``low income housing'' is overcome in the eyes of the
            community, and the long term economic viability of the property
            is improved.
      --Mutual Housing Associations, given their strong capital positions
            and fee structures that support the depth of professional staff
            needed by an ongoing developer/owner, are also ongoing
            producers of additional housing. Mutual Housing Associations
            accounted for over 900 of the 1,520 multifamily units produced
            by the NeighborWorks network in fiscal year 2000.
        The Mutual Housing properties merit particular attention, because
    they demonstrate sustainable excellence and positive impact over an
    extended period, 10-15 years. Though the Mutual Housing model continues
    to grow in some markets, many of the NeighborWorks
    organizations that produce affordable housing are not structured as
    Mutual Housing Associations. Through the NeighborWorks
    Multifamily Initiative, though, the best elements of Mutual Housing
    along with the lessons learned are now being promoted as ``best
    practices'' throughout the NeighborWorks network.
        The Multifamily Initiative became the catalyst for creating the
    Neighborhood Capital Corporation (NCC), which provides affordable,
    short-term financing to acquire multifamily properties that are at risk
    of deterioration or of being lost as affordable units available in a
    community. Private owners of rental properties regularly approach
    NeighborWorks organizations about purchasing these
    properties. Sometimes the owner is no longer interested in maintaining
    the property. In other instances, subsidies are expiring and the owner
    has no interest in investing additional capital or in maintaining the
    property as affordable. Thus, very often the best solution for
    residents, owners and neighborhoods is for a nonprofit organization to
    acquire the property and commit it to long-term affordability. Many of
    these properties house elderly tenants, families below 30 percent of
    area median income, and families who have few options for relocation.
        The Multifamily Initiative explored approaches and obstacles to
    such purchases and found the primary obstacle is flexible pre-
    development and acquisition financing that allows an organization to
    respond quickly when a property becomes available. Neighborhood
    Reinvestment responded to this problem by making an initial investment
    of $1.8 million in NCC. NCC's board of directors is composed of
    executive directors of some of the most successful development
    corporations in the network. NCC is creating a capital fund that will
    meet the needs of qualified NeighborWorks members and allow
    them to effectively and efficiently address the interests of
    multifamily owners, their tenants and our neighborhoods. In its first
    full year of operation, NCC projects that it will provide approximately
    $1 million in loans, while leveraging $6 million from other sources,
    thus impacting 500 units of multifamily housing.
        Against the national backdrop, the NeighborWorks
    Multifamily Initiative seeks to preserve affordable housing resources
    as community assets, while improving the physical properties of the
    housing and the quality of life for families with a range of incomes.
      --The NeighborWorks Rural Initiative.--
            NeighborWorks organizations serving rural communities
            comprise the fastest growing segment within the network. In
            1995, six NeighborWorks organizations were serving
            rural communities; by 2000, this figure grew to 49 network
            organizations. We anticipate this trend will continue.
            NeighborWorks organizations in rural areas help
            confront problems caused by a deteriorating housing stock, low
            incomes, and of rapidly increasing land prices. The rural
            network members are engaged in areas that historically have
            been difficult to serve, such as American Indian reservations,
            the Southwest border Colonias, and the Mississippi Delta.
        Several years ago, our rural NeighborWorks members
    elected to establish a formal identity and to call themselves the RNA
    Community Builders, as a means of eliciting support from foundations
    and other entities with a particular interest in rural issues. The RNA
    has become a highly effective institution, attracting program related
    investments from the philanthropic funders, and others, in order to
    make short-term loans to its members. More recently the RNA has also
    been designated as a certified Community Development Financial
    Institution intermediary. Neighborhood Reinvestment has provided
    significant support to the start-up of the RNA and to its ongoing
    activity. In fiscal year 2000 Neighborhood Reinvestment hired a
    national rural coordinator to concentrate on our rural interests and
    activities and to serve as a liaison with the RNA. Since its creation,
    RNA has made 30 loans to rural network members, creating 220 units of
    affordable housing and leveraging over $18 million in permanent
    financing.
      --Neighborhood Reinvestment Training Institute.--The Neighborhood
            Reinvestment Training Institute is one of the primary venues
            for the Corporation's outreach to the broader community
            development field and increases the capacity of local
            neighborhood revitalization organizations. Neighborhood
            Reinvestment sponsors five national training events each year,
            serving an average of 800 participants at each Institute, which
            lasts a week. The Neighborhood Reinvestment Training Institute
            is recognized as a national leader in providing high-quality,
            practitioner-focused training to community development
            professionals. During fiscal year 2001, the Training Institute
            will provide more than 160,000 training hours.
        The Training Institute has developed several focused efforts to
    build the skills of local practitioners and focus efforts of local
    organizations so that they build capacity. These include:
      --Eight Programs of Study that guide participants through a subject-
            specific curriculum, culminating in a professional certificate
            that recognizes their accomplishments. Candidates in a Program
            of Study must successfully complete up to four weeks of courses
            and exams, and take a comprehensive exam at the end of all
            coursework.
      --The development of an Advanced Training Platform, a new, intensive,
            interactive and advanced practicum for seasoned practitioners.
            This will initially be offered in early fiscal year 2002. This
            practicum will draw and expand on negotiation skills, economic
            analysis, leadership development, management skills, and policy
            application.
      --Resident leadership development continues to be a core value in the
            NeighborWorks network's approach to community
            revitalization. To respond to a need for enhanced resident
            leadership development, the Training Institute is intensifying
            its efforts by sponsoring regional Community Leadership
            Institutes. This will enable resident leaders to share their
            experiences, hone their leadership skills and bring innovative
            ideas back to their communities. This reflects the
            Corporation's conviction that while new homeowners, improved
            housing and increased investment are essential to
            revitalization, the most essential ingredient for long-term
            success is informed, effective and motivated resident leaders.
      --In recognition of Neighborhood Reinvestment's former Executive
            Director George Knight, who retired at the end of fiscal year
            2000, the VA, HUD and Independent Agencies Conference Committee
            set aside $2.5 million of Neighborhood Reinvestment's fiscal
            year 2001 appropriation to establish the George Knight
            Scholarship Fund. Established as an endowment, this Scholarship
            Fund will assist often-fledgling community development
            organizations and professionals as they seek to develop the
            capacity to address community needs. This fund will enable the
            Training Institute to more than double the number of tuition
            scholarships granted to staff of nonprofit organizations across
            the country.
        The George Knight Scholarships were offered for the first time at
    the Neighborhood Reinvestment Training Institute in Chicago during the
    week of April 16. Thirty-three professionals received more than $16,000
    in scholarships that enabled them to attend a week of training. Because
    of this Subcommittee's commitment to top-quality training, the
    Corporation anticipates being able to provide approximately 250
    scholarships, totaling $125,000 annually.
        In addition, the Subcommittee's set aside has been and will
    continue to be leveraged with private contributions. A large savings
    bank has begun this trend with a recent contribution of $550,000. The
    Corporation will continue to seek other private contributions to this
    scholarship endowment.
      --National Insurance Task Force.--Since 1994, Neighborhood
            Reinvestment, members of the NeighborWorks network
            and members of the insurance industry have worked together to
            develop strategies that improve the availability and pricing of
            property and casualty insurance in low- and moderate-income
            neighborhoods. Known as the National Insurance Task Force, this
            group includes representatives the insurance industry's top
            property and casualty insurance carriers, as well as insurance
            industry trade associations, insurance regulators, educational
            institutions, Neighborhood Reinvestment and the members of the
            network. The purpose of the Task Force is ``To develop
            partnerships between the insurance industry and community-based
            organizations to better market the products and services of
            both, for the benefit of the customers and communities they
            serve.''
        The Task Force continues to develop cutting-edge products and tools
    that help facilitate the creation of local collaborations between the
    insurance industry and NeighborWorks organizations across the
    country. Over the last two years the Task Force has piloted a ``Loss
    Prevention Partnership'' program. Selecting cities with insurance
    perils--Chicago, Charleston, SC, and Denver--the Task Force is
    experimenting with strategies to reduce the likelihood of damage from
    perils such as fire, wind and water. Education, special programs,
    prevention tools and a local loan fund all play a role in these local
    pilots. Once again, the NeighborWorks network is serving as
    an appropriate and exciting laboratory to test innovative new
    approaches to intransigent problems.
      --NHSA.--NHSA nearly doubled its loan purchases from local
            NeighborWorks organizations in fiscal year 2000--from
            $46.2 million in the prior year to $83.3 million. NHSA's
            investors were the key to making this extraordinary increase
            possible. In fiscal year 2000, the investor base increased to
            more than 120 investors and lenders, which included two new $10
            million investors. Members of the NHSA Board of Trustees have
            begun discussion of a $500 million social investment initiative
            for the period 2001 through 2006 in response to increased need
            for liquidity for the NeighborWorks loans from
            revolving loan funds. Other philanthropic and corporate funding
            sources are being explored to meet these goals.
                            exciting new initiatives
        Neighborhood Reinvestment continually seeks innovative solutions to
    help transform communities. What follows are just some of the areas in
    which the Corporation has recently expanded its focus.
      --HUD's Section 8 Home Ownership Program.--In the late-1990s, changes
            to the HUD Section 8 Program statute permitted its vouchers to
            be used for the first time toward the costs of home ownership.
            However, few housing authorities are prepared to accommodate
            this opportunity, since most lack formal homebuyer counseling
            or lending experience. In addition, most private lenders have
            no experience with the Section 8 program and, since it is re-
            appropriated on an annual basis, are unwilling to accept
            Section 8 vouchers toward a mortgage payment. In 1999 and 2000,
            HUD approved 15 demonstration sites for Section 8 homeownership
            programs. Four of these demonstration sites involved
            partnerships between a public housing authority and a
            NeighborWorks organization. These effective and
            unique partnerships were formed in Syracuse, New York; Long
            Island, New York; Nashville, Tennessee; and Burlington,
            Vermont. The early success of these sites made the network a
            national leader in effectively using the Section 8 program to
            help qualified low-income Section 8 families become first-time
            homeowners and make progress on the road to self-sufficiency.
        While the actual number of families who have purchased a home is
    small, the efforts of this small group of organizations have truly been
    pioneering, and the families who have been successful represent the
    largest number of families served under this option in the country.
    Families served by NeighborWorks organizations under the home
    ownership option have incomes as low as 30 percent of area median
    income. Table 1 summarizes these efforts in Syracuse, Long Island,
    Nashville and Burlington.

     TABLE 1.--CLOSINGS UNDER THE FOUR NEIGHBORWORKS PILOT PROGRAMS IN THE SECTION 8 HOMEOWNERSHIP OPTION
    ----------------------------------------------------------------------------------------------------------------
                                                                                     Long
                                                              All      Syracuse     Island     Nashville  Burlington
    ----------------------------------------------------------------------------------------------------------------
    Buyers to Date......................................          23           7           2           4          10
    3 Year Pipeline.....................................         266          89          60          60          57
    Minority-Headed Households (percent)................          53          71          50         100         100
    Female-Headed Households (percent)..................          74          71         100         100          70
    First Time Buyers (percent).........................         100         100         100         100         100
    Median Income.......................................     $24,900     $23,798     $22,945     $22,896     $29,529
    Median House Price..................................     $85,000     $43,750     $82,500     $86,900    $115,500
    Average Family Size.................................         3.4         3.1         3.0         3.0         3.8
    Average 1st Mortgage................................     $60,922     $42,327     $41,457     $52,187     $81,327
    Average 2nd Mortgage................................      $7,128      $4,980     $18,737     $16,825       2,430
    ----------------------------------------------------------------------------------------------------------------
    Source: Neighborhood Reinvestment Corporation; February 2001.

        I would like to tell you about one buyer under the Section 8 home
    ownership option in Burlington, Vermont. This family's story is typical
    of many buyers that we have seen in the Section 8 home ownership
    program--working families, dedicated to the American dream of owning a
    home and getting off public assistance.
        One of Burlington's first customers to close on a home using the
    Section 8 program had been working with the Burlington Community Land
    Trust's NeighborWorks HomeOwnership Center since January
    1997. As an African American, single mother raising two children on one
    income, it was difficult for her to save for a downpayment and
    impossible to qualify for a mortgage that would afford a home in
    Burlington, which is the 27th most expensive housing market in the
    country and where the median home price is $204,400.\1\ Over the next
    several years, this woman continued to work with the
    NeighborWorks HomeOwnership Center on budgeting and took a
    second job that allowed her to save for a downpayment at a faster rate.
    ---------------------------------------------------------------------------
        \1\ National Association of Realtors; fourth quarter, 2000.
    ---------------------------------------------------------------------------
        In April 2000, the Burlington Community Land Trust rehabilitated a
    vacant and distressed four-bedroom home, which the family was able to
    purchase for $102,700. The Burlington Community Land Trust provided a
    lower interest second mortgage for $30,000. Through additional
    assistance, from local and state programs, the first mortgage was
    brought down to $52,700, which was manageable for the single-parent
    household.
        For fiscal year 2001, Congress recognized the
    NeighborWorks network's approach to the Section 8 home
    ownership option and provided Neighborhood Reinvestment with a $5
    million set aside to test it further.
        The NeighborWorks network is uniquely suited to respond
    to the exceptional opportunity provided by this change to the Section 8
    Program. Its Campaign for Homeownership has finely tuned the tools and
    activities that make home ownership possible for low- and moderate-
    income families, including high quality pre- and post-purchase
    counseling and second mortgage loans. Several network organizations
    responded to the Section 8 challenge by developing a strategy that
    includes a conventionally generated first mortgage based solely on the
    family's income, and a second mortgage, originated by the
    NeighborWorks organization, to fill the gap between what the
    family can afford and the price of the house. This second mortgage is
    repaid by the Section 8 voucher, thereby freeing the private lender
    from having to interact with the voucher system at all.
        The $5 million set-aside is helping Neighborhood Reinvestment
    create additional partnerships between NeighborWorks
    organizations and housing authorities implement this home ownership
    strategy. The set-aside is being used to fund two activities:
      --$4.25 million has been awarded as grants to local
            NeighborWorks organizations, with more than two-
            thirds of this funding used for capital that will fund local
            second mortgage pools. These funds will be leveraged by
            private-sector investments, thus helping to stretch federal
            funding further. The remaining funds will be used for operating
            grants. These are critical since many very low-income, welfare-
            dependent families have significant pre-purchase counseling
            needs beyond those of the typical NeighborWorks
            client. While families who qualify for Section 8 vouchers must
            be employed in order to take advantage of the home ownership
            option, many face real barriers (such as severe credit
            impairment) that can be addressed only through time-intensive,
            one-on-one counseling that can be provided with enhanced
            operating funds.
      --Approximately $750,000 of the set-aside will be used to provide
            technical assistance, training, peer-to-peer learning
            opportunities, and research about the NeighborWorks
            organizations' efforts utilizing this option. One of the
            benefits offered by Neighborhood Reinvestment is the ability to
            bring economies of scale, a diverse testing ground and sound
            evaluation methods to efforts like the Section 8 home ownership
            option. In addition, the expertise developed under the
            NeighborWorks Campaign for Home Ownership 2002 allows
            the Corporation to provide assistance that cannot be found
            elsewhere.
        In early April 2001, the Corporation reviewed applications from
    interested network members and made decisions on which
    NeighborWorks organizations would receive funding under the
    set-aside. Although the Corporation anticipated being able to use the
    $5 million set-aside to expand this pilot effort from four
    NeighborWorks organizations to 10 to 14 organizations the
    Corporation will actually fund 11 applications for 21
    NeighborWorks organizations serving more than 25 communities.
    Funding under the set-aside is being used to assist public housing
    authority and NeighborWorks organization partnerships in the
    following communities: Nashville, Tenn.; Toledo, Ohio; Lafayette, Ind;
    Oak Ridge, Tenn; Ravenna, Ohio; Hamilton, Ohio; Chattanooga, Tenn;
    Burlington, Vt; Newport, Vt; Springfield, Vt; West Rutland, Vt; Barre,
    Vt; Chicago; Centereach, N.Y.; Syracuse, N.Y.; San Bernadino, Calif.;
    Sacramento, Calif.; Allentown, Pa.; Pueblo, Colo.; and Hugo, Okla. We
    expect to help as many as 680 families purchase a home over the next
    three years and to recruit nearly 6,800 families to consider the home
    ownership option.
        I will keep you informed about the progress of our work and the
    impact of your funding in this area. To that end, we have contracted
    with a well-respected research firm that will monitor the progress of
    the Section 8 home ownership option within the network and produce
    regular reports. Recognizing the great demand for practical information
    about this program and acknowledging the NeighborWorks
    network's leadership on this effort, we will offer an on-going course
    at the Neighborhood Reinvestment Training Institute on the Section 8
    home ownership option.
        Building on the network's success, the Corporation requests $10
    million for fiscal year 2002 to expand the Section 8 homeownership
    initiative, strengthening partnerships with housing authorities to
    reach 300 communities and 3,500 potential homebuyers.
      --Predatory Lending.--Research has shown that predatory lending is a
            very real threat to the great work NeighborWorks
            organizations and other nonprofits and their lender and
            government partners have done in distressed communities. As
            predatory lending practices have proliferated and affected
            increasing numbers of families and communities,
            NeighborWorks organizations and others looked to
            Neighborhood Reinvestment to provide a forum for discussion and
            a mechanism for coordinating efforts to combat these abusive
            lending practices at the local level.
        In response, Neighborhood Reinvestment has:
      --sponsored symposia on predatory lending;
      --shared information across the network about education efforts and
            other measures to stem this tide;
      --sponsored a study of predatory practices with the Joint Center for
            Housing Studies of Harvard University;
      --commissioned two studies on the growth of sub-prime lending in
            Boston and Atlanta that have attracted significant attention;
      --worked to define the difference between sub-prime and predatory
            lending practices;
      --developed materials to alert consumers to the dangers of high debt
            loans and predatory lenders; and
      --convened a task force of seasoned practitioners on the topic.
        In addition, Neighborhood Reinvestment has developed a significant
    partnership with Freddie Mac to develop a loan product for families
    that find themselves with a loan that has the hallmarks of a predatory
    loan. This program, which has an extensive counseling requirement,
    offers an opportunity for families to refinance--and thereby retain--
    their homes. We also believe that financial literacy training and post-
    purchase education are effective strategies to combating the
    proliferation of predatory loans. Neighborhood Reinvestment is actively
    engaged in developing additional tools for this kind of training.
      --HUD Demonstration Program--Secondary Market for Non-Conforming
            Loans to Low Wealth Borrowers.--NHSA is a participant in a HUD
            Demonstration Program to develop and sustain a secondary market
            for non-conforming loans to very low-income borrowers. NHSA has
            made a strong start in assembling loan pools that will be
            studied over a seven-year period. HUD's support is allowing
            NHSA to purchase loans with eased credit qualifications through
            the extraordinary cooperation of investors and lenders, backed
            by NHSA's increased capacity to provide needed credit
            enhancements for the special loan pools. Lessons learned will
            help to guide NHSA's product development as well as inform the
            Department and the major secondary markets with regard to the
            nature of the changing product needs and creditworthiness of
            challenging groups and markets.
     vision for fiscal year 2002: building on the neighborworks
                               network's strength
        This year we are requesting an appropriation of $95 million, which
    includes $10 million to further Neighborhood Reinvestment's and the
    network's pioneering efforts in using Section 8 vouchers to purchase a
    home. At this funding level, Neighborhood Reinvestment will be able to
    maintain its current level of services to the NeighborWorks
    network with modest increases to the outputs and measures.
        A $95 million appropriation in fiscal year 2002 will assist the
    NeighborWorks network to:
      --Leverage more than $1.5 billion in direct total investment into
            distressed rural, suburban and urban communities;
      --Assist more than 38,000 families to purchase or maintain their
            homes;
      --Assist more than 500 families through the Section 8 home ownership
            initiative, resulting in their purchase of a home;
      --Own or manage over 29,000 affordable rental or mutual housing
            units; and
      --Provide pre- and post-purchase home ownership counseling to nearly
            70,000 families.
        To support and expand these significant accomplishments, the
    Neighborhood Reinvestment Corporation and NHSA expect to:
      --Add 10 new organizations to the network, increasing the
            NeighborWorks network to 240 organizations serving
            over 1,700 communities;
      --Conduct 210 reviews of member organizations and review 240 audits;
      --Provide over 160,000 training contact hours to community
            development leaders and practitioners, not only through the
            Neighborhood Reinvestment Training Institute but also through
            local and district training opportunities; and
      --Purchase $60 million in loans from NeighborWorks
            organizations, bringing the total number of loans owned by NHSA
            to 7,350 totaling $312 million.
        To be certain that we are making best use of our Congressional
    appropriation this coming year and beyond, especially as the network
    continues to expand, we are undertaking a corporate-wide strategic
    planning process. This will ensure the continued relevancy and vibrancy
    of our services to the NeighborWorks network and its
    constituents. The strategic planning process:
      --will help us understand the significant changes in our work
            environment and context;
      --ensure that the Corporation responds to our constituents' changing
            interests and needs;
      --formulate budget submissions for the coming fiscal year and beyond
            based on priority needs; and
      --articulate a clear direction for Neighborhood Reinvestment services
            and activities over the next three to five years.
        As a result of the strategic planning process, Neighborhood
    Reinvestment will articulate its vision for executing our statutory
    mission and define and communicate the guiding principles of our work
    in a contemporary context, enabling the Corporation and its partners to
    provide even more effective service to communities across the United
    States.
                           outcomes and achievements
        The last two fiscal years have shown increased growth in nearly all
    areas of the NeighborWorks system. I have full confidence
    that with an approval of the Corporation's fiscal year 2002 budget
    request, Neighborhood Reinvestment and the network will meet or exceed
    all of the anticipated outcomes and achievements. The following table
    summarizes the outcomes from fiscal year 2000, projected results for
    fiscal year 2001 and the expected results based on a $95 million
    appropriation for fiscal year 2002.

                                           TABLE 2.--OUTCOMES AND ACHIEVEMENTS
    ----------------------------------------------------------------------------------------------------------------
                                                                                       Fiscal Year--
                                                                     -----------------------------------------------
                                                                                           2001        2002 (Budget
                                                                           2000         (Projected)      Request)
    ----------------------------------------------------------------------------------------------------------------
    Congressional Appropriation (millions)..........................             $75             $90             $95
    Resultant Total Direct Investment (billions)....................            $1.3            $1.4            $1.5
    Organizations Added to NeighborWorks Network \1\......  16 (215 total)  12 (230 total)  10 (240 total)
    Families Assisted in Purchase or Rehabilitation of their Homes..          34,000          36,100      \2\ 38,100
    Families Counseled Pre- and Post-Purchase.......................          60,280          63,900      \3\ 66,000
    Rental Units Owned or Managed by NeighborWorks                  24,935          27,450          29,450
     Organizations..................................................
    Communities Served..............................................           1,559           1,723           1,780
    NHSA Purchases \4\ (millions)...................................           $83.3             $50             $60
        Number of Loans.............................................          12,375           6,600           7,350
        Value of Loans (millions)...................................            $408            $276            $312
    Program Reviews.................................................             159             200             210
    Audits Reviewed.................................................             199             220             240
    ----------------------------------------------------------------------------------------------------------------
    \1\ For fiscal year 2002 we have projected very modest increases in the increase of member organizations for two
      reasons. First, while the demand for affiliation continues to grow, we want to insure that important efforts
      like the Section 8 home ownership pilot succeeds and NeighborWorks network members continue to have
      access to the basic levels of training, financial and technical resources that are critical to their long term
      health and productivity. Second, existing NeighborWorks members are rapidly expanding their efforts
      to serve much broader geographies. The number of communities served has increased from 825 communities to
      1,659 communities since fiscal year 1998, while the number of organizations has increased by 29 organizations.
      The ability and willingness of NeighborWorks organizations to reach out to other organizations, to
      new communities and to additional neighborhoods has been exceptionally well-received in sites like Montana,
      New Mexico, Baltimore and many others. We anticipate that this is a trend that will continue into the future.
    \2\ Plus 500 Section 8 Buyers.
    \3\ Plus 3,500 Section 8 clients.
    \4\ The objective of NHSA and Neighborhood Reinvestment Corporation is not to use federal funding to supplant
      private funding, but rather to attract it. The lower volume of loans purchased by NHSA indicates the
      willingness of the private sector--specifically private lenders--to engage in lending activities in distressed
      neighborhoods.

                                   conclusion
        This is an exciting and challenging time, as Neighborhood
    Reinvestment and the NeighborWorks network continue to build
    upon the strengths of the past while looking ahead--to confront the
    problems and opportunities of the future. I am very eager to lead this
    organization along its well-chosen route while scouting ahead for new
    ways we can be successful in our work and add value to the field of
    community-based development.

                      AFFORDABLE MULTIFAMILY DEVELOPMENTS

        Senator Bond. Well, that was a well-timed presentation. You
    landed right on the money.
        Throughout the country, and in my own State of Missouri,
    there is a real shortage of affordable rental housing for low
    income families. I am very concerned that not enough affordable
    housing is being produced, especially for those that we would
    consider extremely low income.
        We are going to be working on developing an affordable
    housing production bill in the next few weeks, and any input
    you can give us would be most appreciated.
        My first question to you would be: What lessons have NRC
    and NeighborWorks organizations learned about
    providing rental housing for extremely low income families,
    while maintaining the properties' long-term viability? That has
    been a real problem in some--in some areas in the past. What
    have you learned? What is your experience?
        Ms. Lazar. We have learned a number of things. One is that
    you want to make sure that the operating costs for the
    properties are really adequate to fund all the necessary
    reserves, particularly, if you are dealing with older
    properties; that all of the necessary physical work that needs
    to get done, gets done well through the rehabilitation; and
    that reserves are set aside to maintain those properties.
        To that end, you want to be able to make sure that the
    operating costs are sustainable by the rents and that you
    manage the properties with as little debt as possible.
        We talked earlier about the FHA Disposition Program. I
    think it is very, very important that we spend some time
    studying what we can do with the housing stock that now exists
    and how those properties could be acquired for as little money
    as possible, so that they can be maintained as affordable
    housing stock and be maintained for the future in an
    economically viable way.
        We have found, in low cost communities, that we are able to
    push the envelope a bit and are able to acquire properties and
    then bring in folks at a variety of incomes and help cross-
    subsidize the project, so that we have some tenants paying
    higher rent, and other tenants paying lower rent. This allows
    us to bring in more lower income tenants through the cross-
    subsidy of the higher rent.
        Higher cost areas are more of a challenge. What we have
    seen is that the Section 8 subsidy has worked well there. There
    are other ways of looking at other types of operating subsidies
    that may be able to keep rents affordable by reducing the debt
    considerably, by being able to acquire properties at low or no
    cost, and by subsidizing the development costs up-front.

                EXAMPLES OF SERVING EXTREMELY LOW-INCOME RENTERS

        Senator Bond. Well, we are going to be looking at a number
    of those things. And I have heard stories about charitable,
    not-for-profit organizations having to get Federal grants to
    buy distressed properties for FHA--from FHA. And I am saying,
    what are we--where does that make--where does that make any
    sense? I mean, there ought to be--we ought not to be--we ought
    not to be doing that.
        Can you give us some examples of properties owned by
    NeighborWorks organizations that serve families with
    incomes below 30 percent of poverty and--and how they approach
    serving this population?
        Ms. Lazar. Sure. I am happy to.
        We have properties in Cambridge, Massachusetts, that are
    serving families with incomes below 30 percent of area median.
    They are able to do it by relying upon Section 8 to reach these
    extremely low-income residents. In Cambridge, Massachusetts,
    you have very high development costs and operating expenses. It
    really makes any other approach infeasible. You have old
    housing stock, as well, which costs that much more to maintain
    and retrofit.
        In Sacramento, we use a combination of Section 8 and very
    low debt levels to reach extremely low income residents. We
    blended a couple of techniques.
        In North Dallas, we have been able to acquire properties
    with very low debt levels at zero percent interest, and a
    higher income mix, which allows for the internal cross-
    subsidization, and allows us to reach extremely low income
    people.
        Senator Bond. How much money is NRC dedicating to its
    multifamily activities, and what other resources do you use, I
    guess, in addition to Section 8?
        Ms. Lazar. That is a good question. Our organizations get a
    limited amount of funding from us, directly, for multifamily
    activities. We provide expendable grants to them and capital
    grants to them. They average somewhere in the neighborhood of
    $70,000 for the expendable grants; $100,000 for the capital
    grants.
        We do not have a lot of money right now to put into
    developing multifamily properties. It would be nice to be able
    to look to other grant sources to fund these potential
    projects.
        We have a tremendous need for flexible dollars that could
    be used to acquire properties as they become available. We tend
    to lose properties because the deal is not fully funded and
    nobody has any money to acquire properties that are on the
    market.
        Often, it takes 10 to 12 months to acquire a project for
    multifamily housing and to put all the financing pieces
    together. A buyer might be very anxious to sell, and the groups
    that we work with do not necessarily have the equity or a
    source of flexible grant funds that can be repaid later to do
    the acquisition. This type of money would be very useful.

                            SECTION 8 HOME OWNERSHIP

        Senator Bond. With respect to Section 8, you have received
    a $5 million set-aside to expand the partnerships between
    NeighborWorks and PHAs in implementing the Section 8.
    And you have asked for $10 million.
        Could you give us an update on how the--how it is working,
    and if you have any suggestions on improving the program?
        Ms. Lazar. Sure. I will be glad to.
        This, as you might guess, is a very labor-intensive effort.
    The lenders who are often providing the first mortgages do not
    really understand Section 8 as a potential tool for repayment.
    They have not necessarily worked with this population before,
    so we have to do education on that end.
        On the other end, we have PHAs, who really do not have very
    much experience with lending, mortgage origination, and
    servicing. So, we have a lot of pieces that we have to put
    together, in terms of the education of the organizations we are
    working with.
        This year, with the $5 million, we have awarded 11 grants
    to about 21 NeighborWorks organizations working in 25
    communities around the country. We anticipate that this is
    going to create home ownership opportunities for about 680
    families and we will have an opportunity to counsel about 6,800
    families through this process.
        We have been working all around the country. We have been
    doing very intensive training with the prospective buyers, many
    of whom have already been through some family self-sufficiency
    programs and other pre- and post-purchase counseling programs.
    We are finding that the time it takes to really groom these
    folks for home ownership takes about three times the amount of
    time that it takes other people.
        It is very labor-intensive, but ultimately, I see the pay-
    off as really wonderful, in terms of putting families in homes
    and giving them the opportunity to grow their assets and come
    up into the mainstream of American economic life.
        Senator Bond. Thank you very much, Ms. Lazar. And as I--I
    will submit further questions for the record.
        Now, I turn to Senator Mikulski for her questions.
        Senator Mikulski. Thank you very much.
        And, Mr. Chairman, I just want to put my opening statement
    into the record, please. Thank you.
        [The statement follows:]

                Opening Statement of Senator Barbara A. Mikulski

        I want to welcome Neighborhood Reinvestment Corporation Executive
    Director Ellen Lazar.
        The Neighborhood Reinvestment Corporation and its NeighborWorks
    organizations have extremely impressive records.
        It has a mission of providing an opportunity structure that helps
    those who practice self-help.
        The Neighborhood Reinvestment Corporation really maximizes the
    taxpayer's ``bang-for-the-buck''--it leverages 14 private dollars for
    $1 of public investment.
        On a local level, in my hometown of Baltimore, the NeighborWorks
    organization is extremely effective in assisting neighborhoods facing
    shortages of decent, affordable housing.
        Unfortunately, we live in a world with distressed communities that
    are underserved by the mainline private financial institutions.
        People living in these communities want to move up the ladder of
    opportunity--but they can't access the help they need to reach to own a
    safe, decent, affordable home.
        I believe there are 3 types of neighborhoods--stable, stressed, and
    siege.
        NeighborWorks organizations help keep stable neighborhoods stay
    that way and ensure that stressed neighborhoods don't become sieged by
    empowering residents to rehabilitate and purchase homes.
        I think that our other Federal agencies with the mission of
    promoting the American Dream of homeownership can learn from the
    Corporation's experience preventing predatory lending--a despicable
    practice where scam artists gouge the poor.

        Senator Bond. Without objection. I apologize for not
    calling on you at the time.
        Senator Mikulski. No. No. No. No. No. No.
        Senator Bond. It is my fault.
        Senator Mikulski. I had to step outside for a moment.
        Ms. Lazar, we just think it is great that you are the
    Executive Director of Neighborhood Reinvestment. Neighborhood
    Reinvestment has been one of these quiet, often overlooked
    agencies. And it has had good stewardship in the past.
        When I first came to this subcommittee and worked, then,
    with my colleague, Senator Garn, it was like--something like a
    $19 million appropriation. And this has always had strong
    Congressional support, even though it is not always in the
    public eye.
        You bringing your background from CDFI, I think, is just
    going to be terrific, because you understand, essentially,
    housing financing, and at the same time, strong grassroots
    support. So, we think you are the right Director for this new
    century.

                               PREDATORY LENDING

        I want to go to predatory lending. And you might or might
    not know that--with the cooperation of the chairman, we have
    really tried to do something about predatory lending--flipping,
    as it is called in Baltimore. We were a--we were one of the
    worst places in America, particularly for FHA--the use of FHA
    to gouge the poor and defraud the taxpayer. We are working on
    that. And I want to thank Secretary Martinez for really staying
    the course of this.
        Could you tell me, though, what you are doing in predatory
    lending? And I know that there are two issues; one, FHA, which
    we have concentrated on, here; then there is the sub-prime
    issues, which were really beyond the scope of an Appropriations
    Committee. But I know Housing and Banking is looking at it.
        And could you tell us, though, how you are involved, and
    what tools or other things that you might need to help with it?
    And I would like to, if we could, concentrate on the FHA. And I
    will then tell you why.
        In Baltimore, after the poor were gouged and they went into
    default or bankruptcy because of these gimmicks--17 percent
    interest--I mean, I will not even--I will not take you through
    the melancholy anecdotes.
        But then there was FHA--and in deteriorating neighborhoods,
    it contributed to decay. So, they went from deterioration to
    decay. Then we had teeter-totter neighborhoods, meaning that
    they--they had been through blockbusting; they had been through
    trauma, aging in place, kids moving out, speculators coming,
    and the gougers. Very stressed neighborhoods.
        And then there is an FHA house standing abandoned, which
    then contributes more to the totter, when we are trying to move
    stressed neighborhoods to stable.
        What--what--what have you been doing? What more would you
    like to do, that we could help you do, both in terms of helping
    the poor not be gouged, sticking it to the predatory lenders
    through proper law enforcement, and third, the FHA disposition?
        Ms. Lazar. Okay.
        Senator Mikulski. Even suggestions you might have for us to
    take to Mr. Martinez.
        Ms. Lazar. Okay. I am happy to do that.
        There are a number of areas that we have been working in on
    the predatory lending front; primarily in education. We have
    been the convener of a lot of symposia.
        Senator Mikulski. For who?
        Ms. Lazar. For people in the community development field
    and government in order that they may educate residents. Our
    research is widely disseminated for the field. I could share
    some of that with you. I think it would be interesting for you
    to have.
        We worked, most recently, down in Georgia. We had, at one
    of our training institutes in Atlanta, a day-long discussion on
    predatory lending in Georgia.
        We have done things all over the country to bring together
    folks to talk about predatory lending, but there is more than
    talking about it that needs to get done.
        In our pre- and post-purchase counseling modules, we are
    making people very aware of the issues around predatory
    lending.
        In addition, when we have loans that come in to us to
    refinance, where we are holding the second note and the loans
    have been subordinated to us, we have an opportunity to really
    look and evaluate those prospective loans and may be able to
    stop predatory loans from going forward.
        Where families have already gotten stuck with what looks
    like an egregious loan, we have worked with Freddie Mac to put
    together a loan program called the Home Equity Loss Prevention
    Program--HELP. The HELP Program basically provides an
    opportunity for a family to refinance a loan with this Freddie
    Mac product, which would allow them to take some cash out for
    home improvements or other financial needs, but still maintain
    their equity in their home.
        We are also working closely with Freddie Mac on their
    ``Don't Borrow Trouble'' campaign around the country.
        Personally, I have been a great advocate at finding more
    dollars for public education and advertising in this arena. I
    think that public service announcements are key to reaching the
    folks that are the targets and the victims of predatory lending
    practices. I think more resources in that area would be very,
    very useful.
        I also think more funding for the Federal Trade Commission
    and the Justice Department's enforcement activities here would
    be very helpful. There is so much activity out there and if
    they do not have the ability to go after it and make it stick,
    it makes it that much harder to enforce.
        I would be very enthusiastic about looking at more
    enforcement tools, as well as more broader public education
    tools through the media.
        Senator Mikulski. Well, I think some of this can be done.
    And really, we can recruit the private sector, particularly
    Freddie Mac, Fannie Mae. I believe the mortgage bankers really
    want to participate in this.
        And we will be talking about predatory lending with
    Secretary Martinez and continuing our Baltimore effort, but one
    of the things I would like you to think about, and if it is an
    appropriate role for Neighborhood Reinvestment--you are the
    home for a lot of the nonprofits in this country that are
    involved in housing.
        And one of the important things--and this goes to faith-
    based--okay--et cetera, which is pre-counseling for home
    ownership, whether it is to avoid flipping, whether it is--even
    if you are getting into Section 8, it is not buying a home. We
    all know this. It is keeping a home. And really, for
    Neighborhood Reinvestment to be training the trainers.
        The other is--and we are just brainstorming here for a
    moment, but we would need to know more about this. As we look
    at faith-based initiatives--I am sure my colleague has
    experienced what I have--every little church, some even with
    storefronts, want to come in to get in on it. They think there
    is this big pot of money that we are going to give out there in
    the community.
        What we find is they do not know what a community
    development corporation is. They--and even if there is a large
    church, like in the AME tradition, which has always been
    excellent, in terms of community involvement. Capacity
    building, you know.
        And I would like--which also, for many people in the Latino
    community, the African-American community, the faith-based
    organizations are where they are going to learn the most; not
    through some government person coming to an improvement
    association meeting that has got seven people coming to it,
    when Reverend Reid has got 10,000 people in the AME Church on
    Sunday.
        Ms. Lazar. Yes.
        Senator Mikulski. So, my point is that capacity building,
    as well as public information on home ownership, of which
    avoiding predatory lending would be one component, and then
    perhaps a linkage to the faith-based, as we are gearing up on
    faith-based, but even to make highest and best use of faith-
    based, one of which is their incredible ability to communicate
    with their congregations.
        Ms. Lazar. Yes. I understand what you are saying, Senator.
        Senator Mikulski. And the trust involved there. And many of
    them have credit unions.
        Ms. Lazar. Yes. We do a huge amount of training.
        Senator Mikulski. Is that beyond your scope or----
        Ms. Lazar. We do a lot of training for trainers, and a lot
    of training through our Home Ownership Campaign.
        We have begun some dialogs with a number of faith-based
    organizations, the National Council of Black Churches and other
    organizations to see how we can work together to serve
    communities.
        We will continue fostering those relationships and get back
    to you about how we are doing and where we are able to make
    some inroads.
        A lot of our organizations already have strong
    relationships with their faith-based congregations. We can see
    how and document for you how they are working together on this
    issue.
        Senator Mikulski. Mr. Chairman, I know my time is up. One
    of the things I would like Ms. Lazar--if she could suggest to
    both you and I, the recommendations of Neighborhood
    Reinvestment for HUD, if you think--on what to do with this FHA
    disposition area.
        Senator Bond. I think that is a----
        Senator Mikulski. Really. Really.
        Senator Bond. That is a--that is something that I keep
    hearing things that----
        Senator Mikulski. Me, too.
        Senator Bond [continuing]. Make me scratch my head and
    wonder what is--what is happening.
        Senator Mikulski. Yes. And where HUD, FHA--homes
    languishing, as I just said, in our communities--not only
    predatory, are then--really help destroy the neighborhood--and
    somewhat--so----
        Senator Bond. That--we would--as I have--we have asked
    for--we have asked for advice and guidance in a number of
    areas. And we look forward to hearing your suggestions. And
    obviously, we will continue to be in touch with you and----
        Ms. Lazar. Well, we are happy to do it.
        Senator Bond [continuing]. Thank you very much for--for
    your good work and--and for your wise counsel, which I assume
    we will be receiving shortly.
        Thank you very much.
        Senator Mikulski. Yes. Thank you for all the great things
    in Baltimore and Salisbury.
        Ms. Lazar. Great. Glad you are happy.
        Senator Mikulski. Thank you.

                              SUBCOMMITTEE RECESS

        Senator Bond. And with that, the hearing is recessed. Thank
    you very much.
        Ms. Lazar. Thank you very much.
        [Whereupon, at 11:30 a.m., Thursday, April 25, 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 2002

                                  ----------

                             WEDNESDAY, MAY 2, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Christopher S. Bond (chairman)
    presiding.
        Present: Senators Bond, Craig, Mikulski, Leahy, and
    Johnson.

                         DEPARTMENT OF VETERANS AFFAIRS

    STATEMENT OF HON. ANTHONY PRINCIPI, SECRETARY OF
                VETERANS AFFAIRS
    ACCOMPANIED BY:
            NORA E. EGAN, CHIEF OF STAFF, OFFICE OF THE SECRETARY
            THOMAS L. GARTHWAITE, M.D., UNDER SECRETARY FOR HEALTH,
                VETERANS HEALTH ADMINISTRATION
            FRANCES M. MURPHY, M.D. MPH, DEPUTY UNDER SECRETARY FOR HEALTH,
                VETERANS HEALTH ADMINISTRATION
            JOHN R. FEUSSNER, M.D., CHIEF RESEARCH AND DEVELOPMENT OFFICER,
                VETERANS HEALTH ADMINISTRATION
            CHARLES V. YARBROUGH, CHIEF FACILITIES MANAGEMENT OFFICER
            JIMMY NORRIS, CHIEF FINANCIAL OFFICER
            ART KLEIN, DIRECTOR OF BUDGET OFFICE, VETERANS BENEFITS
                ADMINISTRATION
            JOSEPH THOMPSON, UNDER SECRETARY FOR BENEFITS, VETERANS
                BENEFITS ADMINISTRATION
            PATRICK NAPPI, DEPUTY UNDER SECRETARY FOR BENEFITS, VETERANS
                BENEFITS ADMINISTRATION
            ROBERT J. EPLEY, ASSOCIATE DEPUTY UNDER SECRETARY FOR POLICY
                AND PROGRAM MANAGEMENT, VETERANS BENEFITS ADMINISTRATION
            JAMES W. BOHMBACH, CHIEF FINANCIAL OFFICER, VETERANS BENEFITS
                ADMINISTRATION
            ROGER RAPP, ACTING UNDER SECRETARY FOR MEMORIAL AFFAIRS,
                NATIONAL CEMETERY ADMINISTRATION
            VINCENT L. BARILE, DEPUTY UNDER SECRETARY FOR MANAGEMENT,
                NATIONAL CEMETERY ADMINISTRATION
            DANIEL TUCKER, DIRECTOR, BUDGET AND PLANNING SERVICE,
                DEPARTMENTAL ADMINISTRATION
            TIM S. McCLAIN, GENERAL COUNSEL, OFFICE OF THE SECRETARY
            JOHN H. THOMPSON, DEPUTY GENERAL COUNSEL
            RICHARD J. GRIFFIN, INSPECTOR GENERAL, OFFICE OF THE SECRETARY
            ELIGAH D. CLARK, CHAIRMAN, BOARD OF VETERANS' APPEALS, OFFICE
                OF THE SECRETARY
            GUY H. McMICHAEL III, ACTING PRINCIPAL DEPUTY ASSISTANT
                SECRETARY, ASSISTANT SECRETARY FOR INFORMATION AND
                TECHNOLOGY
            D. MARK CATLETT, ACTING PRINCIPAL DEPUTY ASSISTANT SECRETARY
                FOR MANAGEMENT
            DENNIS M. DUFFY, PRINCIPAL DEPUTY ASSISTANT SECRETARY,
                ASSISTANT SECRETARY FOR POLICY AND PLANNING
            ROBERT W. SCHULTZ, DEPUTY ASSISTANT SECRETARY FOR
                ADMINISTRATION, ASSISTANT SECRETARY FOR HUMAN RESOURCES AND
                ADMINISTRATION
            E. PHILLIP RIGGIN, DEPUTY ASSISTANT SECRETARY, ASSISTANT
                SECRETARY FOR CONGRESSIONAL AFFAIRS
            CLAUDE M. KICKLIGHTER, DIRECTOR FOR SPECIAL EVENTS, ASSISTANT
                SECRETARY FOR PUBLIC AND INTERGOVERNMENTAL AFFAIRS

                OPENING STATEMENT OF SENATOR CHRISTOPHER S. BOND

        Senator Bond. Good morning. The Subcommittee on Veterans
    Affairs, HUD and Independent Agencies will come to order.
        This morning we will be hearing testimony from the
    Department of Veterans Affairs on its fiscal year 2002 budget
    request. We are delighted to be able to welcome this morning
    Secretary Tony Principi for his first appearance under the new
    administration before the subcommittee.
        Tony is an old hand at VA, having served under the last
    Bush administration as Deputy Administrator, and then as Acting
    Secretary. Tony, your wealth of knowledge and expertise about
    the issues confronting the Department are a mixed blessing. On
    the one hand, it has not taken you long to get up to speed. On
    the other hand, I do not think you expect much of a honeymoon.
    We are expecting that you will be able to address quickly and
    effectively the myriad of significant challenges before you
    and, as we all know, there are more than just a few.
        VA's budget proposal totals $51 billion, including $23.4
    billion in discretionary spending, an increase of $1 billion
    over the current fiscal year. In addition, VA's medical
    collections are expected to increase significantly to a total
    of $896 million next year. Coupled with collections, medical
    care for veterans would total a record amount of nearly $22
    billion. This increase demonstrates the President's commitment
    to veterans' health care. It is one of the largest increases we
    have seen requested for medical care.
        Now, some have questioned whether this budget is enough to
    provide high quality, accessible care to all veterans who seek
    it. I think the President's budget is a very good start. We
    look forward to discussing it with you and working with you
    when there are other areas of the budget that need fine-tuning.
        Frankly, this year's budget is a more honest budget than we
    have seen from VA in quite sometime. The reason is, VA has
    acknowledged its spending patterns have not matched up with its
    budget as requested in three key areas and has adjusted its
    budget accordingly. Improving the VA budget process is critical
    to ensure there is accountability for the funds provided.

                           VA'S MEDICAL CARE PROGRAM

        For example, I am very troubled that spending has not
    matched VA's plans, particularly in the area of hepatitis C. We
    need to understand better why this has happened. There are many
    different explanations I have heard. The reasons may be, there
    was not adequate attention paid to hepatitis C, but in any
    event, the amount of money spent on hepatitis C was totally
    different from what was requested for it.
        Mr. Secretary, as you found upon your return to VA the
    Veterans Health Administration has made some tremendous changes
    over the past 6 years. A number of initiatives begun under
    former Secretary for Health Dr. Kenneth Kizer have resulted in
    moving VA from primarily a hospice system to a comprehensive
    care outpatient system.
        I think that is a real success story, that the VA has been
    able to increase significantly the total number of veterans
    served by VA medical care. One million people, or 36 percent
    more veterans today are getting VA care compared to 1995. That
    is a huge number, and at the same time I think VA has been able
    dramatically to be able to improve the quality of patient care,
    and the accessibility of its services.
        Today, VA has tripled the number of community-based
    outpatient clinics it had in 1995, making care available closer
    to home for thousands of veterans nationwide. I can tell you,
    in Missouri it has been very warmly received, and it has been a
    badly needed improvement in the care, but there is a lot more
    to be done, and some of the really tough issues have not yet
    been tackled, especially the need to restructure VA's capital
    assets to make better use of health care resources and
    eliminate wasteful expenditures on outmoded and unneeded
    buildings, and there were about 4,700 in VA's inventory last
    time we checked, total buildings. Not all of them are needed,
    but I am sure some of them are.
        According to the GAO, VA is wasting $1 million a day to
    maintain unneeded buildings, and that could be a conservative
    estimate. We look forward to getting an update on the capital
    asset realignment for enhanced services, or CARES initiative.
    As I understand it, VA should be concluded phase 1 of CARES,
    which is basically a review of VISN 12 in Chicago.
        Tony, you probably know we have been studying since at
    least 1995 whether we really need four VA hospitals in Chicago.
    We need to be sure that CARES, which, if it works properly,
    should result in a comprehensive long-term strategic plan for
    the Veteran Health Administration, is on track and working the
    way it should.
        I am pleased that you have included significant resources,
    $115 million, in your budget for CARES-related infrastructure
    projects which emerge from this planning process. This should
    reassure everyone we have every intention of moving forward
    with the infrastructure improvements that will be recommended
    out of the CARES process.
        Also, VHA must adapt further to address the declining and
    aging veteran population, including the implementation of new
    programs which will help aging veterans get long-term care in
    noninstitutional settings wherever possible, such as the
    Millennium Act, which was enacted in 1999 to better meet aging
    veterans' needs, and we hope that we can see progress, but it
    has been slow in implementing the requirements of the act, and
    we need to understand why.
        So the issue of access, while great advances have been made
    improving the accessibility of services, is a work in progress.
    About 13 percent of veterans who currently use VA must travel
    more than 30 miles to reach VA medical care. GAO has done some
    work for us which will be included in testimony for the record
    today which identifies significant disparities across the
    system.
        VHA also must consider the increasing number of so-called
    Priority 7's. These are folks who formerly were not able to get
    to VA medical care. In the past several years, VA has increased
    the number of higher-income, nonservice-connected veterans to
    about 20 percent of all its users from less than 4 percent in
    1996. We should be proud that this deserving population is able
    to get care today. However, we need to consider whether they
    should bear a greater level of the cost, as the current level
    of collections from their insurance and copayments covers only
    about 10 percent of the cost of their care, and that care
    provided to them is not coming at the expense of low-income
    service-connected veterans who often rely exclusively on VA for
    their care.
        These are but a few of the issues before the Veterans
    Health Administration.

                        VETERANS BENEFITS ADMINISTRATION

        With respect to the Veterans Benefits Administration, the
    budget includes almost $1.1 billion for VBA, $133 million, or
    13 percent increase over the current year. This increase again
    signifies the administration's strong commitment to veterans'
    programs.
        Mr. Secretary, you have indicated that addressing the
    backlog is your highest priority, and have announced a goal of
    processing regional disability claims within 100 days by the
    summer of 2003. We are getting the backlog down to 250,000.
    This is an admirable goal, cutting both those in half. The
    question is, is it achievable? Good luck.
        VBA is currently taking more than 200 days to process a
    claim, and the backlog is about 500,000. While VBA is making
    some progress in timeliness and claims processing, progress has
    been hindered by the duty to assist legislation enacted last
    year, and then the former Secretary's decision to grant
    disability compensation for Vietnam veterans with Type II
    diabetes.
        It seems VBA's problems never end. Last year, VBA claimed
    its failure to reach its 1999 goals were the result of
    organizational and cultural shifts in VBA, along with the
    increased difficulty and complexity of the workload. This year,
    it is the duty to assist and diabetes.
        While I understand the latest crisis resulted from
    legislation which greatly expands VBA's requirements, and which
    was not fully supported by VBA, duty to assist was not
    unanticipated. Also, many improvements which have been
    suggested over the years, such as moving case management,
    centralizing certain functions, and holding managers
    accountable for their performance, still have not been fully
    implemented.
        Mr. Secretary, your efforts to take a fresh look at this
    through the task force you have created are greatly appreciated
    and absolutely necessary. We want to work with you to provide
    the resources you need to implement these needed reforms. It is
    my view that you must have a long-term strategy, not just more
    Band-Aids to address the immediate crises, that will take VBA
    well beyond the current problems.
        We look forward to seeing your detailed plan, including
    resources requirements, later this summer. We hope when you
    return next year to testify on the fiscal year 2003 budget,
    there will be some good news.

                        NATIONAL CEMETERY ADMINISTRATION

        Finally, for the National Cemetery Administration, VA is
    requesting a 11-percent increase, for a total of $121 million.
    This includes $10 million for the National Shrine commitment,
    which ensures that the backlog of deferred maintenance needs be
    addressed and the resting places of our fallen heroes may be
    maintained in an appropriately dignified manner.
        Also, construction funding totalling $87 million is
    requested for seven cemetery projects.
        In conclusion, as I stated at the outset, I believe this is
    a robust budget for VA which targets some critical needs. I
    look forward to discussing with you and my colleagues whether
    additional funds might be needed to ensure the important goals
    you have set forth for the coming year can be met.
        Before closing, let me raise an additional issue. During
    last year's hearing, I raised some concerns about the quality
    of care our Nation's veterans received in nursing homes. In the
    aftermath of that hearing, we focused whether policies and
    procedures were in place to coordinate the oversight efforts of
    all Federal and State regulatory agencies when monitoring
    problem nursing homes.
        Since then, we have worked with the General Accounting
    Office in examining the VA's policy for overseeing the quality
    of care provided to veterans. We look forward to the final
    results of the GAO study and sharing the findings with the VA.
    We have a series of questions about the VA's current and
    proposed policies which will address the goal of enhancing and
    encouraging the VA's rigorous oversight of nursing homes that
    care for our veterans across the United States.
        [The Information follows:]

      VA Health Care--Community-Based Clinics Improve Primary Care Access
                                 (GAO-01-678T)

                             (By Cynthia Bascetta)

        Chairman Bond, Ranking Member Mikulski, and Members of the
    Subcommittee: We are pleased to contribute this statement for the
    record of the Subcommittee's deliberations on the President's fiscal
    year 2002 budget request for the Department of Veterans Affairs (VA).
    This budget proposes $22.3 billion for health care system expenditures
    by the Veterans Health Administration (VHA) to serve an estimated 4.1
    million veterans and other beneficiaries.\1\ This system comprises 22
    health care networks, which operate over 700 medical facilities, most
    of which are community-based outpatient clinics (CBOC).
    ---------------------------------------------------------------------------
        \1\ About 9 percent of VHA's patients nationwide are nonveterans,
    for example, dependents of veterans who died of service-connected
    disabilities, patients provided humanitarian care, employees given
    preventive immunizations, and beneficiaries seen through sharing
    agreements with the Department of Defense.
    ---------------------------------------------------------------------------
        As you know, VHA launched a major initiative in February 1995 to
    expand its network of CBOCs. Before 1995, VHA operated about 175
    community-based clinics, as well as 172 hospitals, which also offered
    outpatient services. Since VHA launched its initiative, about 400 CBOCs
    have opened and another 145 CBOCs are currently planned. These newly
    opened and planned clinics, hereafter referred to as Initiative CBOCs,
    were to operate essentially as physicians' offices focusing on primary
    care and were to be located in close proximity to VHA's patients.
        VHA's stated goals for its Initiative CBOCs emphasized making
    access to care more convenient for its existing users, especially those
    with compensable service-connected disabilities or incomes below
    established thresholds.\2\ For these high priority veterans--VHA's
    traditional population--Initiative CBOCs were expected to improve
    access, for example, by reducing the need to travel long distances or
    to travel in congested urban traffic.
    ---------------------------------------------------------------------------
        \2\ VHA uses a sliding scale of income thresholds, depending on
    number of dependents.
    ---------------------------------------------------------------------------
        My comments focus on (1) the accessibility of VHA primary care for
    patients who used VHA health care in the past, including the potential
    improvements that would result from opening planned Initiative CBOCs,
    and (2) the characteristics of Initiative CBOC users. To conduct our
    work, we surveyed VHA's 22 networks concerning their existing and
    planned CBOCs, analyzed VHA's outpatient care database for use patterns
    and demographic information, and analyzed information in a VHA database
    that identifies the geographic location of VHA's patients to determine
    the effect of recently opened and planned CBOCs on their proximity to
    VHA's health care facilities.
        In summary, Initiative CBOCs have contributed to improved
    accessibility of VHA primary care for patients who used VHA facilities
    in the past; however, access remains unevenly distributed across the
    networks. Planned CBOCs should help to further improve access, although
    network variation is not likely to be diminished much. While 87 percent
    of VHA's patients systemwide live in reasonable proximity to primary
    care clinics,\3\ 13 percent--about 432,000 patients concentrated in 6
    networks--still live more than 30 miles from a VHA primary care clinic.
    VHA's currently planned CBOCs could provide reasonable proximity to
    primary care for an additional 68,000 patients, but the majority of
    those who live more than 30 miles from a primary care clinic would
    still reside in 6 of the 22 networks. The difficulties in providing
    cost-effective VHA-staffed CBOCs or contract care in areas with few
    patients make it hard to improve accessibility, according to network
    managers.
    ---------------------------------------------------------------------------
        \3\ VHA's primary care clinics include Initiative CBOCs, hospital-
    based clinics, and pre-existing community outpatient clinics.
    ---------------------------------------------------------------------------
        Although Initiative CBOCs largely serve patients who have received
    VHA health care in the past, they have also facilitated access for new
    patients.\4\ In fiscal year 2000, for example, about 135,000 Initiative
    CBOC users were new patients, including 56,000 higher-income veterans.
    During the same year, 158,000 new higher-income patients used other VHA
    outpatient facilities, but not Initiative CBOCs. Although their numbers
    are growing, new higher-income patients remain a relatively small
    segment of both patients using Initiative CBOCs and patients using any
    VHA outpatient health care.
    ---------------------------------------------------------------------------
        \4\ New patients are defined as those who did not obtain health
    care through VA for 3 fiscal years before a visit. Past patients, in
    contrast, are those who did receive VA health care at any time during
    the 3 preceding fiscal years.
    ---------------------------------------------------------------------------
                                   background
        Regional directors of VHA's 22 health care networks (known as
    Veterans Integrated Service Networks, or VISNs) \5\ were given
    responsibility for CBOC planning. VHA guidance stated that attracting
    new patients should not be the sole or primary goal of a new CBOC. This
    guidance instead noted that planners should exercise caution because
    any new patients attracted to CBOCs must be accommodated within
    existing resource constraints.
    ---------------------------------------------------------------------------
        \5\ In 1995, VHA created 22 VISNs, a new management structure to
    coordinate the activities of and allocate funds to VHA medical
    facilities in each region. See appendix I for a list of these networks.
    ---------------------------------------------------------------------------
        Since VHA's CBOC initiative was launched in February 1995, the
    number of CBOCs has more than tripled. As of February 28, 2001, VHA had
    573 operating CBOCs, including nearly 400 Initiative CBOCs. According
    to network officials, firm plans for another 100 CBOCs have already
    been authorized by the Congress or have been submitted to VHA
    headquarters or the Congress for consideration.\6\ Tentative plans for
    45 CBOCs are in the development phase.\7\ Network managers expect most
    of these plans to be implemented within the next 3 years. Networks vary
    in their numbers of existing and planned CBOCs, as figure 1 shows.
    ---------------------------------------------------------------------------
        \6\ Of these planned CBOCs, 12 have already opened. Because they
    opened after our reference date of February 28, 2001, we counted them
    among the firmly planned CBOCs.
        \7\ Network managers also indicated that an additional 70 locations
    are being considered. Because the plan development phase has not begun,
    we excluded them from our analyses.

        Although new CBOCs continue to open, the peak of expansion seems to
    have passed. From March 1998 through February 1999, 124 Initiative
    CBOCs opened. Fewer have opened each year since. If networks implement
    all planned CBOCs within the next 3 years, then new openings will
    average about 50 CBOCs annually.
        Existing CBOCs (including both Initiative and pre-existing CBOCs)
    differ somewhat in the services they provide. The vast majority--more
    than 90 percent--offer primary care, and about half offer mental health
    services.\8\ In addition, one-third offer other services as well.\9\
    ---------------------------------------------------------------------------
        \8\ The Veterans Health Care Eligibility Reform Act (Public Law
    104-262) authorized VHA to provide preventive care. Consistent with
    this, more than 97 percent of Initiative and planned CBOCs offer
    primary care, compared to 82 percent of pre-existing CBOCs. In
    contrast, more than 80 percent of pre-existing CBOCs offer mental
    health services, compared to 45 percent of Initiative CBOCs.
        \9\ These other services typically include ancillary or preventive
    services (such as laboratory testing or nutritional counseling),
    although some CBOCs offer limited specialty care as well.
    ---------------------------------------------------------------------------
        Systemwide, VHA staff operate about 75 percent of VHA's current
    CBOCs using VA-owned or leased space. Contract arrangements are,
    however, becoming increasingly common. Contractors operated only about
    1 in 25 CBOCs opened before February 1995. In contrast, one in three
    Initiative CBOCs are contract-run, and one in two of VHA's planned
    CBOCs are expected to involve contracted staff and space.
        VHA's initiative to expand CBOCs was one component of a broader set
    of changes intended to improve veterans' access to health care.
    Notably, the Veterans Health Care Eligibility Reform Act of 1996
    authorized a uniform package of health care benefits for all veterans.
    As a result, VHA's traditional veteran patients became eligible for a
    broader array of services (including preventive care) than was
    previously available. In addition, veterans with incomes higher than
    established thresholds could also receive the same uniform benefit
    package if VHA determines that it has more resources than it needs to
    serve traditional patients.
        Over the last 6 years, VHA's patient base has increased
    dramatically. For example, VHA served 2.8 million patients in fiscal
    year 1995 compared to 3.8 million in fiscal year 2000, a 36 percent
    increase. VHA's fiscal year 2002 budget projects that about 4.1 million
    patients will be served, representing an increase of almost 50 percent
    since 1995.
    CBOCs are Improving Primary Care Access, but Results Vary Among
            Networks
        As the number of Initiative CBOCs has increased, the percentage of
    VHA's patients who live in reasonable proximity to a VHA primary care
    facility has increased to 87 percent. In 1995, we found that about two-
    thirds of VHA patients had reasonable proximity to VHA health care
    facilities, which we then measured as living within 25 miles of an
    outpatient clinic.\10\ After we recommended that VHA establish a time
    or distance standard for CBOCs,\11\ VHA began to report the number of
    patients who lived within 30 miles of its facilities.
    ---------------------------------------------------------------------------
        \10\ VA Health Care: How Distance From VA Facilities Affects
    Veterans' Use of VA Services (GAO/HEHS-96-31, Dec. 20, 1995).
        \11\ VA Health Care: Improving Veterans' Access Poses Financial and
    Mission-Related Challenges (GAO/HEHS-97-7, Oct. 25, 1996).
    ---------------------------------------------------------------------------
        VHA's most recent report \12\ showed that about 86 percent of its
    total fiscal year 1999 patient population, 3.4 million patients, lived
    within 30 miles of a VHA outpatient facility. Since that time, VHA has
    opened about 100 additional Initiative CBOCs, and we estimate that the
    percentage of those patients living within 30 miles of a VHA primary
    care clinic has increased to 87 percent.\13\
    ---------------------------------------------------------------------------
        \12\ Geographic Access to Veterans Health Administration (VHA)
    Services in fiscal year 1999: A National and Network Perspective,
    report by the planning systems support group, a field unit of the VHA
    Office of Policy & Planning (April 2000).
        \13\ Overall, 88 percent of VHA's patients live within 30 miles of
    a VHA outpatient facility, but not all of these facilities offer
    primary care.
    ---------------------------------------------------------------------------
        However, the percentage of the patients who live 30 miles or less
    from a primary care clinic is not evenly distributed among VHA's
    networks. As figure 2 shows, the percentage of patients who are within
    30 miles of VHA primary care ranges from less than 70 percent in some
    largely rural networks, such as the VHA Upper Midwest Health Care
    Network (VISN 13), to nearly 100 percent in largely urban networks,
    such as the Veterans Integrated Service Network--Bronx (VISN 3).

        Moreover, approximately 432,000 patients--or about 13 percent of
    VHA's patient population--live more than 30 miles from a VHA primary
    care clinic. As figure 3 shows, almost 60 percent of these 432,000
    patients live in six networks.

        If networks implement all firm plans for 100 new CBOCs, then more
    than 50,000 additional patients will be within reasonable proximity to
    VHA primary care. In addition, another 18,000 patients will have
    reasonable proximity to primary care if the tentative plans for 45 more
    CBOCs are also implemented.\14\
    ---------------------------------------------------------------------------
        \14\ If all plans for CBOCs were implemented, about 89 percent of
    VA's patients would live within 30 miles of a VA primary care clinic,
    an increase of about 2 percentage points over current levels.
    ---------------------------------------------------------------------------
        However, opening all planned CBOCs would not eliminate uneven
    access across the networks. Specifically, we estimate that 364,000
    patients would remain more than 30 miles from VHA primary care, and the
    same six networks would still account for the majority (60 percent) of
    these patients. Moreover, more than 68,000 patients (19 percent) live
    in one network--the Veterans Integrated Service Network--Jackson (VISN
    16)--and more than 148,000 patients (41 percent) live in the other five
    networks.
        Managers in these networks noted challenges to improving the
    proximity of VHA primary care to their patients. In some areas, there
    are not enough VHA patients to support a cost-effective VHA-run CBOC.
    Even where there are enough patients, network managers reported that
    there can be difficulties recruiting VHA medical personnel to staff
    CBOCs or obtaining appropriate, affordable space. They also noted
    obstacles to arranging contract care. For example, some network
    managers mentioned difficulties in finding local providers who were
    willing to enter into contracts to provide primary care to veterans at
    reasonable costs.
        Network managers nationwide noted that reducing the number of
    patients who live more than 30 miles from a VHA health care facility is
    not their only goal when planning CBOCs. Many, for example, mentioned
    reducing veterans' travel time to 30 minutes or less--whether because
    of distance, congested urban traffic, or other factors. VHA is in the
    process of estimating the time its patients must spend traveling to VHA
    health care facilities, an endeavor made possible by recent advances in
    computer mapping software. Because many patients who are within a 30-
    mile radius of a health care facility may need to travel more than 30
    minutes to reach it, switching to a time-based measure of access will
    likely reduce the number of patients considered to have reasonable
    access. As a result, the uneven accessibility across networks portrayed
    in figure 2 is likely to change once VHA begins measuring access in
    terms of travel time rather than distance.
    CBOCs and Other Outpatient Facilities Serving a Relatively Small, but
            Growing Number of New, Higher-Income Veterans
        New VHA patients have represented about 30 percent of Initiative
    CBOC users in each of the last 4 years, although their numbers are
    growing. In fiscal year 2000, for example, 454,000 patients used
    Initiative CBOCs,\15\ including 135,000 who were new patients to the
    VHA system. In contrast, less than 10,000 new VHA patients were
    Initiative CBOCs users in fiscal year 1997. As figure 4 shows, each
    year since 1998 VHA has experienced significant increases in the use of
    Initiative CBOCs by both new patients and patients who had previously
    used other VHA outpatient facilities.
    ---------------------------------------------------------------------------
        \15\ Most patients who used Initiative CBOCs also used VHA's other
    facilities to obtain health care services.

        The percentage of Initiative CBOC patients who were new to VHA
    varied across networks. In fiscal year 2000, for example, new VHA
    patients who used CBOCs ranged from 16 to 42 percent, as table 1
    shows.\16\
    ---------------------------------------------------------------------------
        \16\ These analyses are based on the network in which patients
    reside, rather than the location of the Initiative CBOC used. That is,
    our numbers describe patients who live within a network, rather than
    patients who use the facilities within that network. For example,
    patients who live in VISN 6 may have used Initiative CBOCs in a
    neighboring network, such as VISN 5. Such patients would be included
    only in the data reported for VISN 6.
    ---------------------------------------------------------------------------

    Table 1.--Percentage of Initiative CBOC Patients Who Were New VHA
    Patients in Fiscal Year 2000

                                                                   Number of
            Percent                                                 networks
    16-20.............................................................     3
    21-25.............................................................     4
    26-30.............................................................     8
    31-35.............................................................     3
    36-40.............................................................     2
    40-42.............................................................     2

    Note: These analyses are based on the network in which patients reside,
    rather than the location of the Initiative CBOC used.

    Source: GAO analysis of information provided by VHA.

        Of the 135,000 new VHA patients using Initiative CBOCs in fiscal
    year 2000, about 56,000 were higher-income veterans, up from 1,300 in
    fiscal year 1997.\17\ Moreover, higher-income veterans as a share of
    new patients who use Initiative CBOCs have risen from 14 to 41 percent
    from fiscal year 1997 through fiscal year 2000 (see figure 5).\18\
    ---------------------------------------------------------------------------
        \17\ In fiscal year 2000, a total of about 100,000 higher-income
    veterans used Initiative CBOCs; however, 44,000 had previously obtained
    outpatient health care from VHA.
        \18\ A small percentage of Initiative CBOC patients do not fall
    into either the traditional veteran population (those with compensable
    service-connected disabilities or low income) or the higher-income
    veteran population. These patients include nonveterans, veterans whose
    eligibility for benefits was being assessed, and veterans whose
    disability and income status were not identified in the outpatient
    database. They accounted for about 5 percent of Initiative CBOC
    patients in fiscal year 1997, but less than 4 percent of Initiative
    CBOC patients in fiscal years 1998 through 2000.

        Like the percentage of new patients, the percentage of new higher-
    income patients using Initiative CBOCs varied across networks. In
    fiscal year 2000, for example, new higher-income veterans who used
    Initiative CBOCs ranged from 15 to 62 percent, as table 2 shows.

    Table 2.--Percentage of New Initiative CBOC Patients Who Were Higher-
    Income Veterans in fiscal year 2000

                                                                   Number of
            Percent                                                 networks
    15-24.............................................................     2
    25-34.............................................................     7
    35-44.............................................................     5
    45-54.............................................................     6
    55-62.............................................................     2

    Note: These analyses are based on the network in which patients reside,
    rather than the location of the Initiative CBOC used.

    Source: GAO analysis of information provided by VHA.

        Systemwide, most new higher-income veterans do not use Initiative
    CBOCs, but instead use only other VHA outpatient facilities.
    Nevertheless, the number and share of new higher-income patients using
    Initiative CBOCs have increased dramatically. The proportion of new
    higher-income veterans who use Initiative CBOCs has grown from 2
    percent in fiscal year 1997 to 26 percent in fiscal year 2000.\19\ As
    previously discussed, the number of these new higher-income patients
    has increased from 1,300 in fiscal year 1997 to 56,000 in fiscal year
    2000. To put this in perspective, during the same period, the number of
    new higher-income veterans using other VHA outpatient facilities
    exclusively grew from 57,000 to 158,000, as shown in figure 6.
    ---------------------------------------------------------------------------
        \19\ This is consistent with CBOCs growing share of total higher-
    income veterans (new and past users) using Initiative CBOCs; from
    fiscal year 1997 through fiscal year 2000, the percentage of higher-
    income veterans using CBOCs grew from 2 percent to 21 percent.

        Nonetheless, new higher-income veterans remained a small segment--
    about 6 percent--of all patients using VHA's outpatient facilities in
    fiscal year 2000, up from 2 percent in fiscal year 1997.
                            concluding observations
        Overall, through its Initiative CBOCs, VHA is steadily making
    primary care more available within reasonable proximity of patients who
    have used VHA's system in the past. However, the uneven distribution of
    patients living more than 30 miles from a VHA primary care facility
    suggests that access inequities across networks may exist. Also, the
    improvements likely to result from VHA's planned CBOCs indicate that
    achieving equity of access may be difficult. Nonetheless, we believe
    VHA's effort to assess the time it takes patients to reach a VHA
    outpatient clinic could provide a better measure and, therefore, a
    clearer understanding of access differences among networks.
        In addition, our assessment suggests that new CBOCs may have
    contributed to, but are not primarily responsible for, the marked
    increase in the number of higher-income patients who have sought health
    care through VHA over the past few years. While Initiative CBOCs have
    undoubtedly attracted some new patients to VHA, our analysis suggests
    that new patients would have sought care at other VHA facilities in the
    absence of Initiative CBOCs. In that regard, enhanced benefits and
    access improvements afforded by eligibility reform may have attracted
    more new patients, including those with higher incomes, than VHA's
    Initiative CBOCs.
    GAO Contacts and Staff Acknowledgements
        For more information about this statement, please call Cynthia A.
    Bascetta, Director, Health Care--Veterans' Health and Benefits Issues,
    at (202) 512-7101, or Paul Reynolds, Assistant Director, at (202) 512-
    7109. Key contributors to this statement include Kristen Joan Anderson,
    Deborah Edwards, Michael O'Dell, Peter Schmidt, Thomas Walke, and
    Connie Wilson.

                    STATEMENT OF SENATOR BARBARA A. MIKULSKI

        Senator Bond. Now, it is my pleasure to turn to my ranking
    member, Senator Mikulski.
        Senator Mikulski. Thank you very much, Mr. Chairman, and I
    am very pleased to welcome our new VA Secretary, Mr. Anthony
    Principi.
        I had the real pleasure of working with Mr. Principi during
    the previous Bush administration when he was Deputy Secretary.
    I got to know him and got to appreciate his commitment to the
    core mission of the Department of Veterans Affairs, as well as,
    I think, bringing to the table significant management skills,
    and I believe those skills have only been even more finely
    honed and developed during this stint in the private sector.
        So we really welcome you back to this, and we know that as
    you return to the Department of Veterans Affairs there are many
    challenges, budget management, the crises that all health care
    in America is facing, as well as the changing demography of the
    United States of America, which impacts benefits and health
    care in the larger community, but also is particularly focused
    also in the Department of Veterans Affairs.
        So we look forward to working with you not only on the
    appropriations for actual health care, but to deal with issues
    like the nursing shortage that I want to hear more about in our
    questions and answers, to how we are going to deal with an
    aging population, from our World War II moving to frail
    elderly, the Korean War veterans, the anticipated aging of the
    Vietnam population, which is so significant in number and yet
    hard to evaluate where the permanent wounds of war will
    manifest themselves once these vets hit 50. Many battle-related
    conditions will only manifest themselves as one gets older.
        So we look forward to having these discussions with you. As
    you know, in the last 2 years, this committee has worked on a
    bipartisan basis to provide large increases for veterans'
    medical care, and to encourage more veterans to enroll in the
    VA system. At the time when high private health insurance and
    prescription drugs are really straining the elderly, we can
    only expect that this subcommittee will be urged to continue
    these increases.
        Many veterans will be shifting to VA medical care because
    they do not have anywhere else to go. Particularly I am looking
    at a population who are in their fifties. They might now be
    working in businesses where they do not have health insurance.
    Anyway, they are more to be talked about.
        So it is also about increasing our funding.
        The issue also will be about long-term care, and our
    ability to really look at how we will implement the Millennium
    Act, and we go forward to your advice. We cannot do it all in 1
    year, but I believe that if we look ahead to the changing and
    the anticipated boom that the boomers are going to put on the
    system, specifically the Vietnam vets, if we look now under
    your stewardship that each year we really focus on getting
    systems and finances in place, that we do not try to do
    everything immediately but really develop this continuing care,
    I think that we are going to have something to be proud of over
    the next 2 or 3 years.
        So we look forward to what you want to do, and how you
    would recommend that it be paced from both a managerial and
    fiscal standpoint, because I think we all have the same goal.
    If we have the right pacing, I believe we can help you get the
    right money, so let us think about those.
        Also, as you know, the issue of quality has come up. The
    Cleveland Plain Dealer has written some scathing articles. I
    take no position on the accuracy, nor am I here to finger-
    point. I am here to pinpoint, to see really how we can ensure
    the highest quality of services, but also know that quality is
    directly impacted by staff shortages, a bidding war I would
    presume you are in for good nurses and lab technicians and so
    on, and then also the improvement of the use of technology,
    information systems, fiscal management systems, going after
    dead-beat insurance companies to reimburse you so that you have
    the tools of the trade, if you will, to really be able to put
    the management systems in to improve the quality.
        The other thing I want to emphasize is, I am deeply
    troubled about hepatitis C. I am deeply troubled about it. The
    medical and public health community in Maryland--and as you
    know, we have two great academic centers, the University of
    Maryland, which has its excellent relationship with our VA
    hospital as well as Hopkins in infectious disease, tells me
    this hepatitis C is as dangerous, if not more so, to spreading
    in the larger community than probably any of the other
    infectious disease we could face, and there is no cure for it,
    so we have really got to get a handle on hepatitis C.
        We also, as I said, come back to the system of collecting
    what our veterans and taxpayers are owed from private insurance
    companies.

                               PREPARED STATEMENT

        Last, but not at all least, of course, Mr. Thompson, I am
    going to ask about the reduction of the processing time for
    benefits, and I know it is a high priority of the President. I
    know it is a high priority with you, and it is a high priority
    with me, so having said that, I would ask unanimous consent
    that my full statement go in the record, and look forward to
    not only hearing your testimony, but really working hands-on
    with you.
        Senator Bond. Thank you very much, Senator Mikulski. Your
    statement will be included in the record, and we appreciate
    your perceptive comments.
        [The statement follows:]
               Prepared Statement of Senator Barbara A. Mikulski
        Mr. Chairman, I am very pleased to welcome our new VA Secretary,
    Mr. Principi, to the Subcommittee this morning. Secretary Principi has
    a great deal of experience, having served as the Deputy Secretary from
    1989 to 1992, and as the Acting Secretary from 1992 to 1993. I look
    forward to working with him and his team on the issues facing our
    veterans.
        My goals for this hearing are two-fold. First, we must ensure that
    the new Administration's budget keeps the promises we made to our
    veterans. And second, we must make sure the VA is a good steward of
    taxpayer dollars--so that our veterans and the American people get the
    most for their hard earned money.
        The budget requests $51.7 billion for veterans' benefits and
    services: $28.3 billion for entitlements, and $23.4 billion for
    discretionary programs that are under this Subcommittee's
    jurisdiction--a $1 billion increase.
        Promises made must be promises kept. Our veterans must have access
    to the quality medical care and benefits they deserve--in a timely
    manner.
        This year's request for medical care is $22.3 billion. This is a $1
    billion increase over 2001, and includes $896 million that will be
    collected from third-party health insurance and co-payments from
    veterans.
        In the last 2 years, we have provided large increases for medical
    care--$1.7 billion in 2000 and $1.3 billion in 2001--to encourage more
    veterans to enroll in the VA system, and to provide them with the
    medical care they deserve. At a time when high private health insurance
    and prescription drug costs are really straining our elderly on fixed
    incomes, we can only expect that the Subcommittee will be urged to
    continue these increases.
        As medical care funding increases to meet demand, we must not loose
    sight of quality. The VA has made great progress on quality control
    issues. In fact, a recent New England Journal of Medicine report shows
    that heart attack patients treated in VA hospitals receive the same
    quality of care as Medicare patients receive in private hospitals.
        But I am concerned about a series of recent negative articles in
    the Cleveland Plain Dealer that really question the VA's ability to
    deliver safe, quality, medical care. I would like to hear from
    Secretary Principi about these articles. Are these stories largely
    anecdotal, and what has VA done to address these problems?
        And while many groups say we need more for medical care, we must
    also make sure that the VA can spend what it gets in an efficient way.
    We must make highest and best use of tax dollars.
        I am troubled that the VA now tells us it can't spend much of the
    funding we provided for Hepatitis C. I understand that the treatment
    for this disease is very complicated, but this contagious threat should
    be a priority. I want to hear from the VA about the proposed
    adjustments that result in a $168 million cut to this program.
        It is good news that the VA is making progress in collecting what
    our veterans and taxpayers are owed from private insurance companies.
    The VA will collect almost $100 million more in 2002. But we need to do
    more, and I want to know what the VA is doing to ensure that our
    veterans and taxpayers get what they are owed.
        Collections from veterans will also increase--largely because the
    prescription drug co-payment will rise from $2 to $7. I would like to
    know how the VA decided on $7, and if there are plans to make further
    changes the co-payment.
        More money can't solve every problem. Veterans still have to wait
    too long to see a doctor. This problem is not just about funding. It is
    also about management. The VA must have adequate systems in place to
    evaluate this problem, its causes, and develop strategies to reduce
    waiting times.
        And on the benefits side, while the VA has made progress in
    reducing its claims processing time, 173 days is still unacceptable. I
    know Secretary Principi wants to reduce processing time to 100 days by
    2003, and I am interested in learning how he plans to do this.
        Research is an area of the budget that gives taxpayers a great
    return on their investment. This budget would fund VA medical research
    at $360 million. VA research doesn't just help veterans. It contributes
    to the public health by sending new innovations to the marketplace.
        So many important medical technologies have their roots in VA
    research--including the pacemaker and the CT scan. The budget request
    is only about one-third of the funding that will go toward VA
    research--the rest will come from the private sector, NIH, and other
    areas of the VA. But the budget request proposes to cut 79 employees
    from the VA's medical research program, and I'd like to know why.
        Finally, I am very proud of the VA facilities in Maryland--Fort
    Howard, Perry Point, and the hospital, extended rehabilitation, and
    long term care facilities in Baltimore, as well as 7 outpatient clinics
    around the state. These clinics make the best use of our resources to
    deliver quality care to veterans where they live.
        Fort Howard is slated to become a ``continuum of care'' campus for
    veterans. It will serve as a national model for how we can provide
    quality medical services to veterans at all levels of need, while
    allowing them to maintain their quality of life. This is particularly
    important as our veterans population ages.
        The Fort Howard project is not just important to our veterans. It
    is also critical because our taxpayers want to see the VA make highest
    and best use of this grand facility that is on prime real estate. I
    hope to hear from Secretary Principi about the new Administration's
    views on Fort Howard and how he will work to keep this project moving
    in the right direction.
        Again, I welcome Secretary Principi to the Subcommittee, and I look
    forward to hearing his testimony.

        Senator Bond. Now we turn to a newer member of our
    subcommittee, Senator Johnson.

                        STATEMENT OF SENATOR TIM JOHNSON

        Senator Johnson. Well, thank you, Mr. Chairman. I, too,
    would ask consent for my full statement be received into the
    record.
        Senator Bond. Without objection, and with great pleasure.
        Senator Johnson. I want to thank Chairman Bond and Ranking
    Member Mikulski for scheduling this important hearing and
    welcome, of course, VA Secretary Tony Principi to our
    committee.
        I was very pleased that he went out of his way to meet with
    me prior to his confirmation, and that it is my understanding
    that tomorrow he is going to be traveling to South Dakota, to
    Sioux Falls to meet with veterans' leaders there in our
    community, and not least of all dedicate the new Rough Rider
    Cafe at the VA hospital there, and we look forward to----
        Senator Mikulski. The VA has a new flair, as well as a new
    Secretary.
        Senator Johnson. That is right. This is not your father's
    VA.
        But we welcome him to South Dakota for that purpose, and to
    meet with our veteran's leaders in the State. I know that Gene
    Murphy is looking forward to meeting you there as well.
        I will be very brief about this because we need to move on
    to the testimony, obviously, but there are a number of areas
    that are of great concern to me. I am pleased in a way that we
    are looking at an $800 or $900 million increase in veterans'
    health benefits on the heels of what had been some flat line
    budgets in the past for VA health care.
        On the other hand, it has been called to my attention that
    the Secretary's request to the OMB was more in the $1.9 billion
    range, and we all know that the independent budget put together
    by a coalition of veterans organizations in this country called
    for $2.6 billion in veterans health care over last year's
    levels, and so I am concerned whether even the best management
    can do what it needs to do with resources that may fall short.
        I look forward to the testimony today about veterans health
    care funding. Having just come from the opening of a VA
    outpatient clinic in Aberdeen, South Dakota, I am impressed
    with what these outpatient clinics are doing to make high-
    quality health care available and accessible to veterans in
    rural areas in particular. I hope that we can follow on with
    the development of more of these.
        I am very concerned about the future of the Montgomery GI
    bill. Senator Collins and I have joined forces in sponsorship
    of legislation which would create a benchmark level of
    education benefits. Currently roughly half of our vets, even
    though they have contributed their $1,200 pay into the program
    simply do not use the benefits that have fallen far short of
    what the contemporary cost for higher education area, and our
    proposal, I think, is congruent with what Secretary Principi
    looked at as chairman of the Congressional Commission on
    Service Members and Veterans Transition Assistance Commission,
    and I am concerned about the current receipt issues as well as
    claims processing.

                               PREPARED STATEMENT

        I am pleased that you have promised a top-to-bottom review
    of the VA benefits claims processing efforts, and I look
    forward again to where you feel you can make progress in all of
    these areas, given the financial resources that currently are
    being made available. I was pleased that we were able to wrap
    up VA benefits within the context of the budget resolution, but
    also recognize that the budget resolution is not cash in hand.
        So I look forward to the Secretary's testimony on all of
    these issues.
        Thank you, Mr. Chairman.
        [The statement follows:]
                   Prepared Statement of Senator Tim Johnson
        I would like to thank Chairman Bond and Ranking Member Mikulski for
    scheduling this important hearing on veterans budget issues. Their
    leadership on veterans issues over the past few years has been
    instrumental in restoring critical benefits and programs for our
    nation's heroes. As a new member to the Senate VA-HUD Appropriations
    Committee, I look forward to working with the Committee and learning
    from their collective experience on these issues.
        I would also like to thank VA Secretary Tony Principi for appearing
    before the Committee this morning. Secretary Principi was kind enough
    to meet with me the day before his confirmation in the Senate Veterans
    Affairs Committee, and we had a good discussion on several issues of
    importance to South Dakota veterans, including veterans health care
    funding and veterans education benefits. I took that opportunity to
    invite him to my state of South Dakota to meet with veterans and tour
    our first-rate veterans health care facilities. I am pleased that
    Secretary Principi took me up on my offer and will be traveling to
    Sioux Falls, South Dakota, tomorrow to help dedicate the Rough Rider
    Cafe at the VA Hospital there. Unfortunately, I will be unable to join
    Secretary Principi in Sioux Falls, so I wish him a safe trip and hope
    that we can see each other in the state at some other time. Secretary
    Principi has already earned the trust and respect of those in Congress,
    and I look forward to working with him on veterans issues.
        Mr. Chairman, as I travel my state of South Dakota and meet with
    veterans, I am reminded of the very core of what the Founding Fathers
    meant when they talked about America's citizen soldiers who serve as
    the bulwark of defending our democracy and freedom. The sacrifices of
    the men and women who served this nation in time of war are a dramatic
    story that we need to tell to future generations.
        We all know the history: for decades, men and women who joined the
    military were promised educational benefits and lifetime health care
    coverage for themselves and their families. Many of the veterans were
    told, in effect, ``If you disrupt your family, if you work for low pay,
    if you endanger your life and limb, our nation will in turn guarantee
    an opportunity for an education and lifetime health benefits.''
        Those promises have too often not been kept and that is threatening
    our national security. Veterans are our nation's most effective
    recruiters. However, inadequate education benefits and poor health care
    options make it difficult for these men and women to encourage the
    younger generation to serve in today's voluntary service. We are
    blessed to have unprecedented federal budget surpluses, and the only
    question is whether veterans health care and educational benefits
    should be a priority instead of an afterthought.
        As a member of the Senate VA-HUD Appropriations Subcommittee, I
    plan to do all I can to work with my colleagues to honor our country's
    commitments made to veterans. Specifically, I would like to highlight
    the following areas:
        Veterans Health Care Funding.--Recently, I attended the grand
    opening of a new VA outpatient clinic in Aberdeen, South Dakota, and
    had the chance to see firsthand how the VA is reaching out into rural
    areas to provide veterans with the health care they need. VA outpatient
    clinics in my state are a huge success and compliment the work done at
    our three VA hospitals. However, I would like to see additional
    outpatient clinics to provide services for those veterans who still
    must travel long distances, often in difficult weather conditions. That
    requires increased funding for veterans health care. Veterans from
    around the nation have been calling on Congress to provide the VA with
    adequate funding to meet the health care needs for all veterans.
    Without additional funding, VA facilities will be unable to deliver the
    necessary health care services to our veterans population.
        For a number of years, I have worked with veterans and members of
    this committee to increase flat-line appropriations for veterans'
    health care. We were successful two years ago in getting a historic
    $1.7 billion increase for VA medical care. We fought last year for
    another $1.4 billion increase. While these increases will help relieve
    some of the VA's budgetary constraints, I believe that more needs to be
    done to make up for those years of budgetary neglect, as well as to
    keep pace with rising costs of health care.
        While I am pleased that the Administration has proposed an increase
    in veterans health care funding for fiscal year 2002, additional
    funding is needed to address rising health care costs, treatment of
    Hepatitis C, emergency medical services, and long-term care
    initiatives. During consideration of the Senate Budget Resolution, I
    was pleased to see bipartisan support for my effort to increase
    veterans health care funding by an additional $1.718 billion and
    unanimous support for Chairman Bond's amendment to add $967 million for
    veterans health care.
        The Senate has once again sent a message that additional funds are
    needed to address veterans health care needs, and I look forward to
    working with this Committee to turn that message into a reality.
        Montgomery GI Bill.--Another priority for me this year will be to
    continue to improve educational benefits for veterans. The Montgomery
    GI Bill has been one of the most effective tools in recruiting and
    retaining the best and the brightest in the military. It has also been
    a critical component in the transition of veterans to civilian life.
        Unfortunately, the current GI Bill fails to keep pace with the
    rising costs of higher education. On the first day of this legislative
    year, I joined Senator Susan Collins in introducing legislation to
    bring the GI Bill in the 21st Century by creating a benchmark level of
    education benefits that automatically covers inflation to meet the
    increasing costs of higher education. Our concept is a very simple one:
    at the very least, GI Bill benefits should be equal to the average cost
    of a commuter student attending a four-year university. Currently, less
    than one-half of the men and women who contribute $1,200 of their pay
    to qualify for the GI Bill actually use these benefits.
        During consideration of the Senate Budget Resolution, Senator
    Collins and I offered an amendment to create a Reserve Fund
    specifically for GI Bill improvements. With the support of members of
    this Committee, our amendment passed unanimously, and now gives the
    Senate Veterans Affairs Committee budget authority to act this year on
    legislation to bring the GI Bill benefits more in-line with the costs
    of higher education.
        In 1999, Secretary Principi served as chairman of the Congressional
    Commission on Servicemembers and Veterans Transition Assistance. The
    commission, established by law in 1996, reviewed programs that provide
    benefits and services to veterans and to servicemembers making the
    transition to civilian life. The commission's review of benefits and
    services was the most comprehensive since 1956, and the commission
    offered more than 100 recommendations addressing issues including
    veterans education. I look forward to hearing Secretary Principi's
    insight on this issue and how our bipartisan effort in the Senate fits
    in the Administration's plan for improving Montgomery GI Bill benefits.
        Concurrent Receipt.--An issue that needs to be addressed this year
    is concurrent receipt. I find it indefensible that our government
    forces men and women who fought for our country and are disabled as a
    result of it to choose between retirement pay and disability
    compensation. This nickel-and-diming of our country's heroes must stop,
    and I am part of the bipartisan group of Senators supporting the
    Retired Pay Restoration Act of 2001, S. 170, and the Reserve Fund in
    the Senate Budget Resolution creating budget authority for this act. I
    am hopeful that we will be able to continue on the progress made last
    year on Concurrent Receipt and finally make this long-overdue
    correction for 437,000 disabled veterans nationwide.
        Claims Processing.--Finally, I am pleased that the Administration
    has promised a top-to-bottom review of the VA's benefits claims
    processing. Redtape and staggering delays have plagued the claims
    process and given many veterans reason to doubt the effectiveness of
    the VA. I fully support efforts to decrease the current claims
    processing backlog and prepare for projected workload increases due to
    several legislative initiatives, including ``duty to assist.'' I know
    that addressing the claims processing issue will not be an easy task
    for Secretary Principi, but I pledge to work with him and other members
    of Congress to help restore veterans' faith in this system.
        Veterans are our country's heroes, and their selfless actions will
    inspire generations of Americans yet to come. Our country must honor
    its commitments to veterans, not only because it's the right thing to
    do, but also because it's the smart thing to do.
        I am honored to be a member of the Senate VA-HUD Appropriations
    Subcommittee and look forward to working with Chairman Bond, Ranking
    Member Mikulski, other Committee members, and Secretary Principi in
    realizing many of these goals.
        Thank you for the opportunity to share some of my thoughts with you
    today, and I submit a list of questions for Secretary Principi.

                         STATEMENT OF ANTHONY PRINCIPI

        Senator Bond. Thank you very much, Senator Johnson. Now,
    Secretary Principi.
        Secretary Principi. Thank you, Mr. Chairman, Senator
    Mikulski, Senator Johnson. It is such a pleasure to be here. I
    am honored to have the opportunity to be back as head of the
    VA, this time not in an acting capacity and, very importantly,
    as you pointed out, to work closely with this committee in the
    interest of our Nation's veterans, and clearly you all have
    been such strong advocates and been so very helpful to our
    Department over the years.
        I have submitted my statement for the record and, at risk
    of not reading some summary words here, I would like to offer
    some thoughts and comments based upon what I heard you say this
    morning.
        Senator Bond. Mr. Secretary, we will make your full
    statement a part of the record.
        Secretary Principi. Thank you very much. I am pleased to be
    accompanied by Roger Rapp, our Acting Under Secretary for
    Memorial Affairs, to my immediate right, Dr. Garthwaite, our
    Under Secretary of Health, Mark Catlett, who is our Acting
    Principal Deputy Assistant Secretary for Management and really
    handles our finance, our CFO functions, and to my far left,
    Joseph Thompson, our Under Secretary for Benefits.
        I am honored to head the VA, because the VA has such a
    noble and extraordinary mission to really care for people who
    are deserving of our Nation's gratitude. I am very honored to
    head a Department that has such committed people, who have
    devoted their lives to caring for these people. Although we
    have significant challenges before us, I want to point out that
    where we have failed, or not done as well as we should to
    address these challenges, these people at the VA do not fail.
    It is the systems that fail, and systems put in place by
    leaders.
        So as we address these challenges I want my remarks and my
    answers to your questions to reflect the fact that I do believe
    that we have some of the most dedicated people in Government. I
    have been around Government a long time, both on the Hill and
    in the executive branch, and I think we are one of the
    fortunate departments to have those people, but, indeed, we do
    have challenges.
        Let me start with the Veterans Benefits Administration. You
    have all heard me speak about my concerns about the claims
    backlog and some of the steps we have taken and need to take, I
    believe, to bring this backlog down. It is my objective to have
    an inventory that is workable and allows us to achieve very,
    very ambitious goals of an inventory of around 250,000 claims,
    a timeliness of about 3, 3\1/2\ months. Those are, indeed,
    ambitious goals.
        Clearly, some of the problems are outside the VA's control.
    I think we need to start with that, a new mandated service
    connection for things like diabetes, myelitis. We will add
    100,000 claims, and that is a good change. We should be
    providing a presumptive service connection where the science
    clearly shows the disease is associated with military service.
        The duty to assist legislation, the Veterans Claims
    Assistance Act, are good legislation. We should never have
    stopped duty to assist in the first place. But it happened, and
    now we have this new requirement that will add an additional
    340,000 claims to our backlog. That creates more work.
        So clearly, some of it is outside of our control and
    perhaps some of the funding that was requested last year to
    assist with that workload was not there, but that is water
    under the bridge. We live with that. We live with the law the
    way the Congress has written it.
        But there are things that we need to do, too, internally.
    We have had a very worthwhile quest to have unassailable
    accuracy. It is absolutely important that when we adjudicate
    claims, that our decisions are accurate. But that accuracy, and
    that quest for accuracy have come at the cost of timeliness,
    which I believe is almost as important as accuracy, because
    both comprise quality.
        Accuracy is one component; timeliness is another component,
    and unless you have both, you do not have quality. Today we do
    not have quality, because it is taking too darned long to
    adjudicate claims. I think some of the systems we put in place,
    while strategic in thinking, and visionary, may have caused
    some of the productivity standards to drop to a level that is
    unacceptable. Steps are being taken to change that, to suspend
    some of those changes, and at the same time trying to sustain a
    high level of accuracy. We need to do better.
        I have always said that the claims issue is not a VBA
    issue. It is a medical VHA issue, it is an IT issue, it is a
    General Counsel issue. All of the components of the VA are
    brought to bear to assure that we have the right systems to
    adjudicate claims. Although we are making progress in these
    areas, we do not have those systems in place to properly and
    accurately adjudicate claims. That is something we need to do,
    and do it quickly.
        Education processing has been slow. We need to improve upon
    that. As Senator Johnson said, the transition commission, which
    I was fortunate enough to chair, made some worthwhile
    recommendations to the Congress.
        I believe the opportunity for young men and women in
    uniform today to get the best education possible, to conform
    educational programs and VA programs to the needs and to the
    ways current education is delivered in the private sector, are
    things we need to address. I think it is a very, very important
    program, so that people can build successes in their life. We
    want veterans to come to us not out of necessity, because they
    need a pension, because they are poor--this is very important,
    but rather we want them to be successful in life and come to us
    out of choice and not necessity for the programs that they
    need.
        On the health care side of the house, we have made enormous
    improvements on the one hand in quality and patient safety. I
    agree with you, Senator Mikulski, about the anecdotes in the
    Cleveland Plain Dealer. I do not think they are representative
    of our VA health care system.
        However, I take anecdotes seriously. I expect the Veterans
    Health Administration to take them seriously. I expect them to
    be investigated seriously, and reports made to ensure that that
    is not a system problem, or a problem around the country, or
    even if it is just isolated at one location, that we take
    corrective action on each and every anecdote that the Cleveland
    Plain Dealer or any other periodical or GAO report or IG report
    provide to us. That is our responsibility to do so.
        But clearly, we have seen enormous improvements in quality
    and customer satisfaction recently. I believe the $1 billion
    increase in discretionary spending this year, much of which
    goes to VHA, coupled with, hopefully, increased medical care
    collections funds, will give us an overall 5.4 percent increase
    in our health care budget.
        I believe that is a good foundation, and yes, Senator
    Johnson, I did request more, but I am grateful that we have
    received the $1 billion increase in discretionary spending to
    allow us to do some of the things that we believe are very,
    very important to provide high quality health care.
        I am concerned, as you have indicated, as all of the
    members of this committee have indicated, the lack of
    uniformity, and the lack of clear standards in some of our
    systems and programs. Financial systems standards, information
    technology standards, billing and collection standards, uniform
    access to health care--not based upon where you live, but based
    upon need--and status, or what category do you fall into. Those
    are all important policy issues, policy decisions that must
    emanate from Washington and be carried out uniformly, and
    people held accountable for compliance with those standards. I
    think that is terribly important.
        On the other hand, I also believe equally strongly that the
    people in the field, the people in the trenches closest to the
    patients, closest to the beneficiaries, should have the
    flexibility to manage within those directions and within those
    standards, to make the day-to-day decisions that they need to
    make to deliver care, to provide benefits.
        CARES is an important initiative. I support CARES. I
    support the goal of CARES to rationalize our infrastructure to
    the veterans of today and the veterans of tomorrow, and taking
    into account the demand for care. However, I absolutely insist
    that as we go forward with the CARES process, that the data is
    unassailable, that the voices of the stakeholders are heard
    throughout the process, and that the models for the veteran
    population and the demand for care are the correct ones.
        I think those are very, very important, because we are
    undertaking a mission of realigning assets that may change the
    mission, may result in the closure of a hospital. Before we do
    that, we need to ensure that the data is absolutely the right
    data for this process.

                               PREPARED STATEMENT

        I think that about covers some of my highest concerns, and
    now I will take your questions. I thank you very much for the
    opportunity to express some of these issues, and I look forward
    to working with the committee.
        [The statement follows:]

                 Prepared Statement of Hon. Anthony J. Principi

        Mr. Chairman, and members of the Committee, good morning. Thank you
    for inviting me here today to discuss the President's fiscal year 2002
    budget proposal for the Department of Veterans Affairs.
        We are requesting more than $51 billion for veterans' benefits and
    services: $28.1 billion for entitlement programs and $23.4 billion for
    discretionary programs, such as medical care, burial services, and the
    administration of veterans' benefits. Our budget increases VA's
    discretionary funding by $1 billion or 4.5 percent over the fiscal year
    2001 level. With an increase in medical care collections of
    approximately $200 million, this brings the total increase to $1.2
    billion or 5.3 percent.
        The budget ensures veterans will receive high-quality health care,
    that we will keep our commitment to maintain veterans' cemeteries as
    national shrines, and that we will have the resources to tackle the
    challenge of providing veterans more timely and accurate benefits
    claims determinations.
        The President promised a top-to-bottom review of our benefits
    claims processing. He has designated this area as a key budget
    initiative and I have made it one of my top priorities. I know you
    share this Administration's commitment to restore the confidence of
    many veterans who have lost faith in VA's ability to fairly and
    promptly decide their benefits claims.
        For the administration of veterans' benefits, we are requesting
    $1.1 billion, an increase of $132 million over last year's level. Mr.
    Chairman, as we all know, VA is not completing work on benefits claims
    in as timely a manner as our veterans deserve. I am proud to say this
    budget will rejuvenate VA's efforts to process compensation claims
    promptly and accurately.
        An additional 890 employees will allow VA to handle the projected
    workload triggered by several key pieces of legislation enacted last
    year. This request fully implements new legislation that strengthens
    VA's ``duty to assist'' role in helping veterans prepare their claims.
    The new law will require VA to review 98,000 cases that were denied
    previously, plus another 244,000 cases that were pending when the
    legislation passed. In addition, our request enables us to carry out
    the new policy of adding diabetes to a list of presumptive conditions
    associated with exposure to herbicides. About 105,000 applications for
    disability compensation are expected in fiscal year 2002 under the new
    rule on diabetes.
        Because of additional workload, VA predicts an increase in the time
    needed to process these applications. In fiscal year 2002, the average
    claim is projected to take 273 days to complete, compared to 202 days
    this year. However, I have begun immediate efforts to address the
    claims processing backlog.
        Additional resources will be coupled with a proactive approach to
    solving problems. On April 16, 2001, we held a preliminary meeting of
    the special Claims Processing Task Force that will address claims
    processing and develop hands-on, practical solutions to the challenges
    we face. The 10-person task force, headed by retired Vice Admiral
    Daniel L. Cooper, will examine a wide range of issues affecting the
    processing of claims, from medical examinations and information
    technology, to efforts to shrink the backlog and increase the accuracy
    of decisions. The panel's final report is due to me in approximately
    120 days.
        For veterans' health care, we are requesting $21.9 billion,
    including nearly $900 million collected from third-party health
    insurance and co-payments from veterans. This reflects an increase of
    $1 billion over last year's level.
        The budget request reaffirms our primary commitment to provide
    high-quality medical care to veterans with service-connected
    disabilities or low incomes. VA provides comprehensive specialty care
    that other health care providers do not offer, such as services related
    to spinal cord injury, Post Traumatic Stress Disorder, prosthetics and
    addiction programs. I am proud of our unique accomplishments and our
    request provides full funding to continue our leadership role in these
    areas.
        Our budget proposal for medical care includes an additional $196
    million for long-term care and an additional $164 million to improve
    patient access. VA's goal is for patients to receive appointments for
    primary care and non-urgent care in 30 days or less, while being seen
    within 20 minutes of a scheduled appointment. The budget also supports
    the President's new health care task force, which will make
    recommendations for improvements. The task force will be comprised of
    representatives from VA and the Department of Defense (DOD), service
    organizations, and the health care industry.
        The budget includes $121 million for the operation of our National
    Cemeteries--an increase of $12 million over last year's level. Our
    request ensures that VA's cemeteries will be maintained as National
    shrines, dedicated to preserving our Nation's history, nurturing
    patriotism, and honoring the service and sacrifice of our veterans. It
    provides $10 million--twice the amount included in fiscal year 2001--to
    renovate gravesites and to clean, raise and realign headstones and
    markers.
        The request also includes funding for land acquisitions for new
    cemeteries in the Detroit, Pittsburgh and Sacramento areas; development
    of a new cemetery in Atlanta; and design of a new cemetery in Miami. In
    addition, funds are provided for columbaria expansion and improvements
    at the Massachusetts National Cemetery in Bourne, and the Tahoma
    National Cemetery in Kent, Washington.
        Mr. Chairman, our 2002 budget is not simply a petition for
    additional funding. It also reflects opportunities for cost savings and
    reform. VA will do its part to ensure the most efficient use of limited
    resources, while maintaining the highest standards of care and service
    delivery.
        The National Defense Authorization Act for Fiscal Year 2001
    established a new DOD benefit for military retirees over age 64 who
    have Medicare coverage. These retirees will be able to use their own
    private doctors for free care and receive a generous drug benefit.
    Currently, 240 thousand of these retirees are enrolled in VA's health
    care system. Our budget assumes that 27 percent of them will switch to
    the DOD benefit in 2002, which shifts $235 million in VA medical
    liabilities to DOD.
        This recent legislative change underscores a critical need for
    better coordination between VA and DOD. The Administration is seeking
    legislation to ensure DOD beneficiaries who are eligible for VA medical
    care enroll with only one of these agencies as their health care
    provider. We will work with DOD to avoid duplication of services and
    enhance the quality and continuity of care.
        Restructuring efforts in our health care system will continue in
    2002. VA has begun an infrastructure reform initiative that will
    enhance our ability to provide health care to eligible veterans living
    in underserved geographic areas. Savings from this effort will allow us
    to redirect funds from the maintenance of underused facilities to
    patient care. As we await the results of this assessment--referred to
    as ``CARES''--we will continue to expand sharing agreements and
    contracting authorities with other health care providers. The budget
    includes $115 million to begin implementing CARES recommendations.
        The budget request also includes legislation for several proposals
    that will yield mandatory savings totaling $2.6 billion over the next
    ten years. One proposal would eliminate the vendee loan program and the
    other proposals would extend previously enacted mandatory savings
    authorities that would otherwise expire over the next several years.
        Finally, we will continue to reform our information technology. New
    technology offers VA opportunities for innovation. It also offers a
    means to break down the bureaucratic barriers that impede service
    delivery to veterans, divide VA from other Federal government
    departments, and create inefficiencies within VA itself.
        I wish to restate my pledge that we will not initiate any new
    technology-related activities until we have defined an Enterprise
    Architecture that ends ``stove pipe'' systems design, incompatible
    systems development, and the collection of data that do not yield
    useful information. I have instructed my staff to convene a panel of
    world experts in the area of systems architecture to team with our
    Administrations and staff offices to develop a comprehensive Integrated
    Enterprise Architecture Plan. I expect to be able to deliver this plan
    to Congress in a matter of months. We will implement a technology plan
    that serves veterans first.
        Mr. Chairman, that concludes my formal remarks. I thank you and the
    members of this Committee for your dedication to our Nation's veterans.
    I look forward to working with you. My staff and I would be pleased to
    answer any questions.

                          CLAIMS PROCESSING TASK FORCE

        Senator Bond. Mr. Secretary, you have already answered some
    of the really good questions I was going to ask, but I very
    much appreciate that, and you said that improving claims
    processing for disability compensation is one of your highest
    priorities. Sometime ago, I asked to have explained to me how
    you process these claims, and I could not understand it, so GAO
    put out a little chart to show how the process works, and now I
    understand why I did not understand the process. If this were
    not such a serious business, this could be a laugh line on a
    late-night TV show.
        You talk about the system being difficult for the people in
    VA, and for the people who hope to receive the benefits. There
    has got to be some way that you can make it simpler for the
    people to administer it and for the people who apply, so there
    have been lots of studies in the past. You set up a task force.
    How is this task force going to be different?
        Secretary Principi. Well, this task force is going to be
    different because they are going to address things like that
    chart. Other task forces and commissions, although they looked
    at process, they looked at management, they looked at
    organization, they also looked at changes in laws, abstract the
    roles of veterans benefits.
        What I have asked for is precisely that, some practical,
    hands-on solutions that I as Secretary can implement to
    streamline the process, to see what changes need to take place.
    Do we need to consolidate in some areas? How can we do it
    differently? How can we have cycle time reduction? What expert
    systems are available in the private sector?
        I know there are expert systems available in the private
    sector that can be brought to bear to make the job of the
    ratings specialist easier. It is precisely that chart, and
    trying to improve the processing where possible; that is what
    my goal is.
        I do not know what will come out of the commission, but I
    have tried to appoint a chairman who I have confidence in. He
    is a retired Navy Admiral. You might say, why? I appointed him
    because he is head of our Navy's nuclear power submarine force.
    He is on the board of one of our Nation's most prestigious
    insurance companies. He brings a real discipline and
    engineering mind and focus to the process. If he could run and
    manage nuclear-powered submarines and a fleet of them, I
    believe he is the type of individual that will devote his time
    to this effort because he feels it is important. I am hopeful
    that under his leadership we are going to have some concrete
    suggestions for us to take a serious look at.
        Senator Bond. He may want to go back to running nuclear
    submarines after this, but I would be happy to lend you this so
    you have the before.
        You already mentioned consolidating operations. One of the
    controversial things that has been offered up with the task
    force study, the possibility of seeking legislation to offer
    lump sum payments to certain veterans. I know that some
    veterans applied 12 or more times, and there is possibly some
    radical solutions. Will they be looking at all of those
    aspects?
        Secretary Principi. I did not ask the task force to look at
    finality or lump sum payments. I know those issues, those ideas
    have been highlighted, illustrated in several reports to the
    Congress. I know they are very controversial. I felt that this
    was not the right time. I wanted the task force to look at the
    law as we currently have it, and to see what recommendations I
    could implement right away so we did not go there, sir.

                                BENEFITS BACKLOG

        Senator Bond. All right. Recently, VBA headquarters told
    its 57 regional offices that certain changes which have been
    underway such as transitioning to the new software program
    called RBA 2000 and fully implementing case management could be
    put on hold for now in order to concentrate fully on working
    cases.
        I am a little concerned that while you are striving to make
    this drastic reduction, cutting in half the processing claims
    time and the backlog, that we may be sending a mixed message to
    the field that immediate gains are more important than long-
    term improvements. Do you not think we need to stay on the path
    to the long-term solution to the VBA backlog, rather than
    chucking it for a scramble to cut in half?
        Secretary Principi. No, I do not think so, not at all. I
    visited several regional offices over the past couple of
    months. Not as many as I would like, but I am absolutely
    convinced that the actions to suspend RBA 2000 was a correct
    one. It was not ready to be implemented in my mind. Other
    people take a different view, and I welcome that view.
        I am not forsaking long-term goals to have the right
    software in place so that you do not have to always rebuild
    cases from the beginning. But any time you have productivity
    drops as we have experienced with RBA 2000, then I do not
    believe that this is the right time to launch it or to continue
    it. That is not a statement or act of discarding the software.
    This software holds great promise, but we will have to wait
    until we get out from under this situation.
        Senator Bond. All right, sir. You have already answered my
    question on management and the need for uniform standards
    throughout the field, so now I will turn to my ranking member
    for her first round of questions.

                  DISABILITY COMPENSATION FOR TYPE II DIABETES

        Senator Mikulski. Thank you very much, Mr. Chairman. Well,
    I will not duplicate the questions that Senator Bond did on
    processing, but Secretary Principi, and to your team, even
    going back to when I initially chaired this committee and you
    were Under Secretary and then Acting Secretary, as we know, the
    processing times has been a problem, and I think we have now
    gone from a problem to a crisis, also because of the expanded
    workload, so we look forward to the solutions.
        I want to just raise one issue, though, that I would like
    your task force to consider. As you face the challenges,
    particularly with the addition of Type II diabetes, that you
    think about this, and I just want you to think about it--we can
    hear later what you think--is that if, in fact, in the
    processing of a claim where there is a chronic but manageable
    condition like diabetes, high blood pressure, but particularly
    now in diabetes Type II, that as part of the claim
    adjudication, that there be a health management plan that asks
    how this Type II diabetic--and Dr. Garthwaite, I think you
    would support this concept--would go into some type of diabetic
    management plan.
        I worked very closely with Senator Sue Collins on the issue
    of diabetes, and it is a chronic condition across the United
    States of America that offers really significant ways that we
    can intervene, because Type II diabetes, if not dealt with,
    leads to a very severe set of circumstances, from increased
    heart disease, kidney problems, et cetera, so think about that.
        If you are going to get a benefit, not that we mandate that
    you have got to have a health plan, but we really do strong
    intervention at the time of adjudication that says, let us get
    you the help you need so what you have got is a managed plan,
    and think about that as part of the adjudication process, that
    we really look at that and really maybe even stay in touch with
    them. It would be a great opportunity. we could really do
    prevention intervention here, so think about that.
        Secretary Principi. I think that is an excellent
    suggestion. I think it points out the need for the two
    administrations to work closely in these cases where we are, in
    fact, providing service-connected disability compensation to
    someone with this diabetes, to ensure that we get the medical
    side of the house to provide the outreach, or the plan, if you
    will, the health plan to keep that disability in check.

                               NURSING SHORTAGES

        Senator Mikulski. Exactly, so as we look at also where VA
    is going, it is not unlike where Medicare is going, which is--
    once, Medicare's original purpose was to help pay the bills for
    acute care. Now, its purpose is to manage chronic conditions,
    and that is not unlike what you are facing, but let us go,
    though, to really what you are doing in your primary care, in
    these excellent primary care facilities as well as in the
    hospitals. Are you facing a nursing shortage and, if so, what
    is the magnitude of the shortage that you are facing, and have
    you done any recommendations on how we can help you?
        Secretary Principi. It is serious. Again, I am new at this,
    but at the hospitals I visited, it is a national problem. We
    are large, so we feel it, but we have significant nursing
    shortages on our wards and in our clinics. Every nurse I have
    spoken to, every nurse-manager I have spoken to have looked at
    me a little bit afraid at times, but yes, we are short nurses.
        We have nurses who are double shifting in some cases
    because we do not have enough, and patient safety, patient
    quality, if this--and we are taking decisive steps, and Dr.
    Garthwaite I hope can answer those questions, but this is a
    major issue that our society faces, as well as the VA in
    particular in this case.
        Dr. Garthwaite. We have made a small dent in the number of
    nurses, in the first 6 months of this fiscal year we have
    brought in over 600 nurses net.
        Our approach is fairly comprehensive. We have recently
    increased salary rates. We have some loan forgiveness programs.
    We have student fellowships during the summer that brings
    nurses in to get them involved in our care. We continue to look
    at educational opportunities, as we find students who are
    trained in the VA, like to stay in the VA. We have other
    educational opportunities to allow them to advance in their
    careers into nurse-practitioner roles or nurse-anesthetists and
    other kinds of roles.
        So it is a fairly comprehensive look, but it is really
    dependent on how well society is at getting people to choose
    nursing as a profession.
        Senator Mikulski. But that is my question to you, what are
    you doing about it, and how many vacancies do you have, and
    then is the VA also working, also to help make this an
    attractive profession?
        I mean, Senator Tim Hutchinson and I worked on a bill in
    terms of the larger community. It is an education bill, so it
    is a down payment on the shortage. It does not deal with the
    respect or the pay issues.
        Dr. Garthwaite. One thing we have done is an attempt to
    bring the nurses into the system and to provide them an
    opportunity to move on to baccalaureate and beyond where they
    have potentially, a higher salary down the road and can make
    more contributions. We put $50 million into a training program
    over 5 years to advance their education. We think that helps
    us, and it helps them, and we hope that it provides an
    attractant. We have signed an MOA with a community colleges
    organization, an associate degree nursing organization.
        Senator Mikulski. Well, I am so glad to hear that, Dr.
    Garthwaite. I know my time has expired and it is time to move
    on to Senator Johnson, but I believe nursing comes at different
    skill levels. The nurse practitioner is a whole different skill
    level than really bedside care and acute care.
        The use of community college nursing I think is a great
    way, and for many men and women who would like to enter nursing
    the community college is an affordable gateway, and also offers
    for many of them flex time to move up.
        I would also like you to think about looking within your
    own ranks, where there are people working now in VA who love
    working in VA, and perhaps in other areas, but would love the
    opportunity to go to a community college, and therefore they
    would do lattice work, kind of instead of a ladder of
    opportunity, a lattice of opportunity where they can move up
    the system.
        We look forward to working with you, and I now will wait
    for my next round of questions.
        Senator Bond. Thank you, Senator Mikulski. I certainly
    agree with you on the community colleges. I am going to turn to
    Senator Craig, who has joined us, for any opening statement
    and/or questions he wishes to ask at this point.

                      STATEMENT OF SENATOR LARRY E. CRAIG

        Senator Craig. Thank you, Mr. Chairman. I welcome you
    before the committee. I guess this is the first time you have
    been before the committee. I welcomed you before the full
    Veterans Committee, but we appreciate you being here now where
    the rubber hits the road, and the budgets that we will work
    with you on are really going to provide and/or not provide the
    kinds of services that our veterans expect, and I think all of
    us in this committee believe they deserve.
        I will not go into it today, but I wish we could schedule a
    time with you and the appropriate folks on your staff to deal
    with the benefits and claims processes. We spend a lot of time
    with that out in my offices, primarily in Idaho and in Boise,
    and we have got some questions and some concerns, and just kind
    of want to walk through them with you, that are kind of
    repetitive. We see them quite often, and we think there are
    some ways to deal with them, and that is important, because
    that is really the underpinnings of what our veterans deal
    with.
        I guess my greatest frustration comes in a rural
    environment, and I know we are struggling to do some outreach
    in some small clinics, but the question of equal access for
    rural veterans versus urban veterans, the distances involved,
    and clearly in States like mine several hundred miles is not
    unusual to have to travel one-way.
        Senator Mikulski. How many miles, Senator?
        Senator Craig. Several hundred.
        Senator Mikulski. I thought you said 700.
        Senator Craig. In one instance they traveled 351 miles one
    way, veterans from one area to the Salt Lake Hospital, and for
    elderly, or older people--it is a daunting challenge for the
    young. It is an even greater problem for the old. We are doing
    some clinics. We will be working with you to see how we can
    make that a more functional kind of thing, I think, to deal
    with.

                  REGULATIONS TO IMPLEMENT THE MILLENNIUM ACT

        But the question I guess I would have of you, and the
    Senator from Maryland broached it, with diabetes in the
    Millennium Health Care and Benefits Act, I think we are now
    just beginning to realize what it is all about. However, I do
    not think the VA has yet developed the policies necessary to
    deal with such issues as emergency care and hepatitis C and
    diabetes. Can you tell me where we are, or where you are, where
    the administration is at this point with that?
        Secretary Principi. Yes. We have been terribly slow in
    having our regulations finalized and submitted to OMB and then
    published in the Federal Register. This has been a major issue
    at VA for many, many years. We are beginning to take steps to
    address it.
        Some of the regulations you just cited, Senator Craig, with
    regard to the emergency care, and other millennium care
    provisions are now in the final stages. Some of them are at OMB
    for clearance, and future publication. Of course with the start
    of a new administration, a number of the regulations were
    pulled back for review and need to be resubmitted, but with
    regard to those mentioned, we are very close. However we do
    have some lingering issues about how we process regulations in
    the Department.
        Senator Craig. Well, we anxiously await--when do you think
    we will actually see those out and operable, or to a point of
    being implemented?
        Secretary Principi. I expect them all to be implemented by
    this fall, all of the ones that you mentioned, certainly by the
    end of the year, but I believe we can expedite some of them. I
    think we have a provision that could shorten the publication
    time in the Federal Register to 60 days. I believe that this is
    the case, and so there are steps we could take to get some
    relief to the veterans who have been waiting for reimbursement
    for the emergency care regulations.

                                TRICARE FOR LIFE

        Senator Craig. We have another interesting problem in
    Idaho, and I think it is largely because of--well, I do not
    know whether it is hostility, or just nonacceptance of HMO's
    largely in the medical profession, but I am talking TRICARE.
    Veterans who are military retirees are really medically
    underserved in Idaho, and partly rural, but also as it relates
    to the acceptance of TRICARE.
        I think you are going to have to work with the Department
    of Defense. We are making some advances there, there is no
    question about it, and we have got the Department of Defense
    and the Secretary of the Air Force's focus, because I am
    talking air base type retirees predominantly.
        At the same time, they fall under two categories, one is
    retired and can be eligible in both instances, but I guess what
    I am going to want to do is sit down with you to look at that,
    because we are beginning to get those reactions now, the
    combination of military retiree/veteran and TRICARE.
        Secretary Principi. High priority issue. I have a letter
    going over to Secretary Rumsfeld today. We have spoken on
    several occasions. The President has directed that we both get
    together.
        Senator Craig. Well then, it is an issue nationwide.
        Secretary Principi. There are too many issues between DOD
    and VA which do not help beneficiaries of either system, and
    certainly in our delivery of benefits, especially we have to
    wait months upon months to get a letter from DOD to adjudicate
    so that VA can pay claims and it is unnecessary. I hope we are
    going to announce an interagency commission, or a blue ribbon
    commission to look at both health care systems.

                               PREPARED STATEMENT

        Senator Craig. Well, we will watch that very closely.
        Thank you, Mr. Chairman.
        Senator Bond. Thank you very much, Senator Craig, for
    raising some very important questions.
        [The statement follows:]
                  Prepared Statement of Senator Larry E. Craig
        Mr. Chairman, it is indeed a pleasure to welcome our new Veterans
    Administration (VA) Secretary, Tony Principi and members of his staff.
    Secretary Principi's prior experience working in the VA will be
    invaluable and ensure our government honors our commitments to veterans
    while implementing the most beneficial and cost effective programs. To
    do this, we must look for opportunities to reform the VA health care
    system, while maintaining as our number one priority, our combat
    veterans with disabilities or veterans with low incomes who often rely
    exclusively on the VA for their care.
        The VA's budget proposal totals $51.7 billion for veterans'
    benefits and services, including $23.4 billion in discretionary
    spending, for medical care, burial services, and the administration of
    veterans' benefits. This is an increase of $1 billion over last years
    budget. In addition, with an increase in medical care collections,
    medical care for veterans would total a record amount of nearly $22
    billion. This is a total increase of 5.3 percent, and demonstrates the
    President's commitment to veterans health care.
        The President has promised a top-to-bottom review of how the VA
    processes benefits claims. I don't want to take up time during this
    hearing, but would like to invite Secretary Principi to meet with me at
    a later time to talk about the veterans benefit claim process and the
    dire need of reform. We must work together to restore the confidence of
    many veterans who have lost faith in the VA's ability to fairly and
    promptly process their benefit claims .
        I strongly support a VA which is committed to providing accessible
    high quality medical care and other veterans benefits and services in a
    timely and effective manner. However, we must expand and improve the
    delivery of services and benefits so that all veterans have equal
    access to, and quality of, medical care, particularly in under served
    rural areas such as Idaho. In southern Idaho, the initial steps were
    taken and clinics were provided in Pocatello and Twin Falls. But we
    must not forget the large population of veterans in the north who must
    drive over 350 miles to a clinic. A third clinic in Lewiston would
    provide desperately needed access to essential services.
        Another concern is the long list of veterans waiting to receive
    various services, especially medical care. In recent years there were
    tremendous staff reductions that resulted in reduced services. The
    necessary steps must be taken to reverse this trend.
        The benefits of the Millennium Health Care Act have just begun to
    be realized; however, the VA has not yet developed the policies
    necessary to deal with issues such as emergency care, hepatitis ``C'',
    and diabetes. I look forward to working with Secretary Principi to deal
    with these issues of major concern.
        I also realize there are several additional issues that are a
    concern to America's heroes. The National Defense Authorization Act for
    Fiscal Year 2001 established a new Department of Defense (DOD) benefit
    for military retirees over age 64 who have medicare coverage. Veterans
    who are also military retirees are medically under served in Idaho and
    other rural areas. Secretary Principi must work with the DOD to provide
    medical services to TRICARE dependent military retirees in VA
    facilities to ensure our veterans are properly served.
        In closing, Mr. Chairman, there is no way to over emphasize the
    honor and respect this nation owes the military men and women who
    sacrificed so much to accomplish a strong national defense. I believe
    that this proposed budget is a good beginning for ensuring our veterans
    will receive high-quality health care, that we keep our commitment to
    maintain veterans' cemeteries as national shrines, and we have the
    resources to process veteran benefit claims in a more timely and
    accurate manner. I look forward to working with Secretary Principi to
    meet the many challenges that the VA will face in the coming years.

                                 LONG TERM CARE

        Senator Bond. Now it is my pleasure to turn to Senator
    Johnson.
        Senator Johnson. Well, thank you, Mr. Chairman. I am
    heartened by Senator Craig's concerns and your response on
    greater coordination and reaching out between our VA and our
    DOD facilities. I think this is something that has been needed
    for a long time, and I appreciate your work on that. While
    there is greater emphasis on outpatient care at the VA as well
    as health care providers overall in the Nation, VA also faces a
    demographic reality of large numbers of World War II and Korean
    War era veterans with increasing needs for long term care.
        Under 1999's Millennium Act, we attempted to address long-
    term health care issues, but could you update me on where do
    you see the VA going relative to the long-term care needs of
    increasingly large numbers of veterans?
        Secretary Principi. Yes, sir. The good news first. We are
    making tremendous strides in addressing the extended care needs
    of veterans. Particularly either on an outpatient basis or in
    the community were trying to keep the veteran home as long as
    possible with the right support base, whether it be hospital-
    based home care, or the opportunity for respite care, which
    gives the caregiver a break. I talked to a couple of veterans
    in the hospital in Denver who were quite invalid. They were
    there for a couple of weeks while their caregiver got some
    rest.
        On adult day care programs, I visited great programs in our
    health care system in New York, and so I think we are doing a
    great deal on that score.
        The State veterans home program is an excellent program. We
    have made great strides in working with the States in sharing
    the cost of construction, providing a per diem payment. We have
    had a good success there.
        The only area where we have failed is in VA nursing home
    beds. We are about 1,200 beds short of our mandate, of the law,
    for nursing home care beds, and that is unacceptable. A
    direction has to go out indicating that we will, in fact, open
    and staff VA nursing home beds, to be at least in compliance
    with the law, and to make a policy decision as to whether or
    not we need more beds because of the aging veteran population.
    World War II veterans are now very frail and dying. As Senator
    Mikulski indicated, we have my generation--well, the Korean
    generation and my generation from Vietnam are now approaching
    60, and these programs become more important.
        So I think we are doing some wonderful things, great
    success. We have now established a uniform policy that says
    thou shalt have so many nursing home beds that are open and
    staffed to be in compliance with the Millennium Care Act.
        Senator Johnson. Well, I appreciate your trying to address
    the whole spectrum of long-term care needs rather than focusing
    exclusively on nursing home beds. You are right that home
    health care and assisted living and the whole array that the
    private sector has taken on makes sense within the context of
    the VA, but I am concerned about the shortage of the nursing
    home beds, and also aware that the condition of some of our
    older VA hospitals are not conducive to an easy conversion to
    nursing home facilities, that oftentimes that is not seen as an
    appropriate step, but I look forward to working with you on
    that particular issue.

                                MEDICAL RESEARCH

        One last thing I just want to touch base very quickly with.
    All the concern about physical plant, trying to catch up with
    the backlog on case filings and all the things you are doing,
    an area that I have some concern about is whether we are
    maintaining the resources and the attention of VA research that
    needs to be there, and I wonder, as we get in an increasingly
    difficult crunch financially on the resources available to the
    VA, do you feel that this is an area that is being squeezed out
    of the VA agenda?
        Secretary Principi. I will allow the experts to perhaps
    give a more detailed response, but from my perspective,
    research is very, very important to VA's core mission of caring
    for veterans. I think that some of the recent changes that have
    taken place in our research program, technology transfer and
    intellectual property, where the VA really receives the credit
    for this research, a research that is focused on our veteran
    population, are all things we can be very proud of.
        The budget goes up $10 million, it keeps pace with
    inflation, and I think it gives us a good base to continue to
    seek grants from NIH, which we have been very successful at. We
    take a significant amount of money out of the medical care
    appropriation and combine it with the $1.2 billion research
    program.
        I think we have a lot to be proud of, and I hope we will
    see more discoveries for which the VA will be the beneficiary
    both in terms of our patients who may have lost limbs, have a
    spinal cord injury, or a traumatic brain injury. And that VA
    will get the credit and some of the money to improve the
    research at the facility as well as rewarding the research.
    Those are the goals, and I think we are doing very well.
        Senator Johnson. I would yield back. My time has about
    expired.
        Senator Bond. Thank you very much, Senator.

                           MEDICAL CARE FUNDING LEVEL

        Mr. Secretary, the VA budget for medical care represents an
    increase of $971 million over the current fiscal year,
    including collections, for a total of $21.9 billion. Are you
    confident that is sufficient to meet the needs of all veterans
    who seek VA health care with the best quality and in a timely
    fashion?
        Secretary Principi. I feel like I am on Regis. How do I
    answer that question?
        Again, I am pleased, very pleased with the budget that we
    have received from the President. I think it reflects a real
    commitment. What concerns me is, that we do have a lot of needs
    and a lot of different areas. We have allowed ourselves, and
    not maliciously, to back ourselves into policies that I am
    concerned about.
        We talk about category 7's, for example. We have got the
    CBOC's out there. A lot of people are coming to us. HMO's, as
    you said, Senator, are closing down, and I am not sure we have
    really addressed this issue as all the stars in the universe,
    you touch one, they all get hit. What does this mean for our
    overall system? Where are we going? Who do we provide care to?
    What care do we provide? It impacts on the CARES process, on
    how many category 7's come in, and what kind of copayments do
    we collect from 7's. We are not collecting very much now, as
    you said, 10 percent, and these are people who are nonservice-
    connected, and have higher income. They are deserving because
    they served their country. They may have scaled the walls of
    Normandy and never filed a claim for benefits.
        So they are nonservice connected, and they have higher
    income, but I am not saying they are low priority because of
    what they did during World War II and Korea. These are the
    issues that we have to grapple with, and certainly with the
    committee, we need to determine where we are going, because
    there are 25 million men and women out there. We see about 4
    million. We get $22 billion. If you extrapolate that, that
    leaves probably about $180 billion to care for everybody.
        So we have to determine what does this mean to the system
    as we increase access points. Do we allow everybody to be
    enrolled, and can we provide high-quality care and what will it
    take? Those are the issues that need to be discussed up front
    rather than saying the way I think we have done it.

                            MEDICAL CARE COLLECTIONS

        Senator Bond. Well, I have got a whole bunch of questions
    that I am going to give you lots of opportunities for answers.
    Let me try to run through them. The VA collections you say are
    going to increase by about $200 million. In the past, the
    collections have always fallen short of projections. They have
    remained relatively stable to just around $570 million. Why do
    you think collections can be projected to increase so
    significantly this year and next?
        Secretary Principi. I think a couple of reasons, first,
    reasonable charges. We have seen the results of imposing
    reasonable charges now on third party, and we have already
    collected $355 million in total medical care collections in the
    first half of the year. That is a record, so I am pleased with
    the trend.
        Second, I think we will see some adjustment in copayments
    in pharmaceutical benefits. All of those dollars, of course,
    stay with the system, so we will see an increase in first party
    reimbursements in 2002, and I am hopeful that we will continue
    to improve our processing. I am not convinced that we do it as
    well as we can.
        Our accounts receivable are high, the amounts we recover
    are low, and the cost of collecting is too high. We need to
    find out what are the best practices out there, export those
    best practices uniformly around the system, and have a uniform
    standard. Rather than allowing everybody to do their own thing
    their own way. We need to have more uniformity.
        Senator Bond. I understand a large percentage of the cost
    of the VA bills could never be recovered. They cannot recover
    from an HMO or receive full cost from a medigap policy, but
    clearly there is an opportunity to do better. What do you think
    is the maximum amount of additional reimbursements that you
    believe VA could be recovering, and what do you see as your
    plans down the road to improve the collections program to
    recover fully all of those costs so we can increase the
    resources that we devote to veterans health care?
        Secretary Principi. I do not know. You know, we cannot
    collect from Medicare. You know, the big insurers of the
    private sector collect from Medicare. That is unavailable to
    us, so we have to go after the HMO's, unless they have a
    provision that allows reimbursement--most do not. That puts us
    at a disadvantage, because we have to go after the small
    insurance companies, but I do believe it is higher than we are
    now. I think we may be able to break $1 billion in collections.
    Certainly, as we look at the issue of category 7's, that is
    something that we have to address.
        Dr. Garthwaite. Just one comment. One of our challenges is
    identifying insurance, and we are working with Medicare to see
    if they have a data file that would allow us to know that the
    veterans had insurance.
        Secretary Principi. And also being a TRICARE provider will
    be very important.
        Senator Bond. That is a possibility. Budget accountability
    is something I mentioned earlier. More than $700 million this
    year was identified in spending that will not meet original
    budget plans for fiscal year 2001. I hope you will work with us
    to develop a system that links the budget development with the
    budget execution. If you tell us what you are going to spend it
    on, we can appropriate that rather than having a mismatch
    between what is requested and how you account for it, and that
    is frustrating for us, and it is not effective.
        Quickly, what else can be done to identify insurance for
    veterans who have private insurance?
        Secretary Principi. Well, certainly I have directed--I do
    not know if it has gone out yet, but I have directed that when
    we register or preregister an individual, that the individual
    signs a form. The individual then has to sign that the
    information provided is true and correct, that it is a
    violation of Federal law if they do not write down their
    insurance company. I mean, DOD does it in every case. We need
    to do more to identify insurance at preregistration before any
    veteran comes to the medical center for care.
        Perhaps Dr. Garthwaite has some other ideas, but clearly we
    are not getting the information we should be getting, and as a
    result we cannot bill an insurance company for the cost of
    care.

                            Need For Medicare Reform

        Senator Bond. I will return to that after Senator
    Mikulski's next round of questions. Thanks.
        Senator Mikulski. Thank you very much, Mr. Chairman. I just
    want to amplify the point that had been made related to
    priority 7.
        I believe that you are seeing a growth in the priority 7
    cases because of the failure to do real Medicare reform, and I
    would really encourage you at the highest level within the Bush
    administration to really press that Medicare reform, which I
    know the President does want to do, be really accelerated.
        It is actually even more of an impending crisis, I think,
    than social security. Social security is a demographic money
    problem. This is a whole other issue. I have such confidence in
    Governor Tommy Thompson that I believe that we could really
    make progress on this, but the Medicare HMO is a disaster.
        I have had the closures downs just first in my rural areas
    and then $75 premiums because you lived in Salisbury instead of
    Baltimore. What does that mean if you are 65 years old, the VBA
    give-backs that I know we have worked with on a bipartisan
    basis for training and for home health care.
        So really the need for Medicare reform--and I truly believe
    a prescription drug benefit would really help alleviate the
    pressure on you. They are coming to you not because of part A,
    because they want to come into your great hospitals, but they
    are coming to you because of part B. They want to see the
    doctor, specialist, and have access to prescription drugs, and
    they feel, they could pay for medigap and maybe get additional
    help there, so I think this is where it is intertwined. So
    enough said.

                             GERIATRIC EVALUATIONS

        Long-term care is, again, facing the entire population and
    if we could get the implementation of the Millennium Act, I
    think the Millennium Act is an outstanding act, but the
    question is how to do this, and here is my question. First of
    all you say, Dr. Garthwaite, you need 1,200 beds. One of the
    issues is appropriate evaluation so that people go in the right
    place at the right time.
        My dear father died of Alzheimer's, but because we had
    geriatric evaluation at Hopkins, we could use adult day care
    and that kept him at home with us, and I believe stretched out
    his cognitive ability. But we needed to have the right
    evaluation and where he was in this situation before we looked
    at this.
        So my question is threefold. Number one, are you building
    geriatric evaluation into it? Number two, by geriatricians,
    okay, because the other people that my father saw before I got
    him to the Hopkins geriatric evaluation just said, oh, it is
    old age, and wanted to give him tranquilizers, because he was
    starting to live the 36-hour day that I know you are familiar
    with.
        So the question is, number one, appropriate evaluation,
    number two, how are you going to pace this? This is really
    significant. And number three, the issue of assisted living in
    all of this, because often it is a family collapse rather than
    a health collapse that requires long-term care, and a different
    type of facility might be more suitable.
        Dr. Garthwaite. I could not agree more. My father also died
    of Alzheimer's, so I know personally the challenge of caring
    for someone with that disease. I am sure you are aware of our
    geriatric research education and clinical centers. We actually
    have 21 across the United States, and these are dedicated to
    research and understanding of the challenges and diseases and
    difficulties with aging, and the education of other geriatric
    providers throughout the system.
        I think geriatrics owes its birth, really, to those
    facilities and other programs such as geriatric evaluation
    units that the VA has put forward. In the Millennium Act we see
    several related things. One is that there is a proposal for a
    new covered benefit which would include alternatives to nursing
    care so that we can provide services that really are not
    provided by most health care systems.
        We have efforts underway at providing uniform screening and
    comprehensive evaluation of patients for those services. We
    have authority to conduct one pilot in assisted living, and
    that has been awarded. It has been awarded in VISN 20, and it
    is starting up shortly. I think we totally agree with you with
    the significant emphasis on alternatives to nursing care,
    because frankly that is better for the patients and more cost
    effective.
        Senator Mikulski. I know my time is up, but do you have a
    sense of how you will pace this implementation of the
    Millennium Act? You do not have these facilities. You have a
    few scattered through the entire United States of America.
        Secretary Principi. Well, I know we are talking about the
    one at Fort Howard as a possible assisted living facility, but
    we do not have a clear policy, Senator, and we need to get the
    policy in place, and then from that point make the
    determination of how we are going to proceed.

                                  FORT HOWARD

        Senator Mikulski. Yes, and also new ways of being able to
    do this, not only the assisted living but the adult day care,
    and are there going to be public-private partnerships, and
    creativity, I mean really creative and resourceful.
        Yes, Fort Howard, as you know, is closing. We are looking
    at a way of providing some continuing care for this also, not
    to be the assisted living demonstration project, but I think
    what we have at Fort Howard is an opportunity, and could I have
    you take a look at Fort Howard? I want to be sure you are
    satisfied with what we are doing at Fort Howard, talk with me,
    so that the veterans of Maryland are satisfied and that we can
    move forward on it.
        Secretary Principi. I would be happy to. I was out there
    many, many years ago, and need to do a return visit to assess
    that, but I have talked to my people about it. Dr. Garthwaite
    has a good site for that, but we will take a look at it, and I
    will get back to you, Senator.
        Senator Mikulski. Thank you. Thank you, Mr. Chairman.
        Senator Bond. Thank you, Senator Mikulski.
        Senator Leahy, are you prepared to offer a statement and/or
    ask questions?
        Senator Leahy. Thank you, Mr. Chairman. I will submit
    questions for the record, but as I was upstairs in another
    matter on Judiciary, I am glad to see the Secretary here. He
    and I have known each other for almost 25 years, and I am very
    pleased to see him, and I look forward sometime to having him
    come up to Vermont to see how the VA operates there. There are
    a number of success stories there.
        Secretary Principi. It is great to be back, Senator, and I
    look forward to working with you on the various programs. We
    are making progress. We have some more to do.
        Senator Leahy. I would, with full disclosure, Mr.
    Chairman--because my mother and all her family are from Italy,
    I will only be half as tough on the Secretary as I would be
    otherwise.
        Secretary Principi. You have reminded me of that over the
    25 years.
        Senator Leahy. I find I do not have to remind you any more.
        Senator Bond. Do not bet on it, Tony, but it is nice to
    have out there just in case.
        Secretary Principi. That is the better half, his mother.
        Senator Leahy. When my mom was alive somebody before one of
    our committees, obviously an Italian name, man about 50, and
    was somewhat nervous coming before the committee--it was a
    controversial thing--and my mother called and said, don't you
    give that nice boy a rough time, or that nice young man a rough
    time.

                    TAMPA STUDY--AUTOMATIC CLINICAL GUIDANCE

        I have pushed the VA in the past few years to test new
    software that might automate clinical guidance for veterans.
    There is so much data out there that can be picked up.
        The VA, as you know, has been a great spot to detect trends
    on a lot of things, heart condition, diabetes and so on, and if
    you have the right software, as I see it, you would end up
    increasing the quality of care, but you could also save a lot
    of money, too.
        Now, I understand that a test of these tools at the Tampa
    VA Hospital did show, as Senator Mikulski brought out, the
    dramatic improvement in the care of diabetes patients, but I
    have not read an actual copy of the report. I do not know if
    you have heard of the Tampa study yourself. Do you have any
    thoughts about how this kind of software could improve health
    care across the veterans' health care system, and do you have a
    copy of the study?
        Secretary Principi. I have not seen the study. I know of
    the study, and I know the work there has been successful, and I
    need to read the study, but you are absolutely right, I do
    believe that we need to look at the expert systems that are
    available, the solutions that are available to allow us to do
    our work better and with higher quality and quicker, and I know
    in the benefits claims area as well, there are systems out
    there that perhaps can be imported to assist us.
        We have an aggressive look now. I know the Under Secretary
    for Benefits, Mr. Thompson, to my far left, is doing that and
    we hope to be working with the private sector in looking at a
    procurement for a system or systems very soon that will help us
    get this enormous backlog down.
        Senator Leahy. I think you would find a lot of support on
    this committee on both sides of the aisle for ways to help you,
    and to help the veterans through the kinds of software, through
    information that if you got--and the obvious thing, when you
    see a sudden spike in a particular age category of an illness
    or a result, and that is happening nationwide, the sooner you
    know it the better, because it may well change treatment, and
    the effect for the civilian population just to know this.
        Again, so many advances in the medical science have come
    from the VA system partly because you can look nationwide, so
    let us continue to work together on that, and Mr. Chairman, you
    do not have an easy job on this part of the budget because
    there is always more demands that we never have the resources
    for. I commend you for over the years your deft hand at trying
    to balance how best to do that, and I have enjoyed working with
    you on it. Thank you very much.

                                  PRIORITY 7'S

        Senator Bond. Thank you very much, Senator Leahy. That is
    what makes the job so much fun and rewarding, but that is why
    they call it a budget, because there are always more priorities
    than there are resources to meet them, and we appreciate your
    work on those.
        Speaking of priorities, over the last 5 to 6 years,
    priority 7 veterans have risen to about 27 percent. Your budget
    projects a slight drop, and I would like to know the philosophy
    on the sevens. We want to make sure that they are not being
    provided expansive care for the service-connected low-income
    veterans. Are there other ways that you are considering of
    increasing the cost share for the sevens on the kind of care
    that they receive?
        Secretary Principi. A critical issue, Mr. Chairman. Thus
    far, there has been no change in policy with regard to sevens.
    Again, I would certainly like to continue to be able to enroll
    sevens, but at the same time, the impact they are having on the
    system--whether it is going to have an adverse impact on the
    service connected to the poor--I am not sure we know quite yet,
    because they are still coming in, in relatively large numbers.
        I do believe that if we continue to have unrestricted
    enrollment, that we need to look at the copayment issue and
    getting reimbursement from insurance companies. Because
    collecting 10 cents on the dollar, spending $1.5 billion on
    sevens and only collecting about $150 million, of which 22 to
    23 percent is for overhead to collect the $150 million, the
    system is finitely budgeted. We only have so much money to go
    around, and we heard about all the needs for long-term care,
    and hepatitis C and other programs. We have to make some
    decisions.
        But I am hopeful through an increased copayment and
    increased reimbursement from insurance companies, we can
    continue to enroll sevens and continue to have a full spectrum
    health care system.
        Senator Bond. I notice that there is a projected slight
    drop in 2002. What do you see for the long term? Are we going
    to see a drop, or is this just 2002, just a 1-year time? Is it
    going to continue to go up? There are lots of other--TRICARE
    and things like that--is it likely to impact the number of
    sevens?
        Secretary Principi. I think it is hard to predict. I think
    with an increasing copayment you will see a drop-off,
    certainly, in veterans. I think with TRICARE for Life, where
    military retirees age 65 can now enroll, and enroll their
    spouses in the TRICARE program, will drive some away from our
    system. I do not know what percentage of the military retirees
    will choose to go to TRICARE. We have projected 25 percent, or
    27 percent in 2002, so $235 million of our budget has been
    transferred to DOD to pick up that liability.
        That may be high, that may be low. I think we have to wait
    a year.
        As Senator Mikulski said, if Medicare has a more attractive
    prescription benefit, and Medicare reform, that could have an
    impact on our system.
        There are a lot of variables, a lot of unknowns.

                       COMMUNITY-BASED OUTPATIENT CLINICS

        Senator Bond. Let us turn to community-based outpatient
    clinics. That has been something that I think all the members
    of the committee, and I have been certainly most appreciate of
    the new service that is being provided. We have tripled the
    number of CBOC's since February 1995, but GAO tells us 13
    percent of the VA users, 432,000 veterans, are not within 30
    miles of VA medical facility.
        They found the majority of patients who lack reasonable
    access are concentrated in six networks, including VISN 15,
    which encompasses most of Missouri. Is there something inherent
    in the networks that makes improving access for veterans more
    difficult?
        Secretary Principi. I believe we need national policy
    guidelines with regards to the CBOC's. I believe that is in the
    works, and due to me any day now so that we can take a look at
    the shortfall before we send a new list up to you to activate
    new CBOC's. Therefore, no new list will be sent up until we
    have a uniform policy. Dr. Garthwaite and I will discuss the
    policy, and hopefully continue to make sure that our coverage
    is where it should be.
        Senator Bond. Well, I know that Senator Craig is going to
    be very interested in that, and we are looking forward to
    seeing it. I realize in some areas veterans are just too widely
    dispersed to be within the 30-mile range, but we do look for
    your best recommendations on how to handle those situations.

                                  HEPATITIS C

        Let me turn to hepatitis C. A couple of years ago we were
    estimating $500 million in actual spending. It was only $50
    million last year on screening in the antiviral drug therapy.
    Last year, the agency stated VA believes the surge of patient
    workload is likely to occur in fiscal year 2001 due to
    increasing veterans awareness, education, and training of
    staff, and to VA's promotional efforts. Why haven't these
    projections been realized?
        Secretary Principi. Dr. Garthwaite can answer some of the
    details of this, but from my perspective, I want to point out
    that I believe the Department is committed to screening,
    testing, and providing treatment to as many veterans who have
    inflicted this hepatitis C virus. I think we are plowing new
    ground here. Our estimates were not accurate, because this is
    relatively new to us, and perhaps we did not have the data
    systems in place by which we could truly monitor what was going
    on in the field, and then again, only 20 percent of those with
    hepatitis C actually go into the treatment.
        We found of that percentage, 50 percent complete the
    treatment because of the toxicity of the drugs, and so veterans
    do not complete the treatment, and of those that do complete
    the treatment, 50 percent, I guess, go into remission. I do
    believe however, we have made an effort to outreach and screen
    and provide treatment to a great many veterans.
        Dr. Garthwaite. All I would add is that we started this
    making estimates where everything was an assumption. We have no
    empirical data to use, and so we are rapidly enhancing our
    understanding.
        We believe we have tested--we have certainly done over
    600,000 tests, significantly more than that in 1999 and 2000,
    and identified 75,000 unique individuals who are positive for
    hepatitis C and are actively managing their cases and providing
    them a lot of health care.
        The key is, we do not quite know how many people we have
    screened, because it is in each individual chart, but we did
    recently implement a reminder system that electronically
    captures the screening, so we believe over the next couple of
    years we will be able to document that we have screened every
    veteran at least with the questions that decide whether they
    should have the tests done.
        Senator Bond. So this may be a question of just inadequate
    information, but still it is a management system that you need
    to put into place to make sure that everybody understands the
    need for a screening, so that you will communicate to the
    hospitals that this is a priority to screen for this, and you
    will assure that there is information technology in place to
    assure that follow-up?
        Dr. Garthwaite. We have communicated the importance, but
    you need to remind providers at every visit, at each time there
    is a visit. People are busy. There are a lot of things going
    on, and we need to document it so that we know it actually has
    happened.
        In addition, we are sending out 3\1/2\ million fliers, with
    the help of the American Liver Foundation, to encourage people
    to come be tested.
        Senator Bond. The number for fiscal year 2002 is $172
    million. Is that a reasonable estimate?
        Dr. Garthwaite. We think it is, based upon currently
    updated information, and I think I would beg your indulgence.
    We are trying to get smarter and better as we go, and we will
    share all the information we get with the committee.
        Senator Bond. Well, we will look forward to seeing the
    performance measures when you get those in place so we know
    that it is working.

                                  CARES SYSTEM

        Let us turn now to CARES. I have been very supportive of
    this process. It took too long to get off the ground. We want
    to make sure it does not fall behind. We have heard that,
    quote, if the integrity of the model and data is proven, we
    will continue this process throughout the system.
        What does that mean, and what is your assessment of the
    CARES system, and are you committed to it?
        Secretary Principi. Yes, I am committed to it, because I do
    think we need to rationalize this infrastructure and bring it
    in line with the demographics, and changes in the health care
    delivery. But, I do think the data needs to be unassailable. I
    think it needs to have a great deal of integrity that the books
    have not been cooked, and we are taking into consideration
    suppressed demand and all of the other factors, so that people
    have credibility in what we have done when we have to make the
    hard decisions.
        So I am committed to it. I am not backing away from it.
    But, I know that it is going to involve some tough decisions in
    every State, and I want to get on with it as quickly as
    possible, and make the changes. We are not in the real estate
    business, we are in the health care business, and if we can
    demonstrate that we can enhance health care by changing the
    mission of a facility, then I think that is important.
        Senator Bond. Do you support a moratorium on major medical
    projects, pending the completion of the CARES study?
        Secretary Principi. I am sorry, sir.
        Senator Bond. Do you support a moratorium on major medical
    projects, pending the completion of the CARES process?
        Secretary Principi. Sir, no, I do not. We have a large
    health care system in America, and it is deteriorating in some
    areas, and I think we need to make investments in those areas
    where we know there will be no change in mission.
        I can assure this committee, the chairman, that I would not
    invest dollars in a facility that had even the most remote
    probability or possibility of a mission change. But, we cannot
    afford to allow our system to deteriorate and impact on the
    quality and patient safety, and there are some things that we
    need to get on with. So, I urge the committee that certain
    additions, certain renovations, carefully prescribed in consult
    with this committee, should go on and keeping in mind that this
    process is taking place, but look what happens.
        Look what has happened to the DOD health care system. It
    has deteriorated, equipment past its useful life, and I think
    we need to be very, very careful that that does not happen to
    the VA.
        But again, I know about CARES. I know about putting money
    into the facilities. At the same time, we need to watch our
    capital asset management as well, because we are making
    decisions with regard to licenses, leases, contracts that are
    binding our hands for many years, and that is an issue of
    concern to me as well.
        Senator Bond. Well, we certainly agree with you on the
    safety aspects and other things, but I think it is important
    there be some standard that you have, because I have heard in
    Government there are such things as politically popular
    investments. The proponent always calls them a strategic
    investment. There are those who call them pork-barreling, and
    one of the objectives of CARES was to establish a clear line to
    determine what is a sound investment.
        To the extent that there must be some standards--for
    example, one of the things that I think the seismic risk--VA
    has 69 facilities, most of them on the West Coast. We do
    earthquakes along the New Madrid Fault as well, but how much of
    an emergency is this, and will CARES process impact this? Are
    there other areas where there are critical needs, for which you
    have standards that you would want to move forward?
        Secretary Principi. Well, clearly, seismic is an important
    area. You never know whether or when the next one is going to
    hit. Clearly, some are in more active seismic areas than
    others. We need to take a look at that.
        Electrical, water type of infrastructure repairs that need
    to go on, and facilities that we know will remain with a highly
    unlikely mission change or expansion, I think it is those
    areas, but we need standards. You are right, you need to know
    what we are basing the request on, and we will provide that to
    you, but I do think we need to get on with some minor and major
    construction to keep the system at a high state of quality.
        Senator Bond. Give me a quick update on the pilot project
    in VISN 12, and have you learned any lessons, and will we get
    all phases completed by 2003?
        Secretary Principi. Yes. I am hopeful that we will have the
    options to me in June, later this month, in June. There are
    some draft options now which are being linked to the data, to
    the criteria, and as soon as that work is done we can get into
    the decision-making process.
        Have we learned anything? There was some concern on the
    part of some of the leaders of the veterans service
    organizations that although they were kept informed, they
    really did not feel like they were part of the process. So, we
    are holding a 1-day workshop with them to alleviate their
    concerns and make sure that they are read into it, and have a
    voice in that process.

                          ST. LOUIS VAMC PARKING NEEDS

        Senator Bond. Finally, speaking of strategic sound
    investments, VA has identified a number of projects validated
    by VA's Capital Investment Board in the past few years that
    have not made it into the President's budget. One of those
    happens to be a parking garage at the St. Louis Hospital, where
    parking is very limited for patients and staff. Are there any
    innovative solutions you might look at for addressing the
    problem in St. Louis, and could you work with us to come up
    with some solutions to it?
        Secretary Principi. Yes. The project had been approved by
    the Capital Investment Board for advanced planning funds, but
    it did not hit that priority. However, because of its
    importance we are looking at enhanced use, and will have an
    enhanced use assessment within 30 days. We will get back to you
    with the results of that assessment, but I believe going the
    enhanced use route is a viable option to meet the parking care
    needs, which is very important and very critical.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Bond. Mr. Secretary, thank you very much for your
    answers. Believe it or not, I still have a bunch of questions
    for the record, but I will submit those to you by staff, that
    we will keep the record open for any questions, and we would
    appreciate your answers.
        We thank you very much for your testimony. Is there
    anything further you wish to add?
        Secretary Principi. No, sir, thank you.
        Senator Bond. Thank you very much.
        [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
                    veterans benefits administration issues
        Question. A few years ago, VBA organized its 59 Regional Offices
    into ``service delivery networks.'' What improvements, if any, are
    attributable to the SDNs?
        Answer. The reorganization to nine Service Delivery Networks (SDNs)
    has resulted in more open and honest communication between operating
    elements within the Veterans Benefits Administration (VBA). In addition
    to improved communication, the reorganization has been successful in
    promoting cooperation and eliminating destructive competition. This is
    reinforced through VBA's Executive Performance Appraisal System. A part
    of every facility director's performance appraisal is based on the
    successful achievement of SDN and VBA performance goals, as well as
    local goals. This has resulted in stations within SDNs being more
    willing to share resources in the interest of SDN performance gains.
        Several SDNs have created shared budget web sites to facilitate the
    tracking and sharing of resources at that level. SDNs frequently meet
    to discuss SDN-specific issues and five have created SDN-specific web
    sites. This level of cooperation and participation is unprecedented in
    VBA. The SDN reorganization has opened up formal channels of
    communication that did not exist in VBA previously.
        Communication within the SDN has resulted in improved service to
    veterans. In some cases, directors have adjusted traditional geographic
    barriers in the interest of providing enhanced service to veterans.
    Many SDNs participate in inter-SDN brokering arrangements initiated at
    the SDN level. Several SDN 1 stations share the processing of
    overpayment waiver requests by their Committees on Waivers. SDN 1 also
    utilizes shared resources for conducting local Systematic Technical
    Accuracy Review (STAR) quality reviews. This fosters uniformity in
    decision-making and error identification within the SDN. SDNs 1, 8, and
    9 have developed community Web sites for the sharing of best practices.
    SDN 6 has consolidated burial flag processing at the St. Paul Regional
    Office to increase efficiencies within the SDN. SDN 9 developed an
    electronic system for marketing and selling VA-acquired properties
    across all Regional Offices within the SDN. This initiative has been
    exported nation-wide and has resulted in significant cost savings to
    the government. These are only a few examples of cooperation among SDN
    members resulting in improved service to veterans.
        Question. Performance varies considerably amongst the 59 VBA
    Regional Offices and there seems to be no accountability. How will you
    improve accountability for performance?
        Answer. The restructuring of VBA's field organization into 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. This
    allows VBA 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;
    however, there are systems in place to ensure accountability and
    measure performance on the basis of improvement and outcomes.
    Performance measures are tied to VBA's Balanced Scorecard and strategic
    goals.
        In restructuring the VBA organization, direct line authority over
    field organizations was maintained. Ensuring a direct line of authority
    was particularly critical during the initial stages of team-based SDN
    development. This line of authority is provided through the Deputy
    Under Secretary for Operations and the two Associate Deputies. The
    Associate Deputies are responsible for overseeing the operations of the
    SDNs, including monitoring performance against goals and standards and
    assuring progress in the implementation of national policies and
    initiatives.
        Variations in performance among the Regional Offices occur because
    of a variety of factors, including workload, resources, and staff
    experience levels. Our target setting process, designed to achieve
    performance targets at the national level, assures that individual
    station-specific targets are as appropriate as possible. In order to
    make sure targets are challenging--yet achievable for all Regional
    Offices--and to hold managers accountable for performance, targets are
    individualized for each station in each Balanced Scorecard measure. It
    is with these performance targets that the foundation of accountability
    is set.
        Accountability is established through the performance briefings and
    discussions that are conducted within the SDNs and at VBA leadership
    meetings. These discussions include detailed explanations about
    workload issues at each station. Directors and SDN representatives are
    responsible for explaining to each other their progress in achieving
    national, SDN, and station targets; identifying current performance
    problems; citing solutions that are being implemented; and sharing best
    practices.
        Formal accountability is maintained through our performance
    management system. Element 1 of the Directors' performance standards
    measures the achievement of the Balanced Scorecard targets. A weighted
    composite score is developed to assess how each station and SDN are
    performing overall based on their business lines' performance on the
    Balanced Scorecard. The performance standard element itself weights the
    national score at 15 percent, the SDN score at 50 percent, and the
    station score at 35 percent. Directors must achieve 85 percent of the
    composite performance target. Thus, the directors are held accountable
    for how their stations perform and contribute to the SDN and national
    performance. Directors are provided feedback at the mid-year review, as
    well as during their annual performance appraisal.
        Question. Have SDNs helped in improving accountability?
        Answer. As discussed in response to the preceding question, the SDN
    structure has significantly improved accountability. An additional
    aspect of accountability is provided in element 2 of the Directors'
    performance standards. Under this element, his/her SDN directors rate
    each other on teamwork and cooperation. The rating is done using a web-
    based questionnaire. Directors are provided with written feedback
    developed from the input of the other directors. That feedback is
    discussed in a closed session of the SDN directors in consultation with
    the appropriate Associate Deputy Under Secretary for Operations. Each
    director is responsible to the group of SDN members, thus strengthening
    overall individual accountability.
        Question. VBA expects to improve its accuracy rate from 59 percent
    in 2000 to 72 percent this year. What specific efforts will result in
    such a large increase?
        Answer. VBA has placed an increased emphasis on the timeliness and
    accuracy of the claims process. In the past few years, VBA implemented
    a number of initiatives designed to improve the accuracy of claims
    processing. VBA established Quality Countermeasures Teams to identify
    processing errors and focus resources on corrective actions. The STAR
    program identifies specific errors. Countermeasures are developed to
    address the most prevalent errors, and ``Just in Time'' training is
    provided to mitigate the most frequent errors.
        The Decision Review Officers (DRO) program provides a level of
    review to ensure that accurate decisions are made and that the decision
    is fully explained to the veteran. Feedback from the DROs is used to
    improve accuracy. The Training and Performance Support Systems (TPSS)
    initiative provides comprehensive training for the core claims
    processing work. TPSS and the Systematic Individual Performance
    Assessment (SIPA) initiative will provide accountability and uniformity
    to the claims process and result in improved accuracy.
        These initiatives and capitalizing on the information technology
    investments will provide VBA with the opportunity to make significant
    strides in our efforts to improve the accuracy of the claims process.
        Question. VBA is requesting an additional 890 FTE for fiscal year
    2002. What workforce analysis or data was used to support the need for
    these additional FTE? Do you foresee the need for additional increases
    in VBA staff in fiscal year 2003? Has VBA done any analysis showing
    exactly how many employees and what skill mix are needed in each
    regional office to support the expected disability claims workloads?
    Has VBA developed a formal workforce succession plan?
        Answer. In 1998, as VBA began development of the fiscal year 2000
    budget request, we identified a number of critical management
    challenges that would adversely impact the VBA organization in the
    near-term and long-term future. The workload was becoming increasingly
    more complex and would increase in direct proportion to that
    complexity. A significant percentage of the experienced workforce was
    approaching retirement age.
        The organizational structure did not lend itself to providing
    quality veteran/customer service. In the fiscal year 2000 plan and
    budget formulation process, VBA outlined an ambitious, multi-year
    approach to address these management challenges.
        VBA began addressing the human capital challenge in their fiscal
    year 2000 budget submission; further efforts to resolve the challenge
    were included in the fiscal year 2001 and fiscal year 2002 submissions.
    VBA developed a workforce plan that includes succession planning.
    Staffing needs of each regional office are assessed, and a matrix that
    assesses employee skill levels is currently under development. A
    comprehensive VBA training program (TPSS) is addressing the training
    needs of new and current employees.
        Analysis is underway to determine whether VBA has successfully
    addressed the human capital challenge by the end of fiscal year 2002.
    The results of this analysis will determine whether VBA will request
    additional FTE in fiscal year 2003.
        Question. VBA expects duty-to-assist requirements and diabetes
    claims to increase the pending workload dramatically in fiscal year
    2001 and fiscal year 2002. What is VBA's forecast of the pending
    workloads in fiscal year 2003 and fiscal year 2004? Do these forecasts
    show the workload will decrease? When will it begin decreasing?
        Answer. The legislation regarding these issues not only resulted in
    an influx of new claims, but essentially changed VA's procedures for
    processing both. The new duty-to-assist law requires additional wait
    time be built into the claims process as part of the development. Added
    development is also required prior to making a decision. As a result,
    we do not anticipate that the increase in workload resulting from this
    change will dramatically decrease in the coming years. Similarly, the
    change to the law involving diabetes also changed the fundamental work
    process involved in adjudicating this type of claim. While the initial
    flood of claims will gradually dissipate, we expect a steady stream to
    continue.
        We do anticipate an overall decrease in workload by late 2003 or
    early 2004. We have seen a downward trend in number of claims received,
    and barring any new legislation, we expect this trend to continue.
        Question. In processing initial compensation claims, how long on
    average do Regional Offices wait to receive evidence needed from
    external sources? Other than establishing predischarge sites, what has
    VBA done to reduce waiting times and what else can be done?
        Answer. VBA has analyzed the delays encountered in obtaining
    evidence from its primary information providers. This analysis shows
    that, depending on the sources, it takes 2-166 days to obtain evidence
    necessary to adjudicate claims. The chart below shows the number of
    days it takes to receive evidence from the major providers of this
    information.

    Access to Evidence

                                                                     Days to
            Evidence Source                                          Receive

    CURR (U.S. Army Center for Unit Records Research).................   166
    National Personnel Records Center.................................   100
    Private Medical Records...........................................    50
    VA Physical Exams.................................................    35
    VHA Records.......................................................    31
    Records Management Center.........................................     2

        In the past, VBA had difficulty in obtaining service medical
    records to process compensation claims. In 1992, VA entered into an
    agreement with the Department of Defense (DOD) to resolve this issue.
    Now, DOD sends the veteran's service medical records to the VA Records
    Management Center at the time the veteran is discharged. This process
    has reduced access time to this information to 2 days. VBA initiated
    several efforts to improve the timeliness of its evidence-gathering
    efforts. The National Personnel Records Center is the major source of
    information to process compensation claims. VBA developed an automated
    system to requests veterans' service medical records (veterans
    discharged prior to 1992) and military service records from the
    National Personnel Records Center in St. Louis. The Personnel
    Information Exchange System (PIES) was fully implemented in fiscal year
    2000. In addition, VBA has placed VA staff at the National Personnel
    Records Center to assist in alleviating the backlog of requests for
    information.
        VBA and VHA have partnered to create a joint exam office that will
    improve the timeliness of processing initial claims. A Compensation and
    Pension Records Interchange (CAPRI) was developed in order to improve
    VBA's access to VHA medical records.
        VBA continues to work closely with the United States Army Center
    for Unit Records Research (CURR) to reduce the delays encountered with
    stressor verification requests required in the processing of PTSD
    claims. The Compensation and Pension (C&P) Service has issued a
    Statement of Work for an electronic data exchange system similar to
    PIES to improve the timeliness of those requests.
        Question. What is VBA doing to identify, evaluate and disseminate
    best practices to the field?
        Answer. In recent years VBA has developed systems and mechanisms
    for evaluating practices used by its field facilities. A prime example
    is the establishment of the Business Process Reengineering (BPR) case
    management demonstration sites. These sites by their very nature are
    test beds for best practices. Within the six identified sites
    initiatives designed to improve claims processing are tested prior to
    implementation nationwide.
        These demonstration sites are modeling the case management service
    process to include: defining and implementing this process; testing PC-
    based case management tools; and developing and utilizing a series of
    reader-focused writing letters that provide customers with process
    expectations, evidence needs, and claims status. The sites are also
    measuring the impact of this approach on claims processing by tracking
    a number of processes and service indicators including timeliness,
    accuracy, customer satisfaction, employee satisfaction, pending
    workload, and telephone service. After careful testing and evaluation,
    the initiatives, which are considered best practices, are rolled out to
    other stations.
        The following represents a number of initiatives that were
    developed and tested locally in the field. Based on the merits of these
    local efforts, the concepts were developed, evaluated and are being (or
    about to be) implemented nationally.
      --Training Responsibility Involvement in the Preparation of Claims
            (TRIP)
      --Personnel Information Exchange System (PIES)
      --Social Security Administration (SSA) Link
      --Center for Unit Records Research (CURR) Link
      --Compensation and Pension Record Interchange (CAPRI)
      --Expectation Letter
      --Case Management
      --Veterans Service Representative (VSR) Position
      --Veterans Service Center (VSC)
      --National Automated Responses System (NARS)
      --Reader Focused Writing (RFW)
      --Decision Review Officer (DRO)
      --Skills Matrix
      --Claims Adjudication Processing System (CAPS)
      --Balanced Scorecard Utilization
        Another initiative designed to evaluate and report on best
    practices is VBA's Virtual VBA lab at its Regional Office in
    Washington, DC. This lab is testing a paperless claims folder process
    that will result ultimately in a controlled rollout to other stations.
        Other initiatives aimed at evaluating and disseminating best
    practices include VBA's telephone strategy, which is described in
    detail in VBA's semi-annual BPR report, and quality improvement plans
    and best practices.
        As new initiatives are implemented, their impact is measured
    through the monthly Balanced Scorecard. The scorecard is also used to
    monitor performance nationwide through on-going VBA Leadership
    meetings. The Office of Field Operations holds regular conference calls
    with each of the SDNs to discuss quality improvement efforts, to
    include any best practices.
        Earlier this year, VBA developed a process for the dissemination
    and implementation of best practices that stem from efforts at the
    local level, i.e., grass roots initiatives. Further development of the
    associated evaluation process at the local and national levels is
    underway. The focus of the process is to evaluate and disseminate for
    implementation locally developed initiatives that can demonstrate real
    improvements.
        The best practice evaluation process will begin at the local level
    where the initiative is initially implemented. Applying an appropriate
    evaluation methodology, the Regional Office will assess the
    effectiveness of the practice on improving business operations.
        A defined format will be utilized for reporting best practices to
    include a description of the practice, operation impacts (scorecard),
    policy and procedure impacts, cost, resource requirements, and lessons
    learned.
        Upon review and approval as a best practice, the initiative will be
    posted on VBA's Intranet site. Best practices will be publicized
    further on the field operation's hotline calls. Initiatives
    demonstrating high impacts may be evaluated further via the BPR
    demonstration sites and adopted as a mandatory practice nationwide.
        Question. What are your views on consolidating disability claims
    processing operations?
        Answer. We believe consolidation of some specific types of claims
    processing to be appropriate. We are developing plans that would
    consolidate the processing of our means-tested programs, as well as
    small programs such as the Spina Bifida Allowance for children of
    Vietnam veterans.
        Question. What benefits could be gained from such consolidation?
        Answer. Consolidation of our means tested pension and very small
    ``specialty'' programs will enable us to focus a highly trained staff
    on these complex programs and thereby improve the timeliness and
    accuracy of claims processing and reduce overpayments. It will also
    minimize the complexity of the Veterans Service Representatives (VSR)
    position, allowing the Regional Offices to focus on the compensation
    benefits programs. We will be able to provide better oversight of the
    means-tested programs and stage the workload throughout the year,
    evening out the processing cycles and avoiding surges in pension claims
    workload. Consolidation will also provide opportunities for enhancing
    the effectiveness of our training and employee development programs.
        Question. Could the predischarge initiative have any implications
    for future Regional Office structure?
        Answer. Expansion of our presence at military separation centers is
    an integral part of our current and future plans for delivery of VA
    benefits and services. Original compensation claims filed at
    predischarge sites currently represent approximately 14 percent of the
    total claims received. We expect this volume to increase as more sites
    become fully staffed and operational. At the same time, our data
    indicates that veterans today file claims for increased disability
    benefits more frequently than veterans in past years. The major portion
    of our claims receipts are from veterans who are either reopening their
    claims or are filing claims for increased benefits, and we expect that
    trend to continue. Our future structure therefore needs to be flexible
    to respond to the changing needs of both separating service members and
    veterans. We recognize that there are many factors that will change our
    organization and influence our future field structure. Our goal is to
    create an organization that can quickly and efficiently respond to our
    rapidly changing world.
        Question. What percentage of the original claims workload does VBA
    forecast that the predischarge sites will ultimately receive?
        Answer. Based on the claims filed in the first half of fiscal year
    2001, we believe that about 25,000 claims will be filed at our Benefits
    Delivery at Discharge sites this year. This represents 31 percent of
    the 80,000 claims we expect to receive from veterans during their first
    year after separation from active duty. We would like to expand the
    predischarge program to 100 percent of all service members who wish to
    file claims for disability compensation. However, it may be difficult
    because of the remote assignments of some service members, such as on
    ships at sea, in small military bases not near VA medical facilities,
    or in some foreign locations such as U.S. Embassies.
        Question. Despite recent efforts to improve service at the
    Washington, DC Regional Office, their performance still lags well
    behind all other offices. Average number of days for rating-related
    actions in March was 297, compared to the national average of 185 days.
    Why is this, and what specific actions does VBA take to address the
    worst performing offices, other than shifting their workload to other
    offices in the SDN?
        The Washington Regional Office has made significant progress over
    the last 24 months in workload management. With assistance from other
    Regional Offices within SDN 3, the number of pending claims has been
    reduced by 40 percent (from 12,712 claims in July 1999 to 7,480 in June
    2001). The number of claims pending in excess of 180 days has been cut
    in half (from 7,691 to 3,458). It should be recognized that this
    reduction has been accomplished at the same time that the pending
    inventories have been climbing nationwide as a result of the duty-to-
    assist legislation and other regulatory changes. The Washington
    Regional Office still has a much higher than average percentage of
    claims pending in excess of 180 days. As the office continues to work
    through these older claims, the average days to complete a rating-
    related claim will remain significantly above the national average.
        Additionally, the Washington Regional Office has jurisdictional
    responsibility for claims from veterans residing in foreign countries.
    Foreign claims currently represent about 30 percent of the offices
    pending rating workload. Due to the complexities of foreign mail and
    correspondence and the need to coordinate medical examinations through
    the U.S. Embassies, the time required to process these cases is far
    greater than that of domestic cases. This is a factor that must also be
    considered when assessing the performance of the Washington Regional
    Office. The average days to complete foreign rating claims exceeded
    domestic claims by 83 days for the month of May 2001. The average days
    pending for foreign rating claims currently exceeds domestic by 64
    days.
        The Washington Regional Office has historically experienced more
    difficulty than any other Regional Office in attracting and retaining a
    highly trained workforce. This has a significant impact on performance.
    The fact that VA's headquarters organization is in the same location
    and offers job opportunities within a significantly higher-grade
    structure provides unique challenges that are difficult to overcome.
    There is also intense competition for federal employees from other
    agencies in the Washington, DC metropolitan area at all grade levels,
    and entry-level salaries in the Veterans Service Center (VSC) are not
    competitive with similar opportunities in the area.
        We have developed a proposal to realign workload within SDN 3 that
    we believe offers great potential for improving the operations of the
    Washington Regional Office. We will be expanding the predischarge
    program into the Washington, DC Military District, which is one of the
    most highly visible points of separation for the military services. The
    Washington Regional Office will be responsible for this program. At the
    same time, we will transfer responsibility for claims from veterans
    residing in the Northern Virginia area from Washington to the Roanoke
    Regional Office, and claims from veterans residing in the Maryland
    counties of Prince Georges and Montgomery from Washington to the
    Baltimore Regional Office. This plan will decrease the complexity of
    C&P claims processing at the Washington Regional Office, as the tenets
    of service connection are easier to apply in original disability
    compensation claims when continuity is not an issue and claims are
    typically ``cleaner.'' The proposal will reduce some of the workload
    volume and complexity in the rating activity, which is the area that
    the office has the greatest difficulty in maintaining the necessary
    levels of expertise.
        In addition to the workload and the performance challenges of the
    Washington Regional Office, this question also asks how we address
    other offices experiencing performance difficulties. In order to
    monitor performance in all SDNs and Regional Offices, we have
    established bimonthly Leadership Meetings with Headquarters staff
    (including top management staff from the Office of Field Operations and
    all Services) and the SDN team representatives. These meetings provide
    opportunities to discuss performance, establish clear goals and build
    organizational accountability. The meetings also enable us to gain a
    better understanding of our business and the tools available to manage
    performance, and to share best practices and new ideas.
        Accountability for performance is emphasized through these
    Leadership meetings. At every 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 for each office within the SDN, 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 ensures that we are
    constantly assessing the level of service delivery in all program areas
    and in all regional offices, sharing best practices and working
    together to correct deficiencies and improve performance, and
    appropriately holding top managers accountable for performance
    achievements (or lack thereof). The Service Directors frequently
    participate in these performance reviews.
        Regional Offices not performing well against critical scorecard
    measures must develop a ``wellness plan'' that outlines actions to be
    taken to address performance deficiencies. These plans are monitored
    against monthly goals. This process dovetails with performance reviews
    conducted by the Associate Deputy Under Secretaries on regularly
    scheduled conference calls with each SDN and top managers from the C&P
    Service.
        We are committed to instituting and evaluating performance measures
    that will ensure accountability and drive our future success in
    benefits delivery. With the Balanced Scorecard approach, goals are
    clearly defined at the national, SDN and local levels that identify
    where we are and where we need to go. Management is focused on
    performance achievement, and scorecard information is used to develop
    workable plans for improvement at all levels of the organization. Since
    instituting the Balanced Scorecard, we have identified both strengths
    and weaknesses in our performance and we are learning how we can
    improve our service to veterans.
        In addition, the directors of all of our Regional Offices have a
    complete set of performance standards that clearly identify performance
    expectations. Performance on the Balanced Scorecard measures is the
    first element of the standard, and is identified as a critical element.
    As such, it weighs heavily in the assignment of annual performance
    ratings and any bonuses that may be awarded to senior managers.
                                medical services
        Question. VA's budget assumes that 65,000 military retirees (27
    percent of age 65 and over military retirees using VA) will leave the
    VA, reducing VA medical costs by $235 million. Are you confident that
    there will be a net decrease of this many or more military retirees as
    a result of TRICARE for Life? On what basis was this estimate made?
        Answer. The Administration estimated that approximately 27 percent
    of military retirees who are age 65 or older and currently enrolled in
    the VA health care system would voluntarily choose to shift their
    medical care to the TRICARE system. This estimated shift is based on
    convenience (retirees can go to any Medicare provider) and new out-of-
    pocket co-payments for medicare services. Military retirees will have
    to evaluate which system serves their needs best taking into
    consideration such things as cost, convenience, location and quality of
    health care. The following figures were used in the calculations:
    64,540 enrollees at an average cost of $3,705 per enrollee equals $239
    million. This amount is then reduced by the nearly $4 million in
    collections that would otherwise have been anticipated for those
    enrollees. The net savings is, thus, approximately $235 million.
        Question. According to GAO, 13 percent of VA users (432,000
    veterans) are not within 30 miles of a VA medical facility. GAO found
    that the majority of patients who lack reasonable access are
    concentrated in six networks. Do these networks have management or
    financial issues that need to be addressed?
        Answer. The General Accounting Office (GAO) study limited its
    definition to distance, which can disadvantage the Veterans Integrated
    Service Network (VISN) with large geographic areas and urban veteran
    populations in terms of assessing need. For more urban settings, some
    Networks assess access in terms of travel time rather than distance.
    Nationally, a VHA taskforce proposes the use of 30 minutes or 30 miles
    as a measure for adequate access. Also, when there is an insufficient
    population to support a viable Community Based Outpatient Clinic
    (CBOC), i.e., a panel size of approximately 1,000 users per provider,
    other options are made available to veterans.
        Management in VISN 6 is aware of the need to improve veteran access
    and has done an analysis of veteran population data to justify the
    already established clinics and areas for potential future expansion.
    CBOCs are established in a phased manner determined by need, budget,
    staff, etc. VISN 6 has CBOCs in: Greenville, North Carolina; Tazewell,
    Virginia; Winston Salem, North Carolina (Satellite Outpatient Clinic);
    Charlotte, North Carolina; Raleigh, North Carolina; Braxton, West
    Virginia; Fredericksburg, Virginia; and Danville, Virginia.
        The Raleigh and Fredericksburg clinics were opened in fiscal year
    2001. The Wilmington, North Carolina CBOC has a scheduled opening date
    for later this year. An additional site at Havelock/Morehead City,
    North Carolina received Congressional approval in May 2001 and will be
    activated over the next few months. Additional potential CBOC sites are
    examined via an analysis of veteran population density, remoteness of a
    veteran's residence from care, and a local medical center's ability to
    support the CBOC. Possible sites for fiscal year 2002 are: Lynchburg,
    Virginia; Norfolk, Virginia; Franklin/Cherokee, North Carolina;
    Hickory, North Carolina; Lewisburg, West Virginia; and Charlottesville,
    Virginia.
        Sites considered for fiscal year 2003 through fiscal year 2006 are:
    Goldsboro, North Carolina; Greensboro, North Carolina; Galax, Virginia;
    Tidewater, Virginia; Staunton, Virginia; Williamsburg, Virginia; and
    Elizabeth City, North Carolina.
        The possible CBOC sites for fiscal year 2002 and fiscal year 2003
    are under consideration and may change. VISN 6 management continues to
    analyze veteran population shifts with the intent of establishing
    community clinics in areas where veteran population justifies the need.
        In fiscal year 2000, VISN 7 set aside $10 million as start-up funds
    for its six recently approved CBOCs. Two of the six are fully
    implemented, and the goal is to have the remaining four implemented by
    the end of this fiscal year. When there is an insufficient population
    to support a viable CBOC (panel size of approximately 1,000 users per
    provider) other options are made available to veterans.
        VISN 9 continues to support the further development of community-
    based primary care services for our Nation's veterans. Currently, 18
    CBOCs are operational within the Network. While this has improved
    access to primary care, gaps still remain. Strategic planning for this
    Network is based on a 3 to 5 year cycle, and their planning for
    community-based clinics was developed with assistance from a consultant
    using weighted criteria to assess potential sites (a two-phase approach
    with a high priority and secondary list of potential sites.)
    Stakeholder input was sought and incorporated into the planning
    process. With over a million veterans residing in this service area,
    the VA mid-South Healthcare Network is committed to improving access
    and has aggressively developed community based clinics during the past
    3 years. This network will continue to move forward in the planning and
    implementation of these services.
        VISN 13 Medical Center management continues to financially support
    improved access to VA health care due to the rural nature of the upper
    Midwest. Prior to 1997, VISN 13 treated veterans at 4 VA off-site
    clinics and used 12 traveling health care teams. Since then, VISN 13
    has opened nine new CBOCs and will open two more this summer. CBOC
    business plans will soon be submitted to VA Central Office for three
    more sites. VISN 13 continues to support improving access to veterans
    through CBOCs while maintaining cost-effective operations at the core
    VA medical centers.
        VISN 15 has established 36 CBOCs since 1995. These new points of
    care have decreased the average distance a veteran must travel to
    receive medical care from approximately 75 miles to less than 20 miles.
    The geography and demographics of the veteran population in VISN 15
    prevent all veterans from being within 30 miles of care, e.g., in
    western Kansas there are a small number of veterans spread across a
    vast area.
        VISN 16 reviews management and financial issues on a regular basis
    through performance measures such as the ones noted in the paragraph
    above.
        Question. Is there something inherent in these networks that make
    improving access for veterans more difficult?
        Answer. As stated previously, a distance measure may not be
    appropriate in all cases. The geography and veteran demographics of the
    network make providing access in some parts of a Network much more
    difficult than others. Difficulties in improving access for veterans in
    certain geographic areas can be caused by: insufficient number of
    patients to support a cost-effective CBOC; difficulties recruiting
    medical personnel to staff CBOCs; lack of appropriate, affordable space
    to house CBOCs; and difficulty in arranging cost-effective contract
    care with local health care providers.
        VISN 6 has a widespread geographic area covering 90,000 square
    miles, 222 counties, four states, and 1.2 million veterans. VISN 6
    contains significant mountainous terrain, an area of low population
    density along the coast where veterans are widely dispersed. Many of
    these areas do not contain adequate numbers of patients to be cost
    effective for a CBOC, we will continue to monitor for future needs. In
    other areas where the veteran population does justify the need for a
    CBOC, there have been a few cases where it was difficult to arrange
    local health care due to lack of providers (contract or staff), and
    cost negotiations. These challenges were overcome, with time, and
    approved CBOCs opened as planned.
        VISN 7 has experienced difficulties in finding qualified
    contractors able to provide quality health care at a reasonable cost.
    The VISN has opted, in spite of the difficulties associated with
    establishing a VA-staffed model CBOC, to pursue the VA-staffed model in
    order to better ensure consistency and quality service for veterans.
        VISN 9 strategic plan includes creating a distributed system of
    multi-site models including CBOCs, hospital based primary care
    services, and primary care clinics (owned and contracted), and
    developing new sites in high priority areas to increase access to
    eligible veterans and enhance quality. Linkages between CBOCs and
    medical centers will be strengthened to ensure standardization and
    continuity of care delivery.
        VISN 13 operates 25 CBOCs at 41 locations in a very large urban and
    rural geographic area over 700 miles wide. The Network encompasses all
    or portions of eight states: Iowa, Minnesota, Montana, Nebraska, North
    Dakota, South Dakota, Wisconsin, and Wyoming. Even though such a large
    number of CBOCs provide services to veterans, pockets of veterans
    reside in rural areas further than 30 miles from VA health care. VISN
    13 reduced veterans' average travel time from 31.35 miles in fiscal
    year 1998 to 28.2 miles in fiscal year 1999 according to a VA study by
    the Planning and Systems Support Group.
        For VISN 15, the geography and veteran demographics of the network
    make providing access in some parts of the network much more difficult
    than others. The small number of veterans spread across large distances
    makes the placement of a CBOC in many areas not economically viable. It
    is difficult to recruit staff, particularly physicians, for remote
    areas.
        VISN 16 serves the largest veteran population in VHA encompassing
    170,000 square miles in Arkansas, Louisiana, Mississippi, Oklahoma, and
    portions of Texas, Missouri, Alabama, and Florida. Since 1995, the VISN
    has opened 16 new CBOCs targeting areas with large numbers of medically
    underserved veterans. Network 16 has 28 operating CBOCs, 2 pending
    activation and 4 recently approved. VISN 16 has many rural, poor, and
    sparsely populated areas that pose great difficulties in staffing CBOCs
    (whether contract or VA-staffed) and has re-emphasized its primary goal
    of improving access to care via CBOCS in fiscal year 2000. A CBOC
    Steering Committee was established and, in conjunction with the VISN
    Business Office, developed a process for evaluating CBOC proposals.
    Travel time, veteran age, and waiting times are criteria used to
    evaluate the impact a CBOC will have on improving veteran access to
    primary care. This process allowed the Steering Committee to identify
    four additional sites as potential CBOC locations. These sites were
    approved by the Executive Leadership Council and will be submitted for
    approval, based on available resources. The VISN is continually
    analyzing data to strategically meet the access needs of veterans
    within their service area.
        Question. Should there be more consistency among Networks?
        Answer. The local VISNs plan CBOCs within the context of national
    policies and procedures. There are often unique circumstances in local
    market areas that impact CBOC planning and decision-making, including
    veteran demographics, availability of health care providers, community
    resources, travel issues, veteran preferences, etc. VHA is in the
    process of enhancing its National CBOC policy and developing a national
    strategy to ensure that CBOC planning is focused on a consistent set of
    evaluation factors and that CBOC proposals are evaluated consistently
    at the Network and National levels.
        Question. What is VA's goal with respect to increasing
    accessibility of service, and when will it have been achieved?
        Answer. Providing easy access to medical care is one of VHA's
    strategic ``6 for 2006'' goals. The strategic target goals are:

                                  [In percent]

                                                                   Strategic
            Performance Measure                                       Target

    Increase the percent of enrolled veterans who will be able to
        obtain a non-urgent patient appointment with their primary
        care provider or other appropriate provider within 30 days....    90
    Increase the percent of patients who will be able to obtain a non-
        urgent appointment with a specialist within 30 days of the
        date of referral..............................................    90
    Increase the percentage of patients who report being seen within
        20 minutes of their scheduled appointments at VA health care
        facilities....................................................    90

        VHA measures performance in terms of waiting times for care and
    evaluates the percentage of veterans who travel more than 30 miles to
    reach VA primary care services. In fiscal year 2000, 69.9 percent of
    our patients were within 15 miles and 87.4 percent were within 30
    miles, with a national overall average distance of 13.4 miles compared
    to 14.1 miles in fiscal year 1999. Since 1995, the average distance
    decreased 42 percent from 23.1 miles to 13.4 miles. The decrease in
    average distance and increase in access is partially attributable to
    the increased number of service sites that have become operational
    since 1995.
        Question. How many more CBOCs are needed to meet your goal, and
    over what time period?
        Answer. CBOC planning is Network-based. Networks strategic plans
    include projections for additional CBOCs. A recent GAO survey of
    Networks found that if all planned CBOCs were implemented within the
    next 3 years, new openings would average about 50 CBOCs annually. This
    includes CBOCs that have already gone through the Congressional review
    process, as well as new proposals. The actual number of CBOCs is
    dependent upon the annual development of Network strategic plans and
    their constant modification to meet changing veteran demands.
        Question. In some CBOCs, 50 percent of the patients are Priority
    7s. What is VA doing to manage the utilization of these patients to
    ensure that services are not diminished for traditional patients--those
    with service-connected disabilities or lower incomes?
        Answer. GAO found that new CBOCs are not primarily responsible for
    the marked increase in the number of higher income patients who have
    sought health care through VHA over the past few years. On a national
    level, Priority 7 patients make up a relatively small percentage of
    total health care expenditures. In fiscal year 2000, 15 percent of our
    patients were Priority 7s and exhibited the lowest expenditure per
    patient than for any other priority grouping of patients (source: Table
    2 September Enrollment Report). The cost per enrollee per month, a
    common yardstick in the health care sector, shows that Priority 7
    veterans cost relatively little to treat.

    ------------------------------------------------------------------------
                                                Fiscal Year
                                                2000 Market      Cost per
                                              Share (Percent   Enrollee per
                   Description                    Veteran      Month (as of
                                                Population     February 26,
                                                 Enrolled)         2001)
    ------------------------------------------------------------------------
    Priorities 1 through 4..................              70            $511
    Priorities 5 and 6......................              29            $271
    Priority 7..............................               8             $89
    ------------------------------------------------------------------------

        In terms of access, nationally the Priority 7 patients are the same
    average distance to the closest VHA service site as other priorities.
    The VHA CBOC policy specifically states that clinics shall not be
    established for the purpose of attracting new VA patients and that any
    new users must be accommodated within existing allocations and
    treatment priorities. The local health care system manages utilization
    of services within the context of eligibility rules, patient needs and
    resources.
        Question. VA has identified 69 facilities as ``exceptionally high
    risk'' for seismicity and in need of repair. What is VA's plan to
    address seismic needs, and how will the CARES process impact this?
        Answer. With VA having identified 67 facilities as ``exceptionally
    high risk (EHR),'' the Under Secretary for Health, in a letter to VISNs
    19, 20, 21, and 22, directed the development of project applications
    for these buildings in a multi-year program to identify detailed
    projects for consideration in the Capital Investment Board (CIB)
    project selection process for major projects and/or the VISN approval
    process for minor projects.
        Phase II of the CARES studies includes VISN 21 and VISN 22 where a
    majority of highest priority EHR buildings are sited. The $85 million
    proposed for the CARES Fund (construction, major) and CARES Activities
    (construction, minor) will allow VHA to initiate design through
    construction for any major and/or minor seismic capital initiative
    stemming from CARES recommendations.
        The absence of a completed CARES study should not prohibit funding
    of a major project, but certainly careful analysis must be accomplished
    before making such a proposal. There are facilities that require
    seismic safety improvements where it is extremely unlikely that CARES
    will conclude VHA does not need the building in question. Examples
    include the main hospital buildings at Los Angeles, San Francisco, and
    San Diego. Criteria would include importance of the facility to
    veterans' health care, seismic risk, current condition of building
    infrastructure and compliance to current national codes and VA facility
    criteria.
        Question. Are there other areas in which critical infrastructure
    needs exists, and how does VA propose to address such needs pending
    completion of CARES?
        Answer. A system as large as VHA's cannot maintain quality and
    productivity over time without appropriate recognition of the need for
    infrastructure improvements. The pace of change in health care delivery
    has been an impediment to supporting major construction. Implementing
    CARES options will no doubt require major construction funding in many
    instances. However, the absence of a completed CARES study should not
    prohibit funding of a major project, but certainly careful analysis
    must be accomplished before making such a proposal.
                           special needs populations
        Question. VA has an important responsibility to take care of its
    ``special needs'' population--spinal cord injury, blind rehabilitation,
    mentally ill, PTSD, homeless, and substance abuse. In all but one area,
    VA has increased the number of patients treated since 1996, but I'm
    very concerned that in the area of substance abuse, VA has decreased
    the numbers of patients treated over the last five years by 12
    percent--about 10,000 veterans. Why is this and what is being done to
    ensure this critical need is met?
        Answer. The number of patients treated for substance abuse has
    decreased, especially between fiscal year 1999 and fiscal year 2000.
    Early this year, as authorized by the Veterans Millennium Health Care
    and Benefits Act, we provided over $9 million in funding to 31
    facilities to expand substance abuse treatment capacity. We expect this
    increased funding to affect an increase in treatment capacity this
    year. However, we are working to better understand the reasons for this
    decrease in use of specialized substance abuse treatment programs, and
    to ensure access to substance abuse programs in our clinics as well as
    in our larger facilities. To this end, VHA plans to establish a
    National Mental Health Improvement Program (NMHIP). This program will
    be modeled after a number of well-established VA data-driven
    improvement programs, such as the Continuous Improvement in Cardiac
    Surgery Program (CICSP), the National Surgical Quality Improvement
    Program (NSQIP), the VA Diabetes Program, the Pharmacy Benefits
    Management Program (PBM), and the Spinal Cord Injury/Dysfunction
    National Program. This new program will use validated collection,
    expert analysis, and active intervention by an oversight team to
    continuously improve the access, outcomes, and function of patients in
    need of our mental health programs. These programs include those for
    patients who are Seriously Chronically Mentally Ill, or who suffer from
    Post Traumatic Stress Disorder, Substance Abuse, or Homelessness. This
    program will draw upon existing resources in our Health Services
    Research and Development Service (HSR&D) including existing initiatives
    in our Quality Enhancement Research Initiative (QUERI) and our Mental
    Health Strategic Health Care Group (MHSHG) including the Northeast
    Program Evaluation Center (NEPEC).
     department of defense/department of veterans affairs (dod/va) sharing
        Question. Currently, services shared between VA and DOD's health
    systems amount to only $65 million. What ideas do you have to improve
    collaboration, and how much money might be saved?
        Answer. VA and DOD are working closely to improve collaboration. On
    May 28, 2001, the President announced the formation of the ``Task Force
    to Improve Health Care Delivery for the Nation's Veterans'' comprised
    of health care experts, officials familiar with Department of Veterans
    Affairs and Department of Defense (DOD) health systems, and
    representatives from veteran and military service organizations. This
    group will identify ways to improve benefits and services for veterans
    and for DOD military retirees who are also eligible for VA benefits;
    review barriers that impede coordination; and, identify opportunities
    to maximize use of resources and infrastructure to include buildings,
    information technology and procurement of supplies.
        An over-riding goal in all of these activities is to obtain more
    value from the federal dollar spent. However, it would be premature to
    make cost savings estimates at this time.
        Question. What specific steps does VA plan to take to improve not
    only sharing of services, but also opportunities to maximize joint
    purchasing power, such as in the area of pharmaceuticals and supplies?
        Answer. VA entered into a December 1999 Memorandum of Agreement
    (MOA) with DOD to combine the purchasing power of the two Departments
    and eliminate redundancies. The MOA has three appendices
    (pharmaceuticals; medical and surgical supplies; and high-tech medical
    equipment).
        A major breakthrough occurred in late calendar year 2000, when DOD
    agreed to eliminate their Distribution and Purchasing Agreements
    (DAPAs) for pharmaceuticals and instead rely upon the Federal Supply
    Schedule (FSS) for pharmaceuticals. As a result, DOD's Distribution and
    Purchasing Agreements were eliminated in January 2001, for all
    pharmaceuticals that are available in the FSS.
        A joint VA/DOD Data Management Group is developing data gathering
    and assessment plans for medical/surgical items. However, a major
    impediment towards standardizing and consolidating medical/surgical
    supply items is the lack of a Universal Product Numbering (UPN) system.
    VA is currently taking the lead by developing requisite cost-benefit
    analyses to support requiring federal contractors to provide UPNs for
    medical/surgical commodities. This proposed requirement will undergo
    scrutiny at the Office of Management and Budget (OMB) under the
    auspices of the Office of Information and Regulatory Affairs (OIRA).
        As of March 1, 2001, there are 33 joint DOD/VA contracts for
    pharmaceuticals. The estimated cost savings in fiscal year 2000 for
    both Departments from these contracts totaled $42.5 million ($30.8
    million for VA; $11.7 million for DOD). These savings were realized
    from 24 contracts. To date in fiscal year 2001, an additional eight
    contracts have been awarded with discounts off the lowest Federal
    Supply Schedule price ranging from 0.19 percent to 53.75 percent. Once
    purchase/utilization data is available for these eight new contracts,
    cost savings data will be updated. Also as of March 1, 2001, 24
    additional joint contracts are pending award; four joint contracts were
    not awarded due to lack of savings afforded the government through
    their award. It is difficult to project how much additional savings
    will be achieved due to the dynamics of the pharmaceutical market
    place, i.e. branded products going generic and the clinical strategies
    employed by both Departments in the provision of their drug benefit. It
    should be noted that VA alone would accrue an estimated $745.7 million
    in cost avoidance, i.e. cost avoided through contract prices lower than
    the Federal Ceiling Price, for the period 1996-2002 through national
    contracts for high volume/high dollar pharmaceuticals. Many of these
    contracts will be considered for joint DOD/VA contracting activity when
    individual contracts expire.
        The next major phase of the MOA implementation is underway,
    converting Distribution and Purchasing Agreements to FSS for medical/
    surgical products, and identifying joint opportunities for
    standardization that would promote even greater savings.
                                  co-payments
        Question. When will the new co-payments for prescriptions and
    outpatient care be in place?
        Answer. Medication co-payment proposed regulations were published
    in the Federal Register for public notice and comment on July 16, 2001.
    We anticipate implementing increased co-payment for pharmacy by
    December 1, 2001.
        The outpatient co-payment regulations are still being developed.
    These proposed regulations would follow the regulatory process as we
    described for the medication co-payment regulations; however, we expect
    to have them in place by May 1, 2002.
        Question. What are some of the issues currently being considered
    with respect to changing the current outpatient co-pay from $50.80?
        Answer. VHA is reviewing several options regarding proposing
    changes to the outpatient co-payment. Some of the options include a
    combination of co-pays, coinsurance and an out-of-pocket maximum.
    Another possible option may involve establishing a tiered outpatient
    co-payment. This would be based upon the level of service provided,
    such as one co-payment rate for primary care services and another co-
    payment rate for specialty care services.
        Question. The Inspector General recommended a co-pay increase for
    prescriptions to $10. Why does VA believe $7 is more appropriate?
        Answer. Language contained in Public Law 101-508 states that VA
    cannot charge a co-payment amount that would exceed VA's cost of the
    medication. The VHA Office of Finance completed an extensive review of
    the fiscal year 2000 costs associated with the administration of
    outpatient prescriptions. A VHA Co-payment Work Group, assisted by a
    contractor, also conducted a literature review of medication co-payment
    industry practices. The outcome of these reviews assisted the VHA
    Office of Finance in determining the proposed medication co-payment
    amount.
                              emergency room care
        Question. VA estimates it will spend $138 million next year for
    emergency room care, the same amount estimated in fiscal year 2001. It
    is my understanding that costs eventually could go as high as $400
    million or more annually. By what year do you anticipate this will
    occur?
        Answer. VA cannot start paying for the costs of emergency care
    covered by the emergency care provisions of the Veterans Millennium
    Health Care and Benefits Act until final regulations are published. VA
    hopes that these regulations will become effective before the end of
    fiscal year 2001. VA will begin paying these costs as soon after that
    as possible including retroactive payments to May 2000. There will be a
    start up period during which time eligible veterans and providers must
    be given information concerning the emergency care benefits and the
    process for payment. For this reason, we estimate that fiscal year 2002
    costs will be $138 million. The fiscal year 2003 budget will provide an
    updated estimate of the full year impact of the emergency care
    provisions. That estimate will reflect actual experience and projected
    demand. Initial estimates from the actuary have indicated that full
    implementation could result in costs above $400 million.
                             hepatitis c screening
        Question. Do you agree with GAO that it would be helpful to
    establish performance goals for hepatitis C screening--such as a target
    percentage of enrolled veterans to be screened each year? If so, why
    have none been established and when will such goals be put in place?
        Answer. VHA agrees that establishing feasible and measurable
    performance measures for hepatitis C screening is helpful. Therefore,
    for the purpose of fiscal year 2002, performance goals for hepatitis C,
    screening for hepatitis C risk factor is included as follows:
        Hepatitis C Screening.--Percent of veterans screened for hepatitis
    C risk factors: Measurement will be External Peer Review Program (EPRP)
    until the hepatitis C Clinical Reminder System is fully implemented and
    reporting data. Fiscal year 2001 EPRP data will be used as a baseline.
        Hepatitis C Testing.--Percent of veterans who get tested for
    hepatitis C subsequent to a positive hepatitis C risk factor screening:
    Measurement will be EPRP until the hepatitis C Clinical Reminder System
    is fully implemented and reporting data. Fiscal year 2001 EPRP data
    will be used as a baseline.
                             recovery audit program
        Question. The fiscal year 2000 VA-HUD bill required VA to conduct a
    recovery audit program for its fee-basis care. What is the status of
    the program?
        Answer. The contract has been awarded and the government and the
    contractor continue to work together to begin operations. Collections
    are expected to begin in mid-summer.
        Question. How effective do you think this program will be,
    considering the initial lessons learned during the start-up phase?
        Answer. We anticipate that the program can recover funds and
    provide valuable operational lessons in the way the VA pays for non-VA
    care.
        Question. To date, what is the percentage on overpayments
    discovered? What is the percentage of overpayments recovered? What has
    VA learned from seeing the differences/similarities between those
    overpayments identified and those collected that will improve the level
    of collections and also help VA avoid these problems in the future?
        Answer. The contractor began operations in February 2001. Since
    that time, the contractor has retrieved the necessary data from the VA
    medical center and the Health Administration Center to begin their
    screening or payments. This screening has begun and potential
    collections are being identified. However, to comply with various laws,
    the providers are given a series of appeals and notifications. We have
    not yet completed this entire process so there has been no collection
    of funds to the VA at this time. Some lessons learned are being
    developed but we are still in the learning phase.
        This phase of the contract is not expected to begin until later
    this summer.
                        national cemetery administration
        Question. What is VA's policy with respect to establishing
    additional national cemeteries? What is the current backlog of
    maintenance and repair needs in VA cemeteries nationwide, and what are
    VA's plans to eliminate the backlog?
        Answer. One of the National Cemetery Administration's (NCA)
    strategic objectives is to ensure that the burial needs of veterans and
    eligible family members are met. In order to achieve this objective,
    NCA needs to increase access by developing additional national
    cemeteries in unserved areas, expand existing national cemeteries where
    appropriate, develop more effective use of available burial space, and
    encourage individual states to develop state veterans cemeteries
    through the State Cemetery Grants Program.
        NCA is planning for the development of new national cemeteries to
    serve veterans in the areas of Atlanta, Georgia; Detroit, Michigan;
    Miami, Florida; Oklahoma City (Fort Sill), Oklahoma; Pittsburgh,
    Pennsylvania; and Sacramento, California. These locations were
    identified in a May 2000 report to Congress as the six areas most in
    need of a new national cemetery, based on demographic studies. When
    open, these cemeteries will provide a burial option to nearly two
    million veterans who are not currently served. The President's 2002
    budget provides $48 million to build, design, or acquire land for the
    establishment of new national cemeteries and $25 million for the State
    Cemetery Grant Program. NCA anticipates that these national cemetery
    projects and additional state construction will increase to 88 percent
    the number of veterans served by a burial option in a national or state
    cemetery within 75 miles of their residence by the year 2006.
        The Veterans Millennium Health Care and Benefits Act of 1999
    directed VA to contract for an independent demographic study to
    identify those areas of the country where veterans will not have
    reasonable access to a burial option in a national or state veterans
    cemetery, and the number of additional cemeteries required to meet
    veterans' burial needs through 2020. The contractor's report is due in
    October 2001. The Department will evaluate its policy of establishing
    additional national cemeteries when the data from this report is
    available.
        Another of NCA's strategic objectives is to ensure that national
    cemeteries are shrines dedicated to preserving our Nation's history,
    nurturing patriotism, and honoring the service and sacrifice that
    veterans have made. In order to achieve this objective, NCA must
    maintain occupied graves and developed acreage in a manner befitting
    national shrines. NCA has an initiative called the National Shine
    Commitment. Its purpose is to improve the appearance of burial grounds
    and historic structures of our national cemeteries by addressing
    deferred maintenance needs.
        The fiscal year 2001 appropriation contained $5 million to
    initially address the needs of the National Shine Commitment. The
    President's 2002 Budget requested an increase in the amount of funding
    for this initiative by another $5 million, bringing the total requested
    amount in fiscal year 2002 to $10 million.
        To begin the process, NCA has identified deficiencies in the
    appearance of headstones and markers and the condition of some
    gravesites at a number of its national cemeteries. Repair of these
    deficiencies is estimated at about $40 million. The $5 million provided
    in the 2001 appropriation will be utilized at Long Island National
    Cemetery, the Willamette National Cemetery, the Golden Gate National
    Cemetery, and the Fort Sam Houston National Cemetery.
        When the study directed by Section 613 of the Veterans Millennium
    Health Care and Benefits Act is completed this fall, NCA will be
    provided with an assessment of required one-time repairs at each
    national cemetery. This data will be used in the budget and planning
    processes to help NCA keep its commitment to maintain our cemeteries as
    national shrines.
                               state home program
        Question. VA's budget proposes to cut in half the budget for the
    state home grant program, yet the backlog of need going into fiscal
    year 2002 will be at least $241 million. Why isn't this program a
    higher priority?
        Answer. The State Home Program is very important in meeting VA's
    overall responsibilities to veterans. During this past year,
    significant strides have been made in improving the management of the
    program and preparing for future challenges.
        The Veterans Millennium Health Care and Benefits Act (Public Law
    106-117) requires VA to revise the State Home Construction Grant
    regulations. Due to delays in revision of regulations, as well as
    instituting some management improvements, this program has experienced
    a backlog. However, the revision reflects guidance that will have a
    positive impact on the program and our stakeholders. An interim final
    rule was published in the Federal Register on June 26, 2001, and the
    revised regulations will be in place for the fiscal year 2002 Priority
    List and funding cycle. The Revised Priority List of Pending State Home
    Construction Grant Applications for Fiscal Year 2000/2001 identified 61
    projects, with a total value of $228,321,000 (federal portion). The
    funding request in 2002, when combined with unobligated funding from
    previous years' appropriations, represents a continued commitment to
    support VA-sponsored nursing home care through less expensive State and
    community programs.
        Program improvements and additional staffing are helping VA
    aggressively address future program needs. This program is a high
    priority for VA and we are continuing to make improvements in the
    system.
                 compensation for children of vietnam veterans
        Question. The Secretary has announced his support for providing
    compensation to children of Vietnam veterans with myelogenous leukemia.
    When will legislation be submitted to Congress?
        Answer. Our announcement on April 20th of this year to create
    benefits for certain sick children of agent orange-exposed Vietnam
    veterans was based on a recent report by the National Academy of
    Sciences Institute of Medicine (IOM). The report concluded that there
    is ``limited/suggestive'' evidence of an association between herbicide
    exposure and the occurrence of acute myelogenous leukemia (AML) in the
    children of exposed persons. The IOM's finding relied on evidence from
    three studies, including a study of the offspring of Australian Vietnam
    veterans. However, the Australian Institute of Health and Welfare
    (AIHW) has recently issued corrected information indicating that the
    study's findings concerning AML are not statistically significant. At
    this time, it is unclear how the revised findings of the AIHW might
    have affected the IOM's conclusion's regarding AML. We believe it is
    necessary to seek further guidance from the IOM regarding the impact,
    if any, of the revised AIHW findings on its conclusion with respect to
    AML. We are presently discussing with the IOM the prospect of such
    further review. As soon as this review is completed, we will be in a
    better position to provide our views on this issue.
        Question. What is the estimated number of recipients and the
    associated cost?
        Answer. Initially we had estimated the costs for paying benefits to
    certain sick children of agent orange-exposed Vietnam veterans based on
    the IOM report that concluded there are ``limited/suggestive'' evidence
    of an association between herbicide exposure and the occurrence of
    acute myelogenous leukemia (AML) in the children of exposed persons. We
    believe it is necessary to seek further guidance from the IOM regarding
    the impact, if any, of the revised AIHW findings on its conclusion with
    respect to AML. We are presently discussing with the IOM the prospect
    of such further review. As soon as this review is completed, we will be
    in a better position to provide, if necessary, a cost estimate.
                            community nursing homes
        Question. I have asked the GAO to review VA's processes to assure
    nursing home care provided to veterans is adequate and safe. The GAO
    has briefed my staff and reported that their examination of selected VA
    Medical Center records indicates that required annual inspections of
    community nursing homes, and visits to veterans in these homes, have
    not regularly been conducted at all locations. Further, VA managers at
    headquarters do not know where and when the required oversight has been
    conducted. In other words, no one really knows which medical centers
    have been making inspections and visits and which have not. Can you
    provide the Committee with the number of Community Nursing Homes under
    contract to VA that should have been inspected in 2000 and the actual
    number that were inspected?
        Answer. At the present time, VHA cannot provide information on the
    number of Community Nursing Homes (CNH) inspected in 2000. Based on
    survey information, VHA estimates that 2,500 nursing homes have local
    VA contracts. The recording of this information is inconsistent between
    sites. VHA is in the process of developing guidance to the field for
    the record and transmission of the information. VHA is also
    revitalizing the system that collects the CNH information and expects
    the revised system to be operational in the first quarter, fiscal year
    2002.
        For the Regional CNH contracts, all 900 nursing homes were assessed
    before approval.
        Question. For those that did not receive the appropriate
    inspection, please explain what prevented VA from conducting the
    inspections.
        Answer. VHA needs more information on local VA Medical Center
    (VAMC) program operations before reaching an overall conclusion on non-
    compliance with the CNH inspection policy. The General Accounting
    Office (GAO) concluded the VAMCs that chose not to follow published
    policy did so for a variety of reasons, mostly linked to local
    management priorities.
        VHA's own assessment of non-compliance with VHA policy on local CNH
    evaluations will follow from information collected. VHA expects to
    complete its review in the second quarter, fiscal year 2002.
        Question. Similarly, for the same period, please provide the
    Committee with the number of veterans that VA should have visited on a
    monthly basis in all its community nursing homes, and, for those that
    it failed to visit as required, please provide the reasons for its lack
    of compliance.
        Answer. At the present time, VHA cannot provide data on the
    timeliness of monthly visits. VHA collects information on the number of
    VAMC staff visits to veterans in CNHs. Another data system tracks days
    of care by veteran. Currently, VHA is working to integrate these two
    systems to generate a report on monthly monitoring compliance. Analysis
    of this new report will be completed in the fourth quarter, fiscal year
    2002.
        The assessment of non-compliance with VHA policy on CNH monthly
    monitoring will follow the resolution of data system integration. VHA
    expects to complete its review in fiscal year 2002.
        Question. I understand that VA is proposing a new policy regarding
    its oversight of Community Nursing Homes, and that under the new policy
    VA will no longer inspect the homes annually but will rather use the
    results of HCFA-sponsored inspections and other data to determine the
    homes' adequacy for veterans. Can you provide an estimate of the
    possible savings to VA if it discontinues the requirement for
    inspections of these homes?
        Answer. VHA does not envision any savings by limiting on-site CNH
    inspections. The CNH teams will assume the responsibilities of
    reviewing the Health Care Financing Administration's (HCFA) expansive
    nursing home reports, consulting with State Survey Agencies and
    implementing the improved monthly monitoring and re-hospitalization
    review protocols.
        Question. There appears to have been no attempt by VA to ensure
    that medical centers were using consistent methods of overseeing
    community nursing homes. As a result, VA's current nursing home program
    is highly decentralized, with each medical center left to its own
    devices to determine how best to conduct an effective nursing home
    inspection program. In the future, what training or guidance does VA
    plan to provide (both initially and on an ongoing basis) to medical
    centers for conducting inspections, evaluating HCFA data, visiting
    veterans, or using other oversight tools?
        Answer. VHA is planning a training effort for CNH team members in
    fiscal year 2002. The training will include guidelines for: monitoring
    care in CNHs and HCFA's databases; appropriate interpretation of State
    Survey Agencies' findings; organizing re-hospitalization reviews;
    assessing patient and family satisfaction; and improving relationships
    with State Survey Agencies and HCFA staffs. VHA began training on HCFA
    databases in fiscal year 2001.
        Question. Regardless of the policies and the potential for their
    revision, what steps is VA planning to take to (1) keep informed about
    medical centers' oversight activities, and (2) ensure that all Medical
    Centers follow oversight policies?
        Answer. VHA is introducing a new collection process to determine
    the timeliness of CNH assessments, prior to contract execution or
    renewal. VHA will also integrate existing data systems to determine the
    timeliness of monthly monitoring.
        As a result of the two initiatives described earlier, VHA will
    identify out-of-compliance situations and will work with the VISNs and
    VAMCs to develop a plan of correction.
        Question. I understand that VA's community nursing home program is
    essentially composed of two parts: those community nursing homes that
    have contracted with local VA medical centers in the field, and a
    headquarters-based regional community nursing home program that
    centrally acquires the services of regional and national nursing home
    chains at national rates. The Committee is also concerned that annual
    inspections are not required of these multi-state homes and that VA
    performs little oversight of these homes once they are under contract.
    Why are these homes not subject to the same inspection and review
    policies as those under local contract with medical centers?
        Answer. The inspection process for regional CNH and local CNH
    contracts differ more in style than in substance. VHA believed that
    initial decisions on CNH quality could be made solely on a review of
    State Survey Agencies'(SSA) results. Both regional and local contracts
    processes use SSA reports as their base. The monthly monitoring
    standard and re-hospitalization reviews apply to both regional and
    local CNHs.
        Regional CNH contracts and its predecessor, Multi-State Contracts
    (MSC), were designed without annual VA on-site inspections. VHA
    reasoned that this streamlined process would improve veterans' access
    to CNHs without adding to VAMC administrative cost and would be
    attractive to the nursing home industry. The regional CNH design
    assumed the VAMCs' on-site inspections were of dubious use, based on
    field reports. A 1997 Health Services Research & Development Service
    review of the first year of MSC operations found no overall differences
    in quality between local contracts and MSCs. On a number of variables,
    MSC homes had better quality scores.
        Regional CNH rates are not national but state-specific, with
    different prices for urban and rural areas in each state.
        Question. How will VA ensure that centrally contracted nursing
    homes are reviewed in the future with appropriate frequency?
        Answer. At the present time, 60 percent of all regional CNH
    contracts are reviewed for quality on an annual basis. Recently, VHA
    has taken steps to ensure that all regional CNHs are evaluated each
    year.
        Question. What oversight has VA conducted in the last year to
    assure that each centrally contracted community nursing home meets the
    minimum quality standards required of all its community nursing homes?
        Answer. Seventy-two percent of all MSCs were reviewed for quality
    in the year ending November 30, 2000. In addition to this effort,
    nursing home companies removed 4 percent of their homes for quality
    reasons prior to a formal decision by VHA. VHA denied approval to 29
    percent of the homes that applied for MSC status.
                              state veterans homes
        Question. It is my understanding that nearly half of the State
    Veterans Homes are inspected by HCFA through state inspection agencies.
    If VA plans to rely more heavily on the results of HCFA inspections of
    Community Nursing Homes, could VA discontinue its own inspections of
    state veterans' homes that have had HCFA reviews, as long as VA has
    evidence that the reviews were thorough?
        Answer. By law, VA is responsible for the oversight of State
    Veterans Homes and is required to establish VA standards for annual
    survey review. As a grant-in-aid program to States, the State Veterans
    Home Program requires consistent national standards across all homes.
    The State Veterans Home grant requirements are broader than the HCFA
    requirements. In addition, VA conducts recognition surveys at the time
    the home becomes operational and admits the first patients. Surveyors
    are required to have knowledge of the laws and regulations related to
    the grant program. Thus, VA would not discontinue the recognition and
    annual survey process for State Veterans Homes.
        Question. What are your future plans for VA inspections of State
    Nursing Homes and how do they differ from those envisioned for VA's
    Community Nursing Homes?
        Answer. VA provides training for VA State Nursing Home inspection
    team members. Web-based assessments will be implemented to assure
    ongoing competency in the inspection process. In June 2001, inspection
    results were entered into a Web-based format and transmitted to
    headquarters electronically. The data repository is an Access database
    that will be used to compare findings among state nursing homes,
    including over time. VA will continue to dialogue with VA staff and
    state home constituents about evolving quality issues.
        The role of VA oversight in the two nursing home programs is quite
    different. In State Homes, VA is the lead agency in assuring that
    quality care is provided and that standards are met. This is a major
    regulatory function. Most State Veterans Homes are not certified under
    Medicare/Medicaid and are not inspected by SSA. This factor highlights
    the significance of VA inspections. In the Community Nursing Home (CNH)
    program, VA acts as an informed purchaser of care. It relies heavily on
    SSA reports, in addition to its own monitoring, to determine whether VA
    should initiate or continue a contract with the CNH. VA performs no
    regulatory function in the CNH program, although that authority still
    resides with the Secretary.
                                     ______

                 Questions Submitted by Senator Larry E. Craig
                              vha staff shortages
        Question. In recent years there have been staff reductions which
    have compromised the Veterans Health Administration's ability to
    provide much needed services. What are you doing to deal with staff
    shortages to ensure the highest quality of health care for our Nation's
    veterans?
        Answer. The Veterans Health Administration (VHA) has achieved
    remarkable efficiencies in the restructuring of its workforce from an
    inpatient-based hospital system to an outpatient-based system of
    clinics. During the last five years, VHA expanded access to 500,000
    additional veterans for health care, improved quality as assessed by
    performance measurement and patient satisfaction, and reduced the cost
    of care per veteran served by more than 20 percent. VA is now seen as a
    leader in many health care areas including patient safety, computerized
    patient records, telehealth, surgical quality assessment,
    rehabilitation, mental health care, and clinical and health services
    research.
        During this same period, VHA's total full-time employment has
    declined. VHA was able to manage this decline by shifting resources
    through improvements in health care service delivery and efficiencies
    gained through program and organizational restructuring, technology
    improvements, and business process reengineering.
        When VHA encounters difficulties at specific locations recruiting
    for a particular clinical discipline or specialty, there are a number
    of options available to ensure the quality of care. Among the options
    VHA can use are aggressive recruitment and retention efforts, including
    bonuses; use of temporary employment agencies, contract personnel, and
    fee basis; and redeployment of current staff on a temporary basis.
                           military retirees benefits
        Question. How are you planning on developing the relationship
    between the VA and DOD in order to best implement the National Defense
    Authorization Act of Fiscal Year 2001 and provide the necessary
    benefits for military retirees over age 64 who have Medicare coverage?
        Answer. As you know, Public Law 106-398 expands TRICARE benefits to
    all military retirees, spouses and survivors ages 65 and older who are
    eligible for Medicare Part A, and enrolled in Medicare Part B. This new
    benefit for Medicare-eligible military beneficiaries, TRICARE for Life,
    is scheduled to take effect on October 1, 2001.
        The DOD implementation plan for TRICARE for Life is particularly
    important since VA medical centers do not currently qualify for
    Medicare payments. VHA has asked DOD for clarification of VA's role in
    TRICARE for Life. Additionally, the VA/DOD Executive Council has
    established new work groups specifically charged with addressing
    various aspects of VA's role in relation to TRICARE. These work groups,
    which are required to make monthly reports to the Executive Council,
    will examine collaboration opportunities for geriatric care, assess the
    impact of TRICARE on current sharing agreements between VA and DOD,
    recommend coordinated delivery of VA and TRICARE benefits, and suggest
    improved reimbursement policies. It is my hope that these actions,
    combined with the commitment DOD has made to include VA in future
    TRICARE negotiations, will ensure that VA can provide necessary
    benefits for military retirees over age 64.
                       community based outpatient clinics
        Question. Do you plan to provide more Community Based Outpatient
    Clinics (CBOC) and expand services in the existing facilities?
        Answer. In keeping with its commitment to improve access to care,
    VHA will continue to plan additional CBOCs. Planning for CBOC services
    is Network-based, taking into account local market areas, demographics,
    resources and veteran preferences. Local health care systems
    continually evaluate the services available at their CBOCs and expand
    or modify services, based on veteran needs, utilization and resources,
    among other factors. In an effort to improve the consistency in how VA
    plans and operates CBOCs, VHA is developing new standards and criteria
    for CBOC planning, operations and service delivery.
                                  travel rates
        Question. Are you considering the rising gas prices and will you
    adjust the travel reimbursement rates?
        Answer. Each year, the Department conducts an analysis of the
    actual cost of travel to beneficiaries, taking into consideration a
    number of factors, including gasoline and oil costs. This issue is
    currently under review and we anticipate a decision by December 2001.
                             information technology
        Question. In general terms, how are you planning on reducing the
    bureaucracy and incorporating the latest information technology in
    order to eliminate problems and reduce administrative costs?
        Answer. A panel of experts in the area of systems architecture has
    been meeting with key VA decision makers to develop the VA Integrated
    Enterprise Architecture. The VHA Chief Information Officer is an active
    participant in these meetings and is dedicated to the success of these
    efforts.
        Following this direction, VHA has defined an ``ideal'' Health and
    Health Information approach. Under this methodology, all new IT
    projects will be developed by working with VHA health care providers to
    examine the current work environment and identify areas where IT can
    enhance the current business practices. Additionally, VHA stakeholders
    provide direct input and help VHA to identify and prioritize potential
    new solutions.
        In addition, VA has implemented a stringent IT Capital Investment
    Process. Through this process, VA IT decision makers assess and
    prioritize current and proposed IT projects that have high investment
    costs. All major VHA IT acquisitions meeting the capital investment
    threshold ($10 million acquisition costs or $30 million life-cycle
    cost) or projects with high visibility must go though this process to
    ensure that VA selects those IT projects that best support our mission.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
        Mr. Secretary, I appreciate the many challenges that you are faced
    with in heading the Veterans Administration. Considering your
    significant experience, I am confident that you will successfully meet
    those challenges.
        Fully implementing a one-VA, improving claims processing, and
    ensuring that all veterans have access to quality health care are among
    your agency's priorities. And even with all of that, and much more on
    your plate, we, in Congress continue to pass legislation expanding your
    responsibilities.
        Veterans are an educated and active constituency who understand
    your mandate and realize that improvements do not happen overnight. For
    example, an article in the veterans' publication, ``The Stars &
    Stripes'' noted the VA's challenging mission in implementing the
    Veterans Claims Assistance Act. The author, retired Colonel John
    Howell, said that there is always an initial delay whenever a law is
    implemented, and that everyone should do their part to help during the
    transition.
        As you know, I introduced a $1.4 billion bill to fully fund the
    Department of Defense's health care plan for military retirees, known
    as TRICARE for Life. We all recognize that this program will require a
    transition phase, and that Defense and the VA are still working out a
    Memorandum of Understanding on how implementation between the two
    agencies will occur.
        I wanted to follow up on our earlier discussions about that program
    and other issues facing veterans in New Mexico and the rest of the
    nation.
                                albuquerque vamc
        Question. The VA Medical Facility in Albuquerque is a joint venture
    between the VA and the Department of Defense. This unique relationship
    has been widely regarded as a success to be emulated. Considering
    TRICARE for Life, what assurances can you give that successful joint
    ventures, like the one in Albuquerque, are allowed to continue
    functioning?
        Answer. As you know, the new benefit for Medicare-eligible military
    beneficiaries, TRICARE for Life, is scheduled to take effect on October
    1, 2001. Determining the impact of TRICARE for Life on VA-DOD joint
    ventures, such as Albuquerque, as well as on VA facilities as a whole
    is a priority for the Department of Veterans Affairs. The DOD
    implementation plan for TRICARE for Life is particularly important
    since VA medical centers do not currently qualify for Medicare
    payments. The Veterans Health Administration (VHA) has asked DOD for
    clarification of VA's role in TRICARE for Life. Additionally, the VA/
    DOD Executive Council has established new work groups specifically
    charged with addressing various aspects of VA's role in relation to
    TRICARE. These work groups, which are required to make monthly reports
    to the Executive Council, will examine collaboration opportunities for
    geriatric care, assess the impact of TRICARE on current sharing
    agreements between VA and DOD, recommend coordinated delivery of VA and
    TRICARE benefits, and suggest improved reimbursement policies. It is my
    hope that these actions, combined with the commitment DOD has made to
    include VA in future TRICARE negotiations, will ensure that successful
    joint ventures such as Albuquerque will continue to thrive and expand.
        Question. We are experiencing a national shortage of health care
    professionals, particularly with respect to nurses and doctors. This
    shortage has forced many VA health care facilities to close beds. Due
    to insufficient staff, the Albuquerque facility has had to cut about
    fifty of its 211 beds. What steps are you taking, in the long and
    short-term, to address this shortage of health care professionals to
    make sure that our nation's veterans get the health care they deserve?
        Answer. New Mexico, like many other regions of the country, faces a
    shortage of registered nurses. In Albuquerque, the shortage is
    impacting both VA and private facilities. Over the past twelve months
    the medical center has been unable to operate a full complement of beds
    due to the nursing shortage. Currently about 60 beds are not being
    utilized because of the lack of nurses.
        The Albuquerque facility is dealing with the shortage by delaying
    admissions and deferring some elective surgery, and obtaining care in
    the community.
        Nurse recruitment continues to be a problem in Albuquerque, despite
    recent pay increases of 16.8 percent. The efforts at Albuquerque
    include a variety of bonuses, including sign-on, relocation, and
    headhunter bonuses.
        VHA is taking steps on a national basis to address shortages in
    health care occupations on both a short-term and long-term basis.
    Short-term steps include salary increases, bonuses, aggressive
    recruitment, and focused efforts to retain current employees. Long-
    term, VHA is ``growing our own'' through education programs like the
    National Nursing Education Initiative and the VA Learning Opportunities
    Residency Program (VALOR). The National Nursing Education Initiative
    provides scholarships to current VA employees to obtain baccalaureate
    and higher degrees in nursing. The VALOR program provides training and
    work experience to nursing students in return for financial support and
    special employment consideration upon graduation. VA is also conducting
    an all-employee survey to learn employees' issues. The results of this
    survey will help VHA identify and address areas of concern to improve
    the work environment and make VHA an ``Employer of Choice.''
        Question. New Mexico is a large rural state, which means that
    distributing services and benefits to everyone can be especially
    challenging. The VA's opening of health care clinics is remedying
    veterans' access to health care to some degree. What is your plan to
    ensure that all of our nation's veterans have access to quality health
    care and other benefits that they earned by serving our country?
        Answer. As noted in the report ``Geographic Access to VHA Services
    in fiscal year 1999: A National Perspective'' 85 percent of the fiscal
    year 1999 patients were within 30 miles of the closest VHA service
    site. A recent analysis finds that access to the closest VHA service
    site has improved over the past year. Looking at the fiscal year 2000
    patients, 69.9 percent of our patients are within 15 miles and 87.4
    percent within 30 miles with a national overall average distance of
    13.4 miles compared to 14.1 miles in fiscal year 1999.
        This decrease in average distance and increase in access is
    partially attributable to the increased number of service sites that
    have become operational since February 1995. Since 1995, VHA has
    approved 471 new CBOCs (includes multiple-site contracts); 82 percent
    of these CBOCs are activated and 18 percent are in the development
    phase.
        VHA will continue to operate existing VA medical centers and CBOCs,
    and look for opportunities to partner with other government agencies or
    local community agencies to expand access to high-quality care. Every
    year, in the development of their strategic and financial plans, all
    VHA Networks assess veteran preferences, demographics, and market
    areas, and develop plans for service expansion and/or enhancements. In
    addition, VA continues to work with DOD on their TRICARE for Life
    initiative as well as other sharing opportunities.
                                     ______

                   Questions Submitted by Senator Mike DeWine
                                     cares
        Question. The Veterans Health Administration (VHA) is undergoing a
    significant process of reviewing and realigning VA capital assets to
    enhance the overall health care services provided to our nation's
    veterans. It is my understanding that the Ohio network, VISN 10, will
    be incorporated in Phase II of the CARES initiative. During this
    assessment, I anticipate the absence of inpatient care for veterans in
    the Central Ohio area will be identified. Although Columbus is the
    largest city in Ohio, and the 15th largest U.S. city, veterans and
    their families must travel at least an hour and a half to receive
    inpatient treatment.
        While I recognize the VA has been shifting its attention from
    inpatient to outpatient care, I would like to know what consideration
    has been given to contracting out for private hospital services in the
    Columbus area. For example, a partnership between the VA and a local
    facility such as Doctors Hospital could be beneficial for the entire
    community. Funding resources for such a partnership could be tied in
    with ongoing CARES efforts.
        Answer. The VA Healthcare System of Ohio (VISN 10) anticipates
    participating in the second round of CARES studies to be conducted
    within VA. VISN 10 has undertaken a number of activities in preparation
    for the CARES study, including an ongoing analysis and internal
    assessment of the challenges within the Central Ohio area. There are
    numerous complex inter-related issues within this market. The CARES
    process will provide for a comprehensive assessment of needs and
    options, including a review of options for contracting for inpatient
    medical services. It is anticipated this study will be completed within
    the next six months.
        The Central Ohio ``market'' includes both the Columbus Independent
    Outpatient Clinic (IOC) and the Chillicothe VA Medical Center (VAMC),
    which is located approximately 50 miles south of Columbus. VAMC
    Chillicothe provides basic inpatient support to the Columbus IOC. In
    addition, VAMC Dayton provides a full array of tertiary inpatient
    support to both of the Central Ohio VA medical facilities. The CARES
    process will provide for a complete assessment of the complex
    relationship among these three facilities. This will include the impact
    of decreasing the referral workload from the immediate Columbus area to
    VAMCs Chillicothe and Dayton. Workload volume is critical within health
    care to ensure appropriate clinical competencies and to support a
    variety of capital-intensive specialty medical services. A change in
    any one market area has the potential to dramatically impact the
    viability of specific programs and services at the other two VA medical
    facilities. Until the CARES study is completed, VISN 10 will continue
    to undertake appropriate actions to ensure the full continuum of care
    is provided in the Central Ohio area.
        Emergent inpatient care for veterans is provided within the
    immediate Columbus area via a longstanding contractual arrangement with
    the Ohio State University (OSU). The OSU East medical facility is
    located only a short distance from the Columbus IOC. This successful
    partnership has allowed for the expansion of complex specialty medical
    services at the Columbus IOC, and has served to reduce the amount of
    travel required to provide the full continuum of care to veterans
    residing in Central Ohio. In addition, VA's Fee Basis Program provides
    a high degree of flexibility in terms of procuring medical services
    from the private sector within the Central Ohio area. This program is
    utilized to provide a wide variety of specialty services to veterans
    residing within and outside the immediate Columbus area.
        A project has been developed to expand the capacity of the Columbus
    IOC by approximately 6,000 square feet through converting existing
    warehouse space for clinical functions. Construction will begin within
    the next six months. CBOCs have been opened in Grove City and
    Zanesville. VISN 10 plans to seek approval to open additional CBOC
    sites in Marion and Newark. The CARES process has not delayed or
    impeded efforts to improve access to services in the immediate Columbus
    area.
                                      vera
        Question. It is my understanding that the Veterans Millennium
    Health Care and Benefits Act has placed a sizeable financial burden on
    the VISN 10 budget. For example, the Ohio network is expecting to spend
    approximately $5 million to pay for emergency room visits that are now
    mandated as a covered service. While I fully support the important
    health care advancements which took effect last year, it is critical
    that these additional services do not come at the expense of existing
    VA programs. What consideration has been given to restoring current
    VISN operating expenses? I hope appropriate attention has been given to
    ensure adequate funding of all VHA initiatives.
        Answer. Since 1997, VHA has used the Veterans Equitable Resource
    Allocation (VERA) model, a capitation-based resource allocation system,
    to equitably distribute medical care resources to the 22 Veterans
    Integrated Service Networks. Budgeted and appropriated funding for
    emergency care claims payments is included in the VERA allocation.
    VISNs expect to have sufficient resources to continue to deliver high-
    quality and cost-effective health care to all veterans who enroll in
    the VA health care system and receive treatment. They will operate
    within their appropriated medical care resources and will continue to
    enhance those resources through effective collection of alternative
    revenues. All VHA initiatives should be funded with these resources.
        In the event that networks cannot operate within their workload-
    based allocated budget and maintain their current level of patient
    care, VA will continue to maintain a National Reserve Fund (NRF). VA
    has a process for networks to request additional funding from the NRF.
    If a VISN requires additional supplemental funding during the fiscal
    year, a request is submitted to Headquarters, and it will be reviewed
    using that process.
                                     ______

               Questions Submitted by Senator Barbara A. Mikulski
                                  fort howard
        Question. Are you familiar with the Mission Change and Enhanced Use
    project underway at Fort Howard?
        Answer. In June 2000, the former VA Secretary approved the plans to
    revise the mission at the Fort Howard Medical Center. This plan
    includes:
      --Relocation of Fort Howard inpatient beds and administrative
            functions to other sites in the VA Maryland Health Care System
            (VAMHCS).
      --A proposed continuum of care retirement community perhaps to be
            accomplished through the use of enhanced-use authority if that
            is determined to be the best means of achieving the change.
      --A primary care outpatient clinic to remain on the Fort Howard
            campus.
        Question. Will the new Administration continue to move forward with
    this project?
        Answer. The Administration supports this project. The Fort Howard
    project has the potential to become a model for implementation at other
    VA sites.
        Question. What changes can veterans, their families, and VA
    employees expect in the coming months?
        Answer. Changes in the upcoming months are:

    ----------------------------------------------------------------------------------------------------------------
                    Date                                                  Description
    ----------------------------------------------------------------------------------------------------------------
    December 2001/January 2002..........  Move 12-bed Ventilator/Respiratory unit to Perry Point
    May 2002............................  Relocate administrative functions to Perry Point
    September 2002......................  Relocate remaining inpatient functions to the Loch Raven campus
    September 2002......................  Relocate the current Fort Howard primary care outpatient clinic to
                                           building 249 (located behind the existing hospital building and adjacent
                                           to the main parking lot)
    January 2003........................  Contract award for enhanced-use project, if approved as best means of
                                           achieving Mission Change.
    ----------------------------------------------------------------------------------------------------------------

        Question. Is the new Administration committed to maintaining
    outpatient services at the Fort Howard campus throughout the entire
    transition?
        Answer. Yes. The current outpatient clinic will remain intact with
    no break in operations on the Fort Howard campus. As noted in answer to
    question number 68, a relocation of the primary outpatient clinic will
    be made to more suitable accommodations. During the process of
    redeveloping the campus, a new primary care clinic building will be
    built perhaps by utilizing VA's enhanced-use authority.
        Question. Will the VA stick to the current timetable that calls for
    the mission change to be complete by September 2002, and for the
    enhanced use to be complete by January 2003?
        Answer. The VAMHCS is doing everything possible to assure the
    timelines presented to date are maintained. As has been previously
    presented, all of the mission change relocations are dependent on
    completion of various construction projects. The mission change is
    scheduled for completion by September 2002. A contract award for an
    enhanced-use project, if approved as the best means of achieving the
    mission change, is scheduled in January 2003.
        Question. Will the VA be ready to bid the enhanced use portion of
    the project in January 2002 as planned?
        Answer. The schedule for considering and developing an enhanced-use
    lease for this project is as follows:

    ----------------------------------------------------------------------------------------------------------------
                    Date                                                  Description
    ----------------------------------------------------------------------------------------------------------------
    January 2002........................  VA Medical Center develops a Business Plan. Business/Concept Plan is the
                                           first step in the formal process leading to execution of an Enhanced-Use
                                           project.
    February 2002 thru May 2002.........  Plan initial consideration and possible approval
                                          Public Hearing
                                          Notification to Congress of the Department's designation of the site for
                                           possible Enhanced-Use lease
    June 2002...........................  Solicitation of bids
    July 2002 thru December 2002........  Evaluation
                                          VA Capital Investment Board review and recommendation
                                          Secretary's review and determination
                                          OMB review
                                          Congressional notification of the Department's intent to execute the
                                           contract, if approved
    January 2003........................  Award of Enhanced-Use lease, if approved
    ----------------------------------------------------------------------------------------------------------------

        Question. If the State does not authorize a new State Veterans Home
    at Fort Howard, what impact will it have on the Enhanced Use plan?
        Answer. If the State of Maryland chooses not to authorize a new
    State Veterans Home, the impact would be minimal to a possible
    Enhanced-Use project. Without a State Veterans Home, it is anticipated
    that substantial nursing home beds will be included with the
    development of the Fort Howard campus. The greater loss of not having a
    State Veterans Home at the Fort Howard campus is to the local veterans
    (40 percent of Maryland State veterans reside in the surrounding
    Baltimore area).
        Question. Could the Fort Howard project be a national model for
    changing the way we deliver care to our veterans so that we can better
    meet their needs as they age?
        Answer. Presently, the Fort Howard project is too early in its
    development to ascertain whether a national model is in the offing. The
    concept has promise and potential. VA is encouraged by the interest of
    the State of Maryland.
                                 long-term care
        Question. What is the status of the long-term care regulations?
        Answer. The regulation that adds non-institutional extended care
    services to the medical benefits package is currently under review in
    the Office of Management and Budget. This regulation adds non-
    institutional geriatric evaluation, non-institutional respite care, and
    adult day health care to the benefits package.
        Question. What is the timetable for implementation of these
    regulations?
        Answer. VA plans to publish the proposed long-term care benefit and
    co-payment regulation on October 4, 2001. Following public comment and
    possible changes to the regulation, based on the comments, VA
    anticipates a March 2002 implementation date.
        Question. How much funding will VA spend to implement long-term
    care in 2002?
        Answer. VA estimates it will spend $3.4 billion in 2002 to
    implement long-term care.
        Question. CBO tells us that long-term care will cost at least $400
    million per year. Why does the budget request show a $79 million
    reduction for long-term care?
        Answer. The budget does not show a $79 million reduction for long-
    term care. Due to delays in implementing the Veterans Millennium Health
    Care and Benefits Act, the 2002 President's Budget shows a $228 million
    increase in 2002 and a base adjustment of (-$334 million) in 2001 from
    the 2001 budget estimate versus 2001 current estimate for long-term
    care.

                          $228 MILLION INCREASE IN 2002
                                  [In millions]
    ------------------------------------------------------------------------
                                        Fiscal Year 2002 President's Budget
                                      --------------------------------------
                                           2001         2002
                                         Estimate     Estimate     Increase
    ------------------------------------------------------------------------
    Obligations......................       $3,134       $3,362        +$228
    ------------------------------------------------------------------------

      BASE ADJUSTMENT OF (-$334 MILLION) FROM FISCAL YEAR 2001 PRESIDENT'S
    BUDGET, 2001 BUDGET ESTIMATE TO FISCAL YEAR 2002 PRESIDENT'S BUDGET, AND
                              2001 CURRENT ESTIMATE
                                  [In millions]
    ------------------------------------------------------------------------
                                       Fiscal Year  Fiscal Year
                                           2001         2002
                                       President's  President's
                                       Budget 2001  Budget 2001    Decrease
                                          Budget      Current
                                         Estimate     Estimate
    ------------------------------------------------------------------------
    Obligations \1\..................       $3,123   \2\ $2,789       ($334)
    ------------------------------------------------------------------------
    \1\ Excludes Subacute Care.
    \2\ Adjusted for correction in accounting for Geriatric Evaluation and
      Management (GEM) programs.

                        cleveland plain dealer articles
        Question. Are the incidents described in these articles largely
    anecdotal? Or are they symptoms of a larger problem? What is VA doing
    to respond to the issues raised by these articles?
        Answer. The articles written by Ms. Mazzolini were factual to some
    extent but not representative of all sides of the issue and were taken
    out of context. Despite the bias of the articles, VHA has taken the
    allegations seriously and had already dealt with much of the substance
    prior to any of the incidents being chronicled in the press. In those
    instances where care was deemed to be substandard, action was taken
    including separation and reports filed to the State Licensing Board
    and/or National Practitioner Data Bank. Tort Claims were filed in three
    of the six cases. Cases were peer reviewed at the facility level with
    corrective actions taken where quality of care issues were raised.
    Processes were improved, such as better coordination among the
    inpatient ward staff, gastroenterology service, and the testing
    laboratory; notification of abnormal x-ray findings; and scheduling
    staff surgeon to be in-house during working hours when surgery is
    taking place.
        Many of the patient incidents pre-dated our revised national
    patient safety policy which emphasizes a systems approach focused on
    prevention, not punishment, as the most effective way to improve care
    for our patients. Incorporation of a widely understood methodology for
    dealing with these safety-related issues allows for a clear and more
    rapid communication of information within the organization.
        Several of the incidents raised by Ms. Mazzolini involved the
    supervision of residents. VHA policies and procedural requirements for
    the supervision of residents are established in VHA Handbook 1400.1,
    Resident Supervision (http://vaww.va.gov/publ/direc/health/handbook/
    1400-1hk.html). The Handbook describes responsibilities for monitoring
    resident supervision at VA facilities, and is being updated to clarify
    policy in areas such as consultation and supervision on weekends and
    holidays. Options for the collection and analysis of resident
    supervision data are under development. The developed tools will be
    applied across medicine, surgery and psychiatry bed services, as well
    as ambulatory care settings in all affiliated centers. VHA is currently
    designing tools that will be used to assess the adequacy of resident
    supervision. We also plan to develop an external monitoring process
    devised to assess compliance with VHA policies on resident supervision
    in areas involving diverse aspects of inpatient and outpatient care.
        Question. Do VA doctors routinely supervise surgery over the phone?
        Answer. No.
        Question. What is the VA's resident supervision policy?
        Answer. Resident supervision is the process through which clinical
    care is provided to patients in this educational context. Supervision
    refers to the dual responsibility that a staff practitioner has to
    enhance the knowledge of the resident and to ensure the quality of care
    delivered to each patient by any resident.
        Policies governing resident supervision in VA were recently
    reviewed. ``Resident Supervision, VHA Handbook'' published in March
    2000 clearly outlines the requirements for attending supervision of
    residents in all VA facilities. The handbook is currently being updated
    to clarify policy in areas such as supervision on weekends and holidays
    and consultation. The overriding consideration must be ``safe and
    effective care of the patient that is the personal responsibility of
    the staff practitioner.'' Supervision may be provided in a variety of
    ways. The specific level of supervision is generally left to the
    discretion of the staff practitioner and requires judgment of the
    experience and competence of the resident and the complexity of the
    particular medical situation. The overwhelming consideration is the
    safe and effective care of the patient.
        Question. What is the VA's policy for hiring foreign trained
    doctors?
        Answer. A VHA facility may hire a foreign trained non-citizen
    physician in the absence of qualified citizens. Appointments of non-
    citizen physicians are temporary in nature and each must meet the same
    qualifications standard which is applied to all VHA physicians.
    Additionally, some non-citizen physicians hired by VHA are admitted to
    the United States for residency training in accordance with the
    requirements of the Exchange Visitor Program administered by the
    Department of State. Therefore, while educated outside of the United
    States, the Exchange Visitor physicians are trained in the United
    States, many in the VHA Healthcare System. Citizens, who complete their
    medical education and/or training in a foreign country, may be hired on
    a permanent appointment, provided they meet the qualifications
    requirements.
                                  collections
        Question. How confident is VA that it will actually collect $896
    million in 2002?
        Answer. VA is confident that it will collect the $896 million in
    fiscal year 2002. The $896 million is composed of:
      --$775 million for first- and third-party collections ($207 million
            first-party and $568 million third-party).
      --$120 million for pharmacy co-payments.
      --$1 million for enhanced use-lease.
        The Veterans Millennium Health Care and Benefits Act authorized the
    Secretary to increase the $2 medication co-payment. In addition, VA
    plans to collect $24 million in first party-collections for long-term
    care.
        Question. Billing third parties is a new mission for VA. How is the
    process going?
        Answer. Actually, VA has been billing third parties since 1986,
    though not on the same basis or with the same sophistication as occurs
    today. Public Law 99-272 (April 7, 1986) authorized VA to implement
    third party billings. Major improvements have been implemented
    throughout the years in the third-party billing process and collections
    have steadily increased since 1986. The first full year of collections
    was accomplished in fiscal year 1987 and totaled $23 million. In
    September 1999, we implemented a new billing rate structure called
    reasonable charges which resulted in fiscal year 2000 Medical Care Cost
    Fund (MCCF) third-party collections of $394 million. For fiscal year
    2001, we are projecting over $472 million in third-party collections.
    As facilities improve their documentation, coding, and billing
    processes, we expect a continuing increase in collections.
        Question. What efforts is the VA taking to increase collections
    from third parties?
        Answer.
        Compliance.--One objective of this initiative is to improve coding
    accuracy for billing and medical record purposes and to conform with
    insurance industry standards enabling VA to maximize payments on claims
    submitted to third-party carriers.
        Reasonable Charges.--The implementation of reasonable charges in
    September 1999 allowed VA to bill health care insurance companies using
    rates that approximate community charges. This has increased the dollar
    value of VA bills and should therefore increase revenue. VA is
    continuing to adjust this new billing structure by adding charges for
    new Current Procedural Terminology (CPT) codes and updating all charges
    to Year 2001 levels.
        Medicare Remittance Advice (MRA).--This initiative will enable VA
    to receive a Medicare equivalent explanation of benefits document that
    will be used by Medicare supplemental payers to determine their
    appropriate payment to VA.
        Electronic Data Interchange (EDI).--EDI will enable VA nationally
    to transmit data through a clearinghouse to third-party payers. This
    should result in more timely payments by ensuring that bills are
    transmitted electronically to the payer. This initiative deals with
    cost savings as opposed to increased collections.
        Treasury Offset Program (TOP).--VA is utilizing TOP to recover
    first-party debts that are over $25. The TOP has a number of different
    options for withholding money owed to an individual by the Government
    if the individual has any outstanding debts owed to the Government. In
    addition, the TOP will send two additional notices to an individual
    prior to offset of the individual's tax refunds or social security
    payments.
        Lock Box.--This initiative nationally consolidates the collection
    of first-party medical payments to a Treasury-designated lockbox
    provider and automates the posting of payments to the patients'
    accounts at individual medical centers-with cost savings to VA.
        Outsourcing.--The VA is considering a number of alternative
    business concepts to enhance its ability to collect health care
    revenue. Outsourcing various revenue collection activities is one
    alternative that is being evaluated by several pilot tests currently
    underway. In addition, VISN 5 is designing a new pilot test at selected
    medical centers within the VISN that will focus on specific billing
    (e.g., bill ``scrubbing,'' code verification, and claim submission) and
    collection (e.g., claims follow-up, explanation of benefits (EOB)
    analysis, and decreasing adjustments) activities. Other billing
    functions will remain in-house; e.g., verifying non-service connected
    treatment, validating coding and medical documentation, and assembling
    billing information from various components of the VA information
    system, VistA. The decision to keep these functions in-house was based
    on issues relating to VA-to-vendor IT interfacing, and assuring system
    security, data integrity and confidentiality.
        Revenue Office Improvement Plan.--The CFO Revenue Office has
    recently completed a study of the Revenue Program as requested by the
    Secretary of Veterans Affairs. The plan outlines recommended actions
    required to improve the core business process areas: patient intake,
    documentation, coding, billing, and accounts receivable. Twenty-four
    major recommendations have been made to improve the revenue program.
    Additionally, this plans proposes eight primary performance measures to
    track the improvement of the Revenue Program. The plan also identifies
    a number of critical improvement factors (i.e., leadership commitment,
    accountability and standardization, training and education,
    standardized policies, and information systems that support the revenue
    cycle) to areas to determine which areas could be immediately
    centralized and/or consolidated within VA or outside VA (e.g.,
    contracted out).
        Additionally, VA is reviewing the entire revenue process to
    identify areas that need improvement. Subsequent to the study, we will
    develop an action plan to effect the needed improvements. We expect to
    complete that study in late summer.
        Question. Why has the VA chosen to keep billing in-house, rather
    than contracting it out to the private sector, which has more
    experience in billing issues?
        Answer. VA is considering a number of alternative business concepts
    to enhance its ability to collect health care revenue. Outsourcing
    various revenue collection activities is one alternative being
    evaluated by several pilot tests currently underway. In addition, VISN
    5 is designing a new pilot test at selected medical centers within the
    VISN that will focus on specific billing (e.g., bill ``scrubbing,''
    code verification, and claim submission) and collection (e.g., claims
    follow-up, explanation of benefits (EOB) analysis, and decreasing
    adjustments) activities. Other billing functions will remain in-house;
    e.g., verifying non-service-connected treatment, validating coding and
    medical documentation, and assembling billing information from various
    components of VA information system, VistA. The decision to keep these
    functions in-house was based on issues relating to VA-to-vendor IT
    interfacing, and assuring system security, data integrity and
    confidentiality.
        Question. Has VA been able to develop a list of ``lessons learned''
    to maximize collections?
        Answer. VA did a review in April 1999 of existing process
    procedures and organizational configurations at various VA medical
    centers with successful collections programs. The purpose of the review
    was to determine if there was any relationship of organizational
    alignment relative to the overall success of billing and collections.
    In an attempt to identify the key factors that may influence the
    process, VA turned to the Diagnostic Measures, based upon industry
    standards that have been successfully utilized in identifying areas
    with opportunity for improvement as well as ``best practices'' or
    ``lessons learned.''
        Upon completion of the review, we could not find a common link to
    explain the success of individual MCCF programs. What worked at some
    facilities did not or was not utilized at other facilities. Most of the
    successful programs maximize the use of software, maintain a high level
    of compliance, provide formalized training and, at some facilities,
    benefit from strong leadership. Some facilities also benefit from
    strong TRIAD (director, associate director, and chief of staff) support
    and physician buy-in into the MCCF program.
        It should be noted that almost all of the facilities reviewed were
    located in rural or small metropolitan areas. It also appeared that
    most medical center staff had been with the MCCF program for a number
    of years. When interviewed, the MCCF program coordinators at these
    sites stated that the employees were very much interested in the
    success of the program. It should also be noted that at a number of
    these facilities, the staff was cross-trained for other jobs within
    MCCF.
        The results of this review have been shared with all MCCF program
    coordinators. In June 2001, we will distribute new and improved
    Diagnostic Measures. The new measures will provide reports that give a
    more comprehensive snapshot of individual and VISN-level facility
    performances.
        Question. Does the VA know to what extent it is owed by deadbeat
    third parties? Is VA able to estimate how much?
        Answer. Currently, third-party active claims over 60 days old
    secondary to Medicare, have a total billed amount of $394.6 million,
    with an estimated collectable of approximately $78.9 million. Those
    active claims not secondary to Medicare over 60 days old have a total
    billed amount of $113.4 million with an estimated collectable of $68
    million.
        The recording of the amount to bill the health insurance company is
    based on the dollar value of the medical treatment that is provided to
    an individual. In most instances, that amount is greater than the
    expected payment to be received for the treatment rendered. An example
    is: the VA will bill a Medicare supplemental plan for the full value
    for the service provided even though the plan is a secondary payer to
    Medicare, as the VA does not have authority to bill Medicare.
    Therefore, the Medicare supplement plan will pay only for the Medicare
    deductible and a percentage of the professional fees assessed for the
    treatment provided. This inflates the value of our outstanding
    receivables because approximately 70 percent of VA's billings are
    secondary to Medicare.
        The problem of our overstated receivables for Medicare supplemental
    claims will be remedied when the Medicare Remittance Advice software
    development project is completed and released in the winter of 2002.
    This software will record the receivable to the secondary payer at the
    anticipated value for the service provided.
        Question. How did the VA arrive at the prescription co-pay increase
    from $2 to $7?
        Answer. Language contained in Public Law 101-508 states that VA
    cannot charge a co-payment amount that would exceed VA's cost of the
    medication. VA completed an extensive review of the fiscal year 2000
    costs associated with the administration of outpatient prescriptions. A
    VHA Co-payment Work Group, assisted by a contractor, conducted a
    literature review of medication co-payment industry practices. The
    outcome of these reviews assisted the VHA Office of Finance in
    determining the proposed medication co-payment amount. This proposal is
    now undergoing internal VHA review prior to submission to the Secretary
    for review and approval.
        Question. Does the VA plan further increases or adjustments to the
    co-pay?
        Answer. Under the proposal now being considered by VA, the co-
    payment amount will be reviewed on an annual basis, and recommendations
    for increases or adjustments will be made as appropriate.
        Question. What process will be used to determine any future changes
    to the co-pay?
        Answer. Under the proposal now being considered by VA, VHA will
    monitor the medication co-payment amount and will refer to the pharmacy
    component of the medical consumer price index (CPI) as an index that
    would establish future medication co-payment increases. This is the
    indicator that is most specific to pharmaceuticals.
                                medical research
        Question. Veterans Service Organizations are recommending $395
    million for medical and prosthetic research. The Administration's
    budget request is $360 million. Have you reviewed the organizations'
    request?
        Answer. VA personnel attended the Independent Budget release
    presentation and closely reviewed the document.
        Question. Can you explain the reason for the difference?
        Answer. The differences between the two budgets are shown in the
    following table.

                            [In thousands of dollars]
    ------------------------------------------------------------------------
                                                       2002 Appropriation
                                                   -------------------------
                      Description                   Independent  President's
                                                       Budget       Budget
    ------------------------------------------------------------------------
    Personnel Compensation........................      161,581      192,650
    Employee Travel...............................        2,162        3,737
    Communications, Utilities and Misc. Charges...        1,081        1,227
    Printing and Reproduction.....................        2,087          198
    Research and Development Contracts............      164,734      106,507
    Supplies and Materials........................       42,228       34,666
    Equipment.....................................       21,530       21,252
                                                   -------------------------
          Total...................................      395,403      360,237
    ------------------------------------------------------------------------

        Question. The VA expects about $151 million in private
    contributions to VA medical research. What efforts has VA undertaken to
    maximize private contributions?
        Answer. Non-governmental entities represent an inconsistent source
    of funding for VA research. VA maximizes funding from private sources
    through active contacts, advising field researchers of funding
    announcements, and closely monitoring updates on developmental drugs.
    Virtually all private-sector contributions are directed to support
    specific research projects, not to general support of the VA research
    program.
        Question. Why does the budget request cut 79 employees from the
    medical research program?
        Answer. The increase in the fiscal year 2002 budget is less than
    current services. The FTE level is reduced in an effort to maintain the
    number of new projects funded in fiscal year 2002.
        Question. How will these cuts effect current research efforts? New
    research projects?
        Answer. The cuts will not affect current research efforts. The FTE
    level is reduced in an effort to maintain the number of new projects
    funded in fiscal year 2002. On-going, multi-year projects will continue
    to be funded.
                                 waiting times
        Question. What can the VA tell us about current waiting times? How
    long do veterans wait to get a doctor's appointment?
        Answer. The average waiting time (days) for ``next available''
    clinic appointments has greatly improved over the past year. (See the
    following table.)

            AVERAGE NUMBER OF DAYS FOR ``NEXT AVAILABLE'' APPOINTMENT
    ------------------------------------------------------------------------
               Description              April 2000   March 2001   Difference
    ------------------------------------------------------------------------
    Primary Care.....................         65.1         44.4        -20.7
    Eye Care.........................        101.0         72.9        -28.1
    Audiology........................         49.9         39.7        -10.2
    Cardiology.......................         51.7         40.4        -11.3
    Orthopedics......................         44.6         39.7         -4.9
    Urology..........................         80.7         52.7        -28.0
    ------------------------------------------------------------------------

        Similarly, the percentage of patients who reported waiting greater
    than 20 minutes to see their provider has decreased significantly.

    Percent of Outpatient Respondents Waiting >20 Minutes to See Provider

                                                                     Percent

    1995.............................................................. 55.33
    1996.............................................................. 48.69
    1997.............................................................. 43.63
    1998.............................................................. 33.43
    1999.............................................................. 31.02
    2000.............................................................. 30.20
    March 2001........................................................ 28.39

        Question. How long do they sit in the waiting room?
        Answer. In the most recent VHA Veterans Customer Satisfaction
    Survey (patients who received care between March 24, 2000 and September
    24, 2000), veterans were asked, ``How long after the time when your
    appointment was scheduled to begin did you wait to be seen?'' The
    responses were:

                                                                  Percent of
            Response                                             Respondents

    No wait........................................................... 11.33
    1 to 10 minutes................................................... 33.02
    11 to 20 minutes.................................................. 26.05
    21 to 30 minutes.................................................. 14.67
    31 to 60 minutes..................................................  8.44
    More than 1 hour..................................................  5.28
    Cannot Remember...................................................  1.20

        These data demonstrate that 70.4 percent of patients report waiting
    20 minutes or less.
        Question. What are the goals for patient waiting time?
        Answer. The goals for patient waiting time are:
      --90 percent of enrolled veterans who will be able to obtain a non-
            urgent patient appointment with their primary care provider or
            other appropriate provider within 30 days.
      --90 percent of patients who will be able to obtain a non-urgent
            appointment with a specialist within 30 days of the date of
            referral.
      --90 percent of patients who report being seen within 20 minutes of
            their scheduled appointments at VA health care facilities.
        Question. How were these goals developed?
        Answer. In the late 1990s, VHA recognized through its own analyses
    that access remained a critical concern. In response to these concerns,
    VHA began work to establish system-wide goals.
        It is the perception of direct care providers, administrators and
    Veteran Service Organizations that the single most common concern with
    VA care is access. While VA has made tremendous strides in geographic
    access improvement, waits for non-emergency, non-urgent care are
    considered to be excessive.
        In order to develop a data-driven approach, community benchmarks
    were sought. One of the more robust sources for related data was
    Healthcare Benchmarking Systems International (HBSI). HBSI benchmarks
    hospitals for ``15th next available appointment.'' (``Fifteenth next
    available'' reduces the effect of appointment cancellation.
    Cancellations can affect the validity of ``next available'' measures by
    creating an artificial appearance of timely availability of
    appointments. They are in fact, not really usable because of their
    last-minute nature). A significant limitation of HBSI data is that they
    are based on self-report. Further, a recent survey of university
    medical centers addressed the expected availability of non-urgent
    primary and specialty care appointments. The study found no consistent
    definition of acceptable waiting times and no consistent mechanism of
    validating the relationship between expectations and actual practice.
        Given the lack of standard methodology or benchmarks, VHA
    established the 30/30/20 (90 percent of requested next available non-
    urgent primary care appointments should be scheduled within 30 days; 90
    percent of requested next available non-urgent specialty (eye care,
    audiology, orthopedics, cardiology, urology) appointments should be
    scheduled within 30 days; and 90 percent of patients should be seen
    within 20 minutes of the scheduled appointment time) goals based on
    their perception of veterans' expectations. Implicit in these goals is
    an understanding that providers clinically ``triage'' all patients
    requesting urgent care and provide care on a more urgent basis if
    clinically appropriate. The ultimate objective for reduction of waiting
    times is to care for the patient within a timeframe that is both
    clinically valid and meets the patient's expectations.
        Question. What is the VA doing to develop a system to accurately
    quantify the current situation?
        Answer. In support of the 30/30 strategic goals, VHA established a
    process to measure the average waiting time for a requested
    appointment. Both fiscal year 2000 and fiscal year 2001 performance
    plans require the measurement of the average waiting time for primary
    care and five high-demand specialty clinics. Data issues have been
    addressed; software continues to be enhanced; and training is being
    implemented to enhance data accuracy.
        The ability to collect other data on patient appointment waiting
    times is currently being evaluated. A new scheduling software patch was
    released to VHA field stations on January 31, 2001. This patch was
    designed to collect information on the percentage of patients receiving
    next available appointments within 30 days of their request. Field
    stations installed the patch in late April 2001, and that data was
    available for further evaluation of reliability. Data will continue to
    be scrutinized for reliability, validity, reproducibility and
    usefulness, and the data collection process will be modified as
    necessary.
        The ``20'' of the 30/30/20 is measured through patient surveys.
    Patient surveys are an accurate assessment of the patient's perception,
    at that point in time, of their waiting time. The data is exceptionally
    stable over time. The survey is a well-validated instrument,
    fundamentally developed by the Picker Group. All VHA clinics are
    reviewed. Each outpatient survey includes approximately 110,000
    patients, and in seeking to propel improvement in satisfaction by more
    tightly linking actions with results, two surveys were administered
    this year encompassing a total of about 220,000 patients. For the 2000
    (wave2) survey, 108,007 patients were sampled and 75,939 patients
    responded. This represented patients who received care in the primary
    care clinics during August 2000 at 22 VISNs, including 136 medical
    centers, and 637 clinics. The overall response rate to the survey is
    consistently and remarkably high at 70 percent. The results from the
    national surveys indicate that younger patients are under represented
    in the results. VA survey response rates are among the highest known in
    the health care industry, perhaps a benefit of military service
    history.
        Question. How much funding does VA anticipate devoting to quantify
    this problem in 2002?
        Answer. VA requested an additional $164 million in 2002 for
    improvements to access and service delivery.
        Question. VA planned to spend $400 million for this effort in 2001.
    How is this funding being spent? Has VA developed a reliable system?
        Answer. Between fiscal year 2000 and fiscal year 2001, the total of
    yearly planned additional investments in improvements to access and
    service delivery is estimated to be $346 million. The networks reported
    their planned progress in investments and performance for 2000 and 2001
    in their January 2001 submission to VHA's financial plan. The following
    table shows the areas receiving additional investment.

                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                      Additional Investment
                                                            Per Year
                                                   -------------------------
                                                        2000         2001
    ------------------------------------------------------------------------
    Timeliness:
        CBOCs.....................................           37           74
        Improvements to Work Processes............           68          130
        Infrastructure............................            2            7
    Telephone Care: Ensure all veterans have                  2            8
     access, 24/7.................................
    Timely Access to Clinical Information:
        Telemedicine..............................            3            2
        Information Technology....................            6            7
                                                   -------------------------
          Total...................................          118          228
    ------------------------------------------------------------------------

        The system is designed consistent with the Government Performance
    and Results Act (GPRA) to monitor the overall objective being the
    targeted goals of 30/30/20. Although $346 million has been identified
    for Access and Service Delivery, the appropriation specifically
    provided for this initiative totaled $77 million in fiscal year 2001.
    The remaining dollars must be absorbed from within existing funding
    levels.
                            claims processing times
        Question. What is the current processing time for claims and what
    is the goal?
        Answer. At the beginning of each fiscal year, performance targets
    are established for each of the performance measures contained on the
    balanced scorecard. The fiscal year 2001 national performance for
    Compensation and Pension claims processing timeliness is as follows:

                                    [In days]
    ------------------------------------------------------------------------
                                       Fiscal Year
                                       2001 Actual  fiscal Year  Fiscal Year
            Timeliness Measure           (through   2001 Target  2002 Target
                                       March 2001)
    ------------------------------------------------------------------------
    Rating-Related Actions                   176.5          195          210
     (completed).....................
    Non-Rating-Related Actions                50.9           54           52
     (completed).....................
    ------------------------------------------------------------------------

        Question. What lessons has the VA learned from past efforts to
    improve processing times?
        Answer. Past efforts to improve claims processing timeliness and
    accuracy have resulted in valuable learning experiences. One of the
    most constructive lessons has been in pilot testing major processing
    changes before national implementation. For example, VBA tested the
    case management approach to claims processing before national
    implementation. Customer surveys were also conducted at the test sites.
    As a result of both of these measures, improvements were made to the
    implementation plan before all stations made the transition to case
    management. In addition, VBA recognizes that a moderate amount of
    specialization can help improve timeliness. VBA will be consolidating
    pension claims processing and creating resource centers to concentrate
    on specialized claims work. Finally, enhanced partnerships with
    information resources are critical to improving claims processing
    timeliness. VBA is working to enhance access to VHA medical records,
    establish joint C&P/VHA exam offices, and hire additional employees for
    the St. Louis Records Management Center.
        Question. How much funding does VA anticipate devoting to improving
    claims processing time in 2002? How many employees?
        Answer. VBA has requested over $732 million to fund the
    administration of the Compensation and Pension programs. The funding in
    the fiscal year 2002 budget submission, as in past submissions, is
    devoted to improving the timeliness and accuracy of VBA claims
    processing. It is not possible to separate specific dollar amounts or
    FTE resources that will impact only one performance measure,
    timeliness. VBA expects to have 2,000 Rating Veterans Service
    Representatives (RVSRs) and 3,500 Veterans Service Representatives
    (VSRs) on board by the end of fiscal year 2001.
        Question. How will VA train new employees so they will be able to
    make a real difference?
        Answer. The Compensation and Pension Service (C&P) launched a
    national recruitment initiative, Challenge 2001, for RVSRs and VSRs to
    assist in succession planning.
        In order to meet this need, C&P Service has created an initial
    twelve week training program that will provide RVSRs and VSRs the
    foundations of technical training. The major goal of this training is
    to ensure RVSRs and VSRs can be productive as soon as possible while
    still learning the basic job responsibilities.
        The initial 16 weeks of RVSR training incorporates an intense six
    weeks of classroom instruction along with ten weeks of practical
    application at the student's home office. This is accomplished using
    the Training and Performance Support System (TPSS), which is a computer
    assisted, cooperative learning, and case study tool. This will be
    followed by another twelve weeks of classroom instruction and practical
    application at the student's home station.
        The initial 12 weeks of VSR training incorporates an intense four
    weeks of classroom instruction along with eight weeks of practical
    application at the student's home office. This is accomplished using
    the award winning Field Guide to VSR Training, which is a web-based
    repository of training instruction and materials. There will another
    thirty-six weeks of classroom instruction and practical application
    conducted at the student's home station.
        Question. How will the VA's new ``duty-to-assist'' requirements
    impact processing times?
        Answer. The number of pending claims decreased each year from
    fiscal year 1998 to fiscal year 2000. In addition, the appeals workload
    showed significant improvement over the same time period. VBA began to
    see the effects of the recent legislative changes on our workload.
    Since the implementation of the duty to assist legislation, our pending
    claims and appellate workload have increased significantly since the
    start of fiscal year 2001. During the same period, the timeliness of
    claims processing remained relatively study, with some improvement in
    the timeliness of appeals. The impact of duty to assist requirement has
    had a significant negative impact on processing time. The fiscal year
    2002 projections for rating related processing times is 100 days higher
    than the actual performance achieved in fiscal year 2000.
        Question. Is the VA developing safeguards to ensure times won't get
    worse as it does more to help veterans develop their claims?
        Answer. VBA has developed countermeasures that will minimize the
    potential negative impact on workload and timeliness created by ``duty
    to assist'' and diabetes legislation. The Secretary of Veterans Affairs
    has initiated a comprehensive plan to expedite the processing of our
    oldest pending claims, with priority given to those claims filed by
    veterans age 70 or older. This plan incorporates a three-pronged
    approach:
      --Establish a special processing unit.
      --Revise the mission for the SDN Resource Centers.
      --Provide Level III case management service at all ROs for veterans
            age 70 and older, and for any customer whose claim has been
            pending more than 1 year.
        Work on all three approaches is now in progress, with full
    implementation by November 1, 2001. Additionally, efforts are underway
    to investigate and develop modifications to legislation and regulations
    that will improve claims processing timelines. These proposals will
    allow oral evidence gathering, simplify issues pertaining to effective
    dates and simplify certain pension program adjustments. Among other
    countermeasures planned, VBA will consolidate pension claims process
    and enhance the accessibility of records from VHA and the St. Louis
    Record Management Center. Further recommendations from the VA Claims
    Processing Task Force report are anticipated to advance VBA's potential
    to process claims promptly.
                                  hepatitis c
        Question. The budget request is $168 million below the 2001
    appropriated level for hepatitis C. Can you please explain the reason
    for this cut?
        Answer. Since initiation of the tracking of hepatitis C-specific
    utilization and expenditures, VA has increased the number of patients
    screened, tested and treated every year. VA expenditures for hepatitis
    C have risen every year, reflecting this increased activity.
        Hepatitis C is a new disease. The virus that causes this disease
    was identified in 1988. The blood test for it began in 1992 and the
    first treatments were approved in 1997. VA's previous budget estimates
    were based on assumptions because no reliable data on hepatitis
    screening, testing and treatment existed. Based on VA's actual
    experience in testing for and treating veterans with hepatitis C, we
    are now better able to understand where those early best guess'
    assumptions were inaccurate. This is why there are significant
    differences between appropriated and reported budgets for fiscal year
    2001. Specifically, areas of large discrepancy between the earlier
    estimates and our actual experience involve: Number of patients who
    agreed to be tested for hepatitis C; actual number of people who test
    positive (prevalence); and number who agree to treatment for hepatitis
    C.
        It is important to point out the continuing medical uncertainty
    surrounding some aspects of hepatitis C treatment, including, for many
    patients with minimal clinical disease, the value of treatment versus
    the risk of treatment side effects. Since hepatitis C infection may
    persist for decades without clinical symptoms or signs of liver damage,
    some patient and their providers opt to defer therapy until more
    effective and better-tolerated therapies are available.
        The magnitude of difference between previous models and actual
    experience justifies a reexamination of the models and assumptions
    currently used to project hepatitis C expenditures. As a preliminary
    step in this direction, the Department has revised the projections for
    fiscal year 2002 to $171.6 million. The budget planning process for
    fiscal year 2003 will include a more comprehensive revision of the
    hepatitis C model.
        Question. VA requested $340 million for hepatitis C in 2001, but
    now tells us it will only spend $152 million. Why has VA been unable to
    spend as much hepatitis C funding as it previously requested?
        Answer. See response to above question.
        Question. What guidance does the VA provide to Regional Offices on
    the testing of hepatitis C? What guidance is provided on treatment?
        Answer. VA's hepatitis C program ensures that all VA clinicians are
    provided the most up-to-date scientific information about the disease
    in order to deliver the highest quality care to veterans, and ensures
    that they receive appropriate information about hepatitis C screening
    and testing. This is based on the Under Secretary for Health's
    Information Letter (IL 10-98-013), dated June 11, 1998, which
    establishes the criteria for provider evaluation, screening and testing
    for hepatitis C. As stated in the Information Letter, providers are to
    evaluate patients with respect to risk factors for hepatitis C and
    document the assessment. Based upon the hepatitis C risk assessment or
    patient request, antibody testing is offered based on an algorithm (see
    attachment, Hepatitis C Virus Antibody Screening for the Veteran
    Population). In addition, VA Hepatitis C Centers of Excellence maintain
    a Web page, www.va.gov/hepatitisc, (for both clinicians and patients)
    as a guide for hepatitis C screening and testing.
        Several national educational conferences have also been conducted
    to ensure that VA clinicians are provided with the most up-to-date
    scientific information about hepatitis C in order to deliver the
    highest quality care to veterans with the disease. These programs were
    designed to assist providers in identifying those at risk, provide
    testing and prevent them from becoming infected with the virus that
    causes hepatitis C, as well as to provide the most current scientific
    information about treatment. These conferences which included updating
    hepatitis C, also provided special emphasis on:
      --March 2000--Pre- and post-test counseling for nurses, pharmacists
            and counselors.
      --August 2000--Psychiatric evaluation of patients and treatment of
            complex patients.
      --December 2000--Psychosocial needs of the patient with hepatitis C
            and his/her family.
        To ensure that VA health care is state-of-the-art for hepatitis C,
    treatment guidelines first issued in August 1998 were updated in
    January 2000 (see attached). They are currently being updated again.

                                     ______

                 Questions Submitted by Senator Robert C. Byrd
                 outpatient clinic in charleston, west virginia
        Question. In the late 1990's, the reports accompanying several VA-
    HUD Appropriations Bills included, at my request, language urging the
    Department of Veterans Affairs (VA) to accelerate the establishment of
    community-based outpatient clinics in Charleston, Logan, Petersburg,
    and Franklin, West Virginia.
        Do some of our veterans forego medical care they need because they
    find travel too difficult?
        Answer. Prior to the opening of Community Based Outpatient Clinics
    (CBOC) in Charleston, Logan, Petersburg, and Franklin, many veterans
    cited distance and time required to travel as reasons for not going to
    a VA facility.
        Question. Are outpatient clinics a solution to this barrier?
        Yes. Outpatient clinics appear to be one solution.
        Question. Before the opening of these clinics, what health care
    options were available to veterans of the above-mentioned West Virginia
    cities?
        Answer.

    ----------------------------------------------------------------------------------------------------------------
                 CBOCs                      Type of Care                      Description of Health Care
    ----------------------------------------------------------------------------------------------------------------
    Charleston....................  Non-Emergent...............  29 Independent Physician Clinics in Charleston area
                                    Emergent...................  Major Hospitals include Highland, St. Francis, and
                                                                  Thomas Memorial
    Franklin......................  Non-Emergent...............  Two local medical doctors within the county
                                    Emergent...................  1 hour to the west at Rockingham Memorial Hospital,
                                                                  Harrisonburg, VA
                                                                 45 minutes to the north at Grant Memorial Hospital
                                                                  in Petersburg, WV
    Logan.........................  Non-Emergent...............  5 Independent physician clinics in Logan area
                                    Emergent...................  Logan General Hospital
    Petersburg....................  Non-Emergent...............  Providers in Grant, Hardy, Pendleton, and Mineral
                                                                  counties
                                    Emergent...................  Grant Memorial Hospital
    ----------------------------------------------------------------------------------------------------------------

        Question. On average, how far did a veteran have to travel from
    each city for VA health care?
        Answer.

    ----------------------------------------------------------------------------------------------------------------
                     Description                               Nearest VA Facility Prior to CBOC Opening
    ----------------------------------------------------------------------------------------------------------------
    Charleston..................................  Huntington VA Medical Center--50 miles one way
    Franklin....................................  Martinsburg VA Medical Center--150 miles one way
    Logan.......................................  Huntington VA Medical Center--75 miles one way
    Petersburg..................................  Martinsburg VA Medical Center--130 miles one way
    ----------------------------------------------------------------------------------------------------------------

        Question. How many veterans received health care at each of the new
    outpatient clinics in fiscal year 2000? Have these numbers increased
    since fiscal year 1999? By how much? Is usage of these clinics
    surpassing expectations, particularly in such a relatively short time
    period? Are they providing better health to more veterans in West
    Virginia? Do you anticipate the numbers of visitors to increase even
    more?
        Answer.

    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Unique Veterans
                                                    ---------------------------
                         CBOCs                                           2001                                     Comments
                                                       1999     2000     Est.
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Charleston.....................................    1,857    2,936    3,500  Steady growth. Kanawha County has the largest concentration of veterans in
                                                                                 West Virginia
    Franklin.......................................       55      100      134  Veterans averaging 2.7 visits per year. It is anticipated that the number of
                                                                                 veterans will continue at the current rate.
    Logan..........................................      N/A      N/A      200  The Logan Clinic opened in fiscal year 2001. Access will be increased the
                                                                                 following two years to a maximum of 600 patients.
    Petersburg.....................................      373      580      701  Veterans averaging 3 visits per year. It is anticipated that the number of
                                                                                 veterans will continue at the current rate.
    --------------------------------------------------------------------------------------------------------------------------------------------------------

        Veterans at CBOCs receive the same level of care as provided in
    primary care clinics at VA medical centers. This is monitored through
    the External Peer Review Program (EPRP) Program. Likewise, each veteran
    at a CBOC has the same access to specialty care as a veteran seen at a
    medical center.
        Question. Are there any additional areas in West Virginia where
    there are unmet needs with respect to veterans health care?
        Answer. The four VISNs serving the state of West Virginia review
    the unmet needs of veterans on a regular basis and react accordingly.
    For example, we plan to activate a new, contracted CBOC in Williamson,
    West Virginia, and is anticipated to open in February 2002.
     nursing home care unit at the beckley veterans affairs medical center
        Question. The fiscal year 2001 VA-HUD Appropriations Bill included,
    at my request, an amount of $1 million over the budget request for
    design of a 120-bed VA Nursing Home construction project on thirteen
    acres of available space owned by the Beckley VA Medical Center.
        What is the status of the $1 million design work for the nursing
    home?
        Answer. An Architect/Engineer (A/E) contract for design/build
    documents was awarded August 2001.
        Question. When will the nursing home project be ready to go to
    construction?
        Answer. If construction funds were available, an award could be
    made by February 2002.
        Question. I understand that this project must first pass muster
    with the so-called Capital Asset Realignment for Enhanced Services
    initiative, which is a prerequisite for any new major construction
    project throughout the VA system. Please tell me more about this
    process and how the Beckley project fits into this process. Will this
    new process delay construction beyond the point it would otherwise be
    eligible to go to bid? If so, what is the rationale for holding up this
    project and causing delays that can only increase the costs of the
    construction of the project?
        Answer. CARES is a process being undertaken by VA to evaluate
    health care delivery needs of veterans through 2010. Once the preferred
    option(s) for clinical service delivery are decided for each VISN, an
    appropriate alignment of capital assets, in which those services will
    be delivered, can be made.
        Because VA health care facility capital asset sizing is dependent
    on clinical workload, most investment initiatives are being reevaluated
    as the CARES projections are made. Initiatives underway prior to fiscal
    year 2000 were allowed to continue. However, those still in the
    development or design stage are being further reviewed. VA is on record
    that we cannot stop investing in our aging infrastructure and
    addressing new program needs before the CARES process is completed. VA
    is aware of the need for continued investments, and will consider this
    nursing home care unit project along with other nationwide priorities
    when developing future budgets.
        An AE contract award for design/build was awarded in August 2001 in
    accordance with the fiscal year 2001 VA-HUD Appropriations Bill.
    Pending Congressional authorization and construction funding for this
    nursing home project, VA cannot proceed with a construction contract.
    Consequently, we are completing as much of the process as authorized to
    do.
        Question. What other advice can you give me that would accelerate
    this project, which is designed to provide much needed long-term care
    for our veterans in Southern West Virginia?
        Answer. Utilizing the design/build method of construction and using
    the design funds appropriated in our fiscal year 2001 budget have
    accelerated the design schedule.
     demonstration project--clarksburg va medical center and ruby memorial
                                    hospital
        Question. VA supports amendments for initiating, continuing, and
    enhancing the demonstration project involving the Clarksburg VA Medical
    Center, Ruby Memorial Hospital, and West Virginia University (WVU). The
    pilot demonstration project allows Ruby Memorial Hospital to provide
    specialized treatment to veterans in the Clarksburg/Morgantown areas,
    rather than requiring them to travel out of state to receive care at
    other VA hospitals.
        Has this project greatly improved the access of veterans to a
    number of specialized services? In what particular areas?
        Answer. Yes, the Ruby Memorial Project has greatly improved the
    access of veterans for a variety of specialized services. The major
    referral to Ruby Memorial is ophthalmology. This service includes
    evaluations and testing but also cataract surgery, glaucoma surgery,
    laser treatments for retina disorders and other eye surgeries. Imaging
    is another area for which many veterans receive referrals to Ruby
    Memorial. Services include mammograms, dexa scans (bone density studies
    for women, as well as male/female veterans having chronic obstructive
    pulmonary disease who are treated with steroids/prednisone), Magnetic
    Resonance Imaging (when timeliness or urgency of the study is a
    priority) and arteriograms (when the service is not available at
    Clarksburg and is urgent in nature. Other imaging referrals, especially
    for our women veterans, include ultrasounds of the breasts and pelvic
    area.
        Ruby Memorial Hospital also performs gastrointestinal tests,
    including pH monitoring and enterclysis, which are not performed at
    Clarksburg or at Pittsburgh.
        Referrals are also made to Ruby Memorial for gynecology surgeries
    and sentinal node biopsies for melanoma (the standard of practice in
    the work-up of this disease).
        Cardiac patients also benefit from referrals to Ruby Memorial. Two
    services not available within VA include a congestive heart failure
    clinic and enhanced external counter pulsation treatment. Both of these
    services are for veterans with end-stage congestive heart failure or
    inoperable cardiac disease. Several veterans have benefited from the
    treatments, and quality of life has been improved.
        Finally, patients with emergent medical conditions are transferred
    to Ruby Memorial when Clarksburg VA does not provide the needed service
    and services are not available at Pittsburgh. Such transfers can
    include: cardiac, respiratory, vascular, neurosurgery, or orthopedic
    conditions.
        Question. What are the most common health conditions found in
    veterans at the Clarksburg VA Medical Center? Are there other areas of
    specialized care that WVU could be providing to veterans in these
    areas?
        Answer. The most general health problems treated at Clarksburg VA
    include chronic ischemic heart disease, diabetes, chronic obstructive
    lung disease, and hypertension.
        As noted above, most specialty services are used at Ruby Memorial
    currently. Referrals to Ruby are based on service not available at
    Clarksburg or Pittsburgh, urgency or timeliness of the referral, and
    hardship (when travel to Pittsburgh is not in the interest of the
    veteran).
        Question. Is there potential for similar demonstrations between
    other VA Medical Centers in West Virginia with other West Virginia
    medical facilities, such as the Huntington VAMC and Marshall
    University?
        Answer. Currently, there are plans to locate an eastern panhandle
    campus of the West Virginia University (WVU) School of Medicine in the
    Eastern Panhandle. Once this program is established, the potential
    exists for clinical opportunities between the Medical Center, the CBOCs
    and WVU. The Beckley VAMC is not affiliated with a nearby medical
    school, so collaboration as described is not foreseen. In addition,
    Beckley has no contractual agreements with the two local community
    facilities; however, as with most VAMCs, they do have cooperative
    arrangements to refer patients when the need arises. Most typically,
    this would be for patients requiring emergency/critical care beyond the
    scope of the Beckley VAMC capabilities for which transfer to Salem/
    Richmond is neither practical nor safe.
        Question. Is there merit to constructing a VA Research Center on
    the campus of the West Virginia University Health Sciences Center in
    Morgantown?
        Answer. VA Research and Development is an intramural program:
    appropriated research funds are allocated to VA facilities to conduct
    research on the high priority health care needs of veterans under the
    supervision of VA employees. Unlike the NIH and Department of Defense,
    VA does not make research grants to colleges or universities, cities or
    states, or any other non-VA entity. Moreover, more than 70 percent of
    VA researchers are also clinicians requiring proximity to their
    patients. Accordingly, VA opened a new research building at the
    Huntington VAMC in 1998. An additional research facility at Morgantown
    would place VA investigators 205 miles from the Huntington VAMC and 150
    miles from the Martinsburg VAMC. Researchers at the Clarksburg VAMC
    would still be 40 miles from the proposed center, and to date, that
    medical center has no active VA research funding.
        We believe that funding construction to improve existing VA
    research facilities would best serve America's veterans.
                       va healthcare information security
        Question. I am awaiting a report from the VA regarding a
    constituent proposal I sent to the agency on March 1, 2001, regarding
    ways in which to improve the security of health records of our nation's
    veterans. I understand that these computerized records are very
    accessible to hackers, and that there have been numerous reported
    incidents of stolen records, stolen identities, changed results, and
    denial of insurance and/or employment.
        What is the VA's current plan to protect the privacy,
    confidentiality, and integrity of the sensitive medical records of the
    VA patient population, as recommended by a recent GAO report?
        Answer. VA uses both physical and electronic controls to safeguard
    patient information in the Veterans Health Information System and
    Technology Architecture (VistA). Access to computer rooms at health
    care facilities is limited by appropriate locking devices and
    restricted to authorized VA employees and vendor personnel. Computer
    peripheral devices are placed in secure areas or are otherwise
    protected. Access to file information within VistA, for authorized
    staff, is controlled at two levels. The system recognizes authorized
    employees by a series of individually unique passwords and access via
    menu assignment. Security keys within the Patient Sensitivity function
    of VistA control access to restricted or sensitive computerized
    records. Sensitive record access logs are available through VistA to
    track user access to information on employees, volunteers, and specific
    patients. Paper records are kept in physically controlled areas. VA
    file areas are locked after normal duty hours, and the Federal
    Protective Service or other security personnel protect the facilities
    from outside access.
        In November 2000, VA established a department-level information
    security program, led by an executive-level official. This plan
    provides the framework for addressing department-wide information
    security on a near- and long-term basis. The plan addresses security
    problems, and responds to risks documented in a department-wide risk
    assessment that VA completed in June 2000.
        VA's information security management plan emphasizes accelerated
    enterprise-wide improvements that are directed primarily at improving
    access controls. The plan identifies near-term actions including:
      --Requiring more secure passwords on computer workstations.
      --Removing unsecured dial-in connections.
      --Conducting focused reviews of access and personnel controls.
      --Requiring incident reporting as a standard practice.
      --Implementing configuration standards for external electronic
            connections.
      --Conducting a total workforce review of VA standard security
            awareness curriculum.
      --Implementing personnel controls.
      --Performing penetration tests at selected VA locations.
        These near-term actions have been completed.
        VA's plan also identified a number of longer-term actions that
    emphasize broader assessments and proposed measures to improve
    information security on a more comprehensive basis. These actions
    include establishing a regular cycle to test the Department's
    compliance with established security requirements and certifying and
    accrediting general support systems and major applications.
        VHA is fully supporting this plan. Based on monthly status reports,
    VHA is in compliance and on schedule with implementation of all phases
    of the Department's information security program.
        Question. Does the President's fiscal year 2002 Budget contain
    sufficient funding to implement such a plan? If not, what level of
    funding would be required?
        Answer. The department-wide information security plan is defined in
    an approved Capital Investment Proposal. Funding for this initiative is
    identified and supported in the fiscal year 2002 budget submission.
                                     ______

                   Questions Submitted by Senator Tim Johnson
                               veterans education
        Question. Given your history of strong support for a dramatically
    improved GI Bill, what are your current plans for enhancing this
    important legislation during the next year or two, especially within
    the context of the President's proposed budget for fiscal year 2002?
        Answer. Veterans no longer are well represented in the top
    leadership positions in business, industry, or government because
    graduates of schools that most veterans cannot afford to attend
    disproportionately fill these positions. Further, entry or advancement
    into positions in our Nation's increasingly high-tech business
    environment often demands completion of high-cost, short-term courses
    that lead to advanced degrees, certification, or licensure. To begin to
    address these realities for veterans, we believe MGIB improvements,
    within the current budget context, should focus on reasonable rate
    increases and a benefit payment option that permits acceleration of
    benefit usage, in that order.
        Question. As you may be aware, bi-partisan GI Bill related
    legislation has been introduced in the Senate to help fulfill the
    promise to those who serve in the defense of our nation. The Johnson/
    Collins bill (S. 131), not only enjoys the support of the leadership of
    the Senate, but also has indirectly received the endorsement of the
    Senate as a whole through the creation of a reserve fund amendment to
    the Senate Budget resolution. Since this bill is similar in nature to
    the recommendation of the Servicemembers and Veterans Transition
    Commission in that it links the GI Bill to the cost of education, what
    support can you and the Administration provide to assist with the
    enactment of this important legislation?
        Answer. Indexing the basic MGIB benefit to the annual cost of
    attending a 4-year public college certainly is a worthwhile goal.
    However, we believe the significant tiered rate increases proposed in
    S. 1114 would, to the extent the increases can be accommodated within
    the overall budget guidelines agreed to by the President and Congress,
    represent an important first step toward such goal. We note that
    identical tiered increases are contained in H.R. 1291, which already
    has passed the House.
                              veterans health care
        Question. Of the Administration's requested $1 billion increase,
    only approximately $800 million of that discretionary amount would be
    available for health care--for routine increased costs as well as new
    initiatives such as emergency care and implementation of the long-term
    care provisions in the Millennium Act. Specifically, please explain how
    this increased funding would address these programs.
        Answer. With the $1 billion increase. VA intends to address the
    following:

                            [In thousands of dollars]

            Description

    Pharmaceuticals--New patients accessing the system for their
        pharmaceuticals coupled with the increased treatment of
        enrolled patients in the ambulatory care environment......   259,002
    Long-Term Care--Moves VA towards satisfying the requirements
        of the Veterans Millennium Health Care and Benefits Act...   196,000
    Access and Service Delivery--VA's overall service and access
        goal is to provide medical care when and where it is
        needed in ways that are timely, convenient and cost-
        effective.................................................   164,000
    Prosthetics--Increase due to the continuing impact of mandated
        eligibility reform, advances in technology, as well as the
        effects of aging on the veteran population................    57,338
    Compensation & Pension (C&P) Exams--Expansion of the past
        practice of using Veterans Health Administration (VHA)
        resources to obtain medical opinions, which results in
        increased workload........................................    50,000
    Core Financial and Logistics System (coreFLS)--CoreFLS is
        expected to reduce operation and maintenance costs, as
        well as improve the data integrity, timeliness, and
        reliability of financial data within the VA...............    38,676
    Capital Asset Realignment for Enhanced Studies (CARES): Non-
        Recurring Maintenance (NRM) Enhancement--In anticipation
        of implementing the outcome of the Phase I and Phase II
        CARES studies.............................................    30,000
    CHAMPVA Workload and Regulatory Changes--Increase necessary to
        support the anticipated increase in workload based on past
        experience and expanded CHAMPVA coverage to ensure
        dependents eligible under VA's program receive comparable
        benefits as those provided to dependents under the TRICARE
        program...................................................    29,782
    Child Care Supplement--Public Law 106-58 authorizes Federal
        agencies to use appropriated funds from the salary account
        to assist Federal employees with childcare tuition costs..    22,226
    Entry Pay Increase for Information Technology--Special pay
        rates targeted to entry-level and mid-level technology
        jobs, because Federal agencies reported they had trouble
        hiring and retaining these types of employees.............    20,738
    Hepatitis C--Cost is expected to increase recognizing both a
        new VERA allocation format and an increasing number of
        treatments................................................    20,000
    Special Salary Rates for Pharmacists--Allow VA to improve
        retention of the most senior members of the current
        pharmacy workforce and will improve its competitiveness in
        recruiting new pharmacists................................    16,852
    Dentist Special Pay--Public Law 106-419 provides for medical
        center directors to utilize the full range of pay
        increases authorized to optimize dentist recruitment and
        retention efforts.........................................    14,326
    State Home Changes--VA currently has a legislative obligation
        to pay states for care provided to eligible VA patients...    13,817
    Nurse Special Pay--Public Law 106-419 provides the guarantee
        that VA nurses receive a national comparability increase
        equivalent to the amount provided to other federal
        employees.................................................    13,726

        Other budgeted adjustments including changes in medical
    collections, predicted changes in enrollment associated with TRICAARE
    for Life program and a reduction to correct for under spending in three
    specific programs budgeted in prior years result in an overall increase
    of $1 billion in medical care obligations.
        Question. I understand that OMB rejected your first budget
    submission which was $1.9 billion. Obviously you felt you needed more
    than what OMB was willing to provide. Obviously, as well, the Senate
    felt you needed more than that when they approved my amendment to the
    Budget Resolution called for a $2.6 billion increase--the amount
    recommended by the Independent Budget. What is the Administration's
    plan for bringing veterans' health care funding more in-line with that
    proposed by the Independent Budget?
        Answer. We are confident the President's Budget is sufficient to
    support the VA health care system and provide needed services to our
    veterans. The Administration will continue to provide a high level of
    resources to veterans' health care programs based upon the demand for
    health services by these dedicated men and women who have sacrificed so
    much. VA appreciates the work of the Veterans Service Organizations
    that develop the Independent Budget and how it focuses public debate
    upon services and resources should be provided to those whom have
    served the call to defend freedom. VA and Congress are fortunate to
    have the Independent Budget provide a detailed alternative view of
    where the federal government should allocate limited resources.
        Question. With the rising cost of health care, demands of an older
    veteran population, and increasing responsibilities of new mandates,
    please explain how the VA plans to maintain current services at the
    level recommended by the Administration's budget.
        Answer. The total budgetary resources provide enough to fund
    uncontrollable cost increases (payroll and inflation) and initiative
    increases contained in the fiscal year 2002 budget request. To account
    for a greater volume of services provided and an aging population, VA
    realizes the need to provide sufficient resources for hepatitis C,
    long-term care, increased access, which will be addressed within the
    budgetary resources requested.
        Question. Your statement indicates that you place a priority on the
    specialized services the VA provides related to spinal cord injury,
    mental health, and prosthetics. The Congress recognized the importance
    of these core missions of the VA health care system by mandating in
    Public Law 101-262 that the VA maintain its capacity to provide these
    services. However, in the area of mental health, the VA has already
    lost a major portion of its service capacity since the law was enacted.
    What actions are being taken to restore capacity in mental health
    programs?
        Answer. From fiscal year 1996 to fiscal year 2000, VA has
    maintained or increased capacity to treat veterans in both the
    Seriously Mentally Ill (SMI) and Post-Traumatic Stress Disorder (PTSD)
    categories in terms of patients served. However, there has been a
    decrease in the number of veterans with substance abuse served in
    specialized programs by the system as a whole, from 107,074 in fiscal
    year 1996 to 94,603 in fiscal year 2000. In addition to this apparent
    loss of treatment capacity for substance abuse, there are also system-
    wide variations in the capacity to provide specialized treatment
    services to veterans for the other categories as well as in substance
    abuse. VHA is currently conducting a detailed review of specialized
    mental health treatment programs. This review is being conducted to
    determine if the apparent loss of substance abuse treatment capacity is
    due to counting errors or to actual loss of services. The quality of
    care provided to patients with the target diagnoses (e.g., PTSD,
    Substance Abuse Disorders) both within specialized VHA treatment
    programs and outside of these programs will also be addressed. Results
    of this review are expected in April 2002.
        Public Law 106-117 required that VHA dedicate not less than $15
    million for new specialized PTSD and Substance Use Disorder treatment
    programs. Because of a loss of capacity for specialized Substance Use
    Disorder care in VHA between 1996 and 1999, $5.5 million of these
    monies were targeted for PTSD care while $9.5 million were allocated to
    new Substance Use Disorders programs. A total of 31 new Substance Use
    Disorder programs in 19 networks were funded through this process.
    Similarly, 18 new PTSD specialized programs in 17 networks were
    initiated.
        In October 2000, VHA Directive 2000-034 encouraged the development
    of Intensive Case Management programs for severely mentally ill
    veterans. As of June 2001, VA had 54 active Mental Health Intensive
    Case Management (MHICM) programs with another 10-12 in various stages
    of development. Further, VACO has initiated a planning process through
    which VISNs are encouraged to implement these programs as needed. All
    VISNs have submitted plans for expansion of MHICM teams. These plans
    are currently under review.
        VA's fiscal year 2000 budget increased funding for specialized
    services for homeless veterans by $50 million. Of this increase, $39.6
    million was included in medical care appropriations. Sixty-six new
    programs were established with 120 new FTEE. In addition, four
    demonstration projects were initiated to evaluate new approaches to
    outreach to homeless female veterans, facilitate employment, provide
    dental care for homeless veterans and to support hospitalized homeless
    veterans through their transition to community life. $2.3 million was
    committed to the activation of new CWT programs and other therapeutic
    work initiatives for homeless veterans. When these programs are fully
    operational, it is expected they will serve an additional 1,600
    veterans annually. $3 million was utilized to establish 11 programs
    dedicated to homeless women veterans. These programs are expected to
    serve 1,500 homeless women veterans per year when they are fully
    operational. VA committed $18.8 million to the expansion of the Health
    Care for Homeless Veterans (HCHV) program in fiscal year 2000. The
    program offers extensive outreach, physical and psychiatric health
    exams, treatment, referrals, and ongoing case management to homeless
    veterans with mental health problems, including substance abuse. When
    all new staff and new programs are fully operational, it is expected
    that 12,000 additional homeless veterans will be treated. Approximately
    one-fourth of these veterans will be provided contract residential
    treatment.
        The remainder of these new monies was made available to guarantee
    loans made under the Multifamily Transitional Housing for Homeless
    Veterans Program. This program will allow VA to guarantee loans made by
    lenders to help non-VA organizations develop transitional housing for
    homeless veterans. VA plans to guarantee 5 loans in the next two years,
    with a total of 15 loans guaranteed over the next 4 years. The Homeless
    Providers Grant and Per Diem Program provide grants and per diem
    payments to assist public and nonprofit organizations to establish and
    operate new supportive housing and service centers for homeless
    veterans. Grant funds may also be used to assist organizations in
    purchasing vans to conduct outreach or provide transportation for
    homeless veterans. VA announced a new round of grants in April 2001,
    and has committed $10 million for the 8th round of funding. With the
    new Loan Guarantee for Multifamily Transitional Housing for Homeless
    Veterans Program and additional grant awards under the Grant and Per
    Diem Program, VA expects to help community service providers develop
    approximately 6,000 more transitional beds for homeless veterans over
    the next 4 years.
        VA recently announced the creation of VA Advisory Council on
    Homelessness Among Veterans with the mission of providing advice and
    making recommendations on the nature and scope of programs and services
    within VA. This Committee will greatly assist VA in improving the
    effectiveness of our programs and will allow a strong voice to be heard
    within the Department from those who work closely with us in providing
    service to these veterans.
        Question. While there has been progress to restore beds and
    staffing in spinal cord injury centers, I understand overall VA is
    still far below directed levels, particularly for SCI long-term
    capacity. What actions are being taken to restore capacity in spinal
    cord injury programs?
        Answer. Significant progress has been accomplished in restoring
    capacity to the spinal cord injury centers. A recent June 2001 survey
    indicated that 93 percent of the 949-staffed beds required by VHA
    Directive 2000-022 were staffed. VHA Directive 2000-022 established the
    minimal number of available and staffed SCI Center beds, the minimal
    number of staff for certain aspects of the SCI program, and the need to
    identify additional extended care beds for this population. There has
    been considerable progress made in meeting the requirements of this
    directive. Active recruitment for nurses, physicians, psychologists,
    and SCI therapists is ongoing, within the SCI Centers. One of the most
    challenging areas is nurse recruitment. To assist in this effort, many
    of our facilities are using or considering recruitment and retention
    incentives. Working with the Paralyzed Veterans of America (PVA), an
    additional focus at this time is the designation of 68 extended care
    beds. VA is committed to meeting the specialty and extended care needs
    of this population.
        Question. Please update me on the VA's progress with implementation
    of several important initiatives contained in the 1999's Millennium
    Act, including provisions dealing with long-term health care.
        Answer. A number of provisions that did not require regulations
    have been implemented, as follows:
      --Section 101(a)--Priority for Nursing Home Care for Service-
            Connected (SC) conditions and 70 percent or greater SC
            veterans. Directive issued in February 2000.
      --Sections 102 and 103--Sites selected for long-term care pilot and
            assisted living pilot. Two sites are currently operating and
            the other two are expected to come on line in the next few
            weeks.
      --Section 112--Eligibility for Combat Injured veterans (Purple Heart
            recipients). Directive issued in February 2000.
      --Section 115--Sexual Trauma Counseling. Directive implementing new
            program requirements issued in February 2000.
      --Section 116--PTSD and Substance Use Disorder Programs--$15 million
            was distributed to new Substance Use Disorder and Post-
            Traumatic Stress Disorder (PTSD) program initiatives on January
            26, 2001. A full report to Congress was submitted on February
            15, 2001.
      --Section 208--Enhanced Use Lease Authority--Directive revised to
            include provision that allows networks to retain proceeds from
            enhanced use leases after expenses was issued March 24, 2000.
      --Section 303--Chiropractic Treatment--National policy directive
            issued in May 2000.
        A number of provisions require significant policy development and
    publication of regulations to fully implement:
      --Section 101(b)--Expanding non-institutional and extended care
            services--VA determined benefits package services. Regulations
            on the provisions of non-institutional extended care in the
            enrollment medical benefits package expands the definition of
            ``medical'' to include extended care services, and specifically
            defines the expanded non-institutional services to include non-
            institutional geriatric evaluation, non-institutional respite
            care and adult day health care. The Long-Term Care regulation
            has been combined with the Extended Care Co-Pay regulation. VA
            approved a revised package in July 2001 and has forwarded it to
            OMB. VA is working with OMB on final set of revenue estimates.
      --Section 101(c)(1)(c)--Co-payments required for long term care
            services from most NSC vets and SC vets. Proposed regulations
            being reviewed by OMB should be published soon, with an
            estimated effective date of March 2002.
      --Section 111--Emergency Care--VA authorized to reimburse certain
            vets as payor of last resort for emergency care in non-VA
            facilities. On July 12, 2001, VA published an Interim final
            rule titled, ``Payment or Reimbursement for Emergency Treatment
            Furnished at Non-VA Facilities'' in volume 66, Number 134 of
            the Federal Register. This interim final rule set forth the
            regulatory requirements for reimbursing claimants the lesser of
            the amount for which the veteran is personally liable or 70
            percent of the applicable Medicare fee schedule for treatment.
            VA facilities will begin processing these claims during August
            2001, with an effective retroactive date of May 1, 2000.
      --Section 201--Medication Co-Payments--VA to increase the amount of
            the Pharmacy Co-Pay and to establish maximum monthly and annual
            pharmacy co-pay amounts for individual veterans. Proposed
            regulations were published in the Federal Register, 60-day
            comment period on July 16, 2001. VA expects this regulation to
            be implemented before the end of the year.
      --Section 207--State Home Construction Grants--The new regulations on
            grants to States for construction or acquisition of State Home
            facilities change the priorities for awarding these grants to
            give higher priority to renovation and life safety projects. In
            addition, the new criteria include definitions of need for
            additional beds, by State. Regulations were published in the
            Federal Register on Tuesday, June 26, 2001 and were issued as
            an interim final rule to apply to the fiscal year 2002 State
            Home construction funding cycle (grants due August 15, 2001).
      --Section 201--Outpatient Co-Payments--VA to set the outpatient co-
            pay for each visit. VHA is considering lowering the outpatient
            co-payment and regulations are expected to be sent to OMB in
            August 2001, with an expected effective date in early 2002.
                                  va research
        Question. How does the VA intend to use the $10 million increase
    called for in the Administration's budget? Could the VA effectively
    spend an additional $20-$30 million for research? If yes, please
    provide me with some idea as to the priority areas where VA needs to
    increase its research efforts?
        Answer. VA will use the Administration's proposed $10 million
    increase to maintain current services. We believe the President's
    Budget sufficiently funds VA's research efforts. However, an additional
    $20-$30 million would be used to expand high priority research in the
    areas of:
      --Neurodegenerative diseases of the brain such as Alzheimer's
            disease, Parkinson's disease, brain tumors and genetic diseases
            of the nervous system, and Amyotrophic Lateral Sclerosis (Lou
            Gehrig's disease).
      --Special population needs such as spinal cord injury, multiple
            sclerosis, low vision. Enhancement through development of an
            artificial retina, and upper extremity prostheses using
            nanotechnology.
      --Treatment of chronic diseases such as AIDS treatment and compliance
            studies, PTSD in women, heart surgery (arteries for grafts and
            heart bypass pump), and stroke prevention.
      --Quality of care studies that will enable VA to exploit advances in
            clinical practices including the treatment of cerebrovascular
            diseases (stroke), and lung, prostate, and colon cancer.
      --New National Centers of Excellence to include minority health and
            rehabilitation outcome assessment.
        Question. It is my understanding that there is a critical need for
    improvements in the VA research infrastructure (laboratory and other
    research facility upgrades, local oversight for human studies, etc.).
    How does VA plan to address these needs?
        Answer. VA has several mechanisms with which it is addressing
    research infrastructure needs. First, the Veterans Equitable Resource
    Allocation (VERA) funding that is distributed to VA medical facilities
    includes a component for research and development. In fiscal year 2001,
    the Research and Development component totaled $331 million and was
    allocated based on the level of research activity that each medical
    facility conducts. The medical facility uses these funds in part for
    equipment purchases, renovation and maintenance of research space, and
    local oversight of human studies.
        Second, the Office of Research and Development (ORD) also helps
    medical facilities improve their infrastructure by providing funding
    for local facility research support offices and for research equipment
    (the medical and prosthetic budget may not be used to fund capital
    improvements). In addition, ORD has funded the field offices of the
    Office of Research Compliance and Assurance, the VA's watchdog
    organization for ensuring the safety of human subjects.
        Third, ORD identifies construction requirements necessary to
    support the physical infrastructure of VA's research enterprise. Based
    on an evaluation of the individual research programs the ORD has
    compiled a list of 30 priority sites that would benefit from
    infrastructure improvements. These needed improvements range from
    construction or renovation of ``wet'' laboratories, construction of new
    research structures, and other capital improvements. Three sites (Ann
    Arbor, MI; San Antonio, TX; and Palo Alto, CA) have renovation and/or
    construction projects underway, all of which is classified as minor,
    and the remaining projects are being planned for the future.
        Question. What is the VA system doing to ensure patient safety in
    clinical trials?
        Answer. VA is constantly reassessing patient safety protocols to
    ensure that the well being of our veterans is not compromised in any
    way, both in clinical trials and in all other aspects of health care
    delivery. Innovations include the establishment of the Office of
    Research Compliance and Assurance (ORCA), as well as initiating a
    groundbreaking program to accredit the VA Institutional Review Boards
    (IRB) by an external non-government accrediting agency that reviews and
    monitors human research projects (National Committee for Quality
    Assurance).
        ORCA verifies that VA researchers comply with patient protection
    protocols and standard operating procedures, and it also serves as the
    Department's interface with the Office of Human Research Protection
    (OHRP), in the Department of Health and Human Services. The effort to
    accredit IRBs reinforces efforts to enhance patient protections through
    improved oversight at the facility level. VA is working closely with
    the National Committee for Quality Assurance to make this initiative
    the benchmark for non-VA research programs to follow.
        The Office of Research and Development (ORD) has required its
    investigators to receive training and certification on human subject
    protection. Moreover, ORD is updating the policy handbooks that govern
    the protection of human subjects in VA research projects.
        Multi-center clinical trials funded by VA receive at least four
    levels of patient safety review: Human Rights Committee; Institutional
    Review Boards; Research and Development Committee; and the Data Safety
    and Monitoring Committee.
        In addition, ORD and when applicable, the Food and Drug
    Administration may conduct inspections during clinical trials.
        Question. What recent research advances have been supported by VA
    research funds?
        Answer. VA's research portfolio of more than 2,000 projects has
    produced numerous discoveries that have improved the quality of health
    care for veterans and the American public. The attached document
    ``Impacts 2001'' details 45 recent advances. Some of the more
    significant research results include:
      --VA researchers have identified a promising new treatment for kidney
            cancer. Using a laboratory-developed analog of a hormone that
            inhibits the release of growth hormone, scientists were able to
            reverse cancer growth. Nobel Prize winner Andrew V. Schally,
            Ph.D., M.D.H.C, of the New Orleans VA Medical Center, leader of
            the research group, described the compound as ``a magic
            bullet'' that scientists have been seeking for 100 years.
      --VA researchers in Seattle are developing new prosthetic limbs that
            will provide unprecedented mobility for veteran amputees. The
            resulting powered prosthetic limb is expected to reduce patient
            fatigue and produce greater propulsive forces for walking.
      --Researchers have opened the door to the development of novel
            therapies for treating severe pain in bone cancer patients.
            They showed that osteoprotegerin, a substance that inhibits
            activity of bone-destroying osteoclast cells, also blocks pain
            in mice with bone cancer. Existing treatments for bone cancer
            pain can be ineffective, burdensome to administer, and
            accompanied by numerous side effects.
      --Researchers found that some apparently healthy people showed signs
            of colon cancer. Using colonoscopy to examine the entire lining
            of the colon in seemingly healthy people aged 50-75, 10 percent
            were found to have colon cancer or serious precancerous
            growths. At least one-third of these lesions would have been
            missed by sigmoidoscopy; a more commonly used screening
            technique. Colon cancer usually can be cured if detected early.
      --A VA team established that memory is made up of many systems, each
            supporting a different type of memory. This revolutionary
            concept may lead to treatments for learning disabilities,
            Alzheimer's disease, and other neurological problems.
      --In a major breakthrough for understanding and treating
            schizophrenia, VA researchers have discovered a gene that plays
            a major role in schizophrenia and is linked to two
            physiological defects found in schizophrenics and their family
            members. Using a variety of genetic techniques, the researchers
            traced the chromosomal location of the defective gene to the
            site of a specific nicotine receptor.
      --Researchers have identified a previously unknown dysfunction in
            neurons involved in multiple sclerosis (MS). They found that a
            specific sodium channel, the molecular ``battery'' that
            produces electrical impulses in nerve cells, occurs in cells of
            brains affected by MS but not in those without neurological
            disease. Their work could revolutionize the treatment of MS.
      --VA scientists have identified a gene that plays a key role in
            development of Alzheimer's disease. More recently, a multi-
            center team of VA researchers found that a gene associated with
            the body's regulation of immune response might trigger earlier
            onset of Alzheimer's symptoms. VA investigators also identified
            a gene that causes a form of dementia characterized by tangles
            of long, string-like filaments identical to those found in the
            brains of Alzheimer's patients.
      --VA researchers in San Diego have discovered a cellular pathway that
            may offer a way to encourage liver cell growth in people with
            liver damage or to block the growth of liver tumors. This
            finding may also point the way to better artificial livers for
            people needing a transplant and may even suggest ways to
            restore lost cells in the brain and other tissues.
                            attachment--impacts 2001
    department of veterans affairs, veterans health administration, office
                      of research & development, may 2001
           a message from the chief research and development officer
        The Office of Research and Development (ORD) focuses on health
    problems prevalent among veterans. This highly accomplished program
    spans the range of biomedical, clinical, health services,
    rehabilitation, and epidemiologic research. The mission of the VA
    research program is to discover knowledge and create innovations that
    advance the health and care of veterans and the nation. VA scientists
    are leaders in the development of cutting-edge health-care technology
    and are dedicated to their commitment in providing the best possible
    care for our veterans.
        While pursuing the common goal of improving health care for
    veterans and the nation, the four services of VA research each bring
    unique strengths to our endeavor.
        The Cooperative Studies Program, that I have the privilege of
    directing, is one of the most recognized large-scale clinical trial
    programs in the world. This program determines the effectiveness of new
    therapies through multi-center clinical trials. Investigators
    collaborate with colleagues across the nation and around the world to
    test new treatments that benefit veterans as well as the general
    population. Ongoing efforts range from testing the effectiveness of a
    vaccine against shingles in the elderly to determining whether
    intensified blood-sugar control can prevent major vascular
    complications in type II diabetes.
        The Medical Research Service (MRS) is led by Paul Hoffman, M.D.,
    and has a major role in serving veterans from its achievements in basic
    and clinical research. Major advances and contributions as a result of
    MRS include the successful treatment of tuberculosis, the first
    successful liver transplant, the concept that led to development of CAT
    scan, drugs for treatment of mental illness, and development of the
    cardiac pacemaker. New research is focusing on unraveling further the
    mysteries of cancer, multiple sclerosis, depression, stroke,
    Alzheimer's disease, Parkinson's disease, and diabetes.
        The Health Services Research and Development Service (HSR&D) is led
    by John Demakis, M.D., and is a leader in identifying effective and
    efficient ways to organize and deliver health care. There are eleven
    HSR&D centers of excellence that focus on linking research to patient
    care. In addition, the HSR&D Quality Enhancement Research Initiative
    (QUERI) is translating research results into improved patient care. It
    targets conditions common among veterans, including chronic heart
    failure, diabetes, stroke, and spinal cord injury.
        The Rehabilitation Research and Development Service (RR&D), led by
    Mindy Aisen, M.D., conducts research designed to maximize independence
    for patients by restoring lost function or decreasing the impact of
    disability. Research achievements range from new technology in the
    areas of amputation, spinal cord injury, vision impairment, and hearing
    loss to disabilities associated with aging. Recently, RR&D enhanced
    stroke therapy by being the first to demonstrate robot-assisted
    neurorehabilitation is more effective than the conventional treatment.
        VA continues to focus its mission of providing excellent health
    care for America's veterans. VA researchers have long played key roles
    in developing important health care innovations and are dedicated to
    keeping VA at the forefront of science and medicine. I am pleased to
    present this document highlighting some of their major recent
    achievements.

                                         John R. Feussner, M.D., M.P.H.
                           designated research areas
    Aging and Age-Related Changes
        Normal age-related changes
        Aging syndromes (frailty, immobility, falls)
        Compound problems and comorbidities (coexisting diabetes and
    coronary artery disease, dementia, hip fracture)
        Care of elderly veterans
        End of life issues
    Acute Illness and Traumatic Injury
        Amputation (injury or disease)
        Bone fractures and joint injuries (repair and replacement)
        (Traumatic) brain injury
        Multi-organ failure
        Shock (sepsis)
    Military and Environmental Exposures
        Emerging pathogens
        Post-traumatic stress disorder (PTSD)
        Psychological stress (violence, sexual abuse)
        Thermal exposure (burns, hypothermia)
        Toxins and irritants (dermal, reproductive, respiratory)
    Chronic Diseases
        Bone and joint disorders (chronic low back pain, osteoarthritis,
    osteoporosis)
        Cancers (adult leukemia/lymphoma, solid tissue tumors, cancer pain)
        Cardiovascular, cerebrovascular, and peripheral vascular diseases
    (related acute events: myocardial infarction, stroke, heart failure)
        Chronic infectious diseases (HIV/AIDS, hepatitis)
        Chronic lung disease
        Chronic renal disease
        Dementia & neuronal dysfunction (Alzheimer's and Parkinson's
    disease)
        Diabetes & major complications
        Gastrointestinal disorders (bowel and liver disorders)
        Spinal cord injury & regeneration
    Sensory Disorders and Loss
        Hearing disorders
        Vision disorders
        Disorders of taste and smell
    Mental Illness
        Anxiety disorders
        Behavioral disorders
        Depression and mood disorders
        Schizophrenia
        Specialized VA mental health services (behavioral and medical
    interventions)
    Substance Abuse
        Alcohol
        Drug
        Tobacco
        Dual diagnosis (alcohol and drugs)
        Specialized substance abuse services (behavioral and medical
    interventions)
    Special (underserved, high risk) Populations
        Veterans with permanent disabilities (blind and paralyzed)
        Veteran cohorts defined by shared military experience (prisoners of
    war, Persian Gulf veterans)
        Historically underserved veterans (women, racial, ethnic, cultural
    minorities, rural veterans)
        Veterans whose living arrangements pose challenges to their health
    (homeless, homebound)
    Health Services and Systems
        Supply and organization of resources & services
        Delivery /coordination of resources & services
        Outcomes of care
                         aging and age-related changes
        Research in this area represents VA's efforts to identify the
    unique characteristics of the aging process and develop strategies to
    treat or prevent age-related health problems. Scientists have focused,
    for example, on the special nutritional needs of older adults;
    treatment and prevention of frailty, immobility and falls; and end-of-
    life issues. Following are a few examples of our recent research
    achievements in this area.
    Post-stroke rehabilitation guidelines improve patient outcome
        Stroke is one of the most costly, disabling, and deadly diseases.
    Stroke guidelines have been created to assist clinicians in providing
    standards for acute and post-acute care. These guidelines, however,
    have never been evaluated for their effect on patient outcomes. This
    observational study of nearly 300 patients for six months showed that
    complying with post-stroke guidelines has a positive effect on
    functional outcomes and patient satisfaction. Study results also show
    that guideline compliance was significantly higher for veteran patients
    who received inpatient post-acute rehabilitation in VA rehab units or
    non-VA acute rehabilitation settings compared to patients who received
    post-acute care in nursing homes. These findings support the use of
    guidelines to assess quality of care and improve outcomes. Health
    Services Research and Development
        Hoenig H, Sloane R, Horner RD, Zolkewitz M, Duncan PW, Hamilton BB.
    A taxonomy for classification of stroke rehabilitation services.
    Archives of Physiology and Rehabilitation, 81(7):853-62, July 2000.
        Reker DM, Hoenig H, Zolkewitz MA, Sloane R, Homer RD, Hamilton BB,
    Duncan PW. The structure and structural effects of VA rehabilitation
    bed service care for stroke. Journal of Rehabilitation Research and
    Development, 37(4):483-91, Jul-Aug 2000.
    Age-associated memory loss may be reversible
        A VA team and colleagues have identified a process by which the
    normal primate brain degenerates with aging and showed that this
    degeneration can be reversed by gene therapy. In a study of normal
    monkeys, the researchers found that aging was accompanied by
    significant shrinkage and loss of function in nerve cells of the
    brain's cholinergic system, which regulates the brain's cortex and
    hippocampus, allowing the cortex to process information. Equally
    important, these nerve cells were not dead, only atrophied, and
    returned to nearly normal function and appearance after gene therapy
    that delivered nerve growth factor to the impaired cells. In addition
    to implications for cognitive function in normal aging, the findings
    also may offer a new approach against the cognitive decline in
    conditions such as Alzheimer's disease, in which this same system of
    cells degenerates and dies. Medical Research Service
        Smith DE, Roberts J, Gage FH, Tuszynski MH. Age-associated neuronal
    atrophy occurs in the primate brain and is reversible by growth factor
    gene therapy. Proceedings of the National Academy of Sciences, USA,
    96(19):10893-8, 1999.
    Patients' preferences for life-sustaining treatment in advance
            directives
        An HSR&D project demonstrated the critical need for more informed
    advance care directives that accurately reflect patient preferences
    regarding life-sustaining treatment and inform provider decisions.
    Studies show that physicians may undervalue patient quality of life
    when compared with the patient's own perceptions. In addition,
    physicians, nurses and spouses generally were unable to judge
    accurately what, in the patient's opinion, would constitute ``futile
    treatment.''
        This HSR&D research resulted in the publication of an advance care
    planning workbook entitled Your Life, Your Choices, which is now
    available on the internet at http://www.va.gov/resdev/programs/hsrd/
    ylyc.htm. This comprehensive workbook can be used to educate patients
    about advance care planning outside of the clinical setting. Exercises
    and other aspects of the workbook can promote meaningful communication
    between patients and proxies, facilitate efficient discussions between
    clinicians and patients, and guide future medical care in the event of
    decisional incapacity. Recommendations from this research have been
    distributed throughout the VA by the National Center for Clinical
    Ethics and at national meetings and conferences. The workbook's use in
    the VA health care system should improve the advance care planning
    process and advance directive completion rate in the VA. Health
    Services Research and Development
        Pearlman RA, Starks HE, Cain KC, Rosengren D, Patrick DL. Your
    life, your choices--planning for future medical decisions: how to
    prepare a personalized living will. In: Pearlman RA, Starks HE, Cain
    KC, Rosengren D, Patrick DL, eds. Department of Veterans Affairs:
    Washington, DC, 1997.
    Evaluation of geriatric evaluation and management (GEM) units
        The proportion of veterans over age 65 will increase from 26
    percent in 1990 to 46 percent in 2020, and VA must be prepared to serve
    the needs of this growing population. A large, multi-outcome study will
    determine whether specialized inpatient and outpatient units are the
    best way for VA to care for elderly patients. The impact of this study
    will extend far beyond VA, as millions of older Americans come under
    managed care. No other study is likely to provide the conclusive and
    incontrovertible evidence needed to guide policy in this critical area.
    Cooperative Studies Program
        Evaluation of Geriatric and Management (GEM) Units and Geriatric
    Follow-up. CSP#6. Palo Alto.
    Hospice study helps VHA improve end-of-life care
        Increasing access to high-quality hospice services is an important
    element of VA's comprehensive strategy to improve care for terminally
    ill veterans. The Veterans Hospice Care Study provides important
    information on how to achieve this goal. The final report, which was
    submitted to Congress, highlights the different programs through which
    hospice care is delivered in the VHA, describes patient and family
    satisfaction with care, and identifies barriers to obtaining hospice
    care. These results are serving as the focal point for efforts to
    improve end-of-life care throughout the VA delivery system. Health
    Services Research and Development
        Hickey EC, Berlowitz, DR, Anderson, J, Hankin C, Hendricks, A,
    Lehner L. The veterans hospice care study: an evaluation of VA hospice
    programs. Final Report. February, 1998. Report Number MRR 97-004.
    New resource guide provides information on VA's long-term care services
        A new, three-volume Guide to Long-Term Care Data in the VA is
    helping clinicians, researchers and policymakers plan care and services
    for those veterans who need long-term care. Now available through
    HSR&D's Veterans Information Resource Center web at http://
    www.virec.research.med.va.gov/DATABASES/LTCRGUID/EXPAGE.HTM, this guide
    was developed after researchers conducted a thorough review of VA
    databases for long-term care. It identifies sources of data for
    research, as well as clinical use, and documents the limitations of
    these data. Health Services Research and Development
                       acute illness and traumatic injury
        The field of acute and traumatic injury centers on injuries due to
    blunt force, temperature extremes, electric shock, pressure, or
    diseases such as diabetes and cancer. Specific focus areas within this
    field include amputation, bone fractures, brain injury, multi-organ
    failure, stroke, and shock. Researchers are also investigating the
    physical, psychological, cognitive and behavioral effects of acute and
    traumatic injuries, and the health services and procedures required to
    treat them.
    VA and non-VA hospitals comparable for heart attack care
        This study found care for acute myocardial infarction to be
    comparable among patients in VA and non-VA facilities. Despite the fact
    that VA patients were significantly more likely to have other chronic
    complications, such as hypertension, chronic obstructive pulmonary
    disease (COPD) or asthma, diabetes, stroke or dementia, there were no
    significant differences in 30-day or one-year mortality for those
    receiving VA and non-VA hospital care. These data suggest a similar
    quality of care for acute myocardial infarction for patients in VA and
    non-VA institutions. Health Services Research and Development
        Petersen LA, Normand SLT, Daley J, McNeil, B. Outcomes of
    myocardial infarction in Veterans Health Administration patients
    compared with medicare patients. The New England Journal of Medicine,
    343:1934-41, December 28, 2000.
    Improving amputee mobility and independence
        VA researchers in Seattle are developing new prosthetic limbs that
    will provide unprecedented mobility for veteran amputees. Many
    individuals with amputations across the shin or thigh lack endurance
    because of the extreme effort simply to walk with today's prosthetic
    limbs. To combat this problem, researchers developed an artificial
    muscle and tendon to replace the lost musculature of the lower limb.
    The resulting powered prosthetic limb is expected to reduce patient
    fatigue and produce greater propulsive forces for walking.
    Rehabilitation Research and Development
        Kllute GK, Hannaford B. Fatigue characteristics of McKibben
    artificial muscle actuators. Proceedings of the IEEEIRS7 1998
    International conference on Intelligent Robotic Systems (IROS 1998),
    Victoria BC, Canada, 776-1781, 1998.
    Popular arthritis drugs proven dangerous for ulcer sufferers
        A new class of painkillers, COX-2 inhibitors, used to treat
    arthritis may prove dangerous for some individuals. These drugs differ
    from conventional nonsteroidal anti-inflammatory drugs (NSAIDs) in that
    they block the enzyme involved in pain and inflammation (COX-2) and do
    not harm COX-1, which protects the stomach. However, recent VA research
    shows that these drugs may block the body's natural ability to heal
    stomach ulcers by inhibiting angiogenesis, the formation of tiny blood
    vessels essential to wound and ulcer healing. Researchers treated rat
    and human cells with indomethacin, a conventional NSAID or NS-398, a
    COX-2 inhibitor. Results showed a significant decrease in angiogenesis
    with the COX-2 inhibitor. Medical Research Service
        Jones MK, Wang H, Peskar BM, Levin E, Itani RM, Sarfeh IJ,
    Tarnawski AS. Inhibition of angiogenesis by nonsteroidal anti-
    inflammatory drugs: insight into mechanisms and implications for cancer
    growth and ulcer healing. Nature Medicine, 5(12):1418-23, December
    1999.
    Improved design and function of upper limb prostheses
        A VA research initiative involving microcomputer technology will
    modernize the design of electric-powered upper limb prostheses. VA
    researchers have developed a position-sensitive controller that will
    improve functional performance, fitting flexibility, and ease of
    operation. The new controller provides sensory feedback from the
    prosthesis to the amputee, thus giving the amputee a better ``feel''
    for the position of his prosthetic limb in space. This important
    research by VA will help assure better prostheses and better
    controllers for all upper-limb amputees. Rehabilitation Research and
    Development
        Weir RF, Childress DS, Heckatborne CW. Towards achieving the goal
    of meaningful, coordinated, subconscious, multi-functional control of
    prostheses. Proceedings of the VA Rehabilitation Research & Development
    Service 1st Annual Meeting, ``Enabling Veterans: Meeting the Challenge
    of Rehabilitation in the Next Millennium,'' Washington, DC, 1998.
        Bertos YA. The design and development of an embedded
    microcontroller system for an E.P.P. based position controller for
    upper-limb prostheses. Master's Thesis, Department of Electrical
    Engineering, Northwestern University, 1999
                      military and environmental exposures
        Military and environmental exposures are a unique concern to
    veterans. Researchers working in this field are investigating the
    chronic health effects of events veterans experience during military
    service. This includes contact with foreign substances, such as toxins,
    irritants, or emerging pathogens, extreme temperatures, and post-
    traumatic stress disorder (PTSD). Gulf War veterans are a particular
    focus as we learn more about their special health concerns. Following
    are descriptions of selected studies in the areas of Gulf War veterans'
    illnesses, PTSD, and infectious agents.
    Amyotrophic lateral sclerosis (ALS) among Gulf War veterans
        The Durham Epidemiologic Resource and Information Center is
    conducting an epidemiological investigation of the incidence of ALS
    (Lou Gehrig's disease) among veterans of the Gulf War. The study is
    focusing in particular on three areas: defining the natural history of
    ALS; determining whether there is a higher-than-expected occurrence of
    ALS among Gulf War veterans; and ascertaining the possible or probable
    cause(s) of ALS if above normal event rates are determined.
        Through a national survey of veterans and follow-up examinations,
    the study will increase the understanding of ALS among Gulf War
    veterans by developing descriptive epidemiology of cases. It will also
    compare the rate of ALS among Gulf War veterans with that of military
    personnel on simultaneous active duty but not deployed to the Gulf.
    Researchers are also investigating possible etiologic factors (with
    focus on environmental factors) in the Gulf and possible genetic-based
    susceptibilities to neurodegenerative disorders. Cooperative Studies
    Program
        An investigation into the occurrence of ALS among veterans of the
    Gulf War. CSP# 500, Durham.
    Testing antibiotic treatment for patients with Gulf War illnesses
        VA researchers are testing a possible treatment for Gulf War
    illnesses (GWI). Although the cause of GWI is unknown, one explanation
    that has received fairly wide attention holds that infection with the
    microorganism Mycoplasma fermentans may be responsible. The purpose of
    this study is to determine the effectiveness of a one-year course of an
    antibiotic called doxycycline in patients with GWI who test positive
    for mycoplasma species. If doxycycline is shown to be effective, this
    relatively inexpensive and easily delivered drug could improve symptoms
    and possibly cure many veterans with GWI. Cooperative Studies Program
        Collaborator: Pfizer Pharmaceuticals
        Antibiotic treatment of Gulf War illnesses. CSP#475, Perry Point
    Multi-modal therapy in veterans with Gulf War illnesses
        There is no definitive therapy for treating patients with Gulf War
    illnesses (GWI), and veterans suffering from this symptom complex are
    frequently frustrated by continued pain, fatigue or cognitive
    difficulties. VA researchers are trying to determine whether cognitive
    behavioral therapy and aerobic exercise, two approaches that have
    provided relief for people with fibromyalgia and chronic fatigue
    syndrome, can be used to help veterans with GWI. The study has enrolled
    more than 1,000 veteran patients in one of four treatment groups:
    cognitive behavioral therapy plus aerobic exercise, aerobic exercise
    alone, cognitive behavioral therapy alone, and usual and customary
    care. This research may provide needed answers for veterans who suffer
    from these mysterious and often disabling illnesses. Cooperative
    Studies Program
        A randomized, multi-center, controlled trial of multi-modal therapy
    in veterans with Gulf War illness. CSP#470, West Haven
    Group-treatment model for PTSD
        Despite the often devastating effects of post-traumatic stress
    disorder (PTSD) on veterans, there is no proven, effective method to
    treat this condition. This randomized clinical trial will test what VA
    considers to be the most promising approach for treating PTSD, trauma
    focus group therapy (TFGT). This study is evaluating the efficacy of
    TFGT for treating PTSD symptoms and its effect on other psychiatric
    symptoms, functional impairment, physical health and utilization of
    medical and mental health services. If this intervention is found to be
    effective and feasible, VA will have at least one proven therapy for
    veterans with this debilitating combat-related illness. Cooperative
    Studies Program
        Group treatment of PTSD. CSP#420, Palo Alto
    Flesh-eating bacteria studies point to better treatments
        VA researchers have conducted landmark studies on the so-called
    ``flesh-eating'' group A streptococcal bacteria that can destroy body
    tissues and trigger fatal shock and organ failure. This team was the
    first to describe a group of patients who had suffered toxic shock
    syndrome caused by these strains of streptococci, the bacteria best
    known as the cause of strep throat. The researchers showed that toxins
    produced by these virulent strains cause the release of body chemicals
    that trigger the shock and organ failure. The team has also done
    critical work showing that penicillin, the antibiotic traditionally
    used to treat group A streptococcal infections, is ineffective against
    the flesh-eating strains and that patients must be treated with
    antibiotics that suppress toxin production. Medical Research Service
        Stevens DL, Bryant AE, Hackett SP, Chang A, Peer S, Kosanke S,
    Emerson T, Hinshaw L. Group A Streptococcal bacteremia: the role of
    tumor necrosis factor in shock and organ failure. Journal of Infectious
    Diseases, 173(3):619-26, March 1996.
        Stevens DL. The flesh-eating bacterium: what's next? Journal of
    Infectious Diseases, 179;Suppl 2:S366-74, March 1999.
                                chronic diseases
        VA research focuses on the range of chronic diseases and conditions
    that are highly prevalent among veterans, including life-threatening
    conditions and less severe problems that affect quality of life and the
    need for health services. The disease may be a primary ailment or a
    complication resulting from another disease. Specific areas of emphasis
    include bone and joint disorders, cancer, vascular diseases, chronic
    infectious diseases, lung and renal diseases, dementias, diabetes,
    gastrointestinal disorders, and spinal cord dysfunction. Below are
    short descriptions of VA research studies in some of these areas.
    Optimal management of patients with HIV infection (OPTIMA)
        VA's Cooperative Studies Program (CSP) has started a collaboration
    with the national health-research agencies for the United Kingdom and
    Canada, the UK Medical Research Council and the Canadian Institutes for
    Health Research.
        The first study under the new partnership is a multi-drug strategy
    study designed to compare a ``standard'' treatment of three or four
    antiretroviral drugs to a ``mega'' treatment of five or more drugs in
    patients who have failed at least two ``highly active'' antiretroviral
    regimens. It is the first large-scale, multicenter, randomized
    controlled trial to compare the relative efficacy of the different
    therapeutic strategies. The overall goal is to prevent new or recurrent
    AIDS-related health events, such as pneumonia or death, through an
    optimal combination of drugs. A total of 1,700 patients will be
    randomized over a 2\1/2\ year period at 75 medical centers in three
    countries. The use of multiple settings in different therapeutic
    cultures' will allow for generalizability of the findings and provide
    evidence that will facilitate management of HIV disease in this group.
        The study will be coordinated by the VA West Haven CSP Coordinating
    Center and is set to begin in 2001. Lead investigators are located at
    the Bronx and Palo Alto VA medical centers, the University of British
    Columbia, Canada, and the London School of Hygiene and Tropical
    Medicine, U.K. Cooperative Studies Program
    Major trial testing new vaccine against shingles
        Shingles in older people is extremely painful and can be disabling.
    Shingles is caused by the herpes-zoster virus that causes chickenpox in
    young people. After chickenpox is treated, the virus remains dormant in
    the body until late adulthood, when it may reactivate and cause
    shingles. There is no effective treatment for people who suffer from
    shingles lasting more than a month, nor is there an effective method to
    prevent shingles.
        This study is testing a promising new vaccine for its ability to
    prevent shingles or reduce its severity and complications. This
    randomized, controlled trial will enroll 37,000 older veterans for a
    minimum of three years. If the vaccine proves successful, it will
    supply a safe and cost-effective means for reducing the severe impact
    of shingles and its complications on the health of older veterans.
    Cooperative Studies Program
        Collaborator. Merck Pharmaceuticals
        Trial of Varicella vaccine for the prevention of Herpes Zoster and
    its complications. CSP#403 West Haven.
    Effect of custom orthosis on foot kinematics and forefoot pressure
            distribution
        Foot ulcers related to conditions such as diabetes pose significant
    problems to patients and a vexing challenge to health care providers.
    Gaining an understanding of potential causes of foot ulcers, including
    increased pressures across the forefoot, bony malalignment, and changes
    in relative motions between bones can lead to a more systematic
    approach to treatment and prevention of this problem. An experimental
    flatfoot model is being used to determine the effects of rigid and
    compliant (flexible) orthoses on the movement of the foot. Computerized
    scans delineate the bone architecture of each foot and are used to
    create three-dimensional images for design of customized orthoses.
    Early results show that the rigid orthosis can correct eversion
    (outward turning) of three foot bones. Rehabilitation Research and
    Development
        Sangeorzan BJ, Czerniecki JM. Rehabilitation Research and
    Development Center for Amputation, Prosthetics, Limb Loss Prevention,
    2000.

                                 Heart Disease

    Rise in ``good'' HDL cholesterol vs. heart disease and stroke
        The health benefits of reducing high levels of ``bad'' low-density
    lipoproteins (LDL) are widely known. VA researchers, however, have
    completed the first large-scale clinical trial to show that raising
    ``good'' HDL cholesterol levels (high-density lipoproteins) reduces the
    risk of heart disease and stroke. A VA Cooperative Study involving
    2,531 men at 20 VA medical centers found that the drug gemfibrozil
    caused a 6 percent increase in ``good'' HDL cholesterol in comparison
    to a placebo. In addition, the medication reduced coronary heart
    disease death by 22 percent, nonfatal heart attacks by 23 percent, and
    stroke by 29 percent.
        The finding is particularly encouraging because gemfibrozil is
    safe, economical, and available as a generic drug. The study results
    offer a new therapy for the 20 to 30 percent of coronary heart disease
    patients who do not have elevated ``bad'' LDL levels but do have low
    levels of HDL. Results indicating the benefit of gemfibrozil are being
    considered for inclusion within the Joint VA/DOD Clinical Practice
    Guidelines for the management of lipidemia in the subset of patients
    with this lipid profile. Cooperative Studies Program
        Robins SJ, Collins D, Wittes JT, Papademetriou V, Deedwania PC,
    Schaefer EJ, McNamara JR, Kashyap ML, Hershman JM, Wexler LF, Rubins
    HB. Relation of gemfibrozil treatment and lipid levels with major
    coronary events, VA-HIT: a randomized controlled trial. Journal of the
    American Medical Association, 285(12):1585-91, March 28, 2001.
        Rubins HB, Robins SJ, Collins D, Fye CL, et al. Gemfibrozil for the
    secondary prevention of coronary heart disease in men with low levels
    of high-density lipoprotein cholesterol. The New England Journal of
    Medicine, 5:341(6):410-8, August 5, 2000.
    VA compares favorably with private sector in coronary angioplasty study
        This quality-of-care evaluation showed that VA's tiered health care
    system produces excellent outcomes from high-tech cardiac procedures,
    compared with the private sector. In this study of coronary angioplasty
    patients, VA patients experienced no difference in hospital--or 30-day
    mortality compared with private-sector patients, even though the VA
    patients had more complicated conditions. In addition, VA patients
    underwent less bypass surgery (sometimes a complication of angioplasty)
    within 30 days of the angioplasty procedure. Health Services Research
    and Development
        Ritchie JL, Maynard C, Chapko MK, Every NR, Martin DC. A comparison
    of percutaneous transluminal angioplasty in the Department of Veterans
    Affairs and in the private sector in the State of Washington. Journal
    of the American College of Cardiology, 81(9):1094-9, May 1, 1998.
    Heart attack response findings offer hope for new treatments
        Researchers from the VA San Diego Medical Center and the University
    of California at San Diego (UCSD) have discovered new information about
    the body's molecular response to hypoxia, a condition characterized by
    decreased oxygen levels in blood or tissue resulting from heart attack
    or closing of cardiac blood vessels. They successfully mapped the basic
    response period to these cardiac events, starting with the release of a
    protein (HIF-1) that stimulates the activation of blood-vessel-
    developing genes, and the progress of those genes in reparation of
    damaged tissue. The findings may lead to the development of new
    therapeutic treatments that could diminish the severity of heart
    attacks. Possible therapeutic implications may include the development
    of new treatments in emergency cardiac care.
        The researchers are now planning to evaluate whether doctors can
    decrease heart attack severity and the damage done to heart tissue by
    increasing HIF-1 levels in cardiac patients, either pharmacologically
    or by gene therapy. Other researchers are investigating the effect of
    decreasing HIF-1 levels in cancer patients, with the intention of
    diminishing oxygen supply to cancer cells thereby prohibiting their
    growth and proliferation. Medical Research Service
        Lee SH, Wolf PL, Escudero R, Deutsch R, Jamieson SW, Thistlethwaite
    PA. Early expression of angiogenesis factors in acute myocardial
    ischemia and infarction. The New England Journal of Medicine, March 2,
    2000.

                                     Cancer

    New study results may lead to cancer pain treatment
        Researchers have opened the door to the development of novel
    therapies for treating severe pain in bone cancer patients. They showed
    that osteoprotegerin, a secreted decoy receptor that inhibits activity
    of bone-destroying osteoclast cells, also blocks behaviors indicative
    of pain in mice with bone cancer. Osteoprotegerin actions seem to
    result from inhibition of tumor-induced bone destruction that in turn
    inhibits the neurochemical changes in the spinal cord, possibly
    involved in generating and maintaining cancer pain.
        Although advances in cancer detection and therapy have increased
    the life expectancy of cancer patients, more than one million patients
    suffer from cancer-related pain each year. Pain is the first symptom of
    cancer in 20-50 percent of all cancer patients and 75-90 percent in
    advanced or terminal cancer patients. Bone cancer most frequently
    results from breast, ovarian, prostate, or lung cancer spreading to the
    bone. Progress in understanding and treating bone cancer pain will also
    provide insights into potential therapies for pains arising from soft
    tissue cancers.
        Existing treatments for bone cancer pain can be ineffective,
    burdensome to administer, and accompanied by numerous side effects.
    Therapy for severe bone cancer pain nearly always involves morphine
    which, when given at doses required to the pain, induces unwanted side
    effects resulting in significant reduction in the patient's quality of
    life. Medical Research Service
        Honore P, Luger NM, Sabino MA, et al. Osteoprotegerin blocks bone
    cancer-induced skeletal destruction, skeletal pain, and pain-related
    neurochemical reorganization of the spinal cord. Nature Medicine,
    6(7):838, May 2000.
    Colonoscopy may be best way to screen for colon cancer
        Researchers at 13 VA medical centers found that a significant
    segment of an apparently healthy population showed signs of colon
    cancer. Using colonoscopy to examine the entire lining of the colon in
    3,121 seemingly healthy people aged 50-75, 10 percent were found to
    have colon cancer or serious precancerous growths. In addition, at
    least one-third of these lesions would have been missed by
    sigmoidoscopy, a commonly used screening technique that reveals only
    the lower (distal) part of the colon's lining. The study is the first
    to directly compare exams limited to the distal colon with exams of the
    entire colon to determine possible additional benefits of colonoscopy
    screening in an asymptomatic group of patients. Researchers also found
    that colonoscopy appeared reasonably safe with few complications such
    as bleeding or reactions to sedation used to make patients more
    comfortable during the procedure.
        Colorectal cancer is the second leading cause of cancer deaths in
    North America. It is marked by a premalignant phase in which growths
    called polyps develop in the colon lining. Not all polyps become
    cancerous, but those that progress to cancer typically develop
    abnormalities that flag them as dangerous. In the United States alone,
    it is now estimated that 138,000 men and women will be diagnosed with
    colorectal cancer each year and about 55,000 will die from the disease.
    The findings from this study provide the basis for a more sensitive
    colon cancer screening test and earlier detection and treatment.
    Cooperative Studies Program
        Lieberman DA, Weiss DG, Bond JH, Ahnen DJ, Garewal H, Chejfec G.
    Use of colonoscopy to screen asymptomatic adults for colorectal cancer.
    The New England Journal of Medicine, 343(3):162-8, July 20, 2000.
    VA research suggests path to more effective breast cancer treatment
        Retinoic acid, a radioactive iodide currently used in fighting
    thyroid cancer, may have a role in the fight against breast cancer.
    Researchers and colleagues from the Molecular Endocrinology Laboratory,
    VA Greater Los Angeles Healthcare System, suggest that there is a
    potential for retinoic acid to increase the uptake of radioiodine into
    certain breast cancers. They found that retinoic acid stimulated the
    production of a specific protein, the sodium/iodide transporter,
    responsible for the increased uptake.
        Findings to date are specific only for breast cancer cells that
    were capable of reacting to estrogen. However, retinoic acid may also
    be useful in the diagnosis and treatment of other types of breast
    cancer. Medical Research Service
        Kogai T, Schultz JJ, Johnson LS, Huang M, Brent GA. Retinoic acid
    induces sodium/iodide symporter gene expression and radioiodide uptake
    in the MCF-7 breast cancer cell line. Proceedings of the National
    Academy of Sciences USA, 97(15):8519-24, July 18, 2000.
    Landmark prostate cancer trial will illuminate treatment options
        The management of localized prostate cancer in older men has
    generated considerable debate due to the risks and potential benefits
    associated with different treatment options. Prostate cancer is the
    second most frequent cause of cancer deaths in men. Research shows
    patients' treatment preferences vary significantly, depending on the
    risk associated with surgery, life expectancy, symptoms and tolerance
    for their symptoms. As a result, patient preference and experience are
    critical factors in making treatment decisions for prostate cancer.
        Important questions remain concerning long-term outcomes for
    prostate cancer treatment. VA, in collaboration with the National
    Cancer Institute (NCI) and the Agency for Healthcare Research and
    Quality (AHRQ), is addressing these questions through a landmark study
    that compares the two most widely used treatment methods: radical
    prostatectomy, in which the prostate is surgically removed, and
    ``watchful waiting'' in which only the disease symptoms are treated.
    The Prostate Cancer Intervention Versus Observation Trial (PIVOT) is a
    15-year randomized study involving 2,000 men from approximately 80 VA
    and NCI medical centers throughout the country. All patients will be
    followed for at least 12 years. The results will supply information on
    treatment-specific survival rates, complications and quality of life.
        When completed, this study will provide more definitive answers on
    the best treatment for early-stage prostate cancer. If watchful waiting
    is as effective as surgery, millions of health care dollars could be
    saved every year by avoiding unnecessary surgery. On the other hand,
    results favoring surgery would highlight the need for early detection
    and treatment of this disease. Cooperative Studies Program
        Collaborator. National Cancer Institute; Agency for Healthcare
    Research and Quality. Wilt TI, Brawer MK The prostate cancer
    intervention versus observation trial (PIVOT). Oncology, 11(8):1133-43,
    1997.

                             Neurological Disorders

    Award-winning research breaks important ground on human memory
        Pioneering research by Larry R. Squire, Ph.D., winner of the 1994
    Middleton Award, has shed new light on the nature and processes of
    memory, generating knowledge that may lead to treatments for learning
    disabilities, Alzheimer's disease, and other neurological problems.
    Among the key questions for which Dr. Squire and his colleagues are
    providing critical answers are: What is memory? Where is it stored in
    the brain and how does it work? What happens to memory during normal
    aging and in disease or brain injury?
        The research team's studies established that memory is made up of
    many systems, each supporting a different type of memory. This
    revolutionary concept has changed the direction of research in this
    field. Through a series of animal experiments, VA researchers
    discovered the medial temporal lobe system that controls one form of
    memory. Their research also provided the first proof that the human
    hippocampus is a critical component of the medial temporal lobe memory
    system and is essential for human memory.
        In another recent study, Dr. Squire and his colleagues focused on
    how the human brain files information. Using functional magnetic
    resonance imaging, a scanning technique that measures activity in
    different parts of the brain, they found that the brain structures
    associated with categorization are different from those necessary for
    simple rote memory. Medical Research Service
        Knowlton BJ, Mangels JA, Squire LR. A neostriatal habit learning
    system in humans. Science, 273(5280):1399-402, September 6, 1996.
        Reber PJ, Stark CE, Squire LR. Cortical areas supporting category
    learning identified using functional MR1. Proceedings of the National
    Academy of Sciences, USA;95 (2):747-50, 1998.
        Clark RE, Squire LR. Classical conditioning and brain systems: the
    role of awareness. Science, 280(5360):77-81, 1998.
        Larry R. Squire, Ph.D., VA San Diego Health Care System VA Merit
    Review, Medical Research Service
    Robot-assisted arm movement helps stroke patients
        Rehabilitation researchers are investigating the use of robot-
    assisted arm movement to promote neurologic recovery in persons weak on
    one side following a stroke. The new robotic system can assist shoulder
    and elbow movements in 3-dimensional patterns encompassing a large
    portion of the person's range of motion. The user can guide movement of
    his/her weak arm by moving the opposite arm in the mirror-image
    pattern. A clinical trial with chronic stroke subjects compared an
    eight-week intervention of robot-assisted movement with a control
    intervention of equal intensity consisting of conventional therapy.
        The results indicate that robot therapy is as effective as
    conventional therapy, and may even have advantages over conventional
    therapy. Persons who trained with the robot had greater strength gains
    than persons who received conventional therapy. Robots can potentially
    implement highly repetitive, labor-intensive exercises more efficiently
    than currently possible. This is especially relevant given recent
    evidence that highly repetitive exercises may promote neurologic
    recovery. Robots can also potentially provide new exercise modes not
    currently possible. The advanced sensor technology on the mirror-image
    motion enabler allow precise measurement of interaction forces and
    movement patterns during therapy. This data will lead to a better
    understanding of the role of therapy in promoting neurologic recovery
    following stroke. Rehabilitation Research and Development
        Burgar CG, Lum PS, Shor P, Van der Loos HFM: Development of robots
    for rehabilitation therapy: the Palo Alto VA/Stanford experience.
    Journal of Rehabilitation Research and Development, 37(6):663-73,
    November/December 2000.
    Electromyographic imaging of muscle architecture
        Understanding the way in which particular muscles produce force
    requires accurate knowledge of muscle architecture. Investigators in
    Palo Alto have developed a technique to study motor-unit architecture
    by analyzing electromyographic signals. Signals recorded, using a
    needle electrode during a moderate voluntary contraction, are processed
    to identify the action potential of each active motor unit in the
    vicinity of the electrode. Action-potential landmarks are then used to
    estimate the relative locations of each motor unit's neuromuscular and
    musculotendinous junctions.
        The analysis of different muscles reveals a variety of
    architectural organizations, including different muscle-fiber lengths,
    single and multiple innvervation zones, pennation, and intramuscular
    aponeuroses. This type of analysis promises to be useful for studying
    muscle structure in normal subjects and structural changes in aging and
    disease. Rehabilitation Research and Development
        Lateva ZC, McGill KC. Estimating motor-unit architectural
    properties by analyzing motor-unit action potential morphology.
    Clinical Neurophysiology, 112(1):127-35, January 2001.
    Narcolepsy may be due to loss of brain cells
        A loss of brain cells that make a chemical called ``hypocretin' may
    be responsible for narcolepsy, a debilitating, lifelong disease that
    causes patients to fall asleep uncontrollably during the day.
    Researchers at the Sepulveda VAMC found that human brains from
    narcoleptics had up to 95 percent fewer hypocretin neurons compared
    with normal brains. Although hypocretin has been linked by scientists
    to narcolepsy in animals, the causes of human narcolepsy remains
    unclear. Researchers believe the loss of hypocretin neurons may stem
    from an autoimmune attack by the body, or a sensitivity of the cells to
    certain environmental or biological toxins.
        Current treatments focus on the use of amphetamines and other
    stimulant drugs to keep narcoleptics awake during the day. These
    treatments to not completely reverse symptoms and produce unwanted side
    effects. This research confirms the potential for new therapies aimed
    at restoring the hypocretin messaging system in the brain. Medical
    Research Service
        Thannickal TC, Moore RY, Nienhuis R, Ramanathan L, Gulyani S,
    Aldrich M, Cornford M, Siegel JM. Reduced number of hypocretin neurons
    in human narcolepsy. Neuron, 27(3):469-74, September 2000.
    Sodium channels in multiple sclerosis and pain
        Rehabilitations researchers have identified a previously unknown
    dysfunction in neurons involved in multiple sclerosis (MS). They found
    that a specific sodium channel, the molecular ``battery'' that produces
    electrical impulses in nerve cells, occurs in cells of brains affected
    by MS but not in those without neurological disease. Their work could
    revolutionize the treatment of MS.
        In related work, the researchers recently discovered that two
    molecules control the expression of sodium channels involved in the
    hyperexcitability of pain-signaling neurons that occurs following nerve
    and spinal cord injury. The researchers have found that particular
    sodium channels are prevalent in spinal sensory neurons and not present
    in significant levels in other types of nerve cells. Increased
    understanding of the roles of these channels may lead to improved
    treatments for chronic pain disorders of the nervous system.
    Rehabilitation Research and Development
        Black JA, Dib-Hajj S, Baker D, Newcombe J, Cuzner ML, Waxman SG.
    Sensory neuron-specific sodium channel SNS is abnormally expressed in
    the brains of mice with experimental allergic encephalomyelitis and
    humans with multiple sclerosis. Proceedings of the National Academy of
    Science, USA; 97(21):11598-602, October 10, 2000.
        Fjell J, Cummins TR, Fried K, Black JA, Waxman, SG. In vivo NGF
    deprivation reduces SNS express and TTSX-R currents in IB4-negative DRG
    neurons. Journal of Neurophysiology, 81:803-11, February 1999.
        Fjell J, Cummins TR, Davis BM, Albers KM, Fried K, Waxman SG, Black
    JA. Sodium channel expression in NGF-overexpressing transgenic mice.
    Journal of Neuroscience Research, 57:39-47, July 1, 1999.
    FES and gait function after stroke
        Investigators at the Cleveland Functional Electrical Stimulation
    (FES) Center are studying functional neuromuscular stimulation (FNS) to
    improve gait following stroke. Investigators found that stroke patients
    with sensation tolerate implanted FNS treatment with no discomfort.
    Preliminary findings show that acute stroke patients treated with
    implanted FNS have improvements in muscle function, coordination, and
    gait function. In a companion study, stroke patients who had completed
    conventional rehabilitation and had reached a functional plateau were
    treated with FNS twice weekly for nine months, achieving significant
    improvement in muscle function and gait deficits over their pre-FNS
    status. Rehabilitation Research and Development
        Daly JJ, Ruff RL, Haycook K, Strasshofer B, Marsolais EB, Dobos L.
    Feasibility of gait training for acute stroke patients using FNS with
    implanted electrodes. Journal of Neurological Sciences, 179(1-2):102-7,
    October 1, 2000.
        Daly JJ, Ruff RL. Electrically induced recovery of gait components
    for older patients with chronic stroke. American Journal of Physical
    and Medical Rehabilitation, 79(4):349-60, July-August 2000.
        Daly JJ, Debogorski A, Strasshofer B, Scheiner A, Kollar K,
    Marsolais EB, Ruff RL, Snyder S. Percutaneous electrode performance and
    use for restoration of gait in patients with stroke. Journal of
    Rehabilitation Research and Development, in press.
    Seeking better treatments for Parkinson's disease
        A landmark VA Cooperative Study clinical trial will assess the
    effectiveness of surgical implantation of deep brain stimulation (DBS)
    to reduce the symptoms of Parkinson's disease. DBS is a new promising
    alternative therapy for Parkinson's disease. It will be compared to the
    current standard surgical treatment, pallidotomy, where a small lesion
    is made in a portion of the brain called the globus pallidus. The goal
    of this project is to compare these two treatments and determine the
    most effective brain site for DBS surgical intervention.
        This study will be conducted at VA's six new Parkinson's Disease
    Research, Education, and Clinical Centers (PADRECCs) in Houston,
    Philadelphia, Portland, Richmond, San Francisco, and West Los Angeles.
    These centers will enable top VA researchers, clinicians, and educators
    to better understand Parkinson's disease, develop more effective
    treatments and clinical care strategies for patients, and improve
    education for caregivers. The study will begin in 2001 and will be a
    prospective, randomized, multi-center trial. While treatments exist,
    there is no cure for this debilitating disease that is becoming a
    serious health problem in the United States. VA medical centers treat
    at least 20,000 Parkinson's disease patients each year. Cooperative
    Studies Program
    VA researchers discover genes involved in aging and Alzheimer's disease
        VA is at the cutting edge of genetic research in human aging and
    Alzheimer's disease, the devastating brain disorder that afflicts some
    4 million elderly Americans. VA researchers were part of an
    international team that discovered the first human gene associated with
    aging, a major advance in efforts to understand aging and age-related
    diseases. In addition, VA researchers identified the gene that causes
    Werner's Syndrome, a rare inherited disorder marked by premature aging.
    They also found that this gene normally directs the production of
    enzymes called helicases, which cells need to uncoil and reproduce DNA
    and perform other cell functions. The team's findings indicate that
    mutations affecting DNA are key to the aging process.
        VA researchers have also identified a gene that plays a key role in
    development of Alzheimer's disease. This discovery may allow them to
    better understand how the disorder develops in people who carry this
    gene. More recently, a multi-center team of VA researchers found that a
    gene associated with the body's regulation of immune response may
    trigger earlier onset of Alzheimer's symptoms.
        VA investigators also identified a gene that causes a form of
    dementia characterized by tangles of long, string-like filaments
    identical to those found in the brains of Alzheimer's patients.
    Previously, these filaments were thought to be a consequence of
    Alzheimer's rather than a factor in the disease's progress. The
    investigators found that a mutated form of the so-called ``tau'' gene
    produces these long filaments and causes nerve cell death in patients
    with frontotemporal dementia. These findings point to the tau gene as a
    potential target for new Alzheimer's disease treatments. Medical
    Research Service
        Yu CE, Oshima J, Fu YH, Wijsman EM, Hisama F, Alisch R, Matthews S,
    Nakura J, Miki T, Ouais S, Martin GM, Mulligan J, Schellenberg GD.
    Positional cloning of the Werner's syndrome gene. Science,
    272(5259):258-62, April 12, 1996.
        Payami H, Schellenberg GD, Zareparsi S, Kaye J, Sexton GJ, Head MA,
    Matsuyama SS, Jarvik LF Miller B, McManus DQ, Bird TD, Katzman R,
    Heston L, Norman A, Small GW. Evidence for association of HLA-A2 allele
    with onset age of Alzheimer's disease. Neurology, 49(2):512-8, August
    1997.

                          Osteoporosis/Osteoarthritis

    Working to understand and prevent osteoporosis
        Researchers at the Little Rock VA Medical Center, supported under
    the Research Enhancement Awards Program (REAP), are advancing
    understanding of osteoporosis, a bone disease affecting more than 28
    million Americans. Specifically, the multidisciplinary effort focuses
    on identifying the mechanisms of bone loss in patients with metabolic,
    orthopedic, and cancer-related diseases, and the development of novel
    therapies for their management. Six VA investigators, led by Stavros C.
    Manolagas, M.D., Ph.D., are combining expertise in geriatrics,
    orthopedics, surgery, biochemistry and pharmacology. The REAP funds
    will also be used to create new training opportunities and to launch
    novel research initiatives that will translate basic research findings
    into clinical applications. Medical Research Service
        Jilka PL, Weinstein RS, Bellido T, Roberson P, Parfuitt AM,
    Manolagas SC. Increased bone formation by prevention of osteoblast
    apoptosis with parathyroid hormone. Journal of Clinical Investigations,
    104(4):439-46, August 1999.
    Defective cartilage cells linked to osteoarthritis
        Researchers have found that nitric oxide, a potentially harmful
    free-radical gas found in the body, can significantly disturb the
    ability of mitochondria to breathe and produce energy. Their data
    suggests that a cartilage cell's mitochondria (structures within cells
    that produce most of the energy necessary for general health and well-
    being) go through a type of power failure where they no longer produce
    energy to generate healthy cartilage. Therefore, calcium deposits are
    formed and the joints deteriorate. Little is known about the biological
    causes of the disease. Since osteoarthritic cartilage is chemically
    different from normal aged cartilage, the disease does not appear to be
    a result of aging itself.
        Current VA research suggests the potential for new drugs aimed at
    preserving mitochondrial function in cartilage cells, thereby stemming
    joint deterioration. Osteoarthritis, also known as degenerative joint
    disease, is the most common form of arthritis. Symptoms include pain,
    stiffness, and inflammation in the joints. Treatment typically involves
    pain-relieving and anti-inflammatory drugs along with heat-therapy and
    exercise. This treatment alleviates symptoms but does not address the
    cause of the disease. Medical Research Service
        Johnson K, Jung A, Murphy A, Andreyev A, Dykens J, Terkeltaub R.
    Mitochondrial oxidative phosphorylation is a downstream regulator of
    nitric oxide effects on chondrocyte matrix synthesis and
    mineralization. Arthritis and Rheumatism, 43(7):1560-70, July 2000.
    Mechanical stimulation gives human arthritic cartilage cells a boost
            toward health
        Research at the VA Palo Alto Rehabilitation Research and
    Development Center has yielded new insights into the response of human
    osteoarthritic cartilage cells to physical force or pressure. As a
    joint surface is damaged by disease, a specialized form of the
    structural protein, collagen, is lost from the cartilage, exposing the
    bone surface, causing pain and reducing freedom of movement.
    Researchers at the Palo Alto Rehabilitation Research Center showed that
    a short daily application of hydrostatic pressure, followed by a period
    with no pressure, increased expression of molecules essential to
    formation of collagen. Future studies will try to determine which
    loading conditions produce the best responsiveness and to assess
    whether mechanical stimulation will provide a viable way to regenerate
    health cartilage in diseased joints. Rehabilitation Research and
    Development
        Smith RL, Lin J, Kajiyama G, Shida J, Trindade MCD, Yerby S, van
    der Meulen MCH, Vu T, Hoffman AR, Schurman DJ, Beaupre GS, Carter DR.
    Hydrostatic pressure and cartilage repair--analysis of chondrocyte
    collagen gene expression. Transactions of the 18th Annual Meeting of
    the Society for Physical Regulation in Biology and Medicine, 1998.
    New methods for analyzing densitometry results can improve osteoporosis
            diagnosis
        Dual-energy X-ray Absorptiometry (DXA) is currently the method of
    choice for measuring bone density and identifying individuals with low
    bone mass and osteoporosis. Results can be misleading, however, because
    different-sized bones of the same density can produce different
    readings. Researchers at the VA Palo Alto Rehabilitation R&D Center
    have developed a simple method for adjusting DXA scans of the heel bone
    for bone size.
        This new method provides an accurate determination of volumetric
    bone density. In addition, this group of researchers has developed a
    new DXA-based index for estimating fracture risk in normal and
    osteoporotic patients. These new methods have immediate clinical
    applicability in helping to identify individuals at risk for
    osteoporotic fractures. Rehabilitation Research and Development
        Wren TAL, Yerby SA, Beaupre GS, Carter DR. Interpretation of
    calcaneus dual-energy X-ray absorptiometry measurements in the
    assessment of osteopenia and fracture risk. Journal of Bone and Mineral
    Research, 15(8):1573-8, August 2000.

                              Liver/Kidney Disease

    Study launched for severe diabetes complications
        A large-scale clinical trial may determine whether intensified
    blood-sugar control can prevent the major vascular complications that
    lead to most deaths, illnesses, and treatment costs for patients with
    type II diabetes. This is a seven-year VA study in collaboration with
    the American Diabetes Association and several pharmaceutical companies,
    including SmithKline Beecham, Novo-Nordisk, Aventis, KOS, and Roche
    Diagnostics. The study will be conducted at 20 VA medical centers and
    will enroll 1,700 patients with type II diabetes for whom standard drug
    therapy is no longer adequate. Patients will be followed for five years
    to assess rates of major macrovascular events, including heart attack,
    heart failure, stroke, amputations due to ischemia, surgery for
    coronary artery or peripheral vascular disease, and cardiovascular
    death.
        Participants will receive either standard therapy or an intensive
    therapy that would involve higher doses of the same drugs. Standard
    therapy for type II diabetes includes sulfonylurea and insulin-
    sensitizing medications designed to lower blood-sugar levels and
    sensitize the body to naturally produced insulin. The intensive therapy
    will include medications, along with other antihyperglycemic drugs and
    insulin that will be added in steps. The risk for type II diabetes
    increases with age, with most cases developing after age 40. More than
    18 percent of Americans over age 65 and more than one-fourth of the VA
    patient population have type II diabetes. Cooperative Studies Program
    Cellular on-off switch provides new tactics against liver disease
        VA researchers in San Diego have discovered a cellular pathway that
    may offer a way to encourage liver cell growth in people with liver
    damage or to block the growth of liver tumors. They found that a gene
    cloned in the laboratory was a powerful regulator of development when
    they stimulated mouse liver cells with a hormone known to trigger cell
    growth. The key step was a single change in the protein product of that
    gene.
        This finding may also point the way to better artificial livers for
    people needing a transplant and may even suggest ways to restore lost
    cells in the brain and other tissues. The researchers now hope to learn
    more about the mechanics of the protein change so they can use it as an
    ``on-off'' switch for cell growth, possibly developing drugs or other
    techniques to flip that switch. Medical Research Service
        Buck M, Poli V, van der Geer P, Chojkier M, Hunter T.
    Phosphorylation of rate serine 105 or mouse threonine 217 in C/EBP beta
    is required for hepatocyte proliferation induced by TGF alpha.
    Molecular Cell, 4(6):1087-92, December 1999.
    VA researchers identify potential new kidney cancer treatment
        VA researchers have identified a promising new treatment for kidney
    cancer. Using a laboratory-developed analog of somatostatin, a
    hypothalamic hormone that inhibits the release of growth hormone,
    scientists were able to target specific receptors on tumor sites and
    reverse cancer growth. Nobel Prize winner Andrew V. Schally, Ph.D.,
    M.D.H.C, of the New Orleans VA Medical Center, leader of the research
    group, described the compound as ``a magic bullet'' that scientists
    have been seeking for 100 years.
        Researchers implanted two types of human renal cell carcinoma (RCC)
    tumors in mice, and injected them with an analog, AN-238, previously
    shown to be effective in the treatment of prostate cancer, breast
    cancer, and brain tumors. After five weeks of treatment, the volume of
    the two types of tumors had decreased 67.2 percent and 78.3 percent.
    The analog works by targeting receptors on the surface of RCC tumors,
    inhibiting and even reversing tumor growth.
        This is the first application of the cytotoxic (cell-destroying)
    compound in RCC, the most common form of kidney cancer. RCC is
    diagnosed in an estimated 28,000 Americans each year and nearly 12,000
    people died from the disease in 1999. These latest findings represent a
    great stride toward treatment of a cancer that has been resistant to
    both chemotherapy and radiation and has a very low survival rate.
    Medical Research Service
        Plonowski A, Schally AV, Nagy A, Kiaris H, Hebert F, Halmos G.
    Inhibition of metastatic renal cell carcinomas expressing somatostatin
    receptors by a targeted cytotoxic analogue of somatostatin AN-238.
    Cancer Research, 1;60(11):2996-3001, June 2000.
    Anti-anemia drug for dialysis patients may be administered
            subcutaneously
        More than 90 percent of hemodialysis patients experience severe
    anemia. A new drug, recombinant human erythropoietin, is very effective
    at combating this anemia, but its cost is $5,000 to $10,000 per patient
    annually when administered intravenously. However, a randomized, multi-
    center trial by VA found that recombinant human erythropoietin can be
    administered just as effectively subcutaneously (under the skin), with
    a dosage reduction of 32 percent and no substantial increase in patient
    pain or discomfort. The Cooperative Studies Program is working with the
    Health Care Finance Administration to estimate potential savings to
    Medicare from this subcutaneous administration. Cooperative Studies
    Program Collaborator: AMGEN Pharmaceuticals
        Kaufman JS, Reda DJ, Fye CL, Goldfarb DS, Henderson WG, Kleinman
    JG, Vaamonde CA. Subcutaneous compared with intravenous epoetin in
    patients receiving hemodialysis. Department of Veterans Affairs
    Cooperative Study Group on Erythropoietin in Hemodialysis Patients. New
    England Journal of Medicine; 339(9):578-83, August 27, 1998. CSP#392,
    Hines.
    Transgene treatment for diabetes
        Type I diabetes mellitus is usually followed by autoimmune
    destruction of cells in the pancreas, leading to insufficient insulin
    production. Diabetes is a natural candidate for treatment by gene
    therapy since clinical symptoms are caused by a decreased production of
    a single protein. Numerous studies have demonstrated that functional
    gene transfer is successful both in animals and in cell cultures.
    Attempts to regulate transgenic insulin production, however, have
    proven inadequate as the insulin secretion has been insufficient to
    normalize blood glucose or it has produced lethal hypoglycemia. This
    study has resulted in the design of a system where insulin gene therapy
    utilizes transcription to regulate hepatic production of transgenic
    insulin.
        Effective and safe insulin gene therapy will require regulation of
    transgenic insulin secretion. Researchers at the Atlanta VA Medical
    Center have created a liver-targeted insulin transgene by engineering
    glucose responsive elements into a hepatic promotor containing an
    inhibitory insulin response sequence. They demonstrated the
    applications of this transgene for the treatment of diabetes mellitus
    in mice by administering a genetically recombined virus. Blood sugar
    levels were reduced and maintained after a substantial glucose load.
    Medical Research Service
        Thule PM, Liu JM. Regulated hepatic insulin gene therapy of STZ-
    diabetic rats. Gene Therapy, 7:1744-52, October 2000.
                               sensory disorders
        Humans rely on sensory perceptions to interact with and interpret
    their surrounding environment. Loss or impairment of a sense, such as
    sight or hearing, can be a traumatic event, causing mental and
    emotional anguish. VA researchers are working toward understanding the
    biological causes of sensory loss, restoring or improving lost function
    for affected individuals, and improving the health services and
    rehabilitation aids that are available. Below are examples of our
    research in vision, hearing, and neurologic recoveries.
    Outcome measurement system for blind rehabilitation services
        The measures developed in two VA Merit Review projects form the
    basis of the national database implemented by VA Blind Rehabilitation
    Service and Information Technology Service on Jan. 1, 2001. Items from
    the Satisfaction Survey and the Functional Outcomes instruments are
    being used by VA headquarters to evaluate rehabilitation outcomes for
    Blind Rehabilitation Service. Reports on these measures are provided on
    a quarterly basis to all VA Blind Rehabilitation Centers and VA
    headquarters for purposes of program evaluation. Rehabilitation
    Research and Development
        De l'Aune W, Welsh RL, Williams MD. Outcome assessment of the
    rehabilitation of people with visual impairment: a national project in
    the United States. Journal of Visual Impairment and Blindness,
    95(5):281-91, 2000.
    Improvement of visual function evaluations
        The procedures developed in two VA projects using the scanning
    laser ophthalmoscope have challenged the prevailing clinical lore about
    preferred retinal locus (PRLs) characteristics (exact location of the
    retina) and scotoma characteristics (a blind spot or blind area within
    the normal bounds of vision). The results from these projects have been
    incorporated into practice plans for vision rehabilitation.
        The scanning laser ophthalmoscope has improved evaluation of visual
    function in people with impaired vision. In particular, it has enhanced
    the assessments including the relationship between basic eye movements
    and the ability to carry out complex tasks, the ability to find
    information in a visual field, and face recognition ability. Defining
    the relationship between visual function as assessed by the scanning
    laser ophthalmoscope and activities of daily living is refining
    diagnostic and training methods used in vision rehabilitation services.
    Rehabilitation Research and Development
        Schuchard RA, Fletcher D. Preferred retinal loci and the scanning
    laser ophthalmoscope, in ``principles and practice of ophthalmology,
    Section: optics and low vision rehab'', Kraut J, Azar D, section ed.
    Albert D, Jakobiec F ed. Saunders, Philadelphia, 2000.
        Schuchard RA. Evaluation of visual function, in ``Self study
    series: adult low vision rehabilitation,'' M. Warren ed., American
    Occupational Therapy Association Publications, Washington DC, 2000.
    Popular hearing aids undergo scientific evaluation
        Although they have been in use for decades, three popular types of
    hearing aids--accounting for 70 percent of the market--underwent their
    first rigorous scientific testing in a clinical trial by VA's
    Cooperative Studies Program and the National Institute on Deafness and
    Other Communication Disorders (NIDCD). Results of the study, conducted
    at eight VA medical centers, may enable doctors to help millions of
    Americans deal more effectively with hearing loss. The report shows
    that hearing aids substantially help users in both quiet and noisy
    situations.
        Hearing loss is particularly prevalent among veterans, in part due
    to increased occupational exposure to loud noise on military bases. In
    1999, 85,000 veterans were fitted for hearing aids at VA medical
    centers. Due to its expertise in audiology, the VA healthcare system
    was chosen as a partner in hearing-aid research by NIDCD, part of the
    National Institutes of Health (NIH).
        Up to 28 million Americans--including about a third of those age 65
    or older--have nerve-related hearing loss, which can often be helped by
    hearing aids. But only about 20 percent of those who can benefit from
    hearing aids wear them. One reason is that many primary-care doctors
    may not be fully informed on the benefits of hearing aids. Primary-care
    doctors will benefit from knowing that hearing aids are an effective
    treatment for many patients, especially those with mild to moderate
    hearing loss. Cooperative Studies Program
        Larson VD, Williams DW, Henderson WG, Luethke LE, Beck LB, et al.
    Efficacy of 3 commonly used hearing aid circuits: A crossover trial.
    Journal of the American Medical Association, 284(14):1806-13, October
    11, 2000.
                                 mental illness
        VA research in mental illness focuses on cognitive conditions, from
    anxiety disorders and depression to advanced schizophrenia.
    Investigators have made great strides toward identifying the underlying
    causes of these disorders and are currently working to identify
    improved treatment methods and better health service systems to care
    for those with mental illness. Following are brief descriptions of
    important studies that illustrate VA's research in this important area.
    Team management improves depression care
        Depression is the second most prevalent medical condition in the VA
    and has an impact on function and quality of life that is worse than
    many other chronic physical conditions. Most depression treatment takes
    place in primary care where it continues to be under-detected and
    under-treated. This study of depression treatment adapted the
    collaborative care model for managing chronic illness to the VA primary
    care setting and compared the team care approach with traditional
    consult-liaison treatment. In the team model, psychiatrists,
    psychologists and social workers were assigned to a team that developed
    a treatment plan based on the initial assessment and provided the plan
    to the primary care provider. Primary care provider efforts were
    reinforced by patient education materials and brief social work phone
    calls to support patient adherence, address treatment barriers and
    monitor symptomatology.
        Team care resulted in significantly greater improvement in
    depressive symptomatology and psychosocial function than the more
    traditional consult-liaison treatment without increasing outpatient
    visits. As more chronic conditions are treated in the primary care
    setting, using this model may improve patient outcomes at a reasonable
    cost. Its potential impact on care and outcomes for depression and
    other chronic conditions could be great. Health Services Research and
    Development
        Hedrick SC, Chaney EF, Liu CF, Felker BL, Bagala R, Paden GR.
    Process of care in innovative and traditional treatments for depression
    in VA primary care: reallocating resources. Presented at VA Health
    Services Research and Development Service Annual Meeting, Washington,
    DC, February 15, 2001.
        Chaney EF, Hedrick SC, Felker BL, Liu CF, Paden GR, Hasenberg NM.
    Improving treatment for depression in primary care: alternate
    strategies. Presented at Society of Behavioral Medicine Annual
    Scientific Sessions, Seattle, WA. March 23, 2001.
    Screening tool helps to identify depression
        Major depression can have serious consequences, yet it often goes
    undiagnosed and untreated. VA physicians now have an effective two-
    question screening tool they can use in outpatient settings to help
    identify veterans with major depression. They also have a new awareness
    of the scope of the problem. Recent research shows that depression is
    prevalent among 14 percent of VA outpatients (excluding those with
    substance abuse problems, mania and/or psychosis). These findings have
    been widely disseminated to increase screening. Health Services
    Research and Development
        Whooley MA, Avins Al, Miranda J, et al. Case-finding instruments
    for depression: two questions are as good as many. Journal of General
    Internal Medicine, 12(7):439-45, July 1997.
    Award winning sleep studies may help mentally ill
        Eminent sleep researcher Robert McCarley, M.D., Deputy Chief of
    Staff for Mental Health Services at the Brockton/West Roxbury VA
    Medical Center, won the 1998 William S. Middleton Award, one of VA's
    highest scientific honors. Recognized as an authority on REM (rapid eye
    movement) sleep, Dr. McCarley was honored for his important
    contributions to our understanding of sleep and dreaming. For example,
    he was the first to systematically develop quantitative methods for
    testing hypotheses on cellular control of sleep states. He and his
    colleagues have identified control mechanisms for non-REM sleep and
    demonstrated that certain brain stem cells that use the
    neurotransmitter (chemical messenger between nerve cells) acetylcholine
    are critical for promoting REM sleep. In contrast, they found that
    other brain cells using the neurotransmitters serotonin and
    norepinephrine act to inhibit REM sleep. McCarley's work has helped set
    the stage for new approaches to sleep abnormalities, including sleep
    disruptions in psychiatric disorders. Medical Research Service
        Porkka-Heiskanen T, Strecker RE, Thakkar M, Bjorkumm AA, Greene RW,
    McCarley RW. Adenosine: a mediator of the sleep-inducing effects of
    prolonged wakefulness. Science, 276(5316):1265-8, May 23, 1997.
    Discovery of schizophrenia-associated gene
        In a major breakthrough for understanding and treating
    schizophrenia, VA researchers have discovered a gene that plays a major
    role in schizophrenia and is linked to two physiological defects found
    in schizophrenics and their family members. In studies of nine families
    with multiple cases of schizophrenia, scientists learned that an
    inability to screen out irrelevant background noise, a common defect in
    schizophrenics, is linked to a specific gene that codes for a brain
    receptor activated by nicotine. This discovery may help explain why
    schizophrenics tend to be heavy smokers. Although well documented, the
    high incidence of smoking among schizophrenics had been overlooked as a
    possible link to the root of schizophrenia.
        VA researchers tested subjects for the defect by subjecting them to
    repeated sounds while recording brain waves. Results showed that the
    defect is hereditary and is present in non-schizophrenic as well as
    schizophrenic family members. Using a variety of genetic techniques,
    the researchers traced the chromosomal location of the defective gene
    to the site of a specific nicotine receptor.
        More recently, these investigators found that a defect in eye
    movement tracking is linked to the same receptor. These findings of
    sensory defects linked to a specific neurotransmitter receptor could
    have major ramifications for schizophrenia treatment. Although inhaling
    nicotine activates the receptor and provides short-term relief for
    schizophrenics, the effect is too short-lived to be of treatment value.
    Researchers are now investigating the cause of the genetic malfunction
    and are collaborating with drug companies to identify potential drugs
    to bind the receptors. Medical Research Service
        Freedman R, Coon H, Myles-Worsley M, Orr-Urtreger A, Olincy A,
    Davis A, Polymeropoulos M, Holik J, Hopkins J, Hoff M, Rosenthal J,
    Waldo MC, Reimherr F Wender P, Yaw J, Young DA, Breese CR, Adams C,
    Patterson D, Adler LE, Kruglyak L, Leonard S, Byerley W. Linkage of a
    neurophysiological deficit in schizophrenia to a chromosome 15 locus.
    Proceedings of the National Academy of Sciences, USA, 94(2):587-92,
    1997.
    Study contributes to medication guidelines for schizophrenia management
        Antipsychotic medication is an essential component of treatment for
    schizophrenia, the second most common discharge diagnosis in VA.
    Researchers studied the relationship between patient outcomes and the
    management of medication for schizophrenia. Results showed that 49
    percent of patients receiving care through a VAMC or state psychiatric
    hospital were prescribed doses outside the range recommended by
    practice guidelines for schizophrenia. This study also showed that
    patients who were prescribed medication within practice guidelines had
    significantly less severe symptoms. Findings from this study have
    contributed to the selection of national performance measures for the
    VA that will improve the quality of medication management and better
    patient outcomes. Health Services Research and Development
        Kirchner JE, Owen RR, Nordquist C, Fischer EP. Diagnosis and
    management of substance use disorders among inpatients with
    schizophrenia. Psychiatric Services, 49(1):82-5, January 1998.
                                substance abuse
        Research on substance abuse encompasses all types of addiction,
    including alcohol, nicotine, and other drugs. VA scientists are working
    to identify the underlying causes of abuse and addiction, and the
    subsequent treatment and rehabilitation methods that prove most
    effective. Research also includes efforts to understand the
    ramifications of substance abuse throughout the body, such as the liver
    disease resulting from alcohol abuse. Below are two examples of
    progress in this critical area.
    Probing the genetics of alcoholism
        VA researchers are among leaders in research devoted to teasing out
    the complex interplay between heredity and alcoholism. For example, one
    VA team recently reported that genetically engineered mice without a
    certain cell receptor consumed less alcohol than unaltered mice. Mice
    without the dopamine D2 receptor, a cellular docking site for the brain
    chemical dopamine, consumed half as much alcohol as ``wild type'' mice.
    The study illustrates a technique in which particular genes influence
    substance abuse. Researchers use molecular methods to delete, or
    ``knock out'', a suspect gene and then study the effect in the ``knock
    out'' mice. In an earlier study, the VA researchers discovered that
    mice without a gene containing the receptor for serotonin, consumed
    twice as much alcohol as unaltered mice.
        Although they are just beginning to understand the role played by
    receptor subtypes in alcohol consumption, VA researchers indicate these
    studies may ultimately lead to new pharmacological treatments or gene
    therapies. The researchers caution scientists who study how genes
    affect behavior that genetically identical mice behave differently in
    seemingly identical tests at three separate laboratories. They
    emphasize that genetic manipulation and effects should be replicated
    cautiously before drawing conclusions, especially when there are slight
    results in behavioral differences. Medical Research Service
        Crabbe JC, Wahlsten D, Dudek BC. Genetics of mouse behavior:
    interactions with laboratory environment. Science, 284(5420):1670-
    2,1999, June 4, 1999.
        Phillips TJ, Brown KJ, Burkhart-Kasch S, Wenger CD, Kelly MA,
    Rubinstein M, Grandy DK, Low MJ. Alcohol preference and sensitivity are
    markedly reduced in mice lacking dopamine D2 receptors. Nature
    Neuroscience, 1(7):610-5, November 1998.
    Youthful drinking linked to alcoholism in later years
        Marc A. Schuckit, M.D., a world leader in the study of alcoholism,
    won the 1997 Middleton Award for more than 20 years of pioneering
    research on the importance of genetic influence in alcohol dependence.
    His innovative population studies have set the stage for exciting
    progress in efforts to identify genes that play a role in alcoholism.
        In a landmark investigation, Dr. Schuckit and his colleagues
    tracked 453 men, starting when they were college students, for 10 years
    to determine the relationship between the initial effect of alcohol on
    a person and later alcoholism. The research team found that men who
    showed little reaction to alcohol as students were far more likely to
    become alcoholics 10 years later. Thus, being able to ``hold one's
    liquor'' at age 20 was a warning sign for risk and clearly raising the
    possibility that genes controlling a person's initial reaction to
    alcohol may contribute to later alcoholism.
        These findings were instrumental in a decision by the National
    Institute on Alcohol Abuse and Alcoholism to invest almost $5 million a
    year over 10 years in the six-center Collaborative Study on the
    Genetics of Alcoholism. Dr. Schuckit is among the principal
    investigators for this project, which is yielding important advances in
    the search for genes related to alcohol dependence. Medical Research
    Service
        Schuckit MA, Smith TL. An 8-year follow-up of 450 sons of alcoholic
    and control subjects. Archives of General Psychiatry, 53(3):202-10,
    March 1996. Marc A. Schuckit, M.D., VA San Diego Health Care System and
    the National Institute on Alcohol Abuse and Alcoholism.
    Combination treatment helps smokers kick the habit
        Smoking is a major problem among veterans, contributing to a
    variety of health problems, including arterial disease, heart disease,
    chronic lung disease, lung cancer, and other disorders. VA researchers
    have found that smokers who took mecamylamine orally and used a
    nicotine patch were more successful at quitting than smokers who used
    only a patch. In one study, participants who used the combination
    approach had a 40 percent smoking-abstinence rate after six months,
    compared with 15 percent among those who used a patch alone. In another
    study, 40 percent of subjects who used the combination before trying to
    quit were successful, compared with success rates of 10 to 20 percent
    among those who used a patch only, mecamylamine only, or a placebo.
        When used with a nicotine patch, mecamylamine destroys the taste of
    tobacco and blocks brain receptors that help nicotine produce its
    pleasurable and addictive effects. The approach offers a new strategy
    against smoking addiction and its related health impacts. Medical
    Research Service
        Rose JE, Behm FM, Westman EC. Nicotine-mecamylamine treatment for
    smoking cessation: the role of pre-cessation therapy. Experimental and
    Clinical Psychopharmacology, 6(3):331-43, August 1998.
        Jed E. Rose, Ph.D., VAMC Durham, NC American Cancer Society
    New pharmaceuticals to treat addictive disorders
        The VA Cooperative Studies Program and the National Institute on
    Drug Abuse (NIDA) are working together to clinically test medications
    for substance abuse, alcohol abuse, and mental illness. The goal of
    this program is to support the development and subsequent marketing of
    new pharmaceutical entities to treat addictive disorders and certain
    mental illnesses. These are areas of research that have been under-
    represented in the pharmaceutical development and for which a high
    national priority has been set by the Congress.
        This collaboration will consist of several projects, including
    seven recent, completed, or current studies. Three of the seven studies
    involve the drug buprenorphine for the treatment of opiate-dependent
    patients. One of these studies tested the efficacy of a liquid
    formulation, while another studies the safety and efficacy of the
    combination drug buprenorphine/naloxone. Successful results of these
    studies are now being reviewed by the FDA. If the buprenorphine/
    naloxone combination is approved, it would allow a formulation that
    could be given in a take-home dosing form by physicians experienced in
    the treatment of opiate dependence, thus resulting in a third study in
    this area. There are currently 583 patients in their last year of
    follow-up at 38 test sites in six states, including New York, Florida,
    Illinois, Texas, California, and Washington. Cooperative Studies
    Program
                              special populations
        Demographic, socioeconomic, and health risk factors distinguish
    some groups of veterans from the general population. The VA Office of
    Research and Development is ensuring that these groups are fairly
    represented in the research program. Veteran populations identified for
    special attention include veterans with permanent disabilities, veteran
    cohorts defined by shared military experience, minority veterans, and
    homeless, institutionalized or homebound veterans. Examples of VA's
    research in this area follow.
    Teledermatology benefits veterans with limited access to health-care
            delivery
        Digital images of visual information can be transmitted within
    telemedicine networks. This study compared the reliability for the
    diagnoses and management plans given by clinic-based examiners to those
    of consultants using digital imagery. Preliminary results show that
    dermatologists agree on their diagnoses of skin lesions equally well
    whether evaluating the patient in person or reviewing the digital
    image. In addition, investigators found diagnostic accuracy to be
    comparable among clinic-based and digital image examiners. This study
    suggests that the clinical use of digital imaging is an appropriate
    alternative for patients with limited access to adequate clinical care.
    Health Services Research and Development
        Whited JD, Hall RP, Simel DL, Foy ME, Stechuchak KM, Drugge RJ, et
    al. Reliability and accuracy of dermatologists' clinic-based and
    digital image consultations. Journal of the American Academy of
    Dermatology, 41(5 Pt 1):693-702, November 1999.
    Services needed for women veterans differ from those of men
        Findings from an HSR&D study on the health status of women veterans
    who use VA ambulatory care services is helping VA plan more
    comprehensive and appropriate services for this growing service
    population. Study results strongly suggest that resources needed to
    care for women veterans differ greatly from those needed to care for
    male veterans. As the number of women veterans seeking VA care
    continues to increase, this information is critically important for
    providing high quality care for this special population of VA users.
    Health Services Research and Development
        Skinner KM, Furey J. The focus on women veterans who use Veterans
    Administration health care: the Veterans Administration women's health
    project. Military Medicine, 163(11):761-6, November 1998.
    Case management expands access to services for homeless veterans
        Case managed residential care for homeless veterans with substance
    abuse tended to shift service delivery from inpatient settings to less
    expensive outpatient settings, this HSR&D study found. This approach
    improved patients' access to care. It also improved short-term outcomes
    that were measured in terms of health care, employment, and housing,
    although these gains tended to diminish during the year following
    treatment. This information will inform VA administrators and
    clinicians about the need for ongoing community care to maintain gains
    achieved in the residential setting. Health Services Research and
    Development
        Conrad KJ, Hultman CI, Pope AR, et al. Case managed residential
    care for homeless addicted veterans: results of a true experiment.
    Medical Care, 36:40-53, January 1998.
    Functional electrical stimulation may assist patients with paraplegia
        Functional Electrical Stimulation (FES) uses surgically implanted
    electrodes to activate paralyzed muscles. A consortium including the
    Cleveland VA Medical Center, Case Western Reserve University and
    MetroHealth Medical Center is producing promising results that have led
    to new applications and many advances in restoring function to
    paralyzed individuals. Advances by VA in the implantation and control
    of functional electrical stimulation (FES) walking systems hold great
    promise for patients with paraplegia. A research participant with
    paraplegia is now testing a new 16-channel system that allows him to
    exercise and walk in a limited area around his wheelchair. An implanted
    neuroprosthesis is helping individuals with high chest or low neck
    injuries to exercise their legs, stand, and perform standing transfers.
    Another FES device offers promise for improved bladder and bowel
    control for individuals with spinal cord injuries, giving them greater
    freedom and reducing the costs and inconvenience of bladder and bowel
    care.
        FES is also helping patients with tetraplegia due to spinal cord
    injury to grasp and release objects with paralyzed hands. Researchers
    are developing and testing new hand-grasp systems that offer finer
    control and extend function to the elbow and forearm. Another type of
    implant stimulates the triceps muscle so that individuals with
    tetraplegia can reach overhead and grasp objects. These and other
    advances in FES may allow persons with paraplegia and tetraplegia to
    expand employment opportunities and work more independently.
    Rehabilitation Research and Development
        Kobeti R, Triolo RJ, Uhlir J, Bier C, Wibowo M, Polando G,
    Marsolais EB, Davis JA, Ferguson Y, Sharma M. Implanted functional
    electrical stimulation system for mobility in paraplegia: a follow-up
    case report. IEEE Transactions on Rehabilitation Engineering (in
    press).
        Triolo RJ, Bogie K. Lower extremity applications of functional
    neuromuscular stimulation after spinal cord injury. Topics in SCI
    Rehabilitation 5(1):44-65, 1999.
        Wuolle KS, Van Doren CL, Bryden AM, Peckham PH, Keith MW, Kilgore
    KL. Satisfaction and usage of a hand neuroprosthesis. Archives of
    Physical Medicine and Rehabilitation, 80:206-13, 1999.
        Peckham PH, Keith MW, Kilgore KL. Restoration of upper extremity
    function in tetraplegia. Topics in SCI Rehabilitation, 5(1):33-43,
    1999.
    Early treatment with corticosteroids reduces damage from SCI
        More than 1 million Americans live with disabilities resulting from
    spinal cord injury. Crushing injuries of the spinal cord trigger a
    cascade of biochemical events that may cause more damage than the
    initial trauma. To counter this destructive cascade, VA investigators
    tested two corticosteroids, methylprenisolone and trilizad, in animals
    with spinal cord injuries. The results: animals that received either
    drug within eight hours following injury could regain up to 25 percent
    of their lost neurological function. Subsequent clinical trials in
    patients with acute spinal cord injury established that this early
    intervention can help reduce permanent damage, setting the standard for
    treatment of acute compression spinal cord injury. Further research by
    VA is underway on newer compounds that may further reduce the
    disability and medical care costs of these injuries. Medical Research
    Service
        Giovanini MA, Reier PJ, Eskin TA, Wirth E, Anderson DK.
    Characteristics of human fetal spinal cord grafts in the adult rat
    spinal cord: influences of lesion and grafting conditions. Experimental
    Neurology, 148(2):523-43, 1997.
    Tissue engineering to replace lost nerves
        Tissue engineering, combining living cells with synthetic
    materials, holds promise for repair and regeneration of skin, bone,
    cartilage, nerve and essential organs. Researchers at the VA Palo Alto
    Rehabilitation R&D Center are recruiting patients who require grafting
    of nerves in the hand, arm or leg. Rather than performing a whole-nerve
    autograft, the investigators will repair the damage with an artificial
    graft seeded with the patient's own cells from the sheath surrounding
    the nerve fibers. New biomaterials and techniques now being tested for
    reconstructing peripheral nerves may be applied to the more difficult
    problem of regeneration of the central nervous system after stroke or
    spinal cord injury. Rehabilitation Research and Development
        Sabelman EE, Hu M. 3-Dimensional collagen strands promote Schwann
    cell proliferation & orientation. Proceedings of the Biomedical
    Engineering Society 1998 Annual Fall Meeting, Cleveland, OH, Oct 10-1
    3, 1998, paper no. TE. 14, Annals of Biomedical Engineering v. 26 suppl
    1, p. S-137, Sept/Oct, 1998.
    Transplantation of myelin-forming cells to the injured CNS
        Researchers in West Haven are studying the transplantation of
    Schwann cells as a treatment for injury to the central nervous system
    (CNS). Using magnetic resonance imaging, the investigators hope to
    establish whether cells transplanted into the primate CNS can produce
    myelin, the complex protein that makes up the sheath. Myelinated nerves
    conduct impulses more rapidly than those without myelin.
        These studies serve as a necessary prelude to human studies that
    may lead to successful use of cell transplantation. Investigators have
    also successfully developed cell harvesting and preservation techniques
    that will further research on transplantation of myelin-forming cells.
    Rehabilitation Research and Development
        Kato T, Honmou 0, Uede T, Hashi Y, Kocsis JD. Transplantation of
    human olfactory ensheathing cells elicits remyelination of demyelinated
    rat spinal cord. GLIA (in press).
        Imaizumi T, Lankford AL, Kocsis JD. Transplantation of olfactory
    ensheathing cells or Schwann cells restores rapid and secure conduction
    across the transected spinal cord. Brain Research, 854(1-2):70-8,
    January 31, 2000.
        Waxman SG, Kocsis JD. Experimental approaches to restoration of
    function of ascending and descending axons in spinal cord injury. The
    Neurobiology of spinal cord injury. Kalb RG, Strittmatter SM, ed.
    Humana Press, 2000.
                          health services and systems
        Health Services and Systems is a research effort focused on
    improving the health care provided to our nation's veterans, whether it
    be for a specific disease or a broad category of care, such as primary
    or mental health care. Research in Health Services and Systems
    addresses supply and organization of resources and services, evaluation
    of treatment methods, health and safety of research participants,
    application of research findings to standard practice, and outcomes of
    care. The studies described below are part of our effort to ensure that
    our veterans receive the best possible care.
    VA home health care increases satisfaction for patients and caregivers
        An innovative model of home health care used by Department of
    Veterans Affairs (VA) hospitals--featuring a greater hands-on role for
    doctors and close cooperation among nurses, social workers and other
    team members--was found to yield more satisfaction for patients and
    family caregivers than private-sector home care.
        In a study of nearly 2,000 home-care patients, most of them
    severely disabled or terminally ill, researchers from VA, the
    University of Illinois at Chicago, and Northwestern University tested
    VA's ``Team-Managed Home-Based Primary Care'' model against non-VA
    home-care at 16 sites. While death rate and physical functioning did
    not differ between the two groups of patients, VA patients and their
    caregivers overall expressed more satisfaction with their care.
    Terminally ill patients in the VA sample gave higher marks to their
    care in six of eight quality-of-life measures, including emotional
    functioning, bodily pain and mental health. Caregivers in the VA group
    reported less ``burden,'' translating into reduced caregiver stress and
    burnout.
        The study is among the first large-scale evaluations of home care
    to consider the burden on family members and their emotional well-
    being. Previous research has shown that informal home-based family
    caregiving costs the nation nearly $200 billion per year, compared to
    around $30 billion for formal home health care. Cooperative Studies
    Program
        Hughes SL, Weaver FM, Giobbie-Hurder A, Manheim L, Henderson W,
    Kubal JD, Ulasevich A, Cummings J. Effectiveness of team-managed home-
    based primary care. Journal of the American Medical Association,
    284(22):2877-85, December 13, 2000.
    Enhancing the quality of informed consent (EQUIC)
        Informed consent is the keystone of the protection of human rights
    in medical research, along with careful review of proposed projects.
    EQUIC is a Cooperative Studies program-wide project aimed at
    systematically improving the quality of informed consent, by testing
    and measuring the results of innovative approaches to informed consent.
    Practitioners of clinical trials must ensure that patients'
    participation in research is informed and voluntary. This
    responsibility suggests that researchers should strive continuously to
    improve the effectiveness of methods for informing prospective research
    volunteers about experimental studies, thereby enhancing the protection
    of their interests.
        EQUIC will test a method to assess the capacity of a research
    volunteer to understand and consent to a study; a method for
    ``tailoring'' an informed consent encounter to the vulnerabilities
    uncovered by that assessment; and a direct assessment of the success of
    an informed consent process at producing a good result, defined in
    terms of the successful protection of the patient's rights. Once these
    are fielded and tested, it will be possible to study a wide range of
    innovations in informed consent in the full variety of patients studied
    in the Cooperative Studies Program. An important side benefit will be
    the ability to assess the true results of current practice in the VA
    CSP, and, potentially, other systems. Cooperative Studies Program
        Enhancing the Quality of Informed Consent (EQUIC)CSP# 476, Palo
    Alto.
    VA utilization and survival rates
        An observational study focusing on nine medical conditions examined
    patient utilization and survival rates during a three-year period that
    included a major VA organizational shift from inpatient care to
    ambulatory care. Results of the study indicate improved access to
    outpatient services. While inpatient care dramatically declined and
    utilization of outpatient care increased (except urgent care), survival
    rates improved or remained the same. Thus, the major reorganization of
    the VA health care system during the 1990s does not appear to be
    associated with any deterioration in patient survival rates. Study
    findings also showed an unexplained geographic variation in both
    utilization and outcome rates across all 22 VA health care networks
    that warrants further research to ensure equal care and accessibility
    for veteran patients across the country. Health Services Research and
    Development
        Ashton C, Petersen N, Souchek J, Menke T, Collins T, Wray N.
    Changes in mortality, utilization, and quality in the Veterans Health
    Administration 1995-97, HCQCUS Technical Report 00-01. January 2000.
    Community-based outpatient clinics provide equal care
        Between 1995 and 2000 VA opened 242 new Community Based Outpatient
    Clinics (CBOCs) to allow more convenient access to care for veteran
    patients. A CBOC may be a VA operated clinic or VA-funded/reimbursed
    health care facility that is separate from the main VA medical
    facility. A study evaluated the performance of CBOCs including the
    provision of preventive and other health care, as well as patient
    access to care, utilization, cost and satisfaction.
        Findings showed that on most measures CBOCs' performance was
    equivalent to their affiliated VA medical center, while on average, the
    total cost of health care was considerably lower for CBOC patients.
    Study results also indicate a few areas that warrant attention, such as
    CBOCs having fewer eye examinations for patients with diabetes and
    higher cost per primary visit, fewer specialty visits, and fewer
    hospitalizations on average for all patients. This study will help VA
    continue to develop more effective, inclusive and accessible health
    care at the many CBOCs located across the country. Health Services
    Research and Development
        Chapko MK, Hedeen A, Maciejewski M, Fortney J, Borowsky SJ
    (Management Decision and Research Center, HSR&D, Dept. of Veterans
    Affairs). CBOC Performance Evaluation: Program Implications and Future
    Performance Measures. Report No.1. March 1, 2000.
        Maciejewski M, Hedeen A, Chapko MK, Fortney J, Borowsky SJ.
    (Management Decision and Research Center, HSR&D, Dept. of Veterans
    Affairs). CBOC Performance Evaluation: Performance Report 2: Cost and
    Access Measures. Report No.2. March 1, 2000.
    Clinical guidelines reduce pressure ulcer rates in nursing homes
        Pressure ulcers are a common medical problem associated with
    considerable morbidity, particularly for patients with long-term care
    needs such as those in nursing homes. Practice guidelines on the
    prevention of pressure ulcers have been widely disseminated, and these
    guidelines have been successfully implemented in some VA nursing homes.
    Investigators studied 36 VA nursing homes to identify how these
    facilities accomplished successful implementation so that pressure
    ulcer care may be improved system-wide. Findings show that
    organizational features that promote the implementation of clinical
    guidelines include a culture that promotes innovation and teamwork. A
    trend toward lower rates of pressure ulcer development was associated
    with quality improvement implementation. Information from this report
    assists VA in taking the appropriate actions to increase the adoption
    of clinical guidelines that result in improved patient care. Health
    Services Research and Development
        Berlowitz DR, Bezerra HQ, Brandeis GH, Kader B, Anderson JJ. Are we
    improving the quality of nursing home care? the case of pressure
    ulcers. Journal of the American Geriatrics Society, 48(1):59-62,
    January 2000.
        Berlowitz DR, Hickey EC, Young G, et al. Improving nursing home
    care: importance of organizational culture and continuous quality
    improvement implementation. Abstract presented at the HSR&D Service
    18th Annual Meeting, March, 2000. Washington, D.C.
    Computerized reminders improve physicians compliance with care
            standards
        VA researchers have found that computer prompts improve physician
    compliance with outpatient care standards. This large-scale study
    examined the effects to prompt physicians to follow a specified
    standard of care. Records were examined from 275 resident physicians at
    12 VA Medical Centers with a total of 12,989 patients. Overall, doctors
    who received computerized reminders (CRs) had higher rates of
    compliance for all standards of care.
        Researchers selected 13 standards of care that would be widely
    accepted and could be implemented using the existing hospital database.
    Standards of care focused on patient conditions, such as coronary
    artery disease, hypertension, diabetes, atrial fibrillation, myocardial
    infarction, and gastrointestinal bleeding. A computerized software
    program was developed to download the information obtained from
    patients' visits during this study and compared it to the hospitals'
    prescribed treatments and prescriptions. The program then determined
    whether the participants received proper care.
        Although the study indicates the computer reminders improve
    compliance with multiple standards of care, enthusiasm and use of the
    CRs declined during the study. The authors noted that one possible
    explanation for this decrease may be that competing demands on the
    residents' time in busy clinics lead to neglect of CRs over time.
    Further research is needed to study causes of the physicians' decrease
    in use of the computerized reminders and ways to keep compliance at a
    high level. Health Services Research and Development
        Demakis JG, Beauchamp C, Cull WL, Denwood R, Eisen SA, Lofgren R,
    Nichol K, Woolliscroft J, Henderson WG. Improving residents' compliance
    with standards of ambulatory care: results from the VA Cooperative
    Study on computerized reminders. Journal of the American Medical
    Association, 283(11):1411-6, September 20, 2000.
    Surgical quality at VA improves since implementation of NSQIP
        The quality of surgical care at VA hospitals has improved
    significantly since the inception of the National VA Surgical Quality
    Improvement Program (NSQIP), a collaborative effort of HSR&D and VA's
    Office of Quality Management. The 30-day mortality rate after major
    surgery was found to decline by nearly 10 percent. The rate of
    postoperative complications decreased by 30 percent.
        Better surgical and anesthesia techniques, improved supervision of
    residents in surgical training, and improvements in technology and
    equipment have contributed to VA's progress in surgical care. The NSQIP
    has been instrumental in identifying ways to improve surgical care. The
    project researchers gathered data from 123 VA medical centers on
    patient-specific factors that affected post-surgical mortality and
    morbidity. These data enable the researchers to differentiate high-
    quality from low-quality facilities and to identify best practices to
    improve care. NSQIP researchers also studied functional outcomes of
    veterans who undergo major surgery in urology and orthopedics in 14 VA
    medical centers. They also collaborated with four affiliated academic
    health centers to implement the NSQIP at non-VA hospitals. Health
    Services Research and Development
        Daley J, Forbes M, Young G. et al. Validating risk-adjusted
    surgical outcomes: site visit assessments of process and structure.
    Journal of the American College of Surgeons, 185(4):341-51, October
    1997.
        Khuri SF, Daley J, Henderson W, et al. The National Veterans
    Surgical Risk Study: a risk adjustment for the comparative assessment
    of the quality of surgical care. Journal of the American College of
    Surgeons, 180(5):519-31, May 1995.
    Study shows black patients admitted to VA hospitals have lower
            mortality rates
        Study results indicate that black patients admitted to VA hospitals
    with common medical diagnoses have lower mortality rates than white
    patients. This study, using data provided by VA's Health Services
    Research and Development Service Center for Quality of Care and
    Utilization Studies in Houston, examined racial differences in
    mortality among more than 35,000 patients admitted to 147 VA hospitals.
    Thirty-day mortality rates for patients who were admitted with one of
    six common medical diagnoses (pneumonia, angina, congestive heart
    failure, chronic obstructive pulmonary disease, diabetes, and chronic
    renal failure) were compared. Study findings show that 30-day mortality
    was lower among blacks than whites for each of the six medical
    diagnoses, and that black patients also had lower in-hospital and 6-
    month mortality rates. This survival advantage is not readily
    explained, however it may reflect the benefits of equal access to
    health care and the quality of inpatient treatment at VA medical
    centers. Health Services Research and Development
        Jha AK, Shlipak MG, Hosmer W, Frances CD, Browner MS. Racial
    differences in mortality among men hospitalized in the Veterans Affairs
    Health Care System. Journal of the American Medical Association,
    285(3):297-303, January 17, 2001.

        Question. What is the success rate of VA research applications? How
    does the VA success rate compare to other federally supported
    biomedical research programs?
        Answer. In fiscal year 2000, VA approved for funding 25.8 percent
    of all research proposals. The overall approval rate for research
    grants at the 27 institutes and centers of the National Institutes of
    Health was 32 percent in fiscal year 2000. The National Science
    Foundation approved for funding 29 percent of all research proposals
    for biological sciences.
                                va construction
        Question. The Independent Budget (IB) has made a major issue this
    year of the steep decline in Major and Minor Construction budgets. The
    IB notes that despite the ongoing efforts to realign VA facilities
    through the CARES process, the need for maintenance and renovation has
    steadily grown. The IB states, ``The poor condition of many VA
    properties limits the options available for constructive realignment
    and devalues assets that might otherwise be converted to more effective
    uses.'' If you could set your own level of construction dollars, where
    would you begin to make your investments in the infrastructure of the
    system?
        Answer. The VA health care system will require larger construction
    budget requests in the future to not only implement CARES decisions,
    but to correct seismic safety concerns, and provide for an orderly
    reinvestment in the system's infrastructure. These investment decisions
    will come after careful consideration of the options available to meet
    VHA's several missions. A system as large as VHA's cannot maintain
    quality and productivity over time without appropriate recognition of
    the need for infrastructure improvements. While the pace of change has
    slowed somewhat as an impediment to supporting major construction, VHA
    is now beginning the CARES process. CARES studies will bring another
    set of changes but will also provide a more settled picture of the
    future need for VHA facilities. The CARES studies are underway and are
    expected to identify options for reengineering VHA's physical
    infrastructure. Implementing these options will require major
    construction funding in many instances. However, VA has ongoing
    infrastructure needs that cannot be ignored, such as major seismic
    corrections and safety issues (e.g., Miami, Florida--electrical and
    hurricane deficiencies). The absence of a completed CARES study should
    not prohibit funding of a major project, but certainly careful analysis
    must be accomplished before making such a proposal. VA has significant
    seismic and life safety deficiencies that must be addressed. Many of
    those projects are at facilities that will not be affected by CARES
    studies.
        Question. What are your most immediate needs? What would be your
    long-term goals?
        Answer. The attached report is submitted in accordance with Title
    38 USC, Section 8107 (d)(1), (2), and (3). The report identifies the
    major medical construction projects that have the highest priority
    within the Department of Veterans Affairs (VA). The report was sent on
    April 26, 2001 to the following: Honorable C.W. Bill Young, Honorable
    David Obey, Honorable Arlen Specter, Honorable Barbara A. Mikulski,
    Honorable Alan B. Mollohan, Honorable John D. Rockefeller, IV,
    Honorable James T. Walsh, Honorable Robert C. Byrd, Honorable
    Christopher S. (Kit) Bond, Honorable Lane Evans, Honorable Christopher
    H. Smith, Honorable Bob Filner, Honorable Jerry Moran, Honorable Ted
    Stevens.

                                                DEPARTMENT OF VETERANS AFFAIRS PRIORITY MAJOR MEDICAL CONSTRUCTION PROJECTS--FISCAL YEAR 2001 PRIORITIES
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                       Construction    Non-Recurring     Recurring
               Medical Center                                       Project Title                                    Project Category          Score       Costs           Costs       Annual Costs
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Miami, FL \1\......................  Hurricane and Flood Addition.......................................  General.......................    .270     $28,000,000      $7,100,000    $177,250,000
    Palo Alto, CA......................  Seismic Improvements (NHCU)........................................  Seismic.......................     628      26,600,000       1,200,000      14,500,000
    San Diego, CA......................  Seismic Corrections, Building 1....................................  Seismic.......................     504      35,600,000             N/A     238,000,000
    West LA, CA........................  Seismic Correction.................................................  Seismic.......................     503      27,600,000       1,300,000      89,310,000
    San Francisco, CA..................  Seismic Correction.................................................  Seismic.......................     497      29,400,000       1,900,000      77,500,000
    VISN 6 \2\.........................  Special Emphasis Beds..............................................  Patient Environment...........     455      28,900,000       1,800,000      46,300,000
    Palo Alto, CA......................  Seismic Correction, Bldg. 2........................................  Seismic.......................     437      11,100,000             N/A      17,400,000
    Cleveland, OH......................  Brecksville--Renovate Buildings for Special Emphasis Programs......  Patient Environment...........     419      43,000,000       7,400,000      19,900,000
    Dallas, TX.........................  Mental Health Enhancement..........................................  Ambulatory Care...............     395      27,600,000       3,200,000      16,000,000
    Lebanon, PA........................  Patient Care Renovation............................................  Patient Environment...........     286      10,600,000             N/A       2,600,000
    Pittsburgh, PA.....................  Ambulatory Care/Research/Parking...................................  Ambulatory Care/Research......     280      52,600,000             N/A             N/A
    Butler, PA.........................  Extended Care & Rehabilitation.....................................  Ambulatory Care...............     268      36,900,000       1,500,000      12,100,000
    Atlanta, GA........................  Modernize Patient Wards............................................  Patient Environment...........     264      12,800,000      12,275,000      50,000,000
    Long Beach, CA.....................  Seismic Correction/Clinical........................................  Seismic.......................     255      51,700,000       3,700,000       4,000,000
    Syracuse, NY.......................  Clinical Expansion & MRI...........................................  Ambulatory Care...............     232       4,700,000       5,600,000             N/A
    St. Louis, MO......................  Raised Parking Structure...........................................  Parking.......................     208       6,844,000             N/A         220,000
    Tampa, FL..........................  Parking Structure..................................................  Parking.......................     205      13,900,000          30,000         610,000
    Charlotte, NC......................  Satellite Outpatient Clinic........................................  Ambulatory Care...............     193      17,449,000       1,500,000       5,100,000
    Tampa, FL..........................  Ambulatory Care Expansion..........................................  Ambulatory Care...............     189      12,000,000       3,300,000             N/A
    Washington, DC.....................  Clinic Expansion...................................................  Ambulatory Care...............     181      20,800,000       3,415,000      21,913,000
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ The Miami project is an emergency, caused by an accident that destroyed major switchgear and is considered VHA's top priority.
    \2\ The VISN 6 project represents a new approach to accomplish environmental improvements on special emphasis program wards within the Network. The Department supports this Network-wide
      strategy and the project follows the General Accounting Office's (GAO) recommendation on market-based planning. Addressing the work as minor and non-recurring maintenance category projects
      would require ten minor and twenty NRM projects, would cost approximately $45 million, and would encumber the Network's minor/NRM budget for 17 years. The consolidated approach saves
      approximately $16 million and obviates a long period of disruption for the Network and VAMCs. The improvements are based on Network-wide assessment and on systematic distribution of
      workload.

                                veterans claims
        Question. Do you have sufficient resources and funding to contend
    with the enormous claims backlog and the additional claims processing
    burden resulting from the ``duty to assist'' legislation and the recent
    decision on diabetes?
        Answer. Recent legislation, especially the expanded duty-to-assist
    threshold resulting from the Veterans Claims Assistance Act of 2000
    (VCAA), has had a significant impact on our work processes. The impact
    reaches far beyond the 98,000 claims previously denied under the
    provisions established in the Morton v. West case. All 250,000 claims
    for disability benefits that were pending as of the date of VCAA
    enactment (November 9, 2000), as well as any new claims for disability
    benefits, must be developed and evaluated under the expanded procedures
    required under the law. We estimate that the time to develop and
    evaluate a case has increased by 25 percent as a result of this
    legislation. The expanded presumptive provisions for Agent Orange
    related disabilities to include service connection for diabetes is also
    having a significant impact on VBA workloads. Approximately 35,000 of
    these claims were pending at the time of the regulatory change, which
    became effective July 9th. VBA projected 125,000 additional claims
    during fiscal year 2001 and fiscal year 2002 as a result of this
    regulatory change.
        VBA is addressing these workload challenges by authorizing field
    stations to hire significantly above their fiscal year 2001 funding
    levels. VBA hired 800 additional employees this fiscal year in response
    to these challenges. VBA will use the $19 million transfer from the
    Medical Care account to support this hiring and training initiative by
    restoring funding to initiatives that had previously been suspended to
    support the hiring.
        While the impact of these legislative and regulatory changes
    continues to affect VBA inventories, the supplemental funding has
    allowed VBA to hire resources earlier than previously would have been
    possible. The fiscal year 2002 funding level will support these
    increased staffing levels and allow VBA to continue the progress it has
    started. It is currently projected that inventories will continue to
    climb until the newly hired employees complete training and begin to
    attain minimal levels of productivity.

                              SUBCOMMITTEE RECESS

        Senator Bond. The hearing is recessed.
        [Whereupon, at 11:40 a.m., Wednesday, May 2, 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 2002

                                  ----------

                             WEDNESDAY, MAY 9, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:05 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Christopher S. Bond (chairman)
    presiding.
        Present: Senators Bond, Burns, Shelby, DeWine, Mikulski,
    and Johnson.

                 NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

    STATEMENT OF DANIEL S. GOLDIN, ADMINISTRATOR
    ACCOMPANIED BY:
            MALCOLM L. PETERSON, COMPTROLLER
            SAM VENNERI, ASSOCIATE ADMINISTRATOR FOR AEROSPACE TECHNOLOGY

                opening statement of senator christopher s. Bond

        Senator Bond. Ladies and gentlemen the hearing of the
    Senate VA, HUD, and Independent Agencies Appropriations
    Subcommittee will come to order.
        My colleague and essential partner in this effort, Senator
    Mikulski, is on the floor working a vote on her amendment. She
    has asked that we go ahead. She did give me a promise she will
    read my statement, and I promised I would read hers. But we
    will proceed because of the time constraints.
        The subcommittee meets today to review the fiscal year 2002
    budget request of the National Aeronautics and Space
    Administration. It is a pleasure to welcome Daniel Goldin,
    NASA's Administrator, and his staff.
        Normally I would talk about how much I look forward to the
    annual NASA budget hearing because I am struck by the wonder of
    the universe for which NASA is our gatekeeper and guide and by
    the heroic astronauts who are leading us in the exploration of
    the last true frontier--the universe. I am excited about NASA,
    its mission, its people, and the wonders of the universe.
        Unfortunately, I am also very disturbed by the massive cost
    overruns that have characterized the International Space
    Station, as well as a number of other NASA missions and
    activities. I am discouraged particularly by the Space Station
    which has grown in cost from an initial cost estimate of some
    $17.4 billion to a current assembly cost of more than $26
    billion and growing. The overall cost, when you include
    operational costs and associated shuttle costs, could approach
    $100 billion.
        These funding overruns are a decision making problem which
    could be characterized as a matter of substantial
    mismanagement. However, I believe the problem can be more
    accurately described as management by optimism. I believe and I
    know that NASA means well and wants and believes it can deliver
    its missions and activities both on time and on budget.
    Unfortunately, management by optimism is founded on flawed
    assumptions.
        Nevertheless, even management by optimism is no excuse for
    the sudden disclosure by NASA in February of another $4 billion
    in cost growth and cost overruns for the International Space
    Station. NASA needs to get control of this program and be in a
    position to advise and warn the Congress of both problems in
    the program and any costs associated with these problems. Not
    only has the ISS grown astronomically to a current cost of some
    $26 billion plus, but these additional costs of $4 billion have
    resulted in the suspension of certain key elements that must be
    considered critical to the success of the station as a world-
    class on-orbit science platform.
        At a minimum, the decision by the administration to suspend
    the Habitation Module and the Crew Return Vehicle because of
    these costs overruns means that no science research can be
    effectively conducted on the International Space Station. The
    lack of either the Habitation Module or the Crew Return Vehicle
    will mean that only three crew members can be housed on the
    station at any one time. Even NASA admits it takes two-and-one-
    half crew members to operate the station. Moreover, each of the
    suspended ISS elements have left the United States and the
    other partner nations at the mercy of Russia, which now
    controls the availability of emergency escape vehicles through
    the Soyuz escape vehicle.
        Russia has already demonstrated its willingness to act
    unilaterally without the support of the other partner nations
    in making decisions with regard to the ISS by demanding, just
    in the last few weeks, that the United States and the other
    partner nations accept the presence of a paying tourist to the
    station. Russia made this demand despite the inherent risk that
    this tourist poses to the current crew who are even now
    assembling the station while living in a very hostile and
    deadly environment.
        I want to be clear that I support the decision of the
    administration to suspend these ISS elements until we gain
    control of the costs associated with the International Space
    Station and NASA is able to provide a real budget by which it
    can live. We cannot afford to let NASA programs grow unchecked.
    Now is the time for NASA to get control of the budget for all
    its missions and research projects. NASA needs to move beyond
    management by optimism. I know that NASA wants to do the right
    thing. It believes that it can succeed in making the ISS and
    its many other missions and activities a success.
        Unfortunately, management by optimism has not worked and I
    urge you to look to management through credibility and
    realistic cost projections. If the United States ever wants to
    go to the moon again, to Mars, and to the stars, NASA needs to
    provide us with a road map that makes sense and is one that we
    know we can afford. This is, after all, rocket science and NASA
    needs to find a way to inform Congress of the real costs of a
    mission, including a realistic reserve. Again, that cannot be
    done through management by optimism.
        I have a number of questions on the ISS and the nature of
    the station overruns, as well as the options for completing the
    station as a working science lab. I also have questions about
    the reports about computer programming glitches, loud noise
    levels, vibrations aboard the station, and I am also concerned
    about the status of the Space Launch Initiative which I believe
    is critical to the development of new space launch technologies
    for cheaper access to space.
        With that, let me turn to my colleagues for their opening
    statement, on this side of the podium, Senator Johnson.

                        statement of senator tim Johnson

        Senator Johnson. Well, thank you, Mr. Chairman. I know that
    our ranking member was tied up on the floor with a vote on ESEA
    this morning.
        I would simply welcome Mr. Goldin and thank him for his
    some 9 years of service to NASA. I appreciate his testimony
    today. I look forward to his testimony and the questions from
    the committee.

                               prepared statement

        I will simply submit my opening statement for the record,
    Mr. Chairman.
        Senator Bond. Without objection, it will be so accepted.
        [The statement follows:]

                   Prepared Statement of Senator Tim Johnson

        Chairman Bond, Ranking Member Mikulski, and other members of the
    subcommittee, I want to thank Daniel Goldin for his outstanding service
    throughout his nine years as director of the National Aeronautics and
    Space Administration (NASA). When you think of NASA activities, South
    Dakota does not necessarily jump off the map, as does Florida,
    California, or Texas. We do however have a few NASA projects and
    aerospace related programs in South Dakota that I would like to briefly
    touch upon this morning.
        I was pleased to note in Mr. Goldin's testimony that there is an
    effort to improve space related education and training programs. These
    programs will encourage today's youth in pursuing opportunities in the
    ever changing space fields. South Dakota for one has been changing to
    meet the demands of tomorrow's science and technology agenda.
         skill--scientific knowledge for indian leadership and learning
        The South Dakota School of Mines and Technology in Rapid City
    houses the Scientific Knowledge for Indian Leadership and Learning
    (SKILL) Program. Rapid City is home to the largest Native American
    population per capita, then any other city in the United States with a
    population of over 30,000. This program is vitally important to the
    shape of tomorrow's Native American Leaders.
        In a time when it is extremely difficult to retain and recruit
    Native American students to mainstream institutions of higher learning,
    South Dakota School of Mines and Technology is quite successful. Of the
    29 Native students currently enrolled in this program, 18 students are
    pursuing degrees in Science, Mathematics or Engineering. These are
    fields where there is an enormous dearth of Native American leadership.
    Additionally, of the 74 students who have participated in the SKILL
    program the average grade point average was an extraordinary 3.75, and
    ACT scores were more then double the national average of 9 for American
    Indians at an estimated 18.7.
        This program has demonstrated year after year that they are
    providing Native American students the access to the sciences and space
    related academics they would have ordinarily not have the means to
    study in great depth.
                                     epscor
        South Dakota's major research institutions, technology firms, and
    governmental agencies have collectively been working on ways in which
    to make South Dakota a more attractive and competitive area for space
    research and technology development. Over the past two years,
    scientists and researchers have been working on approaches to promote
    the space science research and made technology improvements to ensure
    that South Dakota is a viable candidate for space science research and
    development.
                                eros data center
        Rapid City is not only connected to Sioux Falls by Interstate 90,
    but it is also connected by the stream of technology shared by both
    cities. Sioux Falls, South Dakota is home to the Earth Resources
    Observation Systems (EROS) Data Center. The Data Center has been
    directly involved with the NASA-EPSCoR Program. This Data Center is a
    part of the U.S. Geological Survey within the Department of the
    Interior. However, I feel that it is worth mentioning in this forum, as
    it is intimately involved in the planning and development of South
    Dakota as a haven for space science research.
        The EROS Data Center houses most of the mapping data that exists in
    the United States. Additionally, the United Nations Environmental
    Programme is looking to use this world-wide data as a source of land
    use survey data in developing nations or less reliable in data
    collection and dissemination. This is vitally important to many of the
    endangered species, as well as, the overall health of the world.
        When the general public thinks of NASA and its functions, it
    generally thinks of the Human Flight Program, or the Mars Mission. This
    is an important part of NASA's mission, however, it is not NASA's only
    function. I would hope that you would continue to support all of the
    functions NASA has, especially the research, training, education, and
    data collection programs.
        I look forward to receiving Mr. Goldin's testimony, and especially
    look forward a productive relationship in the future. Thank you Mr.
    Chairman, and members of this committee.

                       statement of senator conrad Burns

        Senator Bond. Senator Burns.
        Senator Burns. Thank you, Mr. Chairman. I am going to put
    my statement in the record also.
        Senator Bond. Without objection, it will be accepted.
        Senator Burns. I just want to make a couple of points.
        We hear the clamor and the din on overruns and this type
    thing, but I think when you compare what NASA has done, the
    impact that it has had on this country, I would probably say
    that the overruns percentage-wise are not any more in NASA than
    they are in any other sector of Government that has less risk
    or deals with more of the unknown. After all, we are talking
    about a frontier and we are talking about a lot of unknowns out
    there. Of course, it lends itself naturally to cost more in
    some places and less in others.
        So, I am still very hopeful that we can continue the
    reusables of our X-33, the shuttle fleet. I think the reusables
    are necessary because we have got to lighten our expense in
    that area. But I sometimes think we fall under a lot of
    criticism because this is a science and we are dealing with
    unknowns, and so the costs sometimes is hard to understand and
    to justify.
        But nonetheless, from what I have seen in NASA, since I
    have been in the Congress, has been forward-looking. Sure, they
    have made some mistakes along the way, but anytime that you
    deal with an unknown, I want to see somebody that has got a
    perfect record.
        Thank you.
        Senator Bond. Thank you very much, Senator Burns.
        We will now turn to Senator Shelby.

                     statement of senator richard c. Shelby

        Senator Shelby. Mr. Chairman, I ask that my entire written
    statement be made part of the record.
        Senator Bond. Without objection, it will be.
        Senator Shelby. I just want to welcome Mr. Goldin and look
    forward to his testimony. I will have a number of questions.
        Thank you.
        Senator Bond. Senator DeWine.

                        statement of senator mike Dewine

        Senator DeWine. Mr. Chairman, thank you very much. Let me
    thank you for holding this hearing.
        As one of the newest members of the subcommittee, Mr.
    Goldin, I welcome you here. Good to be here with you.
        Over the past 60 years, the Glenn Research Center, along
    with its industry partners, have taken small investments by
    NASA and turned them into huge developments, yielding billions
    of dollars in benefits for our U.S. economy. This work is
    really getting to be recognized. In fact, last September, the
    R&D Magazine named three research teams based at Glenn as
    winners of its R&D 100 Award. According to an article published
    in the March 2001 edition of Continental magazine, the R&D 100
    Award is ``known with in the industry as the `Nobel Prize' of
    applied research.'' Moreover, since the early 1960's, Glenn
    researchers have claimed nearly 80 of the 110 R&D 100 Awards
    given to NASA projects.
        Federal involvement has been key to getting things done at
    NASA Glenn. Their activities are high-risk, high-reward, long-
    term research projects that private industry simply does not
    have the wherewithal nor the funding in which to engage. The
    fact is that the investments that our Federal Government makes
    in this research yield billions of dollars to the economy
    through new employment opportunities and spin-offs.
        Mr. Chairman, let me just make this a part of the record. I
    know we want to get to the questions of Mr. Goldin. I just want
    to say that we appreciate his being here. I look forward to
    having the opportunity to ask questions. I would ask unanimous
    consent, Mr. Chairman, that my full statement be made a part of
    the record.
        Senator Bond. I would be happy to do so.
        [The statement follows:]

                   Prepared Statement of Senator Mike DeWine

        Thank you Chairman Bond and Ranking Member Mikulski for holding
    this important hearing today. And, thank you, Administrator Goldin, for
    joining us to discuss NASA's fiscal year 2002 budget proposal. As one
    of the newest members of this Subcommittee, I welcome you to this
    hearing and look forward to discussing the important issues facing the
    NASA budget, and in particular, the vital work being done in my home
    state of Ohio at the Glenn Research Center (GRC) at Lewis Field in
    Cleveland.
        Over the past 60 years, the Glenn Research Center, along with its
    industry partners, have taken small investments by NASA and turned them
    into huge developments, yielding billions of dollars in benefits for
    our U.S. economy. GRC's work is getting recognized.
        In fact, last September, R&D Magazine named three research teams
    based at Glenn as winners of its ``R&D 100 Award.'' According to an
    article published in the March 2001 edition of Continental magazine,
    the R&D 100 Award is ``known within the industry as the `Nobel Prize'
    of applied research.'' Moreover, since the early 1960's, ``Glenn
    researchers have claimed nearly 80 of the 110 R&D 100 Awards given to
    NASA projects.''
        Federal involvement has been key to getting things done at NASA
    Glenn. Their activities are high-risk, high-reward, long-term research
    projects that private industry simply does not have the wherewithal nor
    the funding in which to engage. The fact is that the investments our
    federal government makes in this research yield billions of dollars to
    the economy through new employment opportunities and spin offs. But,
    despite the considerable payoffs, over the past decade, NASA seems to
    have lost sight of its role in this regard.
        Part of the problem are the overruns in the cost of construction on
    the International Space Station (ISS). As a result, the ISS now
    threatens to erode the U.S. technological edge in the aerospace
    industry. What is happening is that vital, long-term research done at
    NASA centers, such as the Glenn Center, is being ignored because of
    short-term funding problems with the ISS. If I may use a euphemism from
    my agricultural background, NASA is essentially ``eating its seed
    corn.''
        Mr. Chairman, I want to focus my opening statement on the ISS
    example, though candidly, there are many other examples I could cite.
    In 1984, when the Space Station program was initiated, it was supposed
    to be built within ten years, at a cost of $8 billion. By 1993,
    however, the United States had spent a total of $10 billion on the
    Space Station. Eventually, the first hardware for ISS was launched, and
    we are beginning to see some progress. This progress has not come
    without increased costs. In 1996, NASA estimated that the Space
    Station's total cost would rise to $17.4 billion with a completion date
    in 2002. Last year, the total cost estimate increased to $24 billion
    with a completion date in 2005. This year, the cost increased to $28
    billion.
        Over the years, Mr. Chairman, I have consistently supported the
    Space Station because I recognize the importance of research in the
    microgravity environment. I believed in and shared Administrator
    Goldin's vision for performing break-through research in basic
    fundamental sciences, such as combustion science, fluid physics,
    materials, and others. But, this year's budget threatens to end the
    combustion program and cripple the fluids research program. This could
    have a very real and a very devastating impact on NASA Glenn.
        According to the International Space Station Research Plan, the
    combustion research program is critical to understanding basic
    fundamental aspects of combustion. This research has tremendous
    potential benefits to fire safety, transportation, energy production,
    and a variety of other industrial processes. Given the current energy
    situation in the United States, it would seem prudent that we place a
    greater emphasis on combustion research--not eliminate it.
        My point is this--after 18 years of building the Space Station--
    something we were promised would provide breakthrough research--we are
    finally ready to realize the promise. The ISS Destiny Lab Module, which
    was to accept the Fluids and Combustion facility as one of its first
    payloads, sits empty, waiting for research hardware. The irony is that
    the facility, itself, is now being threatened by budget cuts so that
    construction can continue on the Space Station.
        What makes matters even worse is that the Fluids and Combustion
    facility has great promise for our nation. The fluid and combustion
    research programs are very far along in the design of their hardware.
    The facility has won numerous prestigious awards from NASA, including
    the NASA Software of the Year Award in 1998, the R&D 100 Award in 1999,
    the Award for Excellence in Technology Transfer in 2000, and NASA's
    Continuous Improvement Award in 2000.
        I understand that NASA must prioritize its budget. However, it is
    absolutely incomprehensible to me that NASA would even consider
    eliminating the Fluids and Combustion facility--a facility that is
    performing research vital to our nation--a facility whose research has
    broad-based applications to many areas of science and our economy--a
    facility that is performing the type of research that NASA promised
    when the Space Station was sold to Congress and the American people--
    and finally, a facility that has an award-winning design that is, and
    this is rare for NASA and particularly the Space Station, on-budget and
    on-schedule. This just doesn't make sense to me.
        I look forward to hearing from Administrator Goldin about this.
    And, I am hopeful that he can explain to me the reasoning behind its
    proposed budget cuts affecting NASA Glenn.
        Again, thank you for holding this hearing and being here today.

                   introductory of Senn high school students

        Senator Bond. I have been advised by staff that we should
    welcome students from the Senn High School in Chicago,
    Illinois. The students are accompanied by Ms. Kathy Khoshaba,
    their instructor and the sister of Mary D. Kerwin, who is our
    primary legislative liaison with NASA and who always goes the
    extra mile to do a good job. Like the partners of the
    International Space Station, these students represent the
    international community, having come from Mexico, Morocco,
    Vietnam, Kosovo, Ecuador, and Romania. Would you all please
    hold up your hands in the back?
        We are delighted to welcome you here and hope that you find
    this of interest and of use.
        With that, I will now turn to the opening statement of Mr.
    Goldin. Welcome, Dan.

                    statement of administrator daniel Goldin

        Mr. Goldin. Thank you, Mr. Chairman. I am pleased to appear
    before the subcommittee to outline NASA's 2002 budget request.
        With your permission, I would like to share with you a
    brief video that depicts NASA's recent achievements and a look
    at where we believe technology will take us in the not too
    distant future.
        Senator Bond. I would be happy to do so.
        [Video shown.]
        Mr. Goldin. Mr. Chairman, I would like to say what a
    privilege it is to lead NASA. Our work is filled with
    challenges and opportunities to achieve truly remarkable goals.
    Although problems make headlines, NASA can point with pride to
    improving shuttle safety while routinely meeting 5-minute
    shuttle launch windows and reducing shuttle operating costs 30
    to 40 percent. Since 1992, NASA has launched 59 spacecraft, 58
    payloads, and 51 shuttles, for a total of 168 missions. Of
    that, 158 were successes, 10 were failures. It represents a $22
    billion investment in spacecraft and payloads with only a half
    billion dollar loss due to failures. Not bad. We have shorter
    cycle times, spacecraft that cost a fraction of previous
    missions, a bright future with Space Station as a new star in
    the sky, and an amazing array of at least 60 spacecraft to be
    launched in the upcoming years.
        The NASA team has turned budget pressures to an advantage,
    and to them I say, job well done. They are one of the few
    agencies in Government who have lived with a flat budget for
    almost a decade. And we intend to apply that same can-do
    attitude to resolving your concerns about the Space Station
    budget challenge.
        The administration's fiscal year 2002 request for NASA is a
    solid and business-like budget. The request of $14.5 billion
    equates to an increase of 2 percent, or $258 million, over the
    fiscal year 2001 enacted level. It represents a deliberate
    prioritization of efforts within each of our five strategic
    enterprises so as to live within our means.
        It provides a disciplined budget plan for station
    development and operations, consistent with a strategy of
    offsetting cost growth through budget reductions in station
    hardware and other human space flight programs. I will expand
    upon significant management reforms and budget restructuring
    underway to bring station costs under control in a moment. The
    budget also provides ongoing support to fly the shuttle safely,
    while calling for a prioritization of safety upgrades and
    infrastructure improvements and further privatization of Space
    Shuttle activities.
        It is noteworthy that the budget reflects a NASA investment
    in science and technology that is 42 percent of the total
    budget, up from 31 percent in 1991, and targeted to reach 51
    percent by 2006. This investment in the future not only allows
    us to open up the space frontier, but also helps fuel our
    economy and maintain U.S. leadership and competitiveness in the
    global economy.
        In space science the budget contains additional funds for a
    more robust Mars robotic exploration program and advanced in-
    space transportation technologies. It continues the ``Living
    With a Star'' Program and solves development funding problems
    in SIRTF and Gravity Probe-B through elimination of several
    lower priority programs.
        In earth science, the budget provides for the completion of
    the first series of 12 Earth Observing Systems and Earth Probe
    missions and 8 next-generation missions. The development of
    EOSDIS is nearly complete and it performed spectacularly. After
    1 year of operation, the EOS satellites launched thus far have
    doubled our holdings on earth science data. Saying it another
    way, we have collected more data in the past year than in the
    whole history of the space program due to the outstanding
    performance of EOSDIS.
        In aerospace technology, we are designing programs that
    address public needs and revolutionary leap-frog technologies.
    The public needs include improvements in aviation safety, noise
    reduction, emission reduction, mobility of people and goods,
    increased capacity of our airspace, and greatly improved
    reliability and safety for earth-to-orbit launch vehicles,
    coupled with improved mission effectiveness, which will yield
    dramatically reduced costs for space launch systems. The
    revolutionary leap-frog technologies we are focusing on include
    information systems, nanoscale materials, and biologically-
    inspired systems, all vital to our future, as you saw in that
    video.
        This budget fully funds the Space Launch Initiative. Our
    challenge is clear: by developing technologies to be realized
    in new launch vehicles, the improved safety and lower cost of
    access to space could enable new civil and defense applications
    and commercial markets for space, hopefully justifying U.S.
    commercial investment in developing future launch systems.
        Finally, let me bring you up-to-date on our process of
    rebaselining the Space Station. We are moving methodically to
    address the budget and configuration issues and to ensure the
    criteria of the President's budget blueprint are met. The
    program level review of management and budget actions will come
    to closure near the end of this month. We will soon issue an
    ISS program management action plan that will describe
    management actions already implemented, including the temporary
    assignment of program management responsibility from the
    Johnson Space Center to NASA headquarters, and actions to be
    implemented in the near term to improve cost projection and
    management. We anticipate that the agency assessment will be
    complete by mid-summer. Then we will be positioned to initiate
    an external review of our budget reassessment. Our research
    reassessment is ongoing, the results of which will be vetted
    with external bodies by late summer.
        Consistent with the committee's recent guidance, the agency
    has processes in place and is planning near-term changes that,
    even after the program management is returned to Johnson, will
    permanently enhance the visibility of NASA headquarters into
    the station costs such as: approval of all significant
    additions to the program content and significant upgrades will
    be retained at NASA headquarters; and decisions to commit
    reserves will be made at NASA headquarters, by a joint
    headquarters/JSC review board.
        NASA, in compliance with your request, will modify its
    quarterly Space Station reports to the committee to include
    greater cost detail and is prepared to update the committee on
    a monthly basis as the rebaselining proceeds.
        The President's fiscal year 2002 budget fully supports
    requirements for U.S. Core Complete. It allows for the
    possibility of enhancements beyond U.S. Core Complete, but lays
    out conditions before any option is considered. The Space
    Station partnership has time to carefully consider decisions on
    any option for enhancement over the next several months or even
    years. We will continue to work with the administration and the
    Congress to determine the course that can be afforded within
    the budgetary guidance the administration has firmly
    articulated.
        And let me say I fully support the tough approach that
    President Bush has asked us to undertake here and we are going
    to do exactly what he asked us to do.

                               prepared statement

        Let me conclude by emphasizing that NASA remains committed
    to enabling the commercial development of space and the ISS. I
    have asked NASA's Chief of Staff, Courtney Stadd, to coordinate
    an agency-wide evaluation of commercial activities for the
    purpose of creating an enhanced commercialization strategy for
    the agency and America.
        Thank you. I will be pleased to take your questions.
        [The statement follows:]

                     Prepared Statement of Daniel S. Goldin

        Mr. Chairman and Members of the Subcommittee: I am pleased to be
    here today to present to you NASA's budget request for fiscal year
    2002.
        As I look back at the year that has just concluded, I am filled
    with pride at what the NASA team has accomplished and with excitement
    for the many challenges that still lay ahead. What a year we have had!
    NASA flew the Shuttle Radar Topography Mission, the data from which is
    now being used to produce the most accurate digital elevation model
    ever of the Earth's land surface. The Hubble Space Telescope continued
    to provide the world with breathtaking images as it unlocks the secrets
    of the universe and rewrite astronomy textbooks. The Mars Global
    Surveyor brought us detailed pictures of the surface of Mars, providing
    more clues and compelling evidence that suggests water once flowed
    freely on the planet's surface. Back on Earth, NASA researchers brought
    a pulse of light to a complete stop, held it in place, and then were
    able to activate the light pulse again; this achievement has
    significant ramifications for new technologies in computing and
    communications. Space Station assembly and outfitting continued on
    schedule with 4 Shuttle flights, including the delivery of the
    Expedition One crew, which established continuous human presence in
    space, and the deployment of the U.S. laboratory. The NASA team also
    coordinated the successful launch of 6 ELV missions, including the
    Geostationary Operational Environmental Satellite-L, the Tracking and
    Data Relay Satellite-H, the Imager for Magnetopause-to-Aurora Global
    Exploration mission, the NOAA-L weather satellite, the Earth Observing-
    1 satellite, and the Satellite de Applicaciones Cientificas-C mission.
        The Administration's fiscal year 2002 request for NASA is a solid
    and businesslike budget plan. The proposed funding level of $14.5
    billion reflects an increase of 2 percent, or $258 million over the
    fiscal year 2001 enacted level, and a 7 percent increase over fiscal
    year 2000. The budget plan represents a deliberate prioritization of
    efforts within each Enterprise, to ensure that we live within our
    means. It provides a disciplined budget plan for International Space
    Station development and operations, consistent with a strategy of
    constraining Space Station cost growth, by offsetting growth through
    budget reductions in Station hardware and other Human Space Flight
    programs. NASA will undertake significant management reforms and budget
    restructuring to bring Space Station costs under control. The
    President's fiscal year 2002 budget provides ongoing support to fly the
    Space Shuttle safely while calling for a prioritization of Shuttle
    safety upgrades and infrastructure improvements within the proposed
    budget runout. The President's budget also calls for advancing the
    privatization of Space Shuttle activities. It reflects a strong
    commitment to continued execution of the Space Launch Initiative,
    reflecting NASA's commitment to provide commercial industry the
    opportunity to meet NASA's future launch needs and to dramatically
    reduce space transportation costs while improving space transportation
    safety and reliability. It funds a more robust Mars Exploration Program
    by redirecting funding from lower priority Space Science efforts. It
    provides increased funding for science-driven, prioritized, follow-on
    missions for second-generation Earth Observing System measurements that
    will provide greater understanding of how the Earth and its climate are
    changing; this increase is accomplished by identifying offsets within
    lower priority elements of the Earth Science program.
        The President's budget also recognizes that the difficult decisions
    lie ahead. NASA is developing an integrated, long-term Agency plan that
    ensures a national capability to support NASA's mission. We will
    accomplish this by: (1) identifying NASA's critical capabilities and,
    through the use of external reviews, determining which capabilities
    must be retained by NASA and which can be discontinued or led outside
    the Agency; (2) expanding collaboration with industry, universities and
    other agencies and outsourcing appropriate activities to fully leverage
    outside expertise; and (3) pursuing civil service reforms for
    capabilities that NASA must retain, to ensure recruitment and retention
    of top science, engineering and management talent at NASA. NASA will
    also address the Agency backlog of facilities revitalization and
    deferred maintenance by repairing necessary and affordable facilities
    and by carefully phasing down the remainder. All of these tough
    decisions on the relevance of programs and facilities will require
    realistic, responsible decisions on priorities and financial
    supportability.
        It is noteworthy that the President's budget reflects a NASA
    investment in science and technology that is 42 percent of the total
    Agency budget, up from 31 percent in fiscal year 1991, and targeted to
    reach 51 percent by fiscal year 2006. Funding for NASA science and
    technology is an investment in the future and an important factor that
    helps fuel the U.S. economy and maintain U.S. leadership and
    competitiveness in the global economy. The science priorities that
    support the objectives behind the near- and long-term missions being
    pursued by our 5 Enterprises are fully consistent with NASA's Strategic
    Plan. Those priorities are identified by working with the National
    Research Council (NRC) and the NASA Advisory Committees, which make
    recommendations to NASA in critical areas of science research and
    technology development. These recommendations represent the highest
    priorities of the science community. NASA continues to coordinate its
    science programs with other Federal agencies through multiple
    mechanisms, both formal and informal.
                    overview of the fiscal year 2002 budget
        The fiscal year 2002 budget takes actions to address cost growth in
    the Space Station. To ensure that the Station program remains within
    the 5-year budget plan, the President's fiscal year 2002 budget
    redirects funding for certain elements of the program while preserving
    the highest priority goals of a permanent human presence in space,
    world-class research in space, and accommodation of international
    partner elements. The U.S. core will be complete once the Space Station
    is ready to accept major international hardware elements. The cost
    growth is offset in part by redirecting funding from remaining U.S.
    elements, particularly high-risk elements including the Habitation
    Module, Crew Return Vehicle and Propulsion Module, avoiding more than
    $2 billion in costs. In addition, funding for U.S. research equipment
    and associated support will be realigned with the on-orbit capabilities
    of the Space Station.
        The President's fiscal year 2002 budget takes action to ensure that
    the Space Station program will be within the $25 billion statutory cost
    cap when U.S. Core Complete is achieved in fiscal year 2004. How the
    cap language should apply to elements that are considered enhancements
    is an issue that we must work with the Congress. The President's budget
    also proposes a total authorization for the Space Station over a 5-year
    period as a further means to cap Station spending; this amount may be
    adjusted upward if efficiencies and offsets are found in other Human
    Space Flight programs and institutions. NASA has initiated management
    reforms for the ISS program, including transferring program reporting
    from the Johnson Space Center to NASA Headquarters until a management
    plan has been developed.
        The scope of the 104 Space Shuttle missions flown to date has
    demonstrated that the Shuttle is the most versatile launch vehicle ever
    built. This budget includes funding for safety investments, including
    additional safety upgrades and infrastructure needs that will improve
    reliability and ensure continued safe operations of the system. The
    Space Flight Operations Contract performed by Shuttle prime contractor
    continues to comprise almost one-half of the Space Shuttle budget and
    will increase in size as more contracts are consolidated.
        The fiscal year 2002 budget includes a significant increase in
    funding for the Space Launch Initiative. The Space Launch Initiative is
    a focused investment of $4.9 billion dollars between fiscal year 2001
    and fiscal year 2006 for risk reduction and technology development
    efforts for at least two competing architectures with dramatically
    lower costs and improved reliability and safety. Through this
    initiative, NASA will reduce technical and programmatic risks to
    acceptable levels to enable a competition for full scale development of
    one or more 2nd Generation Reusable Launch Vehicles around the middle
    of this decade.
        This budget also includes funding to begin to develop the
    technologies needed to realize our vision for a 21st century aerospace
    vehicle. This vision is one in which aerospace vehicles can smoothly
    change shape, or morph, in flight like birds to optimize performance
    during complex maneuvers in complete safety, and be capable of self-
    repair when damaged. These vehicles will employ intelligent systems
    made of smart sensors, micro processors, and adaptive control systems
    to enable the vehicles to monitor their own performance, their
    environment, and their human operators in order to avoid crashes,
    mishaps, and incidents. They will also serve as the means for sensing
    any damage or impending failure long before it becomes a problem. The
    research into the technology to make this vision a reality--
    nanotechnology, biotechnology and information technology--will result
    in leapfrog capabilities compared to today's state-of-the-art vehicles.
        Also included in the Aerospace Technology fiscal year 2002 budget
    is funding to establish 5 university-based Research, Education, and
    Training Institutes (RETIs). This effort will strengthen NASA's ties to
    the academic community through long-term sustained investment in areas
    of innovative, new technology critical to NASA's future and to broaden
    the capabilities of the Nation's universities to meet the goals and
    objectives of NASA's future science missions and technology programs.
    These RETI's will be openly competed at regular intervals and will
    inched a mandatory sunset date.
        The fiscal year 2002 budget integrates NASA's investments in bio-
    nanotechnology computing and electronics which can provide capabilities
    orders of magnitude better than the best of today's electronics.
    Developed as detectors and sensors, they could enable spacecraft
    systems to be much smaller, with higher performance and lower power-
    consumption than possible with today's technology. Biologically
    inspired materials will have multi-functional capability and overall
    performance far greater than current materials. Key capabilities of
    these systems will be the ability to adapt to changing conditions and
    Agency mission needs and to detect damage or degradation before it
    becomes serious and reconfigure or repair themselves.
        This budget funds the newly restructured Mars Exploration Program
    (MEP) and sets in place basic technology investments for the next
    decade of robotic Mars exploration. The MEP strategy is linked to
    NASA's experience in exploring Earth, and uses Mars as a natural
    laboratory for understanding life and climate on Earth-like planets.
    The 2001 Mars Odyssey orbiter was launched on April 7, and two Mars
    Exploration Rovers are being prepared for launch in 2003. Following
    that, NASA is planning for a Mars Reconnaissance Orbiter mission in
    2005, and a competitively selected Mars Scout mission. In addition,
    science definition and technology development for a next-generation,
    mobile surface laboratory in 2007 is underway that will pave the way
    for a potential sample return mission early in the next decade. Also
    funded in the Space Science budget is the Living With a Star program,
    which address aspects of the Sun-Earth system that affect life and
    society. Its program elements include a space-weather research network;
    a theory, modeling and data analysis program; and space environment
    test-beds. The fiscal year 2002 budget includes funding to support the
    launch of 9 space science missions by the end of fiscal year 2002.
        In NASA's Earth Science Enterprise, the fiscal year 2002 budget
    enables both the present and the future of scientific discovery leading
    to improved climate, weather and natural hazard prediction. In the
    present, it funds the continued deployment of the Earth Observing
    System (EOS) and related research to achieve the world's first
    integrated, detailed look at the interactions of land, atmosphere,
    oceans, ice and life. It is these interactions that drive variability
    and change in the Earth system, including regional weather, El Nino,
    large-scale floods, and volcanic activity. For the future, this budget
    initiates the next generation of observing satellites beyond EOS, as
    well as funds the advanced technology development that will make those
    missions less expensive and more capable. It also funds a program of
    applications research that will demonstrate the practical use of Earth
    science data.
        Also included in the fiscal year 2002 budget is an increase of $10
    million to provide a significant number of scholarships in science and
    engineering to enhance our student and faculty programs, including the
    development of a scholarship program in disciplines critical to NASA's
    future workforce needs. NASA will be seeking legislative authority to
    make these investments in our future scientists and engineers through a
    scholarship for service program. We will link these scholarship
    students to our current summer student and faculty programs, so that
    the students can work at our field Centers, side-by-side with our
    scientists and engineers.
        The President has challenged NASA to ensure that we fully tap the
    R&D capabilities of academia and industry so our workforce and
    institutions are most effectively focused and to ensure a national
    capability to support NASA's mission. We face some difficult decisions
    and will take a close look at program priorities, capabilities outside
    NASA and the capabilities at our NASA field installations. We will
    continue to review the need for certain NASA facilities where the
    continuing cost of maintaining an aging infrastructure should yield to
    other priorities more closely tied to advancing technology.
        Beginning with this fiscal year 2002 budget request, and consistent
    with statutory direction provided in the fiscal year 2001 VA-HUD-
    Independent Agencies Appropriations Act (Public Law 106-377), NASA is
    implementing a two-appropriation budget (excluding the Inspector
    General account)--Human Space Flight (HSF) and Science, Aeronautics and
    Technology (SAT). This is NASA's first step in transitioning to a full-
    cost budget. While full cost will ultimately integrate institutional
    and programmatic funds into a single budget, that integration is done
    in a step-wise manner, by providing for an Institutional Support budget
    line under each Enterprise and eliminating the present Mission Support
    appropriation. This initial step will begin to recognize, budget, and
    track direct full time equivalent (FTE) employees associated at the
    Enterprise level and then use this FTE data to distribute institutional
    costs (Research and Program Management and non-programmatic
    Construction of Facilities) using the relative percentages of direct
    FTE's by Enterprise. Taking this step will help managers and decision
    makers begin to understand the potential magnitude of institutional
    funds that are associated with each Enterprise in preparation for the
    day when full cost budgeting will distribute these funds to the project
    level via the appropriate cost/service pools.
        NASA is an Agency about the future, and it is critical that we, as
    a Nation, invest in the future of science and engineering--as
    represented by the President's fiscal year 2002 budget request--if we
    are to continue to press the boundaries of the future.
        The following information provides detail, with funding delineated
    under the new budget structure presented in the fiscal year 2002 budget
    request, concerning plans for NASA's Strategic Enterprises and major
    program areas. Appended to this statement are several charts depicting
    the funding proposals reflected in the President's fiscal year 2002
    budget request.
                             nasa enterprise detail
    Human Exploration and Development of Space (HEDS) Enterprise
                International Space Station
        ISS is funded at $2.087.4 billion. This budget represents continued
    support for the ISS program, enabling the high priority goals of
    permanent human presence in space, world-class research in space, and
    accommodation of international partner elements. In response to the
    recent estimated ISS budget cost growth projections of $4 billion
    between fiscal year 2002-2006, NASA is undertaking reforms to curtail
    cost growth and identify savings. Because the cost to operate and
    utilize existing ISS elements and to continue the integration and
    launch of the 3-year inventory of hardware already at KSC is
    essentially committed, NASA's strategy is to redirect funding from
    projects with significant development activity remaining. Redirecting
    funding for the Propulsion Module, the Habitation Module and the Crew
    Return Vehicle avoids over $2 billion in costs. Restoration of these
    projects will be contingent on the quality of NASA's future cost
    estimates, the resolution of technical issues, the success of
    management reforms and other cost-control actions underway, and the
    ability to fund enhancements within the 5-year runout for Human Space
    Flight. Funding for U.S. research equipment and associated support will
    be realigned in accordance with the resulting on-orbit capabilities,
    but will maintain support for research considered most promising and
    crucial. While providing a clear call to NASA for fiscal restraint,
    this budget nonetheless maintains a commitment to launch the hardware
    that NASA has already built and maintains the current assembly schedule
    until at least 2004.
        In addition to the redirected funds, NASA is preparing an action
    plan for management reform, and several management initiatives at
    NASA's space flight Centers to reduce costs by improving our cost-
    estimating ability, improving management efficiencies, refocusing civil
    servants, developing a plan for competition, and seeking greater
    participation from international partners.
        With regard to Space Station research, we are fully committed to
    deliver to orbit all of the research equipment planned for the next 2
    years. It goes without saying that there are many in the research
    communities who have very legitimate concerns about the impacts of the
    research funding reductions and crew resource limitations necessary to
    address cost growth. We are developing a post-2004 research utilization
    strategy that will be reviewed by our research community.
        This budget continues our commitment to ISS commercialization. We
    will continue to seek commercial investment in infrastructure and ISS
    operations that may reduce Government costs, and we are continuing to
    assess Non-Government Organization (NGO) concepts for ISS utilization.
                Space Shuttle
        The President's fiscal year 2002 budget includes $3.284 billion for
    the Space Shuttle Program. In April, the Space Shuttle celebrated the
    20th Anniversary of the launch of STS-1. Over the past two decades, the
    Space Shuttle has proven itself to be the safest and most versatile
    launch vehicle ever built. During the past year, the Space Shuttle has
    continued to perform the critical function of providing access to
    support the assembly and resupply of the ISS. The Space Shuttle also
    provides a space-based laboratory for conducting human supported Earth
    science missions, and will continue to maintain the Hubble Space
    Telescope and fly biological and physical research missions.
        To sustain safety and support the Shuttle manifest, the Space
    Shuttle program will continue to invest in the Space Shuttle system to
    lessen the impacts of obsolescence and maintainability issues and to
    achieve lower operating risk by making safety investments, including
    upgrading the system. The Space Shuttle will need to be capable of
    supporting the critical human space transportation requirements for
    Space Station assembly and operations through at least this decade.
    NASA has determined that investing in upgrades provides not only a
    safer vehicle, but also one that is more reliable and one that is
    easier to maintain. NASA is continuing to assess the Space Shuttle
    programs aging infrastructure to determine how these needs--
    particularly safety-related needs--can be addressed within the Agency's
    budget priorities. For fiscal year 2001, 7 scheduled missions will
    support the assembly and resupply of the ISS. In fiscal year 2002, NASA
    is planning to launch 7 missions--5 ISS assembly and resupply flights,
    the Hubble Space Telescope's 3A servicing mission, and a research
    utilization flight (STS-107).
        NASA plans to aggressively pursue Space Shuttle privatization
    opportunities that improve the Shuttle's safety and operational
    efficiency. This reform will include continued implementation of
    planned and new privatization efforts through the Space Shuttle prime
    contractor and further efforts to safely and effectively transfer civil
    service positions and responsibilities to the Space Shuttle prime
    contractor.
                Space Access
        Recent market stagnation threatens the viability of new,
    commercially-developed launch systems. NASA continues to work with this
    industry segment to seek ways to enable an opportunity for them to
    compete with the major launch companies, to ensure reliable cost
    effective U.S. launch services to meet Agency requirements.
                Space Operations
        On-orbit checkout of the TDRS-H spacecraft was conducted in July-
    September 2000, at which time the Multiple Access Return (MAR) service
    exhibited out of specification problems. An investigation of the MAR
    anomaly began in September 2000. The root cause of the anomaly has been
    determined, and changes to the TDRS-I and -J spacecraft flight hardware
    will be implemented prior to their launch. NASA is evaluating its
    contract options relative to accepting or rejecting the TDRS-H
    spacecraft. Additionally, in attaining the separate goals of responsive
    services at the lowest possible cost and of transitioning to commercial
    service providers, the Space Operations and Maintenance Organization
    (SOMO) faces several challenges, namely, evolving to a fee-for-service
    approach to operations, and meeting an aggressive cost reduction target
    while assuring mission safety.
                Advanced Programs
        In order to better align with current Agency budget priorities, in
    fiscal year 2002 the Human Exploration and Development of Space (HEDS)
    Technology Commercialization Initiative (HTCI) is focused largely on
    nearer-term goals within the overall strategic framework that has been
    defined for HEDS. The HTCI is considering commercialization in a
    broader context than the more focused efforts to date involving
    commercialization of the ISS or the Space Shuttle. Through HTCI, NASA
    intends to examine architectures that take advantage of a potentially
    robust future commercial infrastructures that could dramatically lower
    the cost of future space activities.
    Space Science Enterprise
        NASA's Space Science Enterprise (SSE) is focused on exploring the
    near and far reaches of our Universe the planets, stars, galaxies and
    other phenomena in an attempt to answer these fundamental questions:
    How did the Universe begin and evolve? How did we get here? Are we
    alone?
        Through its various research programs and diverse missions, the
    Space Science Enterprise has already made great strides to begin to
    answer these questions. The scientific discoveries and insights gained
    through the Space Science Enterprise programs and missions have
    literally changed the way we view the Universe and our place in it.
    NASA's Space Science fiscal year 2002 budget request is $2.786 billion.
        Space Science had many important successes over the past year,
    several of which were related to our closest neighboring planet, Mars.
    On April 7, NASA began a return to Mars with the successful launch of
    the Mars Odyssey spacecraft, which will arrive at Mars in October 2001.
    Once there, the spacecraft will use its suite of scientific instruments
    to map the chemical elements and minerals that make up the Martian
    surface, look for signs of water, and analyze the Martian radiation
    environment. The Mars Global Surveyor is continuing its in-depth
    imaging mission and has revealed features suggesting the possibility of
    current sources of liquid water at or near the Martian surface.
    Surveyor has also imaged layers of sedimentary rock, which suggest that
    long ago Mars may have had numerous lakes and shallow seas. Since most
    scientists consider water to be one of the key ingredients for life,
    these findings are particularly compelling. NASA is anxious to continue
    exploring the Red Planet, and the new Mars Exploration Program unveiled
    last October will ensure that we do exactly that. Through a series of
    orbiters, landers, rovers, and sample return missions that will take us
    through the next decade and beyond, NASA is committed to unraveling the
    secrets of Mars' past environment and geology and to discovering the
    role that water played. Once we begin understanding some of these
    parameters, we will be better able to determine whether life ever
    arose, or is still present, on Mars.
        Further out in the solar system, NASA landed a spacecraft on an
    asteroid for the first time. Though never intended to be a lander, the
    Near Earth Asteroid Rendezvous (NEAR) spacecraft touched down on
    asteroid 433 Eros in February 2001. NEAR completed a very successful
    prime mission of orbiting Eros at different altitudes and sending back
    dramatic images of the asteroid's surface. With ``nothing to lose,''
    project scientists decided to attempt a ``controlled crash'' onto the
    surface in hopes of getting close-up images during the descent phase.
    Not only did we obtain spectacular images, but also NEAR actually
    continued to send signals after it landed. The spacecraft returned
    readings from its magnetometer and gamma-ray spectrometer from the
    surface of Eros before it was shut off at the end of February.
        NASA has long supported the scientific study of the phenomena and
    fundamental physical processes involved in solar-terrestrial physics
    and has launched numerous spacecraft to study the dynamics of our Sun.
    A suite of NASA spacecraft continues to study the Sun now, in the
    maximum phase of its 11-year solar cycle. The volatility of the Sun
    during this phase was at one time only of concern to solar physicists;
    however, with humankind's increasing dependence on satellite systems,
    energy grids, and air travel, learning more about the Sun and its
    effects on the Earth has become an important area for scientific
    research. Just recently Solar and Heliospheric Observatory (SOHO)
    scientists were able to image a solar storm on the far side of the Sun
    (not facing Earth) for the first time. This allowed them to provide a
    week's advance warning about the bad weather in space, which enabled
    commercial and government entities to take measures against system
    damage.
        After more than a decade in space, the Hubble Space Telescope (HST)
    is still delivering cutting-edge science and amazing images. A HST
    census found that the mass of a supermassive black hole is directly
    related to the size of the galaxy's nuclear bulge of stars. This
    suggests that the evolution of galaxies and their host black holes is
    intimately linked.
        Using the Chandra X-Ray Observatory's superior resolution,
    astronomers have also discovered a new type of black hole in the galaxy
    M82. This black hole may represent the missing link between smaller
    stellar black holes and the supermassive variety found at the centers
    of most galaxies. Just recently, scientists captured the deepest
    exposure yet made by any telescope using Chandra. This image,
    comparable to the famous Hubble Deep Field, found black holes
    dominating the Universe at the faintest and farthest distances. The
    fact that black holes were such a dominant feature of the early
    Universe came, as somewhat of a surprise, since they are not nearly as
    common today.
        NASA's Space Science Enterprise has made major contributions to the
    scientific world over the years. By making hard decisions to cancel
    lower-priority missions with significant cost growth or schedule
    slippage, including the Pluto-Kuiper Express and Solar Probe missions,
    the President's fiscal year 2002 budget request paves the way for more
    capable missions and increasing scientific discoveries and revelations
    in the years ahead. In addition to a robust Mars Exploration Program
    for the next decade, the proposed budget also focuses on new technology
    development in space propulsion systems that could support faster, more
    capable planetary missions, such as a potential Pluto ``sprint''
    mission, and supports critical technology investments for future
    decisions on high-energy astrophysics missions.
        Space Science continues to develop integrated programs of missions
    that have delivered and will deliver a hearty and diverse abundance of
    new scientific understanding about the universe and our place within it
    to the American people.
    Earth Science Enterprise
        The President's budget for fiscal year 2002 is $1.515 billion. It
    reflects the net change in funding for Earth Observing Systems (EOS) as
    peak funding for the first series of EOS declines and funding for
    formulation of next decade missions ramps up. NASA's Earth Science
    Enterprise is our Nation's investment in improving climate, weather and
    natural hazard prediction using the vantage point of space. Our ability
    to view the Earth from space is what enables today's weather forecasts,
    and what will help enable tomorrow's capability to predict El Nino,
    decadal climate change, and even volcanic eruptions. Earth science is
    cutting edge science, exploring changes taking place on our home planet
    that are little understood today. And Earth science is also science in
    the national interest, providing new tools for decision-making by
    businesses, state & local governments, and other Federal agencies.
        Fiscal year 2000 was the best year yet for NASA's Earth Science
    program, as measured by our contribution to the list top science
    discoveries worldwide, published by Science News. We mapped the pattern
    of thinning and thickening of the Greenland ice sheet, published a 20
    year record of North and South polar sea ice extent, and observed a
    Connecticut-size iceberg break off from the Antarctic ice sheet. We
    demonstrated the capability for 2-day prediction of storm formation,
    and showed that air pollutants inhibit rainfall. We discovered that the
    mysterious ``Chandler wobble'' of the Earth on its axis is caused by
    changes in deep ocean circulation, and created a consistent global land
    cover data set for use as a baseline for measurement of future changes.
        Much of this work was made possible by NASA-sponsored scientific
    research and the first elements of the EOS series of satellites now
    being deployed. Landsat 7, QuikSCAT, Terra, and ACRIMsat were all
    successfully launched in 1999, and are delivering science data to
    millions of users today. In February 2000, we flew the Shuttle Radar
    Topography Mission, and are using the data to produce the most accurate
    digital elevation model of the Earth's land surface between 60 deg.N
    and 56 deg.S. This will be of great use not only to scientists but also
    to civil engineers who are working to improve aviation safety in
    mountainous areas and to manage potential flood hazards. Late in 2000,
    we successfully launched the New Millennium Program Earth Observer-1 to
    test several new remote sensing instruments. One instrument is
    demonstrating the capability to make Landsat-type measurements at one-
    fifth the size and one-fourth the cost. Another instrument is
    demonstrating the first hyperspectral imager flown in space, paving the
    way for the next big advance in commercial remote sensing.
        Over the next 3 years, we will complete the deployment of the EOS
    System. Later this year, we will launch the Aqua spacecraft to make the
    most accurate measurements yet of atmospheric temperature and
    humidity--the kind of data that will enable scientific discoveries
    leading to weather prediction to be extended from 3 to 5 days out to 7
    days. ICEsat will make the first detailed topographic maps of the
    world's great ice sheets. Other missions will extend key data records
    of ocean topography and solar irradiance that are essential to seasonal
    and decadal climate prediction. Smaller, complementary missions will
    study Earth system phenomena never before studied globally from space,
    such as the Gravity Recovery and Climate Experiment (GRACE) which will
    provide a precise map of the Earth's mass distribution and changes in
    the Earth's gravity field, including changes in large underground fresh
    water reserves (aquifers). The development of the EOS Data and
    Information System (EOSDIS) is nearly complete, and is already doing
    the job of operating EOS satellites now in orbit and processing their
    data. In fiscal year 2000, EOSDIS provided over 8 million data products
    in response to 1.5 million requests. We have already begun to plan how
    data and information system services should evolve to meet the needs of
    Earth science and applications over the next decade.
        Planning for the next decade of Earth science has been in full
    swing over the past year. NASA's Earth Science Enterprise has a new
    Research Strategy for 2000-2010 that has been positively reviewed by
    the National Research Council and endorsed by the NASA Advisory Council
    committee advising the Office of Earth Science.
        Five EOS successor missions are planned as part of the fiscal year
    2002 budget. A Global Precipitation Mission will build on the success
    of TRMM, and provide the first global observations of rainfall. This
    will provide data essential to future assessments of fresh water
    availability, and to answering some of the highest priority questions
    in the Research Strategy. Ocean topography and ocean surface winds
    missions will succeed the EOS-era Jason and SeaWinds, respectively,
    providing continuity of measurements that are proving essential to
    forecasting and monitoring El Nino and hurricanes. Atmospheric ozone/
    aerosol and solar irradiance missions will extend EOS-era measurements
    of two key factors (atmospheric chemistry and incoming solar energy)
    that help distinguish natural from human influences on climate change.
        In addition, this budget provides essential funding for future
    Earth exploratory missions to probe least understood Earth system
    processes, which will be awarded competitively.
        This budget request also adequately funds research to use these
    observations to begin to answer the questions in the Research Strategy,
    to demonstrate practical applications of these data to society
    described in the Applications Strategy, and to develop advanced
    technology to make such observations better and cheaper in the future,
    as described in the Technology Strategy. It is this investment in Earth
    science from space that will enable the future of climate, weather, and
    natural hazard forecasting to serve national needs and maintain U.S.
    global leadership in space-based Earth observations in the decades
    Biological and Physical Research Enterprise
        NASA's Office of Biological and Physical Research (OBPR) Enterprise
    was established this past year to affirm NASA's commitment to the
    essential role biology will play in the 21st century and establish the
    core of biological and physical sciences research needed to support
    Agency strategic objectives. OBPR was established under the premise
    that revolutionary solutions to science and technology problems are
    likely to emerge from scientists, clinicians, and engineers who are
    working at the frontiers of their respective disciplines and are also
    engaged in dynamic interdisciplinary interactions.
        Funded at $360.9 million in fiscal year 2002, OBPR uses the space
    environment as a laboratory to test the fundamental principles of
    physics, chemistry and biology; conducts research to enable the safe
    and productive human habitation of space; and enables commercial
    research in space. OBPR includes programs in Physical Sciences
    Research, Fundamental Space Biology research, and Biomedical and Human
    Support research. OBPR conducts research activities in conjunction with
    four other major Federal agencies through approximately 30 partner
    agreements. OBPR also manages 12 Commercial Space Centers across the
    country.
        OBPR is preparing for the transition to a new era in human space
    flight. The ISS will provide a growing capability as a research
    platform. OBPR will work to extract the maximum scientific and
    commercial return from this premier research facility while conducting
    research to ensure the health and safety of space travelers in the near
    term and into the future.
        NASA is on track to deliver the first 10 research equipment racks
    to ISS as planned. In addition, we have already selected more than 100
    specific experiments planned for the first 6 ISS increments. During
    Expedition 1, from October 2000 through February 2001, the crew
    conducted several research activities in the areas of educational seed
    growth experiments, crystal growth of biological macromolecules, motion
    and vibration technology and human research. Eighteen NASA experiments
    are scheduled to become operational during Expedition 2 (March through
    July of 2001), including important biomedical experiments in the areas
    of radiation dosimetry, psychosocial factors, sleep physiology, drug
    absorption, and sensorimotor coordination. Those experiments will
    continue into Expedition 3 (July through October of 2001), and
    additional OBPR experiments will be added to study renal stone
    prevention, spatial orientation, and pulmonary function. Consistent
    with the current baseline assembly sequence, the permanent Space
    Station crew size will be limited to 3 crew due to cost growth. Crew
    size will be a major limiting factor for research activities and
    reduced funding support for completing state-of-the-art research
    facilities will have an impact on the planned research program.
        NASA is restructuring the ISS research budget to align it with the
    on-orbit capabilities and fiscal resources available. This
    restructuring activity is taking place over the next few months. OBPR
    is prioritizing and time-phasing research plans for internal lab-based
    research as well as external truss and exposed platform Fundamental
    Physics, Earth and Space Sciences research. OBPR is engaging the
    scientific community as part of this process. We have proposed a
    framework of priorities to ensure a world-class research program,
    consistent with NASA's commitment to safety, to serve as the basis of
    discussion with the scientific community.
        During Space Station construction, OBPR is aggressively pursuing
    opportunities to maximize research within the availability of the Space
    Shuttle missions, through the use of mid-deck lockers on planned ISS
    assembly flights, and ISS utilization flights.
    Aerospace Technology
        The budget request for the Office of Aerospace Technology
    Enterprise is $2,375.7 million. We are funding the highest priority
    aeronautical and space technologies while maintaining an active base
    research program that will enable revolutionary advances in the way we
    design and operate the aerospace vehicles of the 21st Century. We have
    terminated projects that have either delivered on most of their
    promised technology or do not offer a leap in technology commensurate
    with their funding. Included in those terminated are Intelligent
    Synthesis Environment (ISE), High Performance Computing and
    Communication (HPCC), Rotorcraft and other aircraft activities focused
    on near-term military applications. We are placing additional emphasis,
    and dollars, on 21st Century Aerospace Vehicles, Computing, Information
    & Communication Technology (CICT), Virtual Airspace Modeling and
    nanotechnology. These increased investments reflect where we need to
    focus our efforts to expand knowledge and to advance the state of the
    art in revolutionary new aircraft and air traffic management
    technology.
    Aerospace Technology Programs
        To reflect our new emphasis on innovation, as well as reflect the
    technical progress gained in recent years, we have reformulated our
    Enterprise goals--Revolutionize Aviation, Advance Space Transportation,
    Pioneer Technology Innovation, and Commercialize Technology.
        Goal One, Revolutionize Aviation.--Without a revolution in the
    aviation system, it will be impossible to accommodate the projected
    tripling of air travel within two decades in a safe and environmentally
    friendly manner. Revolutionizing the aviation system to meet the
    demands for growth means we must provide a distributed flexible and
    adaptable network of airways--within the physical and environmental
    constraints of today's system. We must and will address the civil
    aviation system's fundamental, systemic issues to ensure its continued
    growth and development, thereby giving backbone to the global
    transportation system and assuring global economic and cultural success
    and vitality.
        We have restructured our Base Research and Technology investments
    to focus on revolutionary 21st Century Vehicle technologies. The design
    and fabrication of 21st Century aerospace vehicles will not be
    accomplished by the traditional methods of multiple mechanically
    connected parts and systems. It will employ fully integrated embedded
    ``smart'' materials that will endow the vehicle with unprecedented
    levels of aerodynamic efficiency and control. Proposed 21st Century
    Aerospace Vehicles will be able to monitor their own performance,
    environment, and even their operators in order to improve safety and
    fuel efficiency, and minimize airframe noise.
        Goal Two, Advance Space Transportation.--I am very excited about
    the Agency's vision to revolutionize the Nation's space transportation
    systems. I believe this is the most important initiative of this
    Enterprise and one of the most important to our Nation. NASA's vision
    for space transportation is being pursued through a phased approach
    embodied within the Integrated Space Transportation Plan and the Space
    Launch Initiative. We recognize that privately owned and operated
    launch vehicles lofting NASA payloads on a regular basis is the right
    strategy to free up the agency's resources for scientific pursuit on
    the new frontier.
        Last month we reached a major milestone in the 2nd Generation
    Reusable Launch Vehicle program when we selected a number of companies
    to enter into negotiations to participate in the Space Launch
    Initiative. Following an exhaustive series of evaluations, we concluded
    that the X-33 and X-34 projects would not receive Space Launch
    Initiative funds. This difficult decision was based upon the
    determination that the benefits to be derived from continuing these
    programs did not justify the cost. We plan to announce the results of
    the ongoing Space Launch initiative negotiations in May.
        Goal Three, Pioneer Technology Innovation.--We aim to revolutionize
    the developmental processes, tools, and capabilities of the aerospace
    industry. To create the aerospace transportation systems of the future,
    we need to develop a new approach to engineering that puts safety,
    reliability and mission assurance first. Collaborative tools and human-
    like intuitive environments are critical to allowing us to
    ``virtually'' build and test vehicles and systems before we spend money
    on expensive hardware. System characteristics such as intelligence,
    rapid self-repair, and adaptability will come about through innovation
    and integration of leading-edge technologies, such as biotechnology,
    nanotechnology, and intelligent systems. The unique goal to Pioneer
    Technology Innovation focuses on both the specific technology
    innovations and the processes, which drive them.
        To strengthen our ties with the academic community we are
    implementing five University-based Research, Education and Training
    Institutes (RETIs). The role of the RETIs will be to research and
    utilize innovative, cutting-edge opportunities for science and
    technology that can have a revolutionary impact on NASA's future
    missions. These RETI's will be openly competed at regular intervals and
    will include a mandatory sunset date.
        We have combined existing programs with new activities to create
    the Computing, Information & Communications Technology (CICT) research
    program to concentrate our core expertise in critical technologies
        Goal Four, Commercialize Technology.--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 2002
    budget request of $146.9 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. About 75 percent of the
    amount requested for NASA's Commercial Technology Program effort is for
    NASA's Small Business Innovation Research (SBIR) 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.
        In addition to NASA's Commercial Technology Program, we are also
    working to transfer commercial technology across the entire aerospace
    program. For example, the need for data dissemination within a high-
    integrity wireless broadband network has been identified as one of the
    major technical barriers to providing an order of magnitude increase in
    aviation system capacity and safety. NASA's work in wireless broadband
    networking illustrates a huge commercial success. We have demonstrated
    real-time data link technology to move and distribute unique and
    distinct flight data to multiple sites in real-time while addressing
    multi-level priorities in a secure, high integrity data sharing
    environment serving safety and capacity needs of the National Airspace
    System. This broadband technology demonstrated a phased array antenna
    technology that achieves data rates 100x greater than what is
    operational in today's National Airspace System, greatly increasing the
    capacity of the NAS, reducing aviation system delays and saving
    billions of dollars in air travel operations cost. In April 2000,
    Boeing unveiled a high-speed global communications service offering
    live in-flight Internet, e-mail, and TV to be available next year.
    While anticipated revenues have not been announced, analysts project
    the addressable market to be about $70 billion over the next 10 years.
                             other key initiatives
    Institutional Support
        NASA has conducted a review of its facilities infrastructure,
    finding that the deteriorating plant condition warrants an increased
    revitalization rate to avoid safety hazards to personnel, facilities,
    equipment and mission. Some facilities have deteriorated to the point
    that they need to be replaced. The President's fiscal year 2002 budget
    request includes facilities funding to address some of these needs, but
    the backlog of revitalization requirements continues to grow and will
    be addressed as part of NASA's Critical Capabilities Review.
        NASA plans to address the considerable Agency backlog of facilities
    revitalization and deferred maintenance, by repairing those facilities
    necessary to take us into the future and that are affordable to keep,
    and by carefully phasing down the remainder. This requires tough
    decisions on the relevance of each facility as well as realistic,
    responsible determinations on the financial supportability of them.
    These decisions will be made as part of the Strategic Resources
    Planning activity that NASA will undertake as part of its Critical
    Capabilities Review over the next several months. This effort will
    fully integrate facilities planning with program planning, consistent
    with NASA's Strategic Plan and Center implementation plans. In fact,
    this Strategic Resources Planning effort will become an integral and
    ongoing part of NASA's facilities planning and management processes.
    Performance Plans
        NASA is fully committed to the Government Performance Results Act
    (GPRA). Each year, we believe we make further progress in portraying
    our goals and commitments towards performance in terms that are
    relevant to the American people. We appreciate the heightened level of
    accountability GPRA affords. The NASA Performance Plan has been
    significantly improved for fiscal year 2002 in several key areas:
      --Public Benefit Statements will be included to more effectively
            communicate the relevance of targeted performance.
      --Each Enterprise/Crosscut Process will provide a description of the
            means that will be used to verify and validate measured
            performance.
      --A Multi-year Performance Chart (fiscal year 1999-2002) will be
            included for each Enterprise/crosscut process to demonstrate
            cumulative progress towards the achievement of strategic goals
            and objectives.
      --Comments from the NASA Advisory Council regarding the development
            of metrics will be incorporated in the Plan.
        NASA is in the process of modifying how we measure NASA R&D so as
    to better recognize the achievements of our long-term research missions
    to benefit the American public. Measuring multi-year, incremental
    efforts on an annual basis; quantifying and predicting the timing of
    research results; and adjusting metrics to reflect gains in knowledge
    and experience are new approaches that we believe would be useful in
    assessing NASA's program performance and measuring R&D efforts in
    general under GPRA.
                                   conclusion
        Mr. Chairman, I am proud of the budget I am presenting to the
    Committee. It is essential that the Congress fully fund this budget. It
    will enable NASA to continue to fly the Shuttle safely, continue
    development of the Space Launch Initiative that will revolutionize our
    launch capability, continue construction of the ISS, and accomplish
    cutting-edge science research and technology. While the difficulties of
    cost growth on the ISS program present challenges, we are committed to
    completing the ISS with our International partners so that we will have
    a world-class research laboratory in space that will provide
    unprecedented opportunity for a host of science discoveries not yet
    imagined.
        I look forward to working with the Subcommittee to make this budget
    a reality.

                                                                NATIONAL AERONAUTICS AND SPACE ADMINISTRATION FISCAL YEAR 2002 ESTIMATES
                                                                                   [In millions of real year dollars]
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                            Full Cost Structure                             2000 \1\          2001 \1\      2002 Pres Budget        2003              2004              2005              2006
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    INTERNATIONAL SPACE STATION.......................................           2,323.1           2,112.9           2,087.4           1,817.5           1,509.1           1,394.3           1,389.0
    SPACE SHUTTLE.....................................................           2,999.7           3,118.8           3,283.8           3,218.9           3,253.3           3,213.5           3,228.0
    PAYLOAD AND ELV SUPPORT...........................................              79.9              90.0              91.3              92.5             100.0             104.7             111.6
    INVESTMENTS & SUPPORT.............................................           1,112.2           1,272.5           1,303.5           1,333.5           1,348.1           1,381.7           1,420.6
    SPACE OPERATIONS..................................................             496.0             521.8             482.2             370.8             286.5             296.8             296.8
    SAFETY, MISSION ASSURANCE, & ENGINEERING..........................              43.0              47.4              47.8              47.8              48.0              48.0              48.0
                                                                       -----------------------------------------------------------------------------------------------------------------------------
          HUMAN SPACE FLIGHT..........................................           7,053.9           7,163.4           7,296.0           6,881.0           6,545.0           6,439.0           6,494.0
                                                                       =============================================================================================================================
    SPACE SCIENCE.....................................................           2,524.1           2,624.7           2,786.4           3,144.2           3,560.5           3,897.5           4,008.1
    BIOLOGICAL & PHYSICAL RESEARCH....................................             340.3             378.8             360.9             380.7             402.6             405.6             419.4
    EARTH SCIENCE.....................................................           1,690.3           1,716.2           1,515.0           1,587.4           1,571.0           1,572.9           1,578.7
    AEROSPACE TECHNOLOGY..............................................           1,834.4           2,214.5           2,375.7           2,823.8           3,135.1           3,174.2           3,402.1
    ACADEMIC PROGRAMS.................................................             138.8             132.7             153.7             143.7             143.7             143.7             143.7
                                                                       -----------------------------------------------------------------------------------------------------------------------------
    SCIENCE, AERONAUTICS AND TECHNOLOGY...............................           6,527.9           7,066.9           7,191.7           8,079.8           8,812.9           9,193.9           9,552.0
                                                                       =============================================================================================================================
    INSPECTOR GENERAL.................................................              20.0              22.9              23.7              24.6              25.5              26.5              27.4
                                                                       -----------------------------------------------------------------------------------------------------------------------------
          Total.......................................................          13,601.8          14,253.2          14,511.4          14,985.4          15,383.4          15,659.4          16,073.4
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ Fiscal year 2000 and fiscal year 2001 restructured to reflect new fiscal year 2002 Full Cost Structure.

        Senator Bond. Thank you very much, Mr. Goldin.
        Let me turn to my ranking member, Senator Mikulski, for her
    opening statement and then for questions she may wish to ask.

                    statement of senator barbara a. Mikulski

        Senator Mikulski. Thank you very much, Mr. Chairman. As you
    know, I had an amendment on the floor to establish 1,000
    community tech centers. And it passed 50-49.
        I know that my colleagues are waiting and we want to move
    quickly into the questions.
        Mr. Goldin, first of all, I want to welcome you. I know
    this is your ninth appearance before this subcommittee, and you
    are also now serving your third President. So, first of all, I
    want to start out by thanking you for your service to the
    Nation in navigating NASA through some very tough budget times
    while still pushing the envelope of science and technology. So,
    I want to say thank you. I think you're also trying to change
    the culture of NASA, particularly in science programs, to do it
    faster, quicker, better, as well as cheaper.
        But as we move into this hearing, I am very troubled about
    what is happening to the Space Station. I want to make sure
    that the problems with the Space Station do not threaten NASA's
    science programs. The Space Station cannot impact on the NASA
    science programs, nor do I want, having to deal with these cost
    overruns, to end up where NASA has to forage for funds and rob
    other very important programs. I think we are at a very
    critical junction.
        Senator Bond and I have led continuous battles on the floor
    to ensure the continuity and the continuation of the Space
    Station. But I am concerned that my colleagues, who are not
    involved in this as deeply as we are, are going to lose faith
    in this program, and I think we could end up maybe even losing
    the program. That is not a threat, but this is really pretty
    serious. And it does not get better. It just does not get
    better.
        In your testimony, I must confess I did not understand what
    you said in your last paragraph about ``I fully support the
    enhancement of Core Complete,'' et cetera. I hope in the
    questions that we can go into it.
        Despite the problems, though, with the Space Station, I
    know it has also been a good year for NASA, and that is why I
    am so excited about these science programs. Thanks to the John
    Hopkins Applied Physics Lab, look at how the NEAR probe landed
    on the asteroid Eros and sent back these incredible photographs
    and, more importantly, scientific data. The Hubble Space
    Telescope continues to rewrite science textbooks every year,
    most recently discovering a mass of a supermassive black hole.
    So, I think the science is moving along.
        We are concerned, of course, in Maryland about the Wallops
    Island with the decline of the commercial space launch
    business. There is an impact on Wallops. I, again, will go into
    that in my questions. I am concerned about their viability. I
    hope that we can come up with a new approach for Wallops.
        In the area of earth science, we are seeing the benefits of
    Mission to Planet Earth, a program that we have fought for for
    almost a decade. What I like about Mission to Planet Earth is
    that we are now really getting back the kind of information we
    hoped would help the people on this planet with weather and
    storm predictions, urban and suburban planning, agricultural
    and precision farming advice. In my own State, where we would
    have an outbreak of pfisteria, we could be able to pinpoint
    solutions rather than fingerpoint at each other.
        So, we could go on about it, but I must say the $4 billion
    in cost growth, which I guess means cost overruns, associated
    with the International Space Station has negative impacts. This
    tourist in space, courtesy of the Russians, was outrageous--was
    outrageous. And the American people do not pay our astronauts
    to babysit tourists. Our astronauts are skilled, trained, and
    willing to put their lives on the line, and they are not paid
    to babysit tourists. It is not Disney World. If Disney wants to
    have a Space Station, let them build it and pay for it. Let
    them try. But I think this was outrageous.
        The Russians have continually reneged on the deals with us.
    They do not pay their own people. They are still selling their
    technology and know-how to Iran. I mean, I am very cranky with
    the Russians. And then this is like being pimps. I just think
    it is outrageous, and I think it is demeaning to the
    professionals at NASA and I think certainly for our astronauts
    to have to spend 1 week so this guy could have the flight of
    his life is outrageous.
        I know you spoke sharply about it, but let me tell you, it
    really cast in doubt the ability to have scientific
    collaboration with the Russians. They do not deliver, and what
    they then deliver is some guy for $20 million who is having a
    mid-life crisis.
        Senator Mikulski. With that, I think I will just conclude.
    I ask that my full statement be in the record.
        Senator Bond. Well, I tell you, that was a good start,
    Senator Mikulski. I am looking forward to reading the rest of
    your statement. We will accept that for the record.
        Senator Mikulski. I am just warmed up now.
        Senator Bond. Would you like to ask some questions while
    you are on a roll?
        Senator Mikulski. No. You go right ahead.

                          Space station cost overruns

        Senator Bond. Following up on the Space Station cost
    overruns, the initial cost estimate of $17.4 billion, then to
    $26 billion, and then the February revelation, another $4
    billion in cost overruns. It seems to me there should have been
    a decision making review process to track the costs and the
    problems.
        What I found even more troubling is we were advised by
    staff that the cost review and planning process in Houston that
    said, hey, we are $4 billion short, actually was comprised of
    contractors and ISS staff meeting, developing a wish list of
    their needs and the desired payments to cover those. They just
    sent it in and said, this is what we would like to have. How
    did this $4 billion figure come about? Did you not hear about
    it in Washington until December? How can we avoid having this
    kind of unpleasant surprise in the future?
        Mr. Goldin. I believe that the issue had to do with a
    process we call threats and liens, and for a number of years,
    we had discounted them because they were out in the future.
    After we launched this Zvezda module, we had slipped, slipped,
    slipped, so we had a couple years where we could not get
    traction and get it baselined.
        After we launched this Zvezda module, the program manager,
    Tommy Holloway, who I do have faith in, took a look at the
    monthly charges, and they were not coming down. He then took a
    look at the threats and liens, and there were a number of
    additions put in. They started doing a bottoms-up cost estimate
    sometime in late summer, September, October, the results of
    which we had in January.
        I was briefed, I think December 12, and I was told of this.
    I advised them to just openly talk about it. Do not go back and
    beat people up and get them to be quiet, but let all the data
    come out so we understand it.
        The basic issue is there are a lot of things we did not
    understand about space operations. Optimism. I will accept that
    criticism. The dilemma was it is the continual operation in
    space that we had never undertaken. The operational tempo, the
    number of missions we had. We underestimated the logistics. We
    underestimated the operating costs. We had a lot of software
    integration problems, which is not uncommon with the rest of
    the industry, and the software/hardware integration probably is
    a place where we need to be able to develop better cost
    estimating tools. That is how it happened. Saying that, when we
    presented it to the administration, they were very clear, and
    they said, we will not have a $4 billion cost overrun. The
    guidance we got was to define a core vehicle that we could
    deliver that will meet three principal needs: world-class
    research, permanent presence of humans in space, and satisfy
    our international partners in terms of the hardware they have
    to deliver to orbit. We put together such a program. We went
    back and we scrubbed a number of elements.
        They also went on to say that what they wanted us to do is
    to see where we could have reforms and efficiencies, be more
    crisp in our cost definition, and then as we get better cost
    confidence, retire the technical risks, and through these
    efficiencies, have money available, to start reinstituting the
    Habitation and the Crew Return Vehicle.
        In essence, what we have done is we have put on temporary
    hold the remaining high-risk, high-cost consuming elements
    until we get that station up, and then we can bring on other
    approaches. In addition, they gave us permission to go out and
    talk to some of our international partners and seek more
    international involvement in building some of this equipment.
    This is all ongoing now.
        And finally, I believe I outlined some of the cost
    approaches we have taken in getting better visibility, and we
    will be briefing your staff on a monthly basis based upon these
    meetings that Mr. Rothenberg will be holding here in
    Washington.
        Senator Bond. I appreciate that. I trust you will be
    looking elsewhere than Moscow for those additional elements.
        Mr. Goldin. I think those additional elements might come
    west of Moscow.

                     Habitation module/crew return vehicle

        Senator Bond. You mentioned the basic mission of the
    station. As I said, I understand that you had to get certain
    things under control and cut back. But the decision by the
    administration to suspend the Habitation Module and Crew Return
    Vehicle because of the cost overruns concerns me that it will
    preclude, for a long time, the effective utilization of the
    station for science research. The lack of either the Habitation
    Module or Crew Return Vehicle, as I understand it, means that
    only three crew members can be on the station at any one time,
    and with two-and-a-half members to operate it, you have got a
    half a crew member doing all the science.
        How are we going to get back to the place where we can be a
    world-class in-orbit science platform with the ISS?
        Mr. Goldin. First let me say we made a commitment through
    2002 to deliver 10 of our 27 research racks to orbit. They will
    be there. We plan through 2004 to have only three crew on board
    to do world-class research, so we have time to go work the
    problem. That is the important point I think you ought to note.
    So, we are on track through 2004 to being able to do what we
    said we are going to do on research.
        Senator Bond. So, that one-half a crew member can do the
    research that is needed in this time frame?
        Mr. Goldin. In this time frame. That was planned.
        We are now looking at other approaches. We are developing
    the X-38 to try and retire the technical risk and see how much
    it is going to cost, do we understand it? Are the Europeans
    willing to put significant money into the X-38 and perhaps take
    a leadership role? We are going to be doing this over the next
    2 years. Within about 2 weeks, we are going to announce an
    award of a contractor that we will be asking to start making
    cost estimates on the CRV based on the X-38 work. It will be a
    low-level contract. So, we believe within a year or 2, we may
    have a solution to the CRV, and we have time to work on it.
        Now, the one thing that would be beneficial, but at the
    present time inappropriate, to get extra crew on board that
    vehicle because we can do temporary habitation with what we
    have, would be to use the Soyuz vehicle. But at the present
    time, in good conscience, I could not recommend to this
    committee or to the President of the United States until I see
    a change in the Russian behavior that we should even consider
    that Soyuz vehicle.
        Senator Bond. I will have a CRV question. Let me turn now
    to Senator Mikulski.

                              Crew return vehicle

        Senator Mikulski. Well, I think many of Senator Bond's
    questions were my own.
        I am going to pick up on the CRV. As you indicated,
    deferring the Crew Return Vehicle is going to limit the number
    to three of the astronauts who are going be on the station. I
    thought it took, again, two-and-a-half people to do the
    operations of the station. That leaves a half a person to do
    research. I do not understand how a half a person can keep us
    on our research line. Does this not have a tremendous reduction
    in biological and physical science research that is done? The
    University Space Research Association has a lot of raised
    eyebrows about this.
        Mr. Goldin. Again, let me say we only planned on having
    three people through at least 2004. That has not changed, and
    we have selected the experiments in that time frame,
    prioritizing biomedical research as our first priority. That
    was in the basic plan. The 10 racks we had talked about taking
    up are on schedule to get up there. What we are trying to do
    now with the time we have available is see what alternate
    possibilities we have. We are looking at a variety of things
    such as perhaps an extended duration orbiter (EDO) that will
    have crew up there.
        But the real problem we have is we need to see how we could
    reconnect with the Russians because, under some conditions,
    being able to have an additional Soyuz or two could give us
    that additional three people. But right now that is the only
    other vehicle to get up there, and I could not recommend to
    this committee that we should do that.
        Senator Mikulski. Well, we always, of course, have to be
    concerned about the safety of our astronauts and their ability
    to leave quickly. I know the CRV was meant to be like a large-
    scale lifeboat.
        Am I right in thinking that Mr. Tito returned in a Soyuz?
    Is that what he came back in?
        Mr. Goldin. The space tourist came back in a Soyuz vehicle.
        Senator Mikulski. Because there is another Tito that died
    and created a lot of problems. At one time it was called
    Yugoslavia.
        But he came back in a Soyuz.
        You know how frustrated I have been with the Russians for
    many years in this. But I think we really do have to explore
    what they could offer and in some ways begin to make it up to
    us. I think the way they work their way back home is to start
    doing very specific things to make it up to us.
        The other thing I have been concerned about is if we only
    have one vehicle to return--I am thinking of a ship. You always
    have more than one lifeboat in a ship. You do not have one
    lifeboat to get everybody off. You have several lifeboats. My
    question would be, during this time while you are working on
    the CRV--and I do not know this and we can talk about it in
    another forum--but where you would have more than one Soyuz
    there.
        Mr. Goldin. The answer is before this stress built up, that
    was the direction we were looking at. We had an issue that we
    had to undertake and we needed to explore the possibilities
    with the administration and the Congress because of H.R. 1883,
    the Iran Non-Proliferation Act of 2000. However, we did not
    expect the CRV, under the best conditions, until 2005-2006
    anyhow and we were exploring that possibility.
        But let me provide a little context to this so you
    understand what has happened with the space tourist going up on
    a schedule that he demanded, not what we recommended from a
    safety standpoint.
        Senator Mikulski. No, not on my time. The Russians have
    already ruined a lot of things for me.
        Mr. Goldin. No, but I wanted to say there is a stress, and
    we are now in the process of trying to reconnect with the
    Russians, reestablish credibility and explore possibilities
    like you are suggesting. But until we do some team-building and
    get confidence, we cannot talk about buying a Soyuz.
        Senator Mikulski. No, I understand it. I am just throwing
    out a conceptual idea. Oh, no. I do not think they understand
    the consequences of this.
        However, let me ask about the Space Station before I move
    on to earth science. We have had so many redesigns, replans,
    and reconfigurations. Can we truly say to our colleagues, as we
    take our appropriations bill to the floor, is this really it,
    or is it going to be a series of continuous surprises under
    every rock? Really. I do not know how many redesigns and so on
    I have been through.
        This is not a woodshed conversation, Mr. Goldin, but I
    think you can understand how troubled we are. Really, it is
    Bond and Mikulski who have to explain this to our colleagues.
        Mr. Goldin. Let me present a few pieces of information to
    you. Since 1994, if you take a look at the budget, we have had
    a 12-percent increase while we built 90 percent of the hardware
    for the station. The way we calculate the cost of the station
    is we take a look at the schedule. So, because the schedule has
    slipped out, it has driven a lot of costs up. We have gone
    through it and we have taken some very tough steps saying we
    are going to stop the remaining high-risk development tasks and
    will not restart them until we have confidence in those
    numbers.
        Senator Mikulski. So, you do not know if this is it.
        Mr. Goldin. I think we have a good idea this is it, but we
    will not start those tasks unless we know we really have the
    costs under control. There are estimates on the CRV that say
    they could save us an enormous amount of money, but we are
    reluctant to say that until we understand what those costs are.

                                 Earth science

        Senator Mikulski. I think the station is an ongoing
    conversation. I am just looking at my yellow light here.
        Let us go to earth science. As I understand the 2002
    budget, it proposes to cut NASA's earth science by $200
    million, or 12 percent. Could you go into that in more detail
    and what this would mean for EOS activities and what impact
    this would have on Goddard?
        Mr. Goldin. Well, to the first order, this budget now
    contains, in a 5-year run-out, the second phase of EOS. So, if
    you take a look at the run-out, we have added $1.4 billion of a
    whole new set of starts. Seven new spacecraft are in that
    budget.
        The drop in this year's budget was a combination of
    effects. One is EOS phase 1 is beginning to come down, and we
    are starting the EOS phase 2, starting to come up. I think that
    is the biggest impact.
        In terms of the impact on Goddard, I think it has an
    unbelievable future because of the commitment to start the
    second phase of EOS. So, I think there is a rosy future, not
    just for your constituents at Goddard, but researchers around
    the country.
        Senator Mikulski. Yes. Well, that is what we are also
    interested in.
        I note that my time is up, and I know Senator DeWine has
    been waiting patiently.
        Senator Bond. Thank you, Senator Mikulski.
        Senator DeWine.

                 Combustion and fluid physics research program

        Senator DeWine. Mr. Chairman, thank you very much.
        Administrator Goldin, I want to talk a little bit about
    combustion and fluid physics research programs. This is,
    frankly, the type of research that has caused me to support the
    Space Station program in the past. It is cutting edge. It has
    such promise for benefits here on earth at a time when gasoline
    prices are soaring, the public is increasingly concerned about
    air pollution, global warming.
        Beyond that, it is my understanding it is on time, on
    budget, has won awards and recognition, both NASA and outside
    experts, and the Destiny module is simply waiting for these
    payloads.
        Yet, because of problems, the combustion program is being
    eliminated, the fluid research program is being crippled. I am
    concerned, frankly, that if NASA is doing this to these
    programs, it does not have its priorities correct. I wonder if
    you could comment on that and tell us a little bit about how
    you set priorities and maybe comment about my criticism of what
    you all are doing. Or else, tell me you are not doing it.
        Mr. Goldin. What I could say to you is you have every right
    to be concerned, and I do not take it as a negative comment.
    The dilemma we have is we have over the years had to live with
    a fixed budget. I want to show you one chart for the big
    context. Then I will come back and answer your specific
    question. Could we put up that budget chart?
        We constantly have to work on priorities. NASA does
    wonderful things, but here is what I would like you to consider
    is the dilemma that NASA has that I do not think any other
    high-risk agency has had to face. If you look at the blue line
    at the bottom, that is the NASA budget normalized to fiscal
    year 1993. So, fiscal year 1993 is 1.0. So, after about a
    decade, we are just about where we started.
        Senator DeWine. I get it. I understand what you are saying.
        Mr. Goldin. What I want you to understand, we have learned
    to prioritize. Our priorities in Space Station research are
    biomedical, biotechnical, and physical research.
        Now, saying that, those are the priorities we set up. We
    are having the Academy look at those priorities. It is not just
    going to be NASA. We are bringing outside review.
        Senator DeWine. And I appreciate that. Just for the record
    I have this concern. I wanted you to understand that.
        Mr. Goldin. But I also want to say we have not made the
    final decisions on the research, and we have about another 2
    months of going through this process to see, given the budgets
    we have, what can we do.
        Senator DeWine. I appreciate that.
        Mr. Goldin. By the way, the combustion research is
    important to us in space because if a fire breaks out, we have
    to know how to contain it in zero gravity.
        So, we agree with what you are saying, but it comes down to
    priorities. I do not want to say it is dead; I do not want to
    say it is alive. I want to wait until we are done with the
    study.

                          Glenn research center (GRC)

        Senator DeWine. Here is one vote for alive.
        Last fall, Director Venneri came to my office in Cleveland
    and promised to augment the Glenn Research Center's budget by
    $250 million over 5 years. This so-called ``get well'' package,
    as it was termed, was to include $31 million above and beyond
    Glenn's 2001 budget. According to my information, prior to my
    meeting with him, Glenn's overall aerospace technology code R
    budget was to have been $278 million. After September, Glenn's
    overall aerospace technology budget was $285 million. The
    funding that was promised at that meeting, $8 million for the
    RLV air-breathing propulsion design program, $10 million for
    the revolutionary aerotech concepts and $13 million for
    advanced energy systems, did certainly come about.
        However, I am concerned that $8 million was taken from
    Glenn under the innovative third generation propulsion, $1.2
    million was taken from other propulsion and power systems,
    another $13 million was taken from other space-based research.
        I wonder if you can explain this. Frankly, it is important
    to me because you all represented to me and came to my office
    prior to the release of the administration's budget and
    indicated that, while Glenn would lose around $52 million from
    its, for lack of a better term, baseline budget, headquarters
    was planning to augment that by $40 million. What is the deal?
        Mr. Venneri. Yes, Senator, everything you said, the
    statements and facts are correct. So, I am not going to repeat
    your comments.
        Senator DeWine. But you agree with the facts, though. We
    have got our facts straight.
        Mr. Venneri. Yes. The work that we defined in the fall that
    added to the $250 million increase is still in the budget. That
    work is still there. Unfortunately, other reductions occurred
    in our 2002 budget that did not stop what we added, but other
    things were pulled out. The reduction in the overall Glenn
    budget is approximately $51 million from 2001 to 2002. About
    $34 million of that is associated with my enterprise. The other
    activity is projected to be the microgravity work you were
    referring to. We are in the process now of dealing with things
    in the aerospace technology that mitigate and minimize that
    impact. Some of those reductions, though, extend into other
    activities at universities. One, University of Maryland, in
    Alabama. These are things that have us troubled because----
        Senator DeWine. Excuse me. I am going to run out of time
    here, but I was talking about the 2001 budget. You are not
    talking about the 2001 budget.
        Mr. Venneri. No. In the 2001 budget, we did what we said we
    were going to do. It is the 2002 budget where the problems are
    coming up.
        Senator DeWine. So, you agree with the facts that I
    recited.
        Mr. Venneri. Yes.

        Polymer energy rechargeable system/glenn microsystems initiative

        Senator DeWine. I will follow up with you. Let me move on
    because I am going to run out of time.
        Let me say I was dismayed at two of the programs that were
    terminated by NASA that involved collaboration between Wright-
    Patterson Air Force Base and NASA Glenn. The polymer energy
    rechargeable systems and the Glenn microsystems initiative are
    providing benefits to NASA, DOD, and have great promise,
    frankly, for the public at large.
        In an era of tight budgets, these programs allow NASA to
    leverage other agency dollars, other facilities and research
    areas, and yet NASA is not supporting these programs to their
    planned completion. Again, I wonder if you could comment on
    that.
        Mr. Goldin. That was carrying straight out administration
    policy of not extending from fiscal year 2001 to fiscal year
    2002 any earmarks that were in the program or space mandates.
    That was mandated policy and we did exactly what the
    administration asked us to do. And it is not just NASA; it was
    across the whole administration. That was not done with
    prejudice. We believe those programs are good programs, but we
    are carrying out administration policy.
        Senator DeWine. I see my time is up. Thank you, Mr.
    Chairman.

                              Crew return vehicle

        Senator Bond. Thank you very much, Senator DeWine.
        Going back to the Crew Return Vehicle, before the cost
    overruns, I understand NASA was looking to spend upwards of $1
    billion for a Crew Return Vehicle using the X-38 technology
    test bed. That seems awfully expensive to me. The Soyuz has
    some problems but it seems to be a lot cheaper.
        Can NASA not develop a CRV, a plain vanilla escape vehicle,
    based on current technologies and what we know about the Soyuz?
    You have done everything else. Why can we not get it for less
    than $1 billion?
        Mr. Goldin. First, let me say the cost of the Soyuz is a
    recurring cost now, and they are not amortizing the development
    cost. That figure includes development plus building of four
    vehicles. So, I do not think we are comparing apples to apples.
    The second thing is the Soyuz has to be replaced every 6
    months, and that is a huge logistics. Our vehicle is good for 3
    years.
        Third, to be able to buy the Soyuz is not the right thing
    to do right now. So, we felt we needed an independent vehicle.
    We think there is a chance of doing it for less, but it could
    be more. That is why we want to hold off and make sure we
    understand the costs before we commit.
        Finally, the Soyuz does not meet the medical requirements
    that we set up. In case there is an astronaut that is hurt on
    orbit or very, very sick, we wanted a very low g when they
    land. The Soyuz has a very high shock. So, we collaborated with
    the medical community to develop a vehicle that had a much
    lower shock level. Again, every country does it differently,
    but we put a very high emphasis on safety of the crew members.
        Senator Bond. I certainly was not implying that we needed
    to be putting more money in the Soyuz.
        Mr. Goldin. I am just a little nervous about that subject
    right now.

                                 Space tourism

        Senator Bond. It would seem to me that if we are going to
    have to make sure that we can conduct our space missions and
    our science missions, that we are going to have to have a
    dependable vehicle that meets our standards.
        Again, we are at the mercy of Russia because of the
    emergency escape vehicles, and I am very troubled that Russia
    has already indicated its willingness to act unilaterally. We
    have gone the extra mile to keep Russia in the ISS program,
    including providing $800 million to help support Russia for its
    Space Station cooperation. But then Russia's actions in
    demanding a space tourist and stating that they were going to
    launch when, I understood it, we did not feel it was
    appropriate to launch. They wanted Russia to take care of their
    tourist schedule. That certainly runs counter to the spirit and
    intent of the entire partnership agreement. In my mind, it
    undermines the whole rationale for the station as a world-
    class, international cooperation, on-orbit science platform.
        I know there is supposed to be a new agreement process to
    review any requests for paying tourists, but what guarantees do
    we have that the Russians will not pull this kind of stunt
    again, either with a tourist or something else, or make any
    other unilateral demands? Is there a way we can get a handle on
    this partnership?
        Mr. Goldin. We had some very frank and candid discussions
    over the last few months, and I saw a distinct change when the
    Russians agreed to go through the formal process that we set up
    almost 6-7 years ago on how to handle it. Then when the
    Russians wanted to launch the Soyuz and we had a safety
    concern, I spent the evening talking to my counterpart, Uri
    Kopchev, who was very gracious and resolved the issue so we
    would not have a potential safety problem.
        I think both of us have to back off from rhetoric. We are
    going to be working together for a number of years, and we are
    beginning a number of team-building efforts to pull back from
    the stress that built up over this activity. But the Russians,
    over the last few weeks, have shown every indication they want
    to work with us in a calm, professional manner, and I think--I
    cannot guarantee it--we will be over it, and only the next 2-3
    months will tell whether we are there.
        Senator Bond. I understood that the Russians went ahead,
    despite our objections, in launching, without delaying the Tito
    trip for several days. Are you indicating that the questions
    you had about the safety, in terms of timing of the launch, had
    been resolved to NASA's satisfaction prior to the launch?
        Mr. Goldin. Yes, sir. What I had talked to Mr. Kopchev
    about was the fact that they had a variety of reasons for
    launching, some of them technical, but not all. Mr. Kopchev
    agreed that the Soyuz vehicle would not dock with the Space
    Station until the shuttle pulled away. That I felt was an
    adequate and realistic safety compromise, and I congratulated
    him for his leadership. There was some communication problem
    and some of the operators were not aware of it, but we got back
    together and we resolved the issues. So, I think we are on the
    road to solving this problem.

                Computer software/loud noise/vibration problems

        Senator Bond. Another area. I am disturbed by the anecdotal
    reports that the station has serious computer software
    problems, consistent loud noise, continuous vibrations. How
    serious are these problems? Do they pose a risk to the crew and
    the station? What are you doing to address these problems?
        Mr. Goldin. First, we have mapped the noise in the station.
    The laboratory and the node are quiet, very quiet. The service
    module is noisy. The Russians are taking steps to put noise
    suppression into the service module.
        There were vibration problems in some of the fans that the
    Russians provided, and they are taking steps to reduce the
    vibrations from the fans.
        Finally, with regard to software, that I believe--I was
    asked a question about cost. That is one of the areas that we
    are on the cutting edge. When we went to Mars with Pathfinder,
    we had 160,000 lines of code. We have 3 million lines of code
    in the Space Station. This is probably the toughest problem not
    just for NASA, but for the whole industry. The overall high-
    tech industry could tolerate software failures. You know, your
    phone clicks off, you turn it back on. Your computer locks up,
    you turn it back on. NASA could allow zero failures.
        We just had what I consider to be a very serious failure on
    board the station just when the crew was ready to pull away. We
    have three computers. It is called dual fault tolerance. What
    happened, we had one failure that cascaded, so all three
    computers shut off. There should not be a cross coupling and we
    do not understand it. We have a whole team of people going at
    it.
        However, this is the kind of problem that we have to deal
    with, and towards that end, after the Mars failures, we
    recognized that we would have bigger and bigger software
    problems. So, at NASA Ames we set up a high dependability
    software consortium and we are working with the top software
    firms in America, Carnegie-Mellon University, University of
    California to try and get at these things. I have to tell you
    the software industry is just delighted to be working with us
    because these are problems common to all, and NASA is on the
    cutting edge. So, this is the approach we are taking, but I
    have got to tell you we are going to have more and more of
    these problems as we go to digital systems, and we will have to
    grin and bear it.
        Senator Bond. Thank you, Mr. Goldin.
        Senator Mikulski.

                                 Space tourist

        Senator Mikulski. Thank you, Mr. Chairman.
        Chairman Bond really followed a line of commentary and
    questions on the space tourist, but I just want to say this.
    When this happened, I was pretty volcanic, but I held my fire
    because of two things. One, we have a new president, and he is
    establishing his foreign policy and his relationship with
    foreign leaders. Russia is very important in this geopolitical
    new world order, and it was not the time to be a unilateral
    Secretary of State for Space. If it happens again, I intend to
    go to the President of the United States about this because I
    think it is demeaning to our space program and I think it does
    place threats and stress. So, the Russians need to know this.
        I think we were all caught by surprise. They acted
    unilaterally. We are creating a climate here, and I think our
    President has to do more than find his footing in foreign
    policy and I look forward to working with him on it. The Space
    Station was a concept of Ronald Reagan, and President Bush's
    dad pulled us together to find a revenue stream for the
    station. There would not have been a Space Station without
    President Bush I, if I might say.
        So, I am a team player here, and I will never jeopardize
    America's foreign policy, but I am just not going to be silent
    or tepid about this should it happen again. I am speaking
    really to the Russians through you in this hearing.
        So, that is where I am on this. So, let us hope it does not
    happen again.
        Have you received assurances they are not going to do it
    again?
        Mr. Goldin. I have had discussions with my colleague. The
    good news is after we got over this unilateral approach, due to
    a variety of stresses, some induced by the space tourist, the
    Russians sat down with our people and we went to the formal
    process through the----
        Senator Mikulski. But, Mr. Goldin, did they or did they not
    give you assurances that they would never do this again, acting
    unilaterally?
        Mr. Goldin. Yes, they did. Now, there is a difference
    between a desire to do something and the ability to make it
    happen. So, what we have to do is work to see how we go in the
    near term. I can tell you have been monitoring the press
    reports. I have been monitoring the meetings we have been
    having with our Russian partners, and there has been a very
    cooperative spirit in working with them lately. I cannot
    guarantee what is going to happen in the future.

                              Earth science budget

        Senator Mikulski. But they need to know this. I believe we
    would be really operating on a bipartisan basis on this.
        But let me move on here. Let me go back to the earth
    science budget, Mr. Goldin. I note that it is being reduced
    this year while space science goes up. That is where the
    confusion was for a moment.
        But why does the budget run-out over the next 5 years show
    flat funding for earth science? In other words, is that where
    we are going to be, flat funding for earth science?
        Mr. Goldin. What it reflects is the phase-down of the EOS
    phase 1, the phase-up of EOS phase 2, which is at about the
    same level of funding, and it reflects administration policy as
    to the level that earth science ought to be funded at.
        We have seven spacecraft in there, and there are four other
    measurements that we would like to make. Those measurements are
    not mature enough to be put into the program, and I believe we
    will be exploring those possibilities for other new starts in
    the phase 2 program in the fiscal year 2003-2004 budget.

                         Space launch initiatives (SLI)

        Senator Mikulski. I would like to turn now, if I could, to
    the Space Launch Initiative. I know that NASA spent about $1
    billion on the X-33, and then it had to be canceled for obvious
    reasons. And I am not disputing the decision. But where do you
    see yourself going now in terms of the Space Launch Initiative
    in which we would be developing a next-generation reusable
    launch vehicle?
        There are concerns that when the SLI program selects one or
    more candidate designs in 2005, the industry will not be able
    to raise sufficient money to develop the reusable launch. I
    think we all would agree this is a very important program. I
    wonder where are we going from here with the cancellation of X-
    33, and then there are concerns in the private sector about how
    we can again get ourselves underway.
        Mr. Goldin. There has been an enormous change in the
    marketplace in launch. Just 3-4 years ago, there was the
    expectation of thousands of launches to low earth orbit, and at
    that time, the private sector was saying, Government, just kind
    of reduce the technical risk for us and we will go develop the
    systems. The commercial market fell out.
        We now are taking a good, hard look at it, and in the Space
    Launch Initiative, which is almost $5 billion over the next 5
    years we are saying we do not want the contractors to spend a
    nickel of their money. It needs to be Government funded. It is
    a modest program that is going to go at the 10 critical
    technical areas. It is not a vehicle. It is trying to retire
    the technical risks so that by the middle of this decade, the
    industry and the Government can make a calculated decision. If
    the commercial marketplace comes back, then they could go
    develop it. If it does not, mid-decade the United States
    Government to meet NASA's unique needs--we want to make the
    vehicles 100 percent safer for the astronauts at one-tenth the
    cost. I believe mid-decade, if the commercial market does not
    return, we are going to have to put in a significant addition
    to the money to pay for the full development of these systems.
    All we are doing now is saying, over the next 5 years, we are
    going to not have industry put in so we can share the data with
    everyone, small companies, big companies, and jointly make a
    decision mid-decade.
        Senator Mikulski. So, you are laying the groundwork for a
    decision.
        Mr. Goldin. We are laying the rails down now.
        Senator Mikulski. Well, with the collapse--or let us say
    the downsizing of the commercial launch industry, even some
    would say the collapse, this brings me to a question about
    Wallops. You worked very hard with Senator Warner and myself to
    develop a vision for Wallops. It was to be a new partnership
    with private industry to promote commercial launch services.
        Well, your assumptions and predictions did not materialize
    because the marketplace changed. What have you thought about
    for Wallops, and if you have not, will you do so so that we
    could talk about it, say, between now and the end of June?
        Mr. Goldin. First, let me say your word ``collapse'' is
    absolutely correct. I do not think that Boeing and McDonnell-
    Douglas are going to be making money on their huge investments
    in the Atlas 5 and the Delta 4. It breaks my heart. I was out
    there with you at Wallops and we put together this Vision 2000,
    and we were going forward.
        We have a plan, which I am going to submit for the record,
    talking about how we are going to now look at Vision 2005.
    Wallops has incredible skills. For example, we are going to see
    if we can have this ultra-long duration balloon technology
    applied to perhaps a balloon mission on Mars. So, we are
    talking about having them work with the Jet Propulsion
    Laboratory (JPL) on future missions.
        Senator Mikulski. Well, I can assure you at Wallops they do
    know metric.
        Mr. Goldin. Yes.
        Senator Mikulski. Sorry. Well, no, I am not really sorry
    about that.
        Mr. Goldin. There are some other tasks. Wallops is
    developing some incredible new advance range technology. They
    have a system that they proved on a sounding rocket that has
    the rocket call home through commercial communication
    satellites that may greatly reduce the cost of launch. So, we
    are looking at bringing them into the Space Launch Initiative
    not as an operating center, but as a technology development
    center.
        Senator Mikulski. So, you do have a plan that you want me
    to look at?
        Mr. Goldin. Yes, and we would like to submit that for the
    record.
        Senator Mikulski. Submit it for the record.
        Senator Bond. Without objection, it will be accepted.
        [The information follows:]

                    Aeronautics Vision for the 21st Century

                       aeronautics is vital to the nation
        Aeronautics is a key to National security, transportation mobility
    and freedom, and quality of life. Air superiority and the ability to
    globally deploy our forces are vital to National interest. The role of
    air power in winning the Gulf War is a clear reminder of the importance
    of aircraft in major conflicts. Aviation is a unique, indispensable
    part of our Nation's transportation system, providing unequaled speed
    and distance, mobility and freedom of movement for our Nation. Air
    carriers enplane over 500 million passengers and fly over 500 billion
    passenger miles, accounting for 25 percent of all individual trips over
    500 miles, 50 percent over 1,000 miles and 75 percent over 2,000 miles.
    Air freight carries 27 percent of the value of the Nation's exports and
    imports and is growing at over 10 percent annually. Global
    communications, commerce and tourism have driven international growth
    in aviation to 5 to 6 percent annually, well beyond annual Gross
    Domestic Product (GDP) growth.
        Aviation employs 800,000 Americans in high quality jobs, second
    only to trucking in the transportation sector. Driven by technology,
    annual growth in aviation labor productivity over the past 40 years has
    averaged 4.6 percent, compared to 2 percent for U.S. industry as a
    whole. For example, technological advances over the past 40 years, many
    of them first pioneered by NASA, have enabled a ten-fold improvement in
    aviation safety, a doubling of fuel efficiency with reductions in
    emissions per operation, a 50 percent reduction in cost and an order of
    magnitude reduction in noise.
        Aviation manufacturing is a consistent net exporter, adding tens of
    billions of dollars annually to the Nation's balance of trade. Aviation
    produces and uses a broad base of technologies--from computing and
    simulation to advanced materials--supporting the high technology
    industrial base of the country. Defense aviation provides fast,
    flexible force projection for the U.S. It is unparalleled globally
    because it employs the most advanced technology.
        Aviation is central to personal freedom, security of the citizens
    and the global movement of people and goods in the new economy.
    Mobility is synonymous with freedom. The ability to move freely and
    efficiently from place to place is a right highly valued by U.S.
    citizens. Mobility requires transportation that is inherently safe,
    available on-demand, and affordable. National security and the economic
    health of the country are heavily dependent on aerospace systems.
        The U.S. is the global leader in aviation. From every aspect--
    technology, products, services, aviation standards and procedures, and
    National defense--the U.S. sets the mark.
                          major challenges to overcome
        A new revolution in air travel is far from assured. Unless we act
    decisively to overcome major barriers, the future can be one of
    disintegration and decline. Any plan for progress must be based on a
    sober realism about the current status of the aerospace system, as well
    as the Government and commercial stakeholders associated with it.
        Both military aerospace research and development (R&D) and
    procurement have declined, reducing the ``technology pull'' from the
    military sector. In past decades, the motivation for advances in
    aerospace technologies was dominated by military needs. The partnership
    among NASA, DOD and industry rapidly advanced, matured and integrated
    aerospace technologies. These technologies were then appropriated for
    commercial use, with great success. Examples of this process abound.
    The turbine engine introduced on the B-707 was originally designed for
    military aircraft. The Pratt & Whitney J-57 and the General Electric J-
    79 engines were also originally developed for military use before
    leading to commercial derivatives. Beyond this, the B-707 airframe was
    developed jointly for a commercial transport and for a military tanker.
    The DC-10, L-1011, and B-747 were developed based on research into
    wide-body aircraft, while competing for what became the C-5A military
    transport contract. In an additional significant development,
    revolutionary fly-by-wire flight controls were developed and first
    adopted for U.S. military aircraft, and Boeing is now incorporating
    fly-by-wire into its newest commercial aircraft.
        Although the increasingly competitive marketplace demands an
    accelerating pace of technological innovation, the opportunity for
    commercial industry to draw on defense-related R&D is decreasing.
    Military aerospace sector is a much smaller share of the overall
    aerospace market. Furthermore, military spending has been focused on
    sustaining the current fleet at the expense of research and technology.
    In 1971, the military accounted for 55 percent of the overall market
    and by 1997 it was down to 34 percent. For turbojet engines, the
    decline is even more dramatic. For example, General Electric Aircraft
    Engines shifted from 70 percent of their business being military to
    about 20 percent. And for Pratt & Whitney the situation is very
    similar.
        Furthermore, during the 1950's there were 45 aircraft development
    programs--during the 1990's there were only six. Far fewer developments
    with protracted design and acquisition schedules--an 80 percent
    increase in the development time for major DOD systems from 5.2 years
    during 1965-69 to 9.3 years during 1990-94--are the result of
    increasing system complexity and inefficiencies in design, development
    and manufacturing. After the Joint Strike Fighter program, no major new
    military aircraft development programs are on the drawing board. With
    fewer aircraft developments, there are fewer opportunities for the
    declining engineering experience base to develop design and production
    skills, crucial in light of the increasing complexity of the systems.
    The decline in exciting aerospace developments has also contributed to
    the sharp decline in the enrollment in our universities' aerospace
    engineering departments, further exacerbating the loss of engineering
    talent.
        The market shift from the military to the commercial sector as the
    major buyer of aerospace products dictates a corresponding shift in R&D
    strategy. Industry consolidation--from 25 aerospace corporations two
    decades ago to four today--has contributed to the substantial reduction
    in the infrastructure that supports aeronautics research and
    technology. Driven to the near term, industry has reduced research to
    three percent of sales, down from 5.5 percent just two years prior.
    Therefore, at NASA, we shifted our technology development toward
    revolutionary long-term, high-risk civil needs, while maintaining a
    strong partnership with DOD to ensure the sharing and application of
    technologies across military and commercial requirements.
        Commercial markets are projected to be extremely large over the
    next decade. These projections are based on the assumption that the
    current aviation system can support unconstrained growth. But, just as
    the Nation (and the world) becomes more dependent on moving people and
    goods faster and more efficiently via air, important obstacles have
    emerged. The air traffic and airport systems in both the U.S. and
    overseas are reaching full capacity. Delays are increasing. Each year,
    airlines must add more ``padding'' to their schedules to maintain on-
    time performance and the integrity of their scheduling systems, while
    facing more congestion in the system. At the same time, legitimate
    concerns over environmental issues (e.g., noise and emissions) are
    preventing additions to physical capacity. In 1998, airline delays in
    the U.S. cost industry and passengers $4.5 billion--the equivalent of a
    7 percent tax on every dollar collected by all the domestic airlines
    combined. Several key airports are unable to gain approval for projects
    to expand infrastructure because they are in non-attainment areas,
    where National objectives to reduce emissions have not been met.
    Therefore, we are seeing constraints to growth that could threaten the
    commercial prospects of our aerospace industry as well as impact the
    integrity of our transportation system.
        Today, these problems are even more acute than in the past.
    Shortfalls in capacity (i.e., airports, air traffic control and vehicle
    capability) and problems with the environment are not easily addressed
    in the private sector. The resulting delays, and noise and emissions
    pollution are not even priced in the market place. These problems are
    termed ``externalities'' since, unlike other costs, no market
    participant pays directly for them. As a result, the private sector has
    inadequate incentives to address the very real problems imposed by
    aviation on third parties.
        As the long-haul jet transport has in effect become a commodity in
    the marketplace, commercial operating margins have become razor-thin.
    And, although the dollar value of the U.S. share of the world aerospace
    market has been increasing, the size of the U.S. share of that market
    has been markedly declining. From about 70 percent in the mid-1980's,
    it is about 50 percent today, in part because of the development of new
    programs overseas. Future market share could decline even further as
    European competition becomes more aggressive. In this environment, U.S.
    industry has developed an increasing number of international
    partnerships, both in technology and product development. And while
    there may be positive aspects of this trend, failure to manage it
    appropriately may in the long run place at risk a technology base
    critical to our National defense and quality of life.
        America should not be lulled into the false security that the U.S.
    will continue to be the leader in aeronautics. The Europeans have
    reached parity in civil transports, and are on a path to forge ahead of
    the U.S. The Japanese have shown significant interest in supersonic
    transports, an area that the U.S. has stopped twice over the last four
    decades. If we lack the vision, not only will we lose the civil
    industry, but also we will be fighting battles with out-dated F-18s and
    joint strike fighters, and taking our vacations on foreign transports.
        The confluence of challenges facing aviation is serious. Overcoming
    these challenges will require leadership and a long-term perspective to
    shift to a new paradigm that will enable renewed growth and benefit.
    The vehicle possibilities defined by the technology horizon are
    exciting, but will require intensive, long-term research programs to
    achieve.
                      a new vision for continued vitality
        All the improvements made over the last 40 years have given us the
    most modern aviation fleet operating in the safest aviation system in
    the world. NASA has been a major contributor to these improvements. The
    Federal Aviation Administration's National Airspace Modernization plan
    had its roots in the far thinkers of NASA's research centers. NASA
    demonstrated, despite many doubters, that wind shear could be detected
    with sufficient warning to safely avoid the weather phenomena that
    resulted in many aviation fatalities. Today, wind shear warning is a
    standard on all commercial transports. We have been a major participant
    in all military aircraft developments and provide technical expertise
    for resolution of in-service problems. The F-18 E/F was in jeopardy of
    being canceled due to the difficulty posed by severe uncommanded
    aircraft maneuvers caused by massive separated flow over the wing until
    our engineers devised a porous fairing that acted as an ``air dam'' and
    prevented the problem. The NASA-led Advanced General Aviation
    Technology Experiments (AGATE) consortium resulted in the development
    of many pre-competitive technologies and provided part of the impetus
    behind the revitalization of the general aviation industry.
        However, the emergence of the revolution in biotechnology,
    nanotechnology, and information technology represents the dawning of a
    new era. This new era has the potential to enable revolutionary changes
    in aviation. We stand on the verge of a totally new paradigm for
    aeronautics--a new ``golden age of aviation.''
        Today most passengers pass through only one percent of our Nation's
    airports on aircraft that weigh twice as much, use 75 percent more
    fuel, and create four times the noise than what is possible. For these
    aircraft, in which routine, scheduled maintenance is the current
    practice to ``catch'' problems that develop in service. Our vision is
    on-board ``intelligence'' to monitor their health and to predict when
    maintenance needs to be accomplished prior to problems occurring. In
    some cases, aircraft could even have the ability to conduct self-
    repair, providing orders of magnitude increases in safety and
    reliability while vastly lowering operating costs.
        The aircraft of the future will not be built from multiple,
    mechanically connected parts. The aircraft will have ``smart''
    materials with embedded sensors and actuators. Sensors--like the
    ``nerves'' of a bird--will measure the pressure over the entire surface
    of the wing and direct the response of the actuators--the ``muscles.''
    These actuators will smoothly change the shape of the wing for optimal
    flying conditions. The control surface will be integrated with, instead
    of an appendage of, the wing, as they are today. Intelligent systems
    made of these smart sensors, micro processors, and adaptive control
    systems will enable vehicles to monitor their own performance, their
    environment, and their human operators in order to avoid crashes,
    mishaps, and incidents. Distributed as a network throughout the
    structure they will provide the means for imbedding a ``nervous
    system'' in the structure and stimulating it to create physical
    response and even change shape. They will also serve as the means for
    sensing any damage or impending failure long before it becomes a
    problem.
        These future structures rely on an emerging technology that builds
    the systems from the molecular, or nano-scale--known as nanotechnology.
    Revolutionary new nanotechnology composites have the promise to be 100
    times stronger than steel and only \1/6\ the weight. We are at the
    leading-edge of this technology, transitioning from fundamental physics
    to building actual macroscopic materials. Much work remains to be
    accomplished. If we are successful, an aircraft made from this material
    could weigh as little as half a conventional aircraft manufactured with
    today's materials and be extremely flexible allowing the wing to re-
    form to optimal shapes, remain extremely resistant to damage, and
    potentially ``self-heal.'' The high strength-to-weight ratio of these
    nano-materials could enable new vehicle designs that can withstand
    crashes and protect the passengers against injury.
        The application of high temperature nano-scale materials to
    aircraft engines may be equally dramatic. Through successful
    application of these advanced lightweight materials in combination with
    intelligent flow control and active cooling, thrust-to-weight ratio
    increases of up to 50 percent and fuel savings of 25 percent are
    possible for conventional engines. Further advances in integrating
    these technologies might result in novel engine concepts that simplify
    the highly, complex rotating turbomachinery. Other future concepts
    include alternative combustion approaches and the potential to move
    toward hybrid engines that employ innovations such as pulse-detonation
    engine core. Combined with intelligent engine control capability, such
    an approach could able integrated internal flow management and
    combustion control. It also has the potential to integrate both the
    airframe and engine systems for unprecedented efficiency and
    directional control capability.
        To take full advantage of nano-materials, new computational tools
    using the advances in information technology are required. Tools that
    take advantage of high-speed computing will enable us to develop large-
    scale models and simulations for the next generation of vehicles. High-
    fidelity collaborative, engineering environments with human interfaces
    will enable industry to accurately simulate an entire product life
    cycle, dramatically cutting development costs and schedules. The
    increasing performance demands and system complexity require new tools
    to adequately predict the risk and life cycle costs of new aircraft.
    New computing techniques and capabilities can be exploited to develop
    robust designs by capturing knowledge and identifying trends to
    anticipate problems and develop solutions during design rather than
    after development. These simulations require tools that deal with the
    increasing complexity of future systems and could offset the
    diminishing design team experience base in this country. No longer will
    we design the engine and airframe independently, but rather the
    computational tools could allow fully integrated vehicle-engine design,
    integrated health management, and management of the total vehicle air
    flow both inside the engine and outside the aircraft. These new
    integrated propulsion and vehicle technology advancements could not
    only optimize subsonic flight regimes, with twice the thrust-to-weight
    ratios, but also enable sustained supersonic flight with minimal impact
    due to sonic booms or other environmental concerns for both civilian
    and military applications.
        In the very long term, comparable advances in electrical energy
    storage and generation technology, such as fuel cells, could completely
    change the manner in which we propel aircraft. Future aircraft might be
    powered entirely electrically. In one concept, thrust may be produced
    by a fan driven by highly efficient, compact electric motors powered by
    advanced hydrogen-oxygen fuel cells. However, several significant
    technological issues must still be resolved to use hydrogen as a fuel,
    such as efficient generation and storage of hydrogen fuel and an
    adequate infrastructure necessary for delivering the fuel to vehicles.
    Success in this effort could end the Nation's dependence on foreign
    sources of energy for transportation. Revolutionary technologies such
    as these are prime areas for significant university involvement.
        If we are successful, what will the vehicle of the 21st Century
    look like? It will be radically different from the commercial transport
    of today whose basic configuration has not changed since the
    introduction of the Boeing 707 and turbojet engines in the late 1950's.
    The design flexibility that the revolution in materials and computing
    technologies provides could enable aircraft whose shape could change to
    meet a range of performance requirements, for example, range,
    maneuverability and radar cross-section. With new fuel cell power
    systems, zero emissions may be possible, and the only noise would be
    that generated by the air flowing over the vehicle. The wing shape may
    be changed during flight to control the vehicle, eliminating the need
    for the weight and complexity of flaps and conventional control
    surfaces. These aircraft could be flown in an air transportation system
    that allows hassle-free, on-demand travel to any location. The
    beneficial variations are potentially limitless--truly revolutionizing
    air vehicles, not only commercial and military aircraft, but also
    personal air vehicles and the utilization of more of the 5,400 airports
    thus providing service to small communities and rural regions that
    today do not have easy access to air travel.
                                critical issues
        We must reverse the decline in expertise.--There is a looming
    crisis in U.S. expertise--from relatively inexperienced design teams to
    reductions in research and development to reduced enrollments at
    universities. Leadership is required to reverse this trend. We, in
    partnership with the academic community, must begin developing a new
    generation of scientists and engineers that blend traditional
    competencies, such as aerodynamics, material and structures, and
    guidance and controls, with the emerging competencies in
    nanotechnology, biotechnology and information technology. We must also
    develop the design tools and environments that will allow us to
    integrate fewer and more specialized scientists and engineers into
    effective teams capable of designing highly complex integrated
    aerospace systems.
        A plan for our National facilities is required.--Over the past
    several years many reviews have been performed relative to our National
    aeronautical facilities. There have been some closures and changes. The
    real outcome of these studies has been the perpetuation of marginal
    facilities through small, evolutionary change. As a result, we have
    maintained the status quo instead of investing in the future. We must
    finally put in place a plan that defines the facilities and
    infrastructure that we need and deliver on this vision.
        The high-risk, long-term vision requires reinvestment of government
    resources.--The government's role is not to subsidize industry.
    However, it is unreasonable to expect the private sector to make all
    the necessary high-risk, long-term investments to achieve the vision.
    Government will need to reinvest existing aeronautics research and
    development resources in the basic research necessary to enable a 21st
    Century aeronautics vision. Government aeronautics research should not
    have a vista of less than 10 years. At the same time we must
    restructure the public-private partnership to ensure the appropriate
    cooperation and technology transfer.
                    blueprint for the future of aeronautics
        NASA will deliver, by September 2001, a Visionary Blueprint for
    National Aviation for the 21st Century. This blueprint will, within the
    Administration's vision for the role of the Federal government,
    establish:
      --Clear National objectives for the future of U.S. aviation.
      --Reinvestment of existing research and technology into revolutionary
            new vehicle technologies.
      --A plan for the infrastructure necessary to support the blueprint.
      --A plan for working with universities to train a new generation of
            scientists and engineers with the necessary multi-competency
            skills.
      --A plan for development of public-private partnerships required
            ensuring the success of the blueprint.
        The realignment of the fiscal year 2002 NASA aerospace research and
    technology program is the beginning of this vision. The blueprint will
    be prepared in concert with the development of the fiscal year 2003
    budget.
        We look forward to working together to develop the right
    aeronautics program for the continued benefit of U.S. National security
    and transportation mobility.

        Senator Mikulski. Also I know that we could also look at
    perhaps launching small payloads to the Space Station on a
    short notice, particularly for an emergency resupply mission.
        But I want to discuss it with you, and I also know that
    Senator Warner and I am sure Senator Allen, as a former
    Governor, would be interested. Wallops is in Virginia, but as
    you know it is a Maryland-Virginia workforce. Senator Warner is
    very keen about the viability of Wallops.
        Mr. Goldin. We will come and present the plan to you before
    the end of June.
        Senator Mikulski. I think that would be good, and we could
    again work on a bipartisan basis on this.
        Senator Bond. Thank you very much, Senator Mikulski.
        Senator Shelby.

                              In-space propulsion

        Senator Shelby. Thank you, Mr. Chairman. I had to go to
    another meeting, as we all do, and I apologize. I may have
    missed some of these questions and also I missed some of Mr.
    Goldin's testimony.
        Mr. Goldin, travel times in space currently limit NASA's
    mission of exploration. We have talked about this before. What
    is NASA doing in terms of in-space propulsion technologies to
    address these limitations, given budget limitations?
        Mr. Goldin. We made a very hard decision in this year's
    budget to add $310 million to in-space propulsion. We want to
    go to the outer planets. It takes too long to get there. There
    is fabulous science out there. Ultimately we are going to want
    to send people to Mars. We do not want to spend 9 months to get
    there, 9 months to a year. We want to get there in months. So,
    we have reprogrammed about $310 million to take a look at this
    very, very critical technology.
        Senator Shelby. Is Marshall not central to this mission?
        Mr. Goldin. Yes, it is.

                       Propulsion research infrastructure

        Senator Shelby. Mr. Goldin, revolutionary advances in
    propulsion will be required if NASA is serious--I say serious--
    about its mission of exploring and developing space. I believe
    NASA has to be serious.
        What has NASA invested in its propulsion research
    infrastructure, specifically facilities and equipment to enable
    future, cutting-edge propulsion technology breakthroughs? You
    alluded to that a minute ago.
        Mr. Goldin. Yes. There is $8 million that we are going to
    be spending this year and I believe another $2 million next
    year. There is one issue that I would like to bring up here
    because we have a good Senator from Ohio and a good Senator
    from Alabama.
        Senator Bond. We had a metal detector screening device set
    up before we came in. We have taken appropriate precautions.
        Mr. Goldin. My life is living hell.
        Senator Shelby. But we are all friends.
        Mr. Goldin. We need to get the Alabama and Ohio delegation
    together. I spoke with Mr. Hobson from Ohio in Dayton. There is
    a stress that I think especially in this area that if we could
    have the help of both delegations, NASA would like to meet with
    you, and then sort out the right place to do the right things
    so our people will see the leadership working together. I think
    that could do wonders in accelerating the pace at which we
    could work. I would like to propose that before the end of June
    NASA does the homework, we get our two center directors
    together, and then we come and present to both delegations. It
    will make my life so much nicer.
        Senator Shelby. Would it make the mission stronger?
        Mr. Goldin. Yes, it would. Yes, sir.

                       advanced Health monitoring system

        Senator Shelby. We will work with you, as you know.
        Mr. Goldin, could you explain how the advanced health
    monitoring system for the Space Shuttle main engines will
    improve shuttle safety?
        Mr. Goldin. Yes. One of the issues we have today is we find
    out that we have problems in the engines when we have a real
    contingency in space and could not do anything or when we take
    the engines apart on the ground and then we find the problem.
    This is a revolutionary breakthrough where we are going to
    monitor critical functions to predict incipient problems rather
    than letting them happen. We are counting on this advanced
    health monitoring system to go into the Space Shuttle main
    engines to improve the reliability so when those astronauts go
    to space, they will go with a much safer launch.

                         Microgravity research program

        Senator Shelby. I want to get into microgravity research
    that we have talked about on many occasions. It has been
    reorganized and so forth. It seems that the low gravity in
    space provides our Nation with an opportunity for significant
    advances in materials processing on earth. It is crucial to our
    manufacturing industry among other things.
        What kind of assurance can we get from you today regarding
    NASA's commitment to our Nation's manufacturing sector through
    a vigorous materials research microgravity program?
        Mr. Goldin. I wish on that one I could look you in the eye
    and tell you we could do it. We have some very strict operating
    instructions from our administration, our President.
        Senator Shelby. I know that.
        Mr. Goldin. And we have to go through this. We are going to
    go through a process on the research over the next 2 to 3
    months, come up with a plan, do the prioritization, see how
    much money we could find. I will tell you that anything that is
    not essential in the human space flight account--and by the
    way, Senator Mikulski, we put a hard boundary. No money will
    come from any science account, outside the Human Space Flight
    account, to fund the problems we are having in the Space
    Station. But within the human space flight account, we are
    looking at shutting down facilities, shutting down advanced
    programs to see how much money we could gather up to do this.
        I cannot guarantee the results of this, but what I can
    guarantee you is we will show you the resources we have
    available. We are going to ask an external review panel at the
    National Academy to take a look at it, and after they review
    it, we will share the results with you. I agree with this
    research.
        Senator Shelby. It could be some of the most important
    research, could it not, because of our manufacturing?
        Mr. Goldin. For manufacturing. But again, we have a lot of
    things to do. So, all I could say is we will work with you and
    tell you the results of what we get within the budget that we
    have.
        Senator Shelby. Do you consult in any way with the U.S.
    manufacturing community on any of this?
        Mr. Goldin. Yes, we do.

                 privatization of remaining Space Shuttle tasks

        Senator Shelby. In your testimony, Mr. Goldin, you refer to
    the President's call ``for advancing the privatization of Space
    Shuttle activities.'' Has NASA conducted or will you conduct a
    cost-benefit analysis on the privatization of remaining Space
    Shuttle tasks?
        Mr. Goldin. We are taking a look at a broad range of
    issues, some of which are cost-driven, others are policy-
    driven. It will not only be a cost decision. We have
    consolidated all the contracts except three, the external tank,
    the Space Shuttle main engines, and the RSRM's, the solid
    rocket motors.
        We are trying to work with Boeing and Lockheed and the
    United Space Alliance in seeing how we could get the safest
    system possible at the lowest cost. We just do not have an
    answer to that question just yet.
        Senator Shelby. Do you think you will in months to come?
        Mr. Goldin. I met with the CEO of USA. I met with the
    leadership of Boeing and Lockheed. We hope, in the next 3 to 6
    months, to see if we could get at it. The first item we are
    looking at is the external tank.

                      NASA's space transportation mission

        Senator Shelby. Mr. Goldin, this is in the area of NASA and
    military space transportation synergy. For years, air
    superiority has been critical for our military. Just yesterday,
    the big news from DOD was that the U.S. military is now
    developing a strategy to establish space superiority. I believe
    the U.S. military is reliant, to a very large extent, on the
    success of NASA's space transportation program.
        How would you characterize the importance of NASA's space
    transportation mission to our military?
        Mr. Goldin. It is very important. I have been meeting on a
    periodic basis and frequent basis with CINCSPACE. General
    Eberhart and I are scheduled to have a meeting on June 7. We
    have told CINCSPACE, we have told air staff that as far as we
    are concerned, this is U.S. taxpayer money. There is almost $5
    billion in the Space Launch Initiative. We want them to be our
    partners. To have two separate programs that would be criminal
    to the American taxpayer.
        We are working jointly with them on the X-37, which is a
    space maneuvering vehicle. It is a joint program office. They
    are putting funds in; we are putting funds in. So, it will be
    the same vehicle that satisfies our needs and their needs. That
    is the only way I know how to go.
        Senator Shelby. Senator Bond, thank you. I might have some
    questions for the record, but thank you for your indulgence.
        Senator Bond. Thank you very much, Senator Shelby. I can
    assure you there will be lots of questions for the record
    because we are not going to be here till dark, and there are
    lots of interesting things on which we need to follow up. We
    appreciate your questions both in person and for the record.
        I now turn to Senator DeWine.
        Senator DeWine. Mr. Chairman, thank you very much.
        Mr. Goldin, let me just state that Ohio is more than
    willing to participate in this Alabama/Ohio summit, and we will
    get that worked out.
        Mr. Goldin. Thank you, sir.
        Senator Bond. We can have it in Missouri.

                              Aeronautics program

        Senator DeWine. That might be all right. We could do that.
    The chairman would be a good host, I am sure.
        Let me ask you one more question. In a recent document,
    entitled European Aeronautics: A Vision for 2020, the European
    Aeronautics Commissioner for Research articulated a vision, a
    vision for Europe to secure global leadership in aeronautics,
    specifically--and I quote--``winning more than a 50 percent
    share of world markets for aircraft, engines, and equipment by
    the year 2020.''
        A government-industry-academia partnership is working to
    bring that vision to a reality, including the required $100
    billion over the next 20 years.
        Given this threat to one of our vital industries, why is
    NASA reducing its investment in aeronautics research? The
    aeronautics budget is being decimated, frankly, in an apparent
    attempt to help solve some of the other budget problems,
    specifically in regard to the Space Station. The Space Station
    is important, but maintaining leadership and preeminence in
    commercial aviation is a necessity I think. I am just
    concerned. You and I have talked about this before. I am just
    concerned with where we are going as we look at where we are
    going to be 10 years from now, 20 years from now, 30 years from
    now. I just think we are making a very, very serious mistake.
        Mr. Goldin. This is a major problem that is bigger than
    NASA. This is a problem, that is, the fact that we have only
    one long-haul jet transport manufacturer in America and only
    two jet engine manufacturers in America. That is point number
    one.
        There has been a shifting demographic over the years
    whereby Defense used to cover the large share of the engines.
    They used to buy, I think, 70 percent of the engines just 20
    years ago. They are now buying 20 percent and within 5-6 years,
    they will buy 11 percent.
        There used to be 46 aeronautics programs in Defense. There
    is now one, and that may not be there. It may just be an
    unmanned vehicle.
        It is hard to train young engineers. The dilemma we have at
    NASA, not having competition in that field, not having Defense
    working on a brand new engine with us, we are alone.
        In addition, there are members of the American community
    who have lobbied very hard saying NASA should not be involved
    in working with the commercial U.S. aircraft industry. They
    have brought unbelievable pressure on this issue, saying it is
    subsidy.
        So, what we have done this year in the budget is made a
    very clear, bright line distinction so there is no ambiguity.
    We showed this video, and I showed that video for a reason. We
    have an aeronautics program that is not corporate subsidy,
    unlike what is going on in other parts of the world. In this
    program, we are going to take a look at the leap-frog, high-
    risk, high-payoff research that no one company could undertake
    themselves and to form a partnership with them.
        But the dilemma is in space, we could conceive a vehicle
    and then we build it and fly it. In aeronautics, we do not
    build anything except technology. For us to tell the Boeing
    company what to do or the Pratt-Whitney company or GE company
    what to do is very, very difficult.
        So, to get at it, we need a Team America. So, what we are
    doing, under the leadership of Sam Venneri, is we are going to
    put together a blueprint and have it done by September. I went
    to the Secretary of Defense, Mr. Rumsfeld. I asked for some
    help, and they have assigned someone from the DOD to work with
    us. We are going to work with the industry. We are going to
    work with academia, and we hope to come up with a blueprint to
    get an agreement in America. What is NASA's role in this? How
    far should we go, and what should the industry do?
        Now, I have to tell you, whatever is going to happen in the
    next 5 or 10 years, the industry is going to have to do by
    themselves. Otherwise, it will be subsidy.
        But what we have to do is take a look at what are the
    national defense needs 10 and 20 years from now, and why is
    America not developing a new generation of plane and engine?
    What are the commercial needs 10-20 years from now, and what is
    the kind of research we ought to be doing that is high-risk--
    some will fail--high-payoff? And getting that vision I think is
    the right way to go instead of having NASA do the near-term
    tasks and then we end up getting accused of subsidy.
        I got to tell you it has been a very tough task. I am very
    disappointed, and I intend to meet with those in the outside
    community that want NASA's aeronautics budget to go to zero.
    Let me put it point blank. They almost did it in 1980. Under
    David Stockman, who was head of OMB, the NASA aeronautics
    budget was zeroed out for the same reason, and thank God,
    during the Cold War where there was a recognition that we were
    late to the defense of the Nation, it got put back.
        I think we all need to not just look at putting dollars in,
    but we need to take a look at Team America. We put together a
    blueprint. For the record, I would like to submit the white
    paper, not just for aeronautics, but how do we solve the air
    space problems. I have shared with Secretary Minetta and we
    have a partnership going there. But I will submit both those
    white papers for the record to give you a sense of where we
    think we ought to go.
        Senator DeWine. Thank you very much. Thank you, Mr.
    Chairman.
        Senator Bond. Thank you very much, Senator DeWine.
        Senator DeWine did raise the question that is of great
    interest to me.
        Senator Mikulski. Me too.
        Senator Bond. I know the Europeans have European Aerospace
    Vision 2020. I am delighted to hear your discussion of the
    steps you are taking. We will accept for the record the
    information you are going to submit because it is very
    important.
        [The information follows:]

          A Technological Revolution for the National Airspace System

                       today's air transportation system
        As we approach the centennial of flight, the size and scope of the
    Nation's air transportation system are truly impressive. Today, 75
    percent of all passenger trips over 2,000 miles and 50 percent over
    1,000 miles are made using air transportation. Furthermore, air freight
    carries 27 percent of the value of the Nation's exports and imports.
        Air transportation is vital to this Nation's economy and quality of
    life. Since 1978, when the airline industry was deregulated, the
    inflation adjusted gross domestic product (GDP) has increased by 62
    percent, while total output of scheduled passenger air transportation
    (as measured by Revenue Passenger Miles, or RPM's) has increased by 190
    percent and total air freight ton miles have increased even more, by
    289 percent. Both passenger and freight growth continue to outstrip the
    growth in GDP. In many ways, the U.S. has only begun to tap what is
    possible in air transportation. The U.S. has 5,400 airports, but the
    vast majority of passengers pass through a little more than one percent
    of those airports and only about 10 percent are used to any degree.
        Technological advances over the past 30 years, many of them first
    pioneered by the National Aeronautics and Space Administration (NASA),
    have enabled a ten-fold improvement in aviation safety, a doubling of
    fuel efficiency with reductions in emissions per operation, a 50
    percent reduction in cost, and an order of magnitude reduction in noise
    generation. In large part, the gains we have enjoyed have been due to
    the efficient transfer of the benefits of technology to consumers via
    competitive air transportation markets.
                              air traffic control
        The U.S. Air Traffic Control (ATC) System controls the movements
    and ensures the separation of aircraft within the U.S. and coordinates
    the departure and arrival of aircraft leaving or entering the U.S. This
    is an enormous system operated by the Federal Aviation Administration
    (FAA). It safely handles 63 million aircraft operations carrying 544
    million passengers traveling over 537 billion revenue passenger miles
    annually.
        The U.S. system is the largest and most complex system in the
    world. The U.S. system is staffed by 17,000 air traffic controllers in
    476 towers, 194 Terminal Radar Approach Control (TRACON) Facilities, 21
    Air Route Traffic Control Centers (ARTCCs) and one Command Center. A
    typical flight crosses 7 ATC centers and communicates with over 25 air
    traffic controllers. By comparison, the European system, the second
    largest, is about half the size measured in total operations.
        Unfortunately, the system has grown in size and complexity overtime
    in a reactive manner in response to serious accidents and to safely
    keep up with demand that resulted from deregulation, especially at the
    huge hubs. Moreover, the system has not fundamentally changed since the
    1960s and is based on technology that had its origins in WWII--radar
    surveillance of aircraft by air traffic controllers, radio navigation
    along air corridors and voice communication between pilots and air
    traffic controllers to maintain safe separation between aircraft.
                       the system is reaching saturation
        Serious constraints to the growth of the air transportation system
    are now emerging. The air traffic and airport systems in the U.S. are
    reaching full capacity. Delays are increasing. Experts agree that the
    congestion and delay problems experienced throughout the U.S. last
    summer will only get worse unless drastic action is taken. Each year,
    airlines must add more ``padding'' to their schedules to maintain on-
    time performance as well as the integrity of their scheduling systems,
    while facing more congestion in the system. At the same time,
    environmental issues (e.g., noise and emissions) are preventing
    expansions to airport infrastructure, such as additional runways.
        In 1998, airline delays in the U.S. cost industry and passengers
    $4.5 billion--the equivalent of a 7 percent tax on every dollar
    collected by all the domestic airlines combined. With demand projected
    to double over the next decade, NASA estimates, based on a computer
    model of operations at the Nation's top 64 airports (80 percent of
    enplanements), that in the absence of change, annual delay costs will
    grow to $13.8 billion by 2007 and $47.9 billion by 2017. But growth in
    airport infrastructure that might offset this problem is not likely in
    the foreseeable future. Several key airports are unable to gain
    approval for projects to expand infrastructure because they are in
    areas where National objectives to reduce emissions have not been met.
    Noise concerns are also preventing the extension or addition of new
    runways at many airports. Therefore, we are seeing constraints to
    growth that could threaten the integrity of our transportation system.
        Beyond these numbers is another serious problem. Because the
    networked nature of air transportation, as the system gets closer to
    its capacity limits it becomes more ``chaotic''. This chaos manifests
    itself such that an isolated problem within the system, such as a
    thunderstorm, creates missed connections, severe delays and canceled
    flights throughout the system. This chaotic behavior cuts to the heart
    of the National imperative to have a dependable transportation system.
    As the figure below demonstrates, even in good weather many of our
    major airports are at or will exceed capacity within the next ten
    years, and in poor weather demand is well beyond capacity for most of
    these airports.
                                 what is needed
        To solve these problems a balanced approach of aggressively
    developing and implementing current ATC modernization efforts must be
    coupled with an aggressive effort to develop a new, high-capacity
    architecture. This will provide essential relief to ever worsening
    delays in the near-term while fundamentally resolving the air
    transportation challenges for the long-term.
                       current atc modernization efforts
        While the addition of new airport infrastructure will be limited
    and costly, the existing system can be improved by leveraging
    technology advances in digital communications, precision navigation,
    and computers. Currently the FAA is replacing aging computer, display
    and navigation equipment in an effort to modernize the infrastructure
    upon which the ATC architecture operates. Within that architecture, air
    traffic controllers need improved computer aids to help them plan and
    manage air traffic more efficiently. As an example, through the FAA
    Free Flight Program, the FAA implemented the NASA developed Center-
    TRACON Automation System (CTAS) at the world's busiest airport, Dallas-
    Fort Worth, to support daily operations in all weather conditions, 24
    hours a day, 7 days a week. CTAS provides computer intelligence and
    graphical user interfaces to assist air traffic controllers in the
    efficient management and control of air traffic. The system has allowed
    a 10 percent increase in landing rate during critical traffic rushes.
    These improvements have translated into an estimated annual savings of
    $9M in operations cost.
        In fact, NASA and the FAA have a long-standing partnership on air
    traffic management systems. NASA uses its unique technical expertise
    and facilities to develop advanced air traffic decision support tools,
    improve training efficiency and cockpit safety through human factors
    research, and develop advanced communications, navigation and
    surveillance systems. The FAA defines system requirements and applies
    its operational expertise to ensure that the technically advanced
    airborne and ground equipment, software and procedures developed by
    NASA are operationally useful, efficient, safe and cost effective. The
    FAA performs complementary research in the application of new
    technologies in addressing airborne and ground-based communications,
    navigation, and surveillance needs and in new decision support tools
    for strategic management of the system.
        Overall, NASA is currently working on a suite of 16 technologies,
    of which CTAS is a subset, to improve gate-to-gate air traffic
    management to increase capacity and flexibility and to overcome airport
    capacity constraints due to weather. Most of these are Decision Support
    Tools that increase the efficiency of operations within the current
    infrastructure. And while these tools will add critical capacity and
    improved flexibility over the next several years, the capacity
    increases they provide will soon be outstripped by increasing demand.
    They will not fundamentally solve the capacity crisis, reverse the rise
    in delays or prevent the disruptive, chaotic behavior of the system.
        The remaining technologies that NASA is working on add new
    capability beyond the current system for the worst delay problem:
    airport delay in adverse weather. These technologies rely on
    transitioning to satellite-based surveillance and navigation utilizing
    the National Airspace System (NAS) implementation of DOD's Global
    Positioning System (GPS). This implementation is under development but
    has not yet been achieved for full system operation. A critical element
    of this deployment is implementing a Wide Area Augmentation System
    (WAAS) to ensure reliable signal availability over the entire U.S.
    Realistically, however, it will be several more years before the
    current issues associated with FAA's required WAAS can be solved.
    Therefore, this suite of tools will not be available until GPS/WAAS is
    available.
        NASA models indicate that these technologies fully implemented
    across the system would increase operational capacity by about 30
    percent and reduce future predicted delays by about 50 percent. (Note:
    Full implementation of the entire suite of technologies is not within
    the scope of the FAA Free Flight Program.)
        Therefore, given the lack of sufficient infrastructure growth, it
    is absolutely critical to aggressively pursue this approach in the near
    term.
               a revolutionary approach to air traffic management
        The current system structure, where most passengers and cargo are
    carried by tens of air carriers through tens of airports, must be
    revised to permit the continued long-term growth of the system. The
    thousands of airports distributed across this country are a true
    National asset that can be tapped with the right technology and the
    right Air Traffic Management (ATM) system. Also, ``airspace,'' one of
    the nation's most valuable national resources, is significantly
    underutilized due to the way it is managed and allocated. Therefore,
    the airspace architecture of the future must increase the capacity of
    the Nation's major airports, fully tie together all of our Nation's
    airports into a more distributed system, and create the freedom to fly
    in a safe, controlled environment throughout all of the airspace.
        One thing that will remain constant is that free market forces will
    drive the air transportation system. Therefore, the future system
    architecture must be flexible to respond to various transportation
    system possibilities. The airline industry must have the flexibility to
    move and expand operations to be responsive to transportation demands.
    This is the highest level guiding principle for the future ATM system.
    The next tier of system requirements are robustness (a system that can
    safely tolerate equipment failures and events such as severe weather)
    and scalability (the ATM system automatically scales with the traffic
    volume). One possibility for achieving scalability would be achieved by
    building the ATM system into the aircraft, so that as you add aircraft
    to the fleet the ATM system would automatically scale to accommodate
    them.
        The system will be built on global systems, such as GPS, to allow
    precision approach to every runway in the Nation without reliance on
    installing expensive ground-based equipment, such as Instrument Landing
    Systems (ILS) at every airport. However, the robustness of the global
    communication, navigation and surveillance (CNS) systems must be such
    that the system can tolerate multiple failures and still be safe. This
    is a significant challenge upon which the new architecture depends.
        If we are successful at meeting the challenge of a robust global
    CNS, then with precise knowledge of position and trajectory known for
    every aircraft, it will no longer be necessary to restrict flying along
    predetermined ``corridors''. Optimal flight paths will be determined in
    advance and adjusted along the way for weather and other aircraft
    traffic. This fundamental shift will allow entirely new transportation
    models to occur. For example, with precision approach to every airport
    in the U.S. and a new generation of smart, efficient small aircraft,
    the current trend of small jet aircraft serving small communities in a
    point-to-point mode could be greatly extended.
        Airborne self-separation will become the dominant method of
    operation. Each aircraft will become capable of coordinating and
    avoiding traffic. They will have full knowledge of all aircraft in
    their area and will be able to coordinate through direct digital
    communication with other aircraft. The pilot will be able to look at
    his flight path at different scales--from a strategic view of the
    entire origin to destination route showing other aircraft and weather
    systems, to a tactical view showing the immediate surroundings and
    flight path over the next few minutes. Aircraft will employ synthetic
    vision--which uses advanced sensors, digital terrain databases,
    accurate geopositioning, and digital processing--to provide a perfectly
    clear three dimensional picture of terrain, obstacles, runway, and
    traffic.
        By empowering the pilots to control their own flight paths, the
    system can operate at maximum efficiency and will change the role of
    the air traffic controller to more of an airspace manager who will
    manage the traffic flows and system demand. The air traffic ``manager''
    will have a full three dimensional picture of all aspects of the
    airspace system. The highly compartmentalized ``sectorization'' of the
    airspace would be largely eliminated. Through direct interaction with
    the three dimensional, high-fidelity representation of the system, they
    will dynamically reconfigure the airspace based on weather systems,
    equipment failures, runway outages, or other real-time problems.
    Intelligent systems will provide expert support to such decision
    making. This real-time airspace redesign will be uplinked to aircraft
    to recompute flight trajectories. They will also manage the allocation
    of scarce resources, such as runways when there are conflicts that
    cannot be resolved between aircraft directly.
        Eventually, the entire system will be fully monitored for faults
    and other risks. The system will move from a paradigm of being
    ``statistically safe'' to real-time knowledge of risk and safety. In
    addition, with pilots and air traffic managers having full data and
    situational awareness of the system, a new level of collaboration can
    occur allowing them to work together to correct anomalous situations.
    An air traffic manager or backup ``ground'' pilot with the ability to
    move between top level strategic views of the system down to seeing the
    view from a single airplane perspective could ``virtually'' sit next to
    and aid a pilot experiencing an emergency situation.
        The future system will truly be ``revolutionary'' in scope and
    performance, but it must also be implemented in a mode that allows
    continuous safe operations to occur, even in the face of unpredicted
    events. In designing the future airspace system, a systems engineering
    approach must be used to define requirements, formulate total
    operational concepts, evaluate these operational concepts, and then
    launch goal-oriented technology activities to meet requirements and
    support the operational concept.
        This is an extremely complex problem. The system is dynamic and
    real-time. At the same time, system integrity is absolutely essential.
    It can't be turned off and it is highly interconnected. At the present
    time, we believe it will take a substantial public-private partnership
    to tackle such a large and difficult problem. And yet the payoff from a
    capacity, efficiency and safety perspective is absolutely enormous.
                          proposed national objectives
        Given the strong partnership that is in place today, it is possible
    to move quickly to begin developing a new airspace system. At the same
    time, we must continue along an evolutionary path of upgrades within
    the current architecture to obtain the maximum capacity of the system
    and continue to ensure safe operations.
        Five Year Objective \1\.--(1) Support evolutionary upgrades to the
    current NAS; (2) Define new high-capacity architecture and
    implementation pathway, including development and operational costs.
    ---------------------------------------------------------------------------
        \1\ This five year objective would require an augmentation to
    current efforts to achieve.
    ---------------------------------------------------------------------------
        Benefit.--Increases overall capacity up to 30 percent and reduce
    future predicted delays up to 50 percent and postures Nation for new
    high-capacity architecture.
      --Continued development and deployment of decision support tools, GPS
            based navigation and information sharing technologies to
            maximize capacity of the current NAS architecture;
      --Detailed definition of a new high-capacity airspace system
            architecture to meet the increasing demand for air
            transportation including the business case for the Nation and
            individual stakeholders;
      --Develop a detailed system modeling and simulation capability to
            provide real time quantitative assessments of the performance
            benefits of new tools and architectures to provide a rational
            basis for evaluation.
      --Systems engineering, preliminary testing and evaluation of the key
            elements of the proposed architecture and integrated evaluation
            using large-scale, high fidelity, real-time simulation of the
            new airspace system;
      --Evaluate and quantify the risk of satellite-based CNS systems for
            the future airspace system architecture.
      --A risk mitigation plan with all required technology components
            defined;
      --A National public-private transition plan, including benefits and
            costs, to move from the current NAS architecture to the high
            capacity architecture.
        Ten Year Objective \2\.--Implement the major elements of the new
    high capacity architecture.
    ---------------------------------------------------------------------------
        \2\ The ten year objective requires FAA leadership and would
    require a change in National policy to implement a new architecture.
    ---------------------------------------------------------------------------
        Benefit.--Achieve a 60 percent increase in the all weather capacity
    at the major airports and the mobility/capacity benefits of opening a
    fully distributed air transportation system.
      --Utilizing highly accurate, global navigation systems, achieve
            precision approach to every runway in the Nation;
      --Implement aircraft onboard systems and a communications
            infrastructure for strategic flight path management, self-
            separation and coordination, and synthetic vision;
      --Implement integrated, strategic management of the airspace system
            to manage traffic flows and demand and the ability to
            dynamically redesign the airspace system.
        Fifteen to Twenty Year Objective.--Complete the transition to the
    high capacity, distributed system architecture.
        Benefit.--A fully integrated, dynamic, distributed system at twice
    the all weather capacity at major airports and 10 times current levels
    at small airports.
      --Procedures for very precise operations at ``all-weather''
            operational rates greater than today's clear weather rates;
      --Real-time, distributed intelligent automated aviation system-wide
            monitoring with safety and operational advisories.
                                critical issues
        Leadership is required.--The air transportation system is fast
    approaching a crisis. The system is becoming increasingly unpredictable
    and frustrating for travelers. Problems of delays, missed connections,
    canceled flights and air rage are being reported almost daily in our
    Nation's press. In this environment, strong leadership will be
    absolutely required if the Nation is going to come together to fix this
    problem.
        A New National policy must be developed.--While this paper has
    focused on technology and a new approach to air traffic management, we
    recognize that this must fit within an overall National policy that
    blends near-term actions with the type of long-term fundamental
    solutions addressed here. Today, however, there is no comprehensive
    policy to ensure the long-term health of our air transportation system.
        A roadmap for a cost-sharing public-private partnership is
    needed.--The air transportation system has critical public and private
    roles and responsibilities. The only way to effectively change the
    system is through investment and change by all parties, government and
    industry. However, in the absence of a clear roadmap and policy that
    lays out the costs and benefits of such change, it has been difficult
    to achieve this partnership. As we move forward, such a roadmap must be
    negotiated and developed.
                                  conclusions
        NASA is a key partner in the future of the air transportation
    system. Through the unique talents and history of the Agency, we have
    become the National leader for research and technology for air traffic
    management. NASA is prepared to continue this leadership and to be a
    catalyst for positive change. We believe it is absolutely essential
    that the Nation take a long-term perspective and begin now to enable
    the high capacity, distributed system we need for the future. We look
    forward to supporting the Secretary of Transportation and the FAA
    Administrator in developing the future National Airspace System.

                         Qualified scientist/engineers

        Senator Bond. Let me ask you a related question. We are
    hearing about acute shortages of qualified scientists,
    researchers, and technicians for aerospace, aeronautics, and
    all the other tech industries. Many foreign-born, U.S.-trained
    scientists are returning to their own country.
        How do you see the supply of scientists? Is there anything
    that NASA is doing, can do, or we should do to get qualified
    scientists here in the United States?
        Mr. Goldin. I view this as the single biggest long-range
    challenge to the vitality of the American economy and its
    national defense. I have been giving speeches around the
    country on this subject. Let me give you a few statistics.
        In the next decade, 2 million scientists and engineers will
    retire, 2 million scientists and engineers will come into the
    workforce, for a net gain of 0.
        A recent study was done, through the auspices of the
    National Science Foundation, and that indicated that we need a
    50-percent increase in the number of scientists and engineers
    over the next decade to be able to meet the economic growth
    that we need to maintain our economy. So, we are way, way off.
        Then you take a look at the statistics. The scientist and
    engineering degrees are going down. The number of foreign
    people entering are going down, and those that get degrees are
    going back home. So, it has become a real crisis. I have talked
    about this subject at the Council on Competitiveness.
        But there is another part to it. If you look at the
    demographics, only 9 percent of the women are scientists and
    engineers. If we got to parity with women in science and
    engineering, we have almost got the problem whipped. If you
    look at minorities, only 7 percent of minorities, who make up
    24 percent of the population, are scientists and engineers. If
    you take a look at minority enrollment in universities, it is
    going down.
        And here is a statistic that really gets me: In 1986, we
    produced 25,000 electrical engineers and 10,000 people with
    degrees in parks and recreation. By 1996, we were at a
    crossover point of 14,000, and now we are producing more people
    in parks and recreation than electrical engineers. You would
    want to cry. Are we going to do the parks and recreation and
    the books and litigation for the world?
        So, what are we doing at NASA?
        Senator Bond. That is the question.
        Mr. Goldin. I had to get that off my chest.
        Senator Bond. I appreciate the buildup. I understand that.
        Mr. Goldin. In this year's budget, we have started a
    program where we want to provide scholarships to promising
    young engineers in return for service, summer jobs, and then
    they come to work for NASA for a few years. Next year we have
    to hire 700 engineers. So, 300 to 500 scholarships are going to
    be awarded for this next year. That is a pilot program. If that
    is successful, we would like to ramp it up.
        Second, I met with John Hennessey, the President of
    Stanford University, and I said, why does Stanford not apply
    for research grants at NASA? He says, we cannot hire faculty or
    students on these 50-100K grants.
        So, we are going to start a new program called Research and
    Education Technical Institutes (RETI), where we are going to
    fund $3 million to $5 million a year on open, peer-reviewed
    competition five of these institutes that will go for 10 years.
    You win a competition, you go for 5 years, and then you get a
    peer review, then you go for 5 more years. This way you can
    hire faculty, engage students, work with industry. We are going
    to do it in nanotechnology, biotechnology, information
    technology, the fusion of those four technologies, power and
    propulsion. We believe that this is going to really help
    American universities attract American kids into science and
    engineering. If this is successful, we hope to expand that
    program.
        Senator Bond. This is something that is of interest to me.
    How much are you going to commit to that?
        Mr. Goldin. $18 million a year for the next 10 years.
        Senator Mikulski. Mr. Chairman, I have to go to another
    committee.
        Mr. Goldin, let us keep in touch.
        Mr. Goldin. Yes, ma'am. I will be there.
        Senator Bond. Thank you very much, Senator Mikulski.
        Senator Mikulski. Thank you, Mr. Chairman.
        Senator Bond. We thank you.
        Senator Mikulski. Actually it is interesting. We all had
    pretty much the same line of questions.
        Senator Bond. Oh, I know. There is so much to cover and we
    thank you very much for your good leadership on it.
        Please go ahead.
        Mr. Goldin. Then we are funding a very significant amount
    of work at universities like Hispanic-Serving Institutions
    (HSI) and Historically Black Colleges and Universities (HBCU).
    We started an Administrator's fellowship program where we
    select some of the top researchers at NASA and send them to
    some of these disadvantaged universities to teach them how to
    do research grants so they could then come back and be funded
    at NASA. In fact, we are really pressing hard in all these
    areas.
        Then we are looking at feeder programs.
        We are involved in the first competition, which you saw in
    that video. That is a nationwide competition and we get
    students from around the country, 400 teams. NASA is the
    biggest sponsor. We sponsor one-quarter of all teams in the
    country. And these kids design and compete robots, and usually
    the NASA team wins. We are getting kids from across the country
    to get interested in math and science. It is like going to a
    football game.
        So, we have a broad range of these programs. All of them
    are pilot and experimental, and what we would like to do is,
    over the next few years, work with this committee and get some
    metrics from the program.
        Finally, I met a gentleman named Paul Romer, who is a
    professor at Stanford University, who is an expert in these
    areas. He is an economist. He is going to develop metrics for
    us and he is going to work with us to see the effectiveness of
    these programs. But this, in my mind, is not exciting like a
    mission to Mars, but it is only about the future of NASA and
    the country.

                             manned mission to Mars

        Senator Bond. Speaking about a mission to Mars, I
    understand you made an announcement yesterday about a manned
    mission to Mars by 2020. What are your plans for that? What are
    you looking at there?
        Mr. Goldin. First, let me say I came to NASA April 1, 1992,
    to follow a vision of George H.W. Bush who said we are going to
    get to Mars by 2018. I reconfirmed the fact that I believe we
    are going to do it. We are doing all the right things to get
    there.
        First, we are building the Space Station and we are going
    to solve the horrendous biomedical problems that have to be
    overcome in going to Mars.
        Also, on the station, we are going to figure out how to
    live and work in space. I do not know if you saw those awesome
    pictures of those astronauts doing space walks. How do you
    assemble things in space? That is going to get done.
        Second, this budget has the most aggressive Mars program
    for robotic exploration that this Nation has ever undertaken.
    We have a series of progressively difficult missions that will
    allow us to develop the technology to do precision, high
    reliability landing on Mars. We are going to develop
    reconnaissance pictures of Mars with the accuracy of the size
    of a basketball. We are going to be putting mobile laboratories
    on Mars, searching for water, doing drilling. All this is
    necessary to build up.
        Finally, with the Space Launch Initiative, I think we are
    going to take out the biggest barrier. And this is not a
    commercial need. NASA needs to get to low earth orbit with high
    reliability. We need to improve the reliability for people by a
    factor of 100, and we need to cut the cost by a factor of 10.
    As a result, instead of taking a couple of million pounds at
    10,000 a pound to low earth orbit, if we could do it with 1,000
    a pound, each mission will not be $20 billion to get to low
    earth orbit, but $1 billion. Doing those things and with the
    in-space propulsion that Senator Shelby talked about, I believe
    that this Nation will be able to meet the goal of getting there
    by 2018.
        Senator Bond. 2018. All right, we will hold you to that.
        Mr. Goldin. I would love to do it. That is my life.
        Senator Bond. Thank you very much.
        I turn to Senator Shelby.
        Senator Shelby. I have no other comments. I do want to
    thank Mr. Goldin. This is your 10th year, is it not? That is a
    long tenure. We want to continue to work with you and make a
    lot of these things happen. Thank you, Mr. Chairman.

                           increasing cost of Energy

        Senator Bond. Thank you, Senator Shelby.
        Mr. Goldin, increasing costs of energy have become a
    critical issue throughout the country and very especially in
    California. NASA has a significant investment in facilities in
    California. There are a number of these, Ames, Dryden, JPL. Do
    you see the energy costs in California making a substantial hit
    on your budget? How big an impact are these energy costs going
    to be?
        Mr. Goldin. Right now at just our three laboratories, not
    at our contractors, we are seeing $36 million. That is under
    the best conditions, negotiating with DOD and GSA, and the
    summer has not even begun. So, if you just look at our
    facilities, the numbers are going to go up.
        But then if you consider the fact that about a quarter of
    our budget is in California, we could be looking at an energy
    bill that is very, very serious. We have no way right now of
    getting the costs from our contractors, but we are working on
    it. But my concern is it is going to get even worse as we go
    into the summer. So, I think we have just hit a small number
    right now. I think it is going to be a lot worse.
        Senator Bond. We need to be talking with you about that
    because that is a concern clearly for your own facilities and
    the contractors.
        Mr. Goldin. By the way, Mal Peterson just sent me a note.
    At Dryden, we are reprogramming funds for energy just to keep
    the facility open. I view this for this year as a real problem.
    We are worried about costs on the shuttle. We are worried about
    costs on the station. These are things that are just well
    beyond our control.

                            NASA contract management

        Senator Bond. One final tough area. GAO continues to
    identify NASA contract management as a high-risk area. They
    indicated that some progress has been made to address its
    contract management weakness with a new system for measuring
    procurement-related activities. But still, GAO in its 2001
    high-risk review reported that NASA needed to rely less on the
    use of undefinitized contract actions--undefinitized. Is that
    the same as undefined? What is the difference between
    undefinitized and undefined?
        Mr. Kamarck. The spell-check could not find it.
        Senator Bond. How about rely less on certain uncertain
    contract actions, namely unnegotiated contract changes, as a
    way of doing business since the practice could result in
    contract cost overruns and cost growth.
        What is NASA doing to deal with this problem?
        Mr. Peterson. Let me give you an example because one of the
    key issues on Space Station several years ago was we had a very
    large backlog of undefinitized contract changes.
        Senator Bond. What the heck is the difference between an
    undefinitized and an undefined?
        Mr. Peterson. Undefinitized means simply that you have a
    proposal for a contract change, and in order to definitize it,
    what you must do is agree with the contractor on a price. That
    negotiation process requires you to get pricing data from the
    contractor, exercise due diligence in making sure they are
    going to be doing exactly the right thing. That process can,
    particularly when there are a lot of changes, take an
    inordinate amount of time. Some people see it, in fact, as
    being sort of busy work, not getting the engineering done,
    instead sitting at a negotiating table with the contractor.
        Several years ago, we became very alarmed at the backlog of
    undefinitized changes in the Space Station and the amount,
    knowing that that backlog impeded our ability to have a good
    baseline for contract assessments. We took a concerted effort
    to reduce that, working with the Boeing company, and in fact,
    have done so.
        It remains an issue. It in part has to do with the number
    of procurement personnel that are available to work these
    changes, and with the series of downsizings that we have gone
    through in some areas, we have cut personnel in the procurement
    organization and we have perhaps induced a problem that we now
    are struggling with. On the other hand, we are committed to
    working this to expedite the negotiation process and to enlist
    the Department of Defense audit agency support to try to get a
    quicker turnaround on the validation of the contractor cost
    estimates.
        Senator Bond. Are we going to get off the high-risk list?
        Mr. Goldin. Yes, sir.
        Senator Bond. When do you hope to achieve that?
        Mr. Goldin. Within a year.
        Senator Bond. That is a little easier to follow up on than
    the 2018.
        Mr. Goldin. We should only all be around for that.
        Senator Bond. Administrator Goldin, thank you very much.
    There is much, much more, obviously, that my colleagues and I
    would like to ask you. But I think the attendance that you have
    had today from members of the subcommittee indicates the great
    interest and commitment this subcommittee has to the work of
    NASA. We thank you for your strong leadership and your visions,
    and we appreciate your good efforts to answer the toughest
    questions we can come up with. We look forward to working with
    you.

                              subcommittee recess

        With that, the hearing is recessed.
        [Whereupon, at 11:47 a.m., Wednesday, May 9, 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 2002

                                  ----------

                            WEDNESDAY, MAY 16, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:12 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Christopher S. Bond (chairman)
    presiding.
        Present: Senators Bond, Domenici, Stevens, Mikulski, and
    Johnson.

                      FEDERAL EMERGENCY MANAGEMENT AGENCY

    STATEMENT OF JOE M. ALLBAUGH, DIRECTOR
    ACCOMPANIED BY:
            JOHN MAGAW, ACTING DEPUTY DIRECTOR
            PATRICIA ENGLISH, ACTING CHIEF FINANCIAL OFFICER

                opening statement of senator christopher s. Bond

        Senator Bond. Good morning. The Subcommittee of VA, HUD,
    and Independent Agencies hearing will come to order.
        Today we meet to take testimony from the Federal Emergency
    Management Agency on its fiscal year 2002 budget request. It is
    a pleasure to welcome for the first time before this
    subcommittee FEMA's new Director, Joe Allbaugh. Mr. Allbaugh is
    no stranger to the needs of natural disaster response, having
    managed for President Bush, when he was Governor of Texas,
    disaster response coordination in Texas for nine presidentially
    declared disasters. As one who has served as Governor and
    presided over quite a few disasters, I know how significant and
    how difficult the position is to be the person actually
    responsible for coordinating that work, and I cannot think of
    better on-the-job training for the current position he holds as
    Director of FEMA. There he will be responsible for one of the
    most critical responsibilities in the Federal Government,
    namely preparing for and responding to the devastation of
    natural and other disasters throughout the Nation.
        FEMA is an agency that the American people depend upon
    following a disaster event. They depend upon FEMA to help come
    in and pick up the pieces and get their lives back together. It
    is an agency that has been performing this task admirably over
    the last several years with a strong focus on customer service.
        But make no mistake. There is plenty more to be done at
    FEMA. We must improve accountability for disaster relief
    expenditures. We have to revamp the flood insurance program. We
    must streamline disaster field operations, and we must improve
    the management of mitigation programs.
        Joe, you have gotten off to a great start at FEMA with a
    quick-paced and very effective response to the Seattle
    earthquake in February. You have been mired in plenty of flood
    events in the Midwest. Soon it will be, sad to say, hurricane
    season, and perhaps with a few fires and a plague or two thrown
    in, you will be able to round out your experience in no time.

                                Disaster reforms

        You have initiated some very important debates about
    preparedness and mitigation, which we look forward to
    discussing this morning. I am glad you are willing to take on
    the much-needed, albeit it very controversial, reforms to
    FEMA's current Federal disaster assistance programs. I have
    been pushing for these reforms for several years, and I can
    tell you that there are a lot more pleasant things that you can
    do than to tell people that we have to have guidelines and
    safeguards and limits on disaster assistance. People do not
    want to hear that, but if you are willing to work with us, we
    think, for the good of the Nation, we must clearly move down
    that path.

                            Flood insurance reforms

        It is clear to me that you recognize where improvements are
    needed and we look forward to working with you to do all we can
    to support your efforts. In particular, I am very interested in
    pursuing a dialogue with you on ways to reform the National
    Flood Insurance Program. It must be made actuarially sound. We
    must increase participation. I share your concerns about the
    costs to the American taxpayer of continuing to pay for
    repetitive flood loss properties at a subsidized rate. That
    cannot go on. If people continue to live in areas where they
    are exposed to flood damages, if they will not mitigate or move
    out, then at some point we have to say enough is enough. And
    that is truly not popular.
        We also need to encourage people with homes at risk of
    flooding to participate in the National Flood Insurance
    Program, as well as to encourage people in communities to take
    all necessary steps to minimize the risks of floods,
    earthquakes, and hurricanes. It is not an easy task, but it is
    a necessary task.

                                  2002 budget

        FEMA's fiscal year 2002 budget requests $2.1 billion,
    including roughly $1.4 billion for disaster relief, $140
    million for the emergency food and shelter program, and roughly
    the current level of spending for FEMA's operating accounts.
    This is a responsible budget which will ensure that critical
    disaster and emergency needs will be met.

                              funds for Disasters

        At this time, it appears there is plenty of money currently
    in the disaster relief fund to meet disaster needs for the rest
    of the year, including those associated with the Seattle
    earthquake and the Midwest flooding, so long as we do not have
    any truly catastrophic events later this year. Including
    contingency funds, as of the end of March, there was almost
    $2.3 billion in unobligated disaster relief funds.
        FEMA's budget assumes the creation of an emergency reserve
    for extraordinary disaster events. The budget resolution passed
    by the Congress does not provide for this reserve. This means
    that we will need to provide at least another $1 billion in
    your budget, consistent with historic costs of disasters, and
    perhaps depending upon an emergency declaration from the
    President.
        But in any event, we look forward to working with you and
    the Office of Management and Budget on these fiscal issues and,
    most of all, working with you on reform of the programs to
    ensure that people who are in need are served, but that the
    taxpayer is not unnecessarily assisting people who have played
    out their string or providing funds that are not absolutely
    needed.
        Before hearing your comments, Mr. Director, it is my
    pleasure now to turn to the distinguished ranking member,
    Senator Mikulski.

                    statement of senator barbara a. Mikulski

        Senator Mikulski. Good morning, Mr. Allbaugh.
        Mr. Allbaugh. Good morning, Senator.
        Senator Mikulski. Again, I would like to most cordially
    welcome you for your first appearance as the FEMA Director
    before this subcommittee. I most enjoyed our conversations both
    in my office, when you first came to your post, and the very
    informative, instructive testimony that you gave in our 3 days
    of hearings on America's ability to respond to terrorism. Later
    in the questions and answers, I want to go into this.
        You know, FEMA has truly become the Nation's 911 agency.
    Unfortunately, that 911 could be called a hurricane, a flood,
    or a terrorist attack from either a foreign or domestic thug.
    That is why I believe that FEMA must truly be an all-hazards
    agency and would like to discuss that with you. It must be
    ready to respond to anything at any time that the President so
    designates.

                             FEMA's terrorism role

        I want to hear about FEMA's plan for taking on an expanded
    role in terms of the presidential announcement last week. I
    have long believed that FEMA, with its ties to State and local
    emergency response units, should be a major force in this area,
    particularly to coordinate consequence management for these
    acts. Terrorist acts, though, are not the same as natural
    disasters. There will be a whole host of national security and
    law enforcement issues mixed in as well. I know the President
    had asked you to undertake a review, and I will be talking with
    you about it. But I see that part as a work in progress and
    that we will need to have further conversations and, even later
    in the year, an additional hearing. But we will get into that
    in the Q&A.

                           FEMA as all-hazards agency

        I used the term ``all-hazards'' agency because FEMA, when
    it really modernized itself and professionalized itself during
    the last 8 years, followed the three R's: readiness, response,
    and recovery. What we see is that, in preparing for the cost of
    any disaster that could affect an American community in which
    there would be a presidential declaration--the reason I use
    ``all-hazards'' agency is that a chemical explosion in, say,
    one of my chemical plants in Baltimore, could either happen
    because of an accident or a malevolent act. We could have an
    outbreak of a disease because of West Nile, and at the same
    time, there could be a bio-attack. It could be domestic, as
    well as foreign. We had Oklahoma City which was domestic. We
    had the World Trade Center which was foreign. But either way,
    there was a response to these, and it is something that we
    should really consider in our training particularly for
    readiness and response the concept of all-hazards.

                             2002 budget reductions

        As Senator Bond has indicated in his testimony, going now
    directly to the budget, I am concerned about the cuts in
    prevention and preparedness programs when it comes to natural
    disasters. There are flashing yellow lights in terms of the
    reduction of the Federal costs for State hazard mitigation
    programs, I would like to talk about what you anticipate as the
    consequence of that. The elimination of the Project Impact
    program is troubling to me because it is where we would hope to
    lower costs in the future, which I know you are trying very
    hard to look ahead to do. So, we need to know the consequences
    of these cuts not only to State and local government, but often
    for the very impact on the communities themselves.
        The changes we are making could be, inadvertently, at odds
    with the theory of helping those who help themselves,
    encouraging State and local governments on how best to handle
    the insurance.
        I also want to talk about this proposal along with the
    phase out flood insurance of repetitive loss properties. It is
    an issue that I have been troubled about for some time. How
    then do we best address that and what would be the criteria?
    Because very often repetitive loss properties, particularly for
    a Senator like me with my rivers and my bay, tend to be older,
    poorer people who built along the river long before it was the
    Gucci thing to do.
        I say Gucci because waterfront property in Maryland used to
    be what working men and women could afford, and now it is very
    pricey. Mr. Magaw knows what I am talking about. But we need to
    look at that.

                                 Fire programs

        The other, again, focusing on the risk that American people
    face, was the commission report on America Burning. It outlines
    pretty clearly what we need to do in terms of helping at the
    local level with a partnership through the National Fire
    Academy and others on how we can prevent fires. You know the
    grim nature of what it is.
        Also, there has been a new program instituted in terms of
    helping our fire fighters with equipment, protective gear, and
    so on. I think what we are concerned about is how can we
    support those communities, particularly those that are
    stretched thin with trying to buy the new equipment, and they
    cannot do it with tip jars and bingo, but that we do not create
    a whole new entitlement or a whole new block of earmark
    potentials in this appropriation. So, I think that can be dealt
    with with good management and clear criteria.
        Again, we look forward to your testimony. I regard this
    hearing as part of our work in progress as we get ready to do
    our work. Thank you very much.
        Mr. Allbaugh. Thank you.
        Senator Bond. Thank you very much, Senator Mikulski.
        We are pleased to be joined by the chairman of the full
    committee, Senator Stevens.

                          rising sea levels in Alaska

        Senator Stevens. Good morning, Mr. Allbaugh. It is nice to
    see you again. I have but one question I think. I read over
    your statement.
        I have got a strange circumstance in my State, and that is
    the ever-increasing level of the water table along the ocean. I
    am going up in this coming recess to look at Point Barrow where
    the water level is so high now, it is starting to flood the
    periphery of the city of Point Barrow. It looks like it is
    going to threaten the sewage lagoon and particularly some
    facilities that were built by the Federal Government along the
    coastline.
        The same thing is happening on the west coast of Alaska
    where there are at least three villages I can think of right
    now where the level of the ocean is coming up and in one
    instance has started to flood the airport and in another
    instance has started to flood the city itself. These are small
    villages really. They are incorporated cities under Alaska law,
    but they are basically native villages along the coastline.
        As we examine it, it appears--and, Mr. Chairman, you may be
    interested in this--that they are not covered by disaster laws
    because it is an ever-encroaching sea that is coming slowly but
    surely higher every year. I do not think I am going to ask you
    any questions about it, but I am going to ask if you will come
    join me sometime to go take a look at this.
        Mr. Allbaugh. I sure will.
        Senator Stevens. I am going to have hearings in Fairbanks
    this next recess, Mr. Chairman, on the global climate change
    and how it is affecting the Arctic. We think there is, in fact,
    an increasing possibility that this sea level is rising because
    of global climate change and that we need to find a way to deal
    with it.
        All of these areas were basically built with Federal funds
    because of the indigenous population that is there. Point
    Barrow was basically built by the Navy during the days when the
    Navy was controlling Naval Petroleum Reserve No. 4. We have got
    to find some way to deal with this.
        To my knowledge, it has not happened anywhere else in the
    country. Are you aware of anywhere else where the encroaching
    sea is inundating the coastline?
        Mr. Allbaugh. I am not aware of anything in the coastal
    areas, but I am aware of a couple of inland basins, one in
    North Dakota and one in South Dakota. I have not had the
    opportunity to visit the lake outside of Watertown, South
    Dakota--I believe that's where it is--but I have visited
    Devil's Lake in North Dakota. I am somewhat familiar with those
    areas in Alaska, but I would love to have the opportunity to
    join you on a trip.
        Senator Stevens. I am familiar with those areas. They are
    basically a result of increasing rainfall and probably
    increasing diversions from other rivers.
        In this instance, this is complicated by the fact that it
    is reported to me that the pack ice, the ice that is just from
    year to year in the Arctic, is 8 inches thinner this year than
    it was last year. We have got some complications coming and I
    want to try to find a way to see if we can understand.
        But in any event, I think it would be important. One of
    these days we are going to have to call on you to see if you
    can help us deal with moving those villages back from the sea.
    They certainly cannot continue to live as they are because a
    good storm, with the wind and sea conditions right, would drive
    the water right through the villages today.
        But I appreciate seeing you and look forward to getting an
    opportunity sometime to have you come up and take a look around
    and to become acquainted with that and see if, together, we can
    work with you and other agencies to devise a plan to help these
    people avoid the consequences of being flooded out.
        Mr. Allbaugh. Yes, sir. Thank you. I always look for
    opportunities to become better educated and better acquainted
    with areas around our country.
        Senator Stevens. Thank you. We will arrange a convenient
    time so we might do a little marine research along the way.
        Mr. Allbaugh. Yes, sir.
        Senator Stevens. Thank you.
        Senator Bond. Thank you very much, Mr. Chairman. I assure
    you that we will join Director Allbaugh as he seeks to learn
    more about this. This sounds like a very important matter upon
    which to follow up. I believe my ranking member and I are very
    much interested in that. Is that correct, Senator?
        Senator Mikulski. Absolutely.
        Senator Bond. I thought we would have bipartisan agreement
    on it.
        Turning now to Senator Johnson.

                        statement of senator tim Johnson

        Senator Johnson. Well, thank you, Mr. Chairman.
        I want to welcome, of course, Director Mr. Allbaugh to the
    subcommittee today and look forward to the testimony.
        I, in the past month or so, have spent a fair amount of
    time home in my State inspecting flood damage in the Watertown
    area, and I want to commend Director Allbaugh for his immediate
    personal attention to the issues that we have there in South
    Dakota with the enclosed basin, but also problems we have on a
    couple of our rivers. This is the Prairie Pothole region where
    we have had a very wet year. Unfortunately, it is a part of the
    country that is prone to volatile swings of the weather and the
    damage that it can cause.
        I am very appreciative of your contact with me and also
    your willingness to work closely with Governor Janklow.
    Governor Janklow in our State has done just an extraordinary
    job in dealing with a string of natural disasters that we have
    had, and the partnership that we have had with FEMA has been an
    important partnership for our State.
        There was a time many years ago where FEMA's reputation was
    not all that it really needed to be. But over the past decade,
    it has become a very high quality, very professional
    organization. I commend James Lee Witt on his work as your
    predecessor, and I know that Mr. Allbaugh is going to continue
    to build on the strengths of what has gone before him here over
    the last number of years to really continue to build FEMA into
    the key agency that it needs to be.
        Governor Janklow submitted a formal request late last week
    for Federal disaster assistance for 11 counties, and it is our
    hope and our confidence that FEMA will be examining that
    request in a very expeditious fashion.

                            Preparedness initiatives

        I have some concerns about the preparedness initiatives,
    and I appreciate that there is more than one way to approach
    this preparedness concern. Project Impact may not be a perfect
    program and if the administration has ways to improve upon a
    whole range of preparedness issues, I respect that, and I look
    forward to working with the administration.
        But for what it is worth, I do want to convey to the
    Director that Project Impact has been a very popular program in
    my State. I have some copies of letters I have received from
    Project Impact communities in my State, and with the chairman's
    consent, I would submit them for the record.
        Senator Bond. Without objection, they will be accepted.
        [The information follows:]

                           Letter From Mary A. Person

                                                 City of Huron,
                                      Huron, South Dakota, May 9, 2001.
    Senator Tim Johnson,
    324 Hart Senate Office Bldg.,
    Washington, DC.
        Dear Senator Johnson: I was glad to see that you were elected to
    serve on a subcommittee that will be addressing Project Impact's
    viability. We were selected as a Project Impact Community in 1999 and
    there are not enough words to express our gratitude for this FEMA
    program. I would like to share with you and the rest of the committee
    why the City of Huron strongly supports the continuation of this
    program.
        We were awarded $302,609.00 in order to make our community a
    disaster resistant one after the 1997 flood. The City of Huron spent
    $45,750.00 in cash towards our matching portion, along with $44,792.00
    worth of in-kind services and used $37,714.00 from other sources of
    funding in order to make our projects a reality.
        We purchased new outdoor warning sirens, flood-proofed Jersey
    Avenue lift station, completed drainage projects at 15th Street SE and
    20th Street SW, installed an EPN/Reverse 911 multi-media warning
    system, provided adjacent community warning systems in Wessington,
    Wolsey, Cavour, Yale and Hitchcock), installed county-wide two way
    radio system and will be distributing community education brochures to
    each household.
        We would not have been able to accomplish the above projects
    without securing the necessary funds from Project Impact. I would like
    to encourage you to do everything in your power to convince the current
    administration that the continued funding of this project is vital.
        Please let me know if I can be of further assistance to you and the
    efforts of this committee to make sure the right decision is made four
    all concerned.
                Sincerely,
                                                Mary A. Person,
                                                                 Mayor.
                                     ______

                          Letter From Brenda S. Barger

                                             City of Watertown,
                                 Watertown, South Dakota, May 14, 2001.
    Senator Tim Johnson,
    324 Hart Senate Office Bldg.,
    Washington, DC.
        Dear Senator Johnson: I understand that the future of Project
    Impact is being reviewed. As Mayor of a city with 20,000 residents, I
    wish to express my views on what Project Impact has meant to our
    community.
        In 1997, Watertown was one of many cities in the Midwest to suffer
    severe flood damages. Since then we have taken many progressive steps
    to mitigate the impacts of future flooding. Help from Project Impact
    has allowed us to broaden our efforts to become, not only more disaster
    resistant but, more disaster-ready.
        Project Impact has provided the help we needed to accomplish such
    things as public tornado shelters, equipping a hazardous material
    response team, providing early warning devices for schools, day cares,
    nursing homes and other public locations, equipping and training our
    local search & dive rescue team and, of course, flood damage
    mitigation.
        To date, we have leveraged $94,000 of Project Impact funds into a
    total investment in these improvements of nearly $325,000. In other
    words, every $1 in Project Impact money has resulted in $3.46 in
    disaster damage mitigation. This is the result of partnerships fostered
    by Project Impact between our community, local and national businesses
    and the federal government. These partnerships continue and we're not
    done yet!
        Project Impact has made this possible. With this vital help, our
    community has learned first hand what can be accomplished by working
    together. Personal experience has convinced the community of Watertown
    that it is much more effective and far less expensive in the long run
    to be better prepared before disaster strikes. This is true in both
    financial costs and in terms of human suffering.
        Thank you very much for your attention to this important matter.
                Sincerely,
                                              Brenda S. Barger,
                                                                 Mayor.
                                     ______

                          Letter From Thomas L. Hopper

                                              City of Aberdeen,
                                                Aberdeen, South Dakota.
    Senator Tim Johnson,
    U.S. Senate,
    Washington DC.
        Dear Senator Johnson: It is my understanding that the program,
    Project Impact, may be eliminated from the federal Appropriations
    budget. The elimination of Project Impact would be a devastating blow
    to communities around this country. Aberdeen was the first community in
    South Dakota to participate in Project Impact. As Mayor of this
    community, I can personally say that Project Impact was a godsend.
        Project Impact was extremely beneficial, not purely from the
    financial aspect ($500,000); but from the standpoint of identifying and
    working to eliminate the risks facing this community from natural as
    well as manmade disasters. The potential from these risks are high and
    it is our duty as elected officials to do all we can to prevent
    catastrophe from affecting our citizens. The total elimination of
    disaster is not possible; however, the ability to prepare and lessen
    those risks are possible.
        Project Impact allowed Aberdeen to identify and proceed on 17 major
    projects. Project Impact allowed us to become acquainted with and
    maintain communication with Federal and state officials who were able
    to keep our ``feet to the fire.'' Projects completed through Project
    Impact totaled $1,400,000, with assistance through federal and state
    grants, partnerships, in-kind and, of course, local government share.
    Future projects identified with Project Impact have a total budget cost
    of $4,100,000.
        Projects identified through Project Impact included:
      --Area-wide Contour Mapping;
      --Area-wide Drainage Studies;
      --Outdoor Warning System;
      --Wastewater Treatment Plant Flood Protection;
      --Water Treatment Plant Flood Protection;
      --Stream Gaging Improvements;
      --Public Education and Awareness Campaigns;
      --Moccasin Creek Dredging Study;
      --Kline Street Storm Sewer Improvements;
      --Business Preparedness and Recovery Planning;
      --City Watch Program;
      --Goodrich and Grand Streets Holding Pond (storm-water retention);
      --Flood Control Structures; and,
      --NOAA Weather Radios Distribution Program.
        Some of the future projects initiated through Project Impact
    include:
      --Southwest Aberdeen Drainage Improvements;
      --Noah Aberdeen Drainage Improvements; and,
      --Royal Road and Dick Drive holding Pond (storm-water retention).
        Project Impact fulfilled its obligation as outlined in the federal
    regulations. Aberdeen was indeed, and still is, very fortunate to have
    participated in Project Impact. Project Impact is a program that needs
    to be continued in order to provide assistance to other communities
    around the country. As I mentioned at the beginning of this letter, the
    elimination of Project Impact would, in itself; be a catastrophe.
        Senator Johnson, I urge you to do all possible to secure funding
    for Project Impact.
        Thank you for your time on this issue.
                Sincerely,
                                              Thomas L. Hopper,
                                                                 Mayor.

        Senator Johnson. As I look at the President's proposals to
    eliminate Project Impact, double the local match requirements
    for hazard mitigation projects, and require public facilities
    to purchase disaster insurance, this does cause me some
    concern. I look forward to working with Mr. Allbaugh and FEMA
    on ways then that we can be proactive in terms of helping our
    communities prepare for the kinds of disasters that in some
    instances we know are likely to occur.
        I commend the President for his work to establish the
    Office of National Preparedness at FEMA.
        I again look forward to Mr. Allbaugh's testimony and to
    working with him and express my appreciation again for his very
    hands-on approach to the problems we have had in my State
    already this year.
        Mr. Allbaugh. Thank you, Senator.
        Senator Bond. Thank you very much, Senator Johnson.
        Now we welcome back to this committee a good friend, the
    chairman of the Budget Committee and the Senator from New
    Mexico, Senator Domenici.
        Senator Domenici. Thank you very much, Mr. Chairman.
        Where are we in the process? Is it time to ask questions?
        Senator Bond. We are at opening statements and the Director
    has not yet presented his initial statement.
        Senator Domenici. I think I will just let him do that.

                         statement of joe. m. Allbaugh

        Senator Bond. All right, with that, Director Allbaugh, if
    you will proceed.
        Mr. Allbaugh. Thank you, Mr. Chairman. Good morning, Mr.
    Chairman, members. I appreciate the opportunity to appear
    before the subcommittee today to discuss our goals and
    priorities for fiscal year 2002. I welcome this opportunity to
    have a conversation with you on our vision for FEMA.
        Mr. Chairman and members, I appreciate the time that you
    and your staffs have spent with me in preparation for this
    hearing. I am pleased that we are developing working
    relationships that will serve our country well both in dealing
    with future emergencies and in setting emergency management
    policies. I look forward to working closely with you as we
    address the critical issues that are facing us all in emergency
    management.
        My senior staff is also here to listen to what you have to
    say today so that they can continue to make FEMA a better
    agency. FEMA is made up of great folks who entered public
    service to help others, and it is my great honor and privilege
    to join ranks with not only our FEMA employees and disaster
    reservists, but State, tribal, and local emergency response
    professionals, and volunteers as well. They provide speedy,
    appropriate help to our fellow citizens in time of need.
        I want to introduce John Magaw, former Director of the U.S.
    Secret Service and Bureau of Alcohol, Tobacco, and Firearms.
    John has served as Acting Director of FEMA before my
    confirmation and is currently serving as the Acting Deputy
    Director. In addition, John is our resident expert on
    interagency coordination of terrorism related efforts.
        I especially want to recognize Patricia English. She is
    sitting to my left. Pat has been serving as FEMA's Acting Chief
    Financial Officer, to whom I have turned frequently in these
    first couple of months of my tenure as the FEMA Director. I
    know that Pat, along with our congressional affairs office, has
    worked to give you and your staff a clear picture of FEMA's
    spending priorities and historical financial records.
        If I could, Mr. Chairman, I would like to mention another
    important person to FEMA, your departing staff member, Carrie
    Apostolou. She has been exemplary in every aspect of her
    professional task. She took the time to look inside FEMA and
    question the what, when, where, why, and how of every issue,
    always fair and constructively critical, while at the same time
    displaying a caring, helpful attitude. We will miss Carrie's
    input.
        In recent decades, we have seen Federal emergency
    management swing from a set of prescriptive preparedness
    programs and a single focus on response and recovery to a more
    comprehensive approach that incorporates mitigation by taking
    prudent, protective measures to reduce losses. At the same
    time, we have seen soaring disaster relief costs that need to
    be managed more effectively.

                  responsibility and accountability in Budget

        The administration's budget request for FEMA in 2002 will
    build on this progress by emphasizing responsibility and
    accountability. This budget request asks individuals,
    communities, States, and FEMA to take on an appropriate degree
    of responsibility in resisting and responding to disasters. We
    at FEMA will continue to work with our customers to empower
    them with the tools to accept this greater responsibility.
    Internally, we will be working toward a greater accountability
    to the members of this committee, the Congress, the President,
    and ultimately the American people.
        As President Bush said in his February address to the joint
    session of Congress, our new governing vision says Government
    should be active but limited, engaged but not overbearing. We
    believe you can see that the budget proposal for FEMA truly
    reflects the President's goal of restoring a proper balance,
    moving away from the expectation that the Federal Government is
    the option of first resort to the option of last resort.
        Recently, I met with the Executive Board of the National
    Emergency Management Association representing the Nation's
    State emergency management directors, and we agreed that there
    is a definite need to restore proper balance. Local communities
    have historically been the first line of defense against
    disasters, and Federal disaster assistance has always been
    designed to supplement the efforts of local and State
    governments. Even though we have spent many years working in
    partnership to be prepared for disasters, we have also focused
    many of our efforts on simply responding to and recovering from
    disasters. In recent years, we have been emphasizing the need
    for pre-disaster mitigation.

                     importance of Pre-disaster mitigation

        Most recently, I saw this firsthand. I visited community
    after community on both sides of the Red River in North Dakota
    and Minnesota as the river was rising. As Governor Hoeven,
    Senator Dorgan, Senator Dayton, Congressman Pomeroy, and I
    toured the areas, the story was the same. In almost every
    community, they had learned the critical value of pre-disaster
    mitigation. Communities as large as Fargo, North Dakota, and as
    small as Breckenridge, Minnesota took seriously their flood
    threat and acted to minimize the impacts of this year's event.
    It worked. Levees and dikes held and temporary levees erected
    by the Corps of Engineers did their job. In areas where FEMA
    and the State and local governments had conducted buy-outs of
    neighborhoods and businesses, the water came up again, but this
    time there were no people nor houses to be impacted. There was
    less suffering. Pre-disaster, community-based mitigation works.
        Although I have been only on the job as FEMA Director for a
    short while, it has been an active period in which I have dealt
    with a wide range of disaster activities. I have seen firsthand
    the responsibilities that fall within my stewardship.
        On day 12 of my tenure, February 28 as has been noted, the
    Nisqually earthquake hit, shaking major areas of Washington
    State. I have visited the Pacific Northwest twice since the
    earthquake, once to see the immediate damage and the second
    time to check on recovery efforts. To date, more than $72
    million in disaster assistance has been dispersed to disaster
    victims.
        I have also seen the devastation, in some ways greater,
    caused by an F4 tornado that devastated Hoisington, Kansas, on
    April 21. FEMA has been active in that community, supporting
    the rebuilding efforts and urging residents to consider
    building safe rooms and to take other tornado mitigation
    efforts.
        In Cerro Grande, New Mexico, where terrible fires last year
    destroyed many homes, I have visited twice to assure the
    residents of that community, Los Alamos County, that FEMA was
    doing all it could do to expedite their recovery. On my second
    visit, I was pleased to present Los Alamos County with about
    $13 million to help make the community more fire resistant.
        Given the huge issue of wildfires in recent years and the
    terrible destruction that those fires bring, I made it a
    priority to visit in April the National Interagency Fire Center
    in Boise, Idaho, where I was briefed on how FEMA and that
    center will work together and what risks lay ahead for this
    upcoming fire season.
        In addition, I hosted a conference in Florida on the issue
    of drought management, and visited 3 of our 10 regional
    offices. These visits have allowed me to quickly get a feel for
    FEMA, its important mission, its successes, its challenges.
    There is no substitute, quite frankly, as you all know, for
    getting out of Washington, DC, and seeing what is happening
    around the country. I will continue to be on the scene.

                                 Project impact

        Part of my challenge is to review ongoing programs. One, in
    particular, as has been mentioned this morning, that I am
    currently reviewing is Project Impact. I believe it is time to
    take Project Impact to the next level and not have our pre-
    disaster mitigation efforts limited by a $25 million grant
    program that was largely designed to raise public awareness
    about mitigation. We are accomplishing that and seeing results.
    We need to build on the success of Project Impact's marketing
    strategy by working to continue access for communities to
    private resources and all the various resources in FEMA's
    mitigation tool kit. At the same time, we need to move toward
    achieving results by implementing our mitigation programs. The
    awareness is there. What we need now are the results.

                               mitigation in Iowa

        I received some coverage on my recent remarks about the
    Mississippi River and its awesome desire to flood. I think it
    is important to note that the State of Iowa and the city of
    Davenport have done a great job with their pre-disaster
    mitigation funds--I saw that firsthand on my visit--and in the
    way they have implemented those dollars. The results of their
    efforts will substantially reduce physical and financial losses
    during this flooding season. This is what mitigation is all
    about and it is what we need to focus on in the future.

                             FEMA's terrorism role

        FEMA is now tasked, as has been noted, with
    responsibilities in other areas in addition to natural
    disasters. It is clear that there is an important Federal role
    regarding acts of terrorism and the use of weapons of mass
    destruction. President Bush is concerned that the efforts to
    address terrorism by various agencies in the Federal Government
    are not well coordinated. We have a responsibility to the
    American people to be as prepared as possible to deal with
    these events, and we need greater accountability to avoid
    duplication in these efforts.
        As you know, the President has directed me to establish the
    Office of National Preparedness at FEMA, which will serve as
    the focal point for the coordination and implementation of
    preparedness and consequence management programs for dealing
    with the threat of weapons of mass destruction. This office
    will work closely with the State and local governments to
    ensure their input into those programs and activities as it
    seeks to improve the quality of Federal support for State and
    local emergency management personnel and our first responders.
        While this is a new assignment for FEMA, this role of
    coordinator and facilitator is not. FEMA is recognized and
    supported as the Federal coordinator of assistance to State,
    tribal, and local governments and individuals in all types of
    disasters, whether they are natural, technological, or national
    security events.
        I appreciate the support you have provided this agency over
    the years. My appreciation comes from the fact and
    understanding that each year you are faced with tough choices.
    With your support, we will make FEMA an even more responsible
    and accountable national resource in preparing for and
    responding to all types of disasters and an agency that will
    continue to be an international model for disaster response,
    mitigation, and recovery.
        Thank you for the opportunity to appear before the
    committee this morning, and if you have any questions, I will
    be happy to try and answer them. Thank you very much.
        [The statement follows:]

                       Prepared Statement Joe M. Allbaugh

        Good Morning Mr. Chairman, Senator Mikulski, and other Members of
    the Subcommittee. I appreciate the opportunity to appear before the
    Subcommittee today to discuss my goals and priorities for fiscal year
    2002. I welcome this opportunity to have a conversation with you on my
    vision for FEMA.
        Mr. Chairman and Committee Members, I appreciate the time you and
    your staffs have spent with me in preparation for this hearing. I am
    pleased we are developing working relationships that will serve the
    country well, both in dealing with future emergencies and in setting
    emergency management policies.
        FEMA is made up of people who entered public service to help
    others. I consider it a great honor and a privilege to join ranks with
    the FEMA employees including disaster reservists, and State, Tribal and
    local emergency response professionals and volunteers. There can be no
    higher calling than providing speedy, appropriate help to our fellow
    citizens in their time of need.
        This morning several senior officials accompany me from FEMA.
    Sitting next to me is Patricia English, FEMA's Acting Chief Financial
    Officer, who I have turned to frequently in my first few months as FEMA
    Director. I know that Pat, along with my Office of Congressional and
    Legislative Affairs, have worked to give you and your staff a clear
    picture of FEMA's spending priorities and historical financial records.
        I'd also like to take the opportunity to introduce John Magaw,
    former Director of the United States Secret Service and the Bureau of
    Alcohol, Tobacco and Firearms. John served as the Acting Director of
    the FEMA prior to my confirmation and is currently serving as the
    Acting Deputy Director. In addition, John is our resident expert on
    interagency coordination of terrorism-related efforts.
        I'd especially like to introduce my first addition to the FEMA
    team, our new General Counsel, Michael Brown.
        Also with me today are:
      --Lacy Suiter, Executive Associate Director for Response and
            Recovery.
      --Margaret Lawless, Acting Associate Director for Mitigation.
      --Ken Burris, our Chief Operating Officer of the U.S. Fire
            Administration.
      --Trey Reid, our Acting Associate Director for Preparedness,
            Training, and Exercise.
      --Howard Leiken, the Acting Administrator of the Federal Insurance
            Administration.
        Less than a hundred days ago, I told the Committee members at my
    confirmation hearing that I am a ``doer'' and that I viewed FEMA as a
    ``doing'' Agency. I laid out six goals I wanted to achieve. Neither the
    employees nor I have wasted any time addressing these goals since I
    became Director.
        During my tenure in this position of public trust, we will:
      --Enhance responsiveness to Governors and local leaders because
            effective and immediate response is critical in disasters;
      --Implement pre-disaster mitigation programs that encourage the
            building of disaster resistant communities;
      --Guide the Federal Insurance Administration to implement policies
            encouraging the purchase of flood insurance and reducing the
            costs of flood related disasters;
      --Enhance the capabilities of the U.S. Fire Administration, which has
            a new opportunity to make a real difference in the firefighting
            community;
      --Pay special attention and strengthen those volunteer and non-
            governmental organizations responding to disasters; and
      --Take great care to foster and support the professional, experienced
            workforce at FEMA through enhanced training and creation of a
            business-like culture within the Agency.
        In addition, President Bush has asked me to establish the Office of
    National Preparedness at FEMA, which will serve as the focal point for
    the Federal coordination and implementation of preparedness, training,
    exercise and consequence management programs for dealing with the
    threat of weapons of mass destruction.
        I consider these initiatives the foundation of an improved system
    of emergency management that focuses on saving lives and protecting
    property through responsibility and accountability. In recent decades,
    we have seen Federal emergency management swing from overly
    prescriptive preparedness programs and a single focus on response and
    recovery, to a more comprehensive approach that incorporates
    mitigation, by taking prudent protective measures to reduce losses. At
    the same time, we have seen soaring disaster relief costs that need to
    be managed more effectively.
        The Administration's budget request for FEMA this year will build
    on this progress by emphasizing Responsibility and Accountability. This
    budget request asks individuals, communities, States, and FEMA to take
    on an appropriate degree of responsibility while empowering them with
    the tools to accept greater responsibility. Built into this budget
    request are sound public policy tools to ensure greater accountability
    to each other and the American taxpayer. We can enhance responsiveness
    to our State partners by enforcing our current policies and developing
    meaningful and objective criteria for disaster declarations that are
    applied consistently. We need to eliminate the ``guesswork'' and focus
    on fundamental needs for disaster declarations by examining all
    relevant factors and not just dollars. I am developing a process to
    accomplish this goal.
        Almost immediately following the release of the Budget Blueprint, I
    was on my way to tour the earthquake damaged Seattle area. This tour
    gave me an opportunity to see personally the value of mitigation. The
    National Earthquake Hazard Reduction Program (NEHRP)--a joint venture
    among FEMA, USGS, NSF, and NIST--has been studying earthquakes,
    developing guidance, and helping implement the most current earthquake
    mitigation methods for almost 20 years.
        Taking my lead from Congress' enactment of the 2000 Stafford Act
    amendments, we will focus on implementing pre-disaster mitigation
    programs that encourage the building of disaster resistant communities.
    FEMA has made solid progress in this area, but more can be done to
    limit the human and financial toll of disasters. As we work to develop
    regulations implementing the Disaster Mitigation Act of 2000, we will
    identify and codify those elements of pre-disaster mitigation that work
    effectively. FEMA will capture the suggestions from our customers in
    State and local government on how we can better help them to minimize
    losses before a disaster strikes.
        I want to take the ``concept'' of Project Impact and fold it in to
    the program of mitigation. Project Impact is not mitigation. It is an
    initiative to get ``consumer buy-in.'' In many communities it became
    the catch-phrase to get local leaders together to look at ways to do
    mitigation.
        Project Impact was a successful initiative to get local leaders
    together to look at ways to do mitigation. Now we move forward from the
    buy-in to doing the work of mitigation.
        I am here to tell you that mitigation works. The Seattle-Tacoma
    area did not suffer significant losses because 20 to 30 years ago local
    leaders invested in its future by passing building codes and issuing
    municipal bonds that implemented solid protective measures.
        FEMA has provided nearly $2.5 billion in Hazard Mitigation Grant
    Program (HMGP) dollars since 1989 and only $105 million in Project
    Impact dollars since 1998. The HMGP dollars have gone to build, rebuild
    and have become the underpinning of community recovery. In the States
    of the members of this Committee alone, more than $864 million in HMGP
    funds are available. More than $691 million of which has already been
    spent on mitigation projects.
        Project Impact has accomplished its objective of raising awareness,
    understanding and ``buy-in'' for mitigation. We need to refocus our
    efforts from marketing to implementing. I am here to reassure you that
    mitigation will not stop. Working with communities, businesses, and
    associations will not stop.
        I am convinced that locally initiated mitigation activities can be
    effective. The technical assistance offered by FEMA employees in our
    Headquarters and the Regional Offices advances the positive effects of
    community-based mitigation. Locally initiated mitigation activities
    make sense and, in fact, should be the rubber band holding together all
    of our various mitigation programs. However, we must better quantify
    the cost-benefit of the Federal dollars spent in this effort.
        We must take time to complete our efforts to quantify the cost-
    effectiveness of mitigation before FEMA seeks any additional funding
    for Project Impact. We also need to complete the regulations
    implementing the Disaster Mitigation Act of 2000. Likewise we need to
    complete our analysis of the cost-benefits of other activities under
    this initiative. This important information will guide our decision
    making process. I want to make sure that the Federal taxpayer, FEMA,
    and the State and local governments are getting the biggest bang for
    their buck. Over the next year, grants already awarded will continue to
    be distributed and the technical assistance offered by our Headquarters
    and Regional Offices will continue to support communities in their
    efforts to become disaster-resistant.
        Disaster mitigation and prevention activities are inherently
    grassroots. These activities involve local decision-making about
    zoning, building codes, and strategy planning to meet a community's
    unique needs. It is not the role of the Federal Government to tell a
    community what it needs to do to protect its citizens and
    infrastructure. I saw this first hand most recently when I visited
    community after community on both sides of the Red River in North
    Dakota and Minnesota as the river was rising. As Governor Hoeven,
    Senator Dorgan, Senator Dayton, Congressman Pomeroy and I toured the
    areas, the story was the same. In every community, they had learned.
    Communities as large as Fargo, North Dakota, and as small as
    Breckenridge, Minnesota, took their flood threat seriously and acted to
    minimize the impacts of this year's event. It worked--levees held--and
    temporary levees erected by the Corps of Engineers did their job. In
    areas where FEMA and the State and local governments had conducted
    buyouts of neighborhoods, the water came up again but there were no
    people or houses impacted. Pre-disaster, community-based mitigation
    works!
        At the same time we are giving more control to State and local
    governments through the Managing State concept of the Hazard Mitigation
    Grant Program and other initiatives, we are asking that they take a
    more appropriate degree of fiscal responsibility to protect themselves.
        The original intent of Federal disaster assistance is to supplement
    State and local response efforts. Many are concerned that Federal
    disaster assistance may have evolved into both an oversized entitlement
    program and a disincentive to effective State and local risk
    management. Expectations of when the Federal Government should be
    involved and the degree of involvement may have ballooned beyond what
    is an appropriate level. We must restore the predominant role of State
    and local response to most disasters. Federal assistance needs to
    supplement, not supplant, State and local efforts.
        Having Federal assistance supplement, not supplant State and local
    efforts is, most likely, going to be one of the more difficult measures
    aimed at responsibility and accountability that this Administration
    will have to work through.
        FEMA is looking at ways to develop meaningful and objective
    criteria for disaster declarations that can be applied consistently.
    These criteria will not preclude the President's discretion but will
    help States better understand when they can reasonably turn to the
    Federal government for assistance and when it would be more appropriate
    for the State to handle the disaster itself.
        Developing disaster criteria is not a new initiative and there is a
    wide range of options. FEMA staff has been working on some
    possibilities and we have been discussing some preliminary ideas with
    the States. Just this past week, I met with several National Emergency
    Management Association members to discuss the disaster declaration
    criteria issue. All are in agreement that something needs to be done to
    take the guesswork out of the declaration process. The hard part is
    going to be the solution.
        This is an effort that will require a strong partnership among the
    State leadership, the Congress, and the Administration to make it
    happen. I will be spending a lot of time with the State emergency
    management directors, the Governors, members of Congress, and others to
    work on disaster declaration criteria.
        This Administration wants to make a real attempt to budget for
    disasters up front rather than using ``emergency'' supplemental
    appropriations. The Disaster Relief Fund request of $1.4 billion and
    the establishment of a National Emergency Reserve of $5.6 billion, for
    FEMA and other Departments and Agencies to tap into when needed,
    represent a request based on realistic averages for disaster
    expenditures. We consider these steps necessary to lead to
    responsibility, accountability, and stewardship of tax dollars.
        We can do this through the new Disaster Mitigation Act 2000 and
    through the new disaster declaration criteria. And, we want to make
    this a State and local initiative. FEMA should not be the cheerleaders
    and the event planners. We should instead be providing the tools to
    make the communities strong self-starters.
        I also look forward to working with the Federal Insurance
    Administration, the single national source of flood insurance. We will
    design policies to effectively balance the insurance and mitigation
    risk management strategies by creating incentives for the purchase of
    flood insurance and reducing the costs of flood-related disasters. This
    Administration is proposing that flood insurance coverage at subsidized
    premium rates for vacation homes, rental properties, and other non-
    primary residences and businesses be phased out. I understand it has
    been the practice of charging many of these policyholders less than
    actuarial rates. This practice undermines financial stability of the
    program. We will also work to address the problem of ``repetitive
    loss'' properties that are a disproportionate burden on this important
    program.
        I intend to place special emphasis on enhancing the capabilities of
    the U.S. Fire Administration, which I believe has a new opportunity to
    make a real difference in the firefighting community. Firefighters lay
    their life on the line regularly. They have been advocating prevention
    and mitigating hazards long before FEMA was in existence. That is why
    President Bush and I fought hard to continue the FIRE grant program in
    this budget. Firefighters and first responders are critical to the
    public safety of our communities and we must support them.
        We will pay special attention to volunteers and non-governmental
    organizations responding to disasters. Disasters hit hardest in
    communities and neighborhoods, and our solutions to disaster problems
    rely on local solutions. Faith-based groups at the community level,
    like the Salvation Army and the Mennonite Disaster Service, play
    critical roles in disaster relief, as does the American Red Cross. The
    power of neighbors helping neighbors should never be underestimated.
    These people make a vital difference without any expectation of thanks
    or recognition. Our Community and Family Preparedness, and Emergency
    Preparedness Information programs focus on building effective self-
    help, self-reliance capability targeted to all members of a community.
        On a recent visit to Hoisington, Kansas, to view the effects of a
    tornado that ripped through the center of the commercial and
    residential heart of that small prairie town, I viewed firsthand the
    role of voluntary and faith-based organizations. The Baptist Church
    mobile feeding kitchen was preparing hot meals for displaced disaster
    victims. The Salvation Army had leased a warehouse for donations and
    was providing feeding vans for workers helping to clear away the
    debris. The Adventist Disaster Services had organized volunteers from
    around the region to help with arduous clean-up tasks. The American Red
    Cross was providing vouchers for emergency lodging, clothing and other
    essentials. I learned later that other groups, such as the Lutheran
    Disaster Services and the United Methodist Committee on Relief, had
    mobilized to begin doing case-work to identify and help with un-met
    needs. Faith-based and voluntary groups such as these, drawing heavily
    from people who live and work in the affected communities, bring out
    the best of our society. These folks play critical roles in disaster
    relief at the community level.
        President Bush's compassionate conservatism is a hallmark of his
    core philosophy. The President is promoting faith-based organizations
    as a way to achieve compassionate conservatism. Not only does FEMA work
    with the faith-based organizations that I mentioned, but FEMA's
    Emergency Food and Shelter Program is the original faith-based
    initiative and is a perfect fit with President Bush's new approach to
    helping the poor, homeless and disadvantaged. Through this program,
    FEMA works with organizations that are based in the communities where
    people need help the most.
        I would like to address the events of the past two weeks regarding
    FEMA's role in Federal consequence management efforts. As you know, the
    President has directed me to establish the Office of National
    Preparedness at FEMA, which will serve as the focal point for the
    coordination and implementation of preparedness, training, exercise and
    consequence management programs for dealing with the threat of weapons
    of mass destruction.
        This Office will work with other Departments and Agencies to
    coordinate Federal programs and assistance in support of an integrated
    local, State and Federal preparedness and consequence management
    response capability. This Office will also work closely with the States
    and local governments to ensure their input into those programs and
    activities as it seeks to improve the quality of Federal support for
    State and local emergency management personnel and our first
    responders.
        I am committed to working closely with Attorney General John
    Ashcroft to ensure that the Department of Justice's lead Federal role
    for crisis management programs and FEMA's lead Federal role for
    consequence management efforts are seamless and thoroughly integrated.
    The role of coordinator and facilitator is not new to FEMA. FEMA has
    developed its reputation as the Federal coordinator of assistance to
    State and local governments and individuals in times of disaster. As
    the President's Director for emergency management, I am also aware of
    the expectations of our citizens that their government protect their
    lives and property when an emergency or disaster occurs, whether it is
    a hurricane, earthquake, flood, tornado, or as the result of an act of
    terrorism.
        As we implement criteria empowering State and local governments to
    assume greater responsibility for people and property, we need to equip
    them to do this. Developing State and local capabilities can only be
    accomplished through effective training. Training must be a cornerstone
    of our goal of increasing responsibility and accountability.
        In the same way FEMA is harnessing new technologies to revamp the
    response and recovery operations and to expedite disaster claims
    processing, we need to maximize and multiply delivery of quality
    training to our State and local customers. We will accomplish this
    through e-learning, distance education, video teleconferencing and
    computer simulations.
        We must utilize the technologies that allow sharing of knowledge
    and resources among various communities and states. FEMA can be the
    leader in helping experts in the field assist each other instead of
    immediately turning to the Federal Government for assistance.
        We will take great care to foster and support the professional,
    experienced workforce at FEMA. This Administration wants to make sure
    the internal infrastructure of FEMA is retrofitted and prepared to
    excel well into the next century. We intend to focus on new, innovative
    ways to promote professional development opportunities and training. It
    is of critical national importance for us to continue recruiting top-
    notch people while finding ways to retain the talented and experienced
    emergency managers who coordinate our nation's disaster program. FEMA
    has many dedicated, long-term employees, who perform their duties day-
    in and day-out, steadily and competently. They are truly the ``Cal
    Ripkens'' of the Federal Government who get the job done when it
    matters.
        Today, FEMA is being called a model of government success due to
    the hard work and dedication of the career employees. With all of its
    success, however, FEMA is not free from problems. I have a respectful
    appreciation for the role of the Inspector General at FEMA and am
    pleased to report that I have established a very good working
    relationship with the Office. In testimony delivered on March 15, 2001,
    Mr. Richard Skinner, Deputy Inspector General, outlined a number of
    areas that FEMA needs to focus on improving. I am committed to
    tightening the internal controls and improving the Agency's processes
    to ensure responsibility and accountability at all levels within FEMA.
    In order to do so, adequate funding and resources are required. Without
    the resources requested in this budget, we will be unable to start the
    many improvements recommended by the Inspector General.
        In addition to ensuring the internal controls and processes are
    improved, I plan to realign some functions within the Agency in order
    to fine tune the organization.
        As President Bush said in his February address to the Joint Session
    of Congress, ``Our new governing vision says government should be
    active, but limited; engaged, but not overbearing.'' We think you will
    see that the budget proposal for FEMA truly reflects the President's
    goal of restoring a proper balance--moving away from the expectation
    that the Federal Government is the option of first resort to the option
    of last resort.
        My team at FEMA wants to meet these goals and design and implement
    sound public policy. But we need your assistance to meet these goals
    without undermining public health and safety. We want to make certain
    FEMA continues to be a shining example of good government. We will
    carry out our mission responsibly and, will be accountable to the
    members of this committee, the Congress, and the American people.
        I appreciate the support you have provided to this Agency. My
    appreciation comes from the understanding that each year you are faced
    with tough choices.
        With your support, I will make FEMA an even more responsible and
    accountable national resource in preparing for and responding to all
    types of disasters, and an agency that will continue to be an
    international model for disaster mitigation, preparedness, response and
    recovery.
        Thank you for the opportunity to appear before this Subcommittee. I
    am happy to answer any questions that you may have.

        Senator Bond. Thank you very much, Joe.
        I think we would certainly agree with you, number one, on
    the need to get out of D.C. and go visit firsthand the areas
    with which you are dealing and to listen to the people we
    serve. That is, I think, absolutely essential for effective
    service.
        Second, regarding your kind words about Carrie Apostolou,
    she has been an invaluable aide to this subcommittee, and we
    wish her well as she assists other subcommittees. But it is a
    significant loss for us.
        I am going to defer my first round of questions and ask
    Senator Domenici if he would like to take the first round since
    he was kind enough to pass on the opening remarks.

                               Cerro grande fire

        Senator Domenici. Thank you, Mr. Chairman. I first want to
    say that I do have before me a Cerro Grande booklet. It has
    been put together by people in the area who have given of their
    time and by Los Alamos National Laboratory. It has scenes like
    this one. There are some that are even worse. It was at the
    peak of this fire which destroyed 400 residences when many of
    these photographs were made, and we are going to make sure you
    get one so you will have a constant reminder of how it was.
        Mr. Allbaugh. Thank you, sir.
        Senator Domenici. Obviously, you have done a wonderful job
    in helping us streamline this operation.
        Mr. Chairman and ranking member, I think you know we took a
    chance in terms of this disaster as to how we were going to pay
    for the damages and who was going to manage the losses. We
    decided that since the fire was started by the Interior
    Department, that we should not let them manage the aftermath. I
    guess some people had strange feelings that might not sit
    right. So, you all and many others agreed to put in the
    emergency law which was drawn for this fire alone and to give
    to FEMA the sole responsibility for managing the money,
    handling the literally thousands of claims.
        I must tell you it was not easy to get that started. It was
    obviously in a state of disrepair for quite some time, but I do
    think we can say today that it is being managed very well.
    There are many claims yet to be handled, but we appreciate your
    management directions to those running that operation.
        Now I want to ask about the $150 million in the original
    presidential budget concepts that were going to be rescinded
    from the Cerro Grande fire claims fund. I understand that when
    the administration and you found out about the large remaining
    needs to solve these claims, that money was put back and it is
    in the base of the President's budget now that is before us. Is
    that correct?
        Mr. Allbaugh. That is my understanding, sir.

                           Emergency reserve in 2002

        Senator Domenici. Senator, Mr. Chairman, and ranking
    member, I wanted to note, as a matter information--I think your
    staff probably knows this but when we put this year's budget
    together with your assistance, Mr. Chairman, we did not give
    the President and OMB their request that there be a $5.6
    billion fund set up for disasters during this year. Rather, we
    said we are going to handle them the old-fashioned way, which
    means as they come up, we will have to fund them. That
    permitted us to spend that money on other programs. I think
    there is over $700 million in this budget of yours that comes
    within that purview that you will not have to charge against
    your allocation.
        Senator Bond. Mr. Chairman, is it your understanding that
    for emergencies such as FEMA, that we can handle those as an
    emergency subject to the President's declaration of an
    emergency?
        Senator Domenici. That is correct.
        Senator Bond. He can choose not to sign it, but if he signs
    it, then it is not scored against our budget allocation.
        Senator Domenici. I think the fair way to say it is that--
    --
        Senator Mikulski. It is an important point.
        Senator Domenici. It is a very important point. It is $5.6
    billion that will be available for the rest of the budget. This
    was one of the reasons we got an agreement. Let us just put it
    in simple terms. Current law will govern how we fund and pay
    for fires. There will not be a new regulation, a new budget
    manner. It will be handled the way we always did. There will be
    emergencies and they will not be counted against your
    allocation, as I understand it.
        Senator Mikulski. Seeking further clarification from a
    brother appropriator and, of course, the chairman of the Budget
    Committee, you used the term ``fires.''
        Senator Domenici. Oh, excuse me.
        Senator Mikulski. But you really meant disasters. Am I
    correct?
        Senator Domenici. Wherever I used ``fires,'' fire was on my
    mind, but it is disasters.
        Senator Bond. We do floods.
        Senator Domenici. You do floods, yes, indeed. You do
    tornadoes, earthquakes, all of them.
        Senator Mikulski. In the President's budget, there was an
    average that was placed in the budget based on a 5-year
    historic average of disasters. Last year we got a breather. It
    was a bit lower and there was some carryover money. And then
    the President was calling for a reserve fund, which is not in
    the budget.
        But what you are saying is let us not worry about it.
    Essentially we would use the money that we currently have, but
    should there be a series of things, then the chairman of the
    Budget Committee would agree that these would be funded as
    emergencies because Senator Bond and I both endured paying for
    emergencies that came from other parts of VA-HUD, and quite
    frankly, we are going to be stretched this year.
        Senator Domenici. I think what we ought to do, so that
    there is no misunderstanding, because there are a number of
    subcommittees that fund disasters, not just this one, I think
    maybe we will get a letter and clear it with Chairman Stevens
    and give it to the subcommittees as to what does not count
    against their allocation. And this is a very big one. In this
    particular one, there is $700 million already that seems to us
    to be not allocable. You will not be bound by that in your
    allocation because it is a disaster already declared, a reserve
    fund for a disaster.
        Senator Bond. Mr. Chairman, we very much appreciate that
    clarification. As you have so generously noted, in recent
    years, the budget allocation for HUD has been used as a
    reservoir to fund disasters, and this has left the budget of
    this committee, as it relates to HUD, in difficult shape. But I
    understand we will still need to appropriate the funding
    subject to the emergency designation, and we thank you very
    much for that clarification.

                                Teleregistration

        Senator Domenici. Just four or five quick ones. You have a
    program that you call Tele-registration. That is for people
    with small claims. Your system would allow the claimants to
    register their claims over the phone, allowing more customer
    service representatives to handle claimants with larger claims.
    That is your goal and objective. Is that going to be carried
    out?
        Mr. Allbaugh. That is correct. That is in operation as we
    speak.
        Senator Domenici. Is it working somewhat?
        Mr. Allbaugh. It is working fabulously. We have an 800
    number where individuals call. They receive a live operator on
    the other end, they give all the pertinent information over the
    phone and their claim is processed right after that phone call
    is completed.

                                Project recovery

        Senator Domenici. I understand there is also a help network
    referred to as Project Recovery. My understanding is that FEMA
    established that with Stafford Act funds after the fire in Los
    Alamos. This is useful because it provides anonymous counseling
    to many victims. Are you committed to continuing that
    beneficial service that we are aware of?
        Mr. Allbaugh. Absolutely. Oftentimes the scars from any
    type of disaster are not those that are physical or at the
    scene of the loss. They are emotional. They are traumatic. And
    it is important that we provide counseling for those
    individuals who have suffered.

                   personal property claims from Cerro grande

        Senator Domenici. With reference to that series of claims
    which make you get involved in all method and manner of
    evaluating property claims, they are having difficulty in some
    instances with their personal property claims. That would mean
    the inventory of what was in their dresser drawers, what kind
    of jewelry they owned, and all that went up in flames.
        Mr. Allbaugh. Right.
        Senator Domenici. Are you going to continue to help them
    fill these out and to extend time, if necessary, which is one
    of your current statements to the Los Alamos----
        Mr. Allbaugh. Absolutely. I think we have even instituted a
    process just recently where there is a certain amount of self-
    certification, if you are speaking specifically about the Cerro
    Grande claims.
        Senator Domenici. Yes.
        Mr. Allbaugh. There is a self-certification to help
    expedite this process, and that has been in place for 4 months.
    We have processed 11,000 claims. I would tell you that in the
    last 35 to 45 days, we received over 6,300 claims on this
    point.
        Senator Mikulski. Who processes those claims? Is it the Red
    Cross or who at the local----
        Mr. Allbaugh. No, ma'am. Right now, with regard to Cerro
    Grande, FEMA processes those claims.
        Senator Mikulski. But in any other disaster, who processes
    those?
        Mr. Allbaugh. Initially, there are other individuals who
    are involved. Ultimately, if the President declares a
    particular event a presidential disaster, we take over that
    responsibility.
        Senator Domenici. I am going to hold the rest of my
    questions.
        Actually for the first time in the history of FEMA in the
    Cerro Grande legislation, which was sui generis--it was just
    for it--we did say that they would process the claims. They
    would be the people that would pay the claims, as I indicated,
    because the option was to give it to Interior, and that did not
    seem right to many people. They probably would have done a good
    job.
        But I wanted the committee to know that given this onerous
    job, they are handling it in a very good way, especially since
    his arrival on the scene, and I want to thank him for that and
    thank the committee.
        Senator Mikulski. Mr. Chairman, I think there are a lot of
    lessons learned from the terrible experience in New Mexico. As
    we move forward on some of our continued reforms, we are going
    to learn a lot from what happened in that very horrific
    situation.
        Senator Domenici. I reserve any time for a second round,
    Mr. Chairman.
        Senator Bond. Senator Mikulski.

                        office of National Preparedness

        Senator Mikulski. Thank you very much, Mr. Chairman, and to
    the other chairman. It really answered one of the areas of
    questions that I wanted to direct to Mr. Allbaugh, which was
    how would we pay for disasters because it is not even
    predictable. But I think we have now got clarification
    particularly on this scoring as an emergency upon presidential
    declaration.
        Before I go to our regular activity, I would like to
    discuss the new responsibility that President Bush has asked of
    you, Mr. Allbaugh. As I understand, in the President's
    statement he has directed you to do a review and to establish
    something called the Office of National Preparedness at FEMA.
    What I would like to know is what did the President ask you to
    do? When will it be done regarding this, again, as a work in
    progress, as we discussed last week? And is the Office of
    National Domestic Preparedness being moved from the FBI to you?
        Mr. Allbaugh. This is a new office at FEMA the President
    asked me to establish. I am taking over our proposal for its
    creation to the White House this afternoon to make sure that we
    have their input. This office will, first and foremost, find
    out what the lay of the land is in this area of terrorism and
    weapons of mass destruction. As has been noted in other
    committee hearings, there are somewhere between 40 and 50
    agencies that are involved in this arena. I asked for a grid as
    to what agencies were involved and what they were doing, and to
    my knowledge that grid and matrix has never been produced.
        Senator Mikulski. I know we had it at our hearings.
        Mr. Allbaugh. First and foremost, this office will find out
    exactly what the picture is currently of this world of
    terrorism and weapons of mass destruction with regard to what
    the Federal Government is doing. I think that over the last
    several years we have spent in excess of $12 billion and we
    still do not have a national preparedness plan.
        Senator Mikulski. Are you doing the review of--as I
    understand it, number one, President Bush is not changing PD-
    39, which says FBI does crisis management, FEMA does
    consequence management.
        Mr. Allbaugh. That is correct. PD-39 will still be in
    existence.

                        review of Consequence management

        Senator Mikulski. And are you undertaking a review of both
    crisis management and consequence management, or the 46
    different agencies involved in consequence management.
        Mr. Allbaugh. My focus will be the 40 or so agencies in
    consequence management first and foremost.
        Senator Mikulski. I see.
        When do you expect the review to be done?
        Mr. Allbaugh. I do not exactly know when. This is going to
    require the Vice President's request oversight, and he has
    willingly agreed, at the President's to oversee this process. I
    am hoping that over the next several months--and I would hate
    to tie anyone's hands inappropriately--that we should have
    something to talk about by early fall or the middle of the
    fall. That is kind of my own personal time frame.
        Senator Mikulski. Well, first of all, I just want to say
    this. Number one, I really pledge my support to work with the
    President, the Vice President, Dick Cheney, and you on this
    because those 3 days of hearings last week really show that our
    consequence management and even aspects of crisis management is
    often quite disjointed and that there are several issues to be
    addressed.
        President Clinton, through former Attorney General Reno,
    did establish something called the National Domestic
    Preparedness Office, and it was to look exactly at those
    agencies that you talked about. And it was over at Justice. It
    was Defense and HHS and the National Guard and first
    responders, and it was to assist State and local emergency
    responders. That is why I asked is this moving from the FBI to
    you.
        Mr. Allbaugh. I think it is premature to make that
    decision. I know that is a subject that the President, Vice
    President, and I have discussed. I think we need to complete
    this review first before any decisions like that are
    undertaken.
        Senator Mikulski. I understand that. I think that the
    intention in mission established at Justice was excellent, an
    open, interdisciplinary, interagency forum to coordinate all
    this. They also had a State and local advisory board, which was
    also good.
        I would just ask you to review this, see what is the best
    place to do it. I do not prejudge it either. I believe that you
    are an extraordinarily competent person, and I believe the
    President has been clear on what he wants. In this matter, what
    President Bush wants, so does Barb Mikulski. We look forward to
    hearing this. I think, Mr. Chairman, when we get to the fall or
    even ongoing, we can talk about what we need to do in this
    area.
        Mr. Allbaugh. Thank you, ma'am.

                        cost share of Hazard mitigation

        Senator Mikulski. In terms of hazard mitigation, this then
    goes to the whole issue of changing the Federal share from 75
    to 50 percent, actually doubling the cost of State and local
    governments. Also, I note in your testimony bringing Project
    Impact into hazard mitigation. Am I correct in that?
        Mr. Allbaugh. That is correct.
        Senator Mikulski. Now, could you tell us what would be the
    consequence of this on State and local governments? And the
    whole point of disaster mitigation was to really encourage them
    to look ahead, plan, and be prepared. We took FEMA from often
    an inept response agency and focused on recovery, at which they
    were not very good, to readiness, response, recovery, and of
    course, prevention early on. What would be the consequence of
    this? Do you think we are going to undo the gains for
    preparedness by this change?
        Mr. Allbaugh. Well, I certainly hope not, and I do have
    some concerns in this area of moving the share from 75/25 to
    50/50. I am not sure that that is fair to the States, quite
    frankly, and it is something that I want to look closely at. I
    have some deep concerns about it. I think ultimately we need to
    be designing, overall disaster criteria so all the States know
    exactly what we are faced with regardless of whether it is a
    small disaster, a medium disaster, or hopefully not a
    catastrophic disaster, but at the same time couple some pre-
    mitigation efforts that States are doing right now, maybe
    rewarding those States for taking those efforts and
    initiatives. We have started this process internally, which at
    some point I hope to share with members of the committee. We
    need to have a comprehensive plan to look at the entire
    mitigation area. In my world, I would prefer not to have 15
    different programs--excuse me?
        Senator Mikulski. Well, I agree with you. First of all, I
    would hope in any formula change, knowing of your previous life
    experience, that there will be really rigorous consultation
    with the National Governors Association----
        Mr. Allbaugh. Absolutely.

                                 Project impact

        Senator Mikulski [continuing]. And with the National
    Association of Counties, which would be crucial.
        And then second, Project Impact was meant to be prevention,
    it was not meant to be a new form of pork in Maryland. When we
    looked at what we needed to do to stop disasters in western
    Maryland, the Speaker of the House and also the Army Corps of
    Engineers did a review for us so that when we moved, we could
    see what the State needed to do and what the Feds needed to do.
    Perhaps that type of prevention should come through their State
    plan when they are applying to you.
        Mr. Allbaugh. I could not agree with you more.
        Senator Mikulski. This is not about pork. This is about
    prevention.
        Mr. Allbaugh. I could not agree with you more. I think
    oftentimes we possibly have left out those local communities,
    the State emergency managers who ought to have a say in
    implementing these programs particularly when it comes to
    mitigation efforts. They need to be seated at the table
    figuring out the right game plan for that particular State.
        Senator Mikulski. Well, my time is up. I will come back.
    The chairman has been waiting.

                   self-certification for Cerro grande claims

        Senator Bond. Thank you very much, Senator Mikulski.
        Just to follow up on a discussion you were having
    previously, you were talking about self-certification. We know
    the importance of moving forward. Self-certification speeds up
    the process, but I am concerned that there be standards,
    processes, or post-audits to make sure that fraud and abuse
    does not creep into the system. We assume that 95 percent of
    the people are honest. Is there a system set up to catch the 1
    or 2 percent?
        Mr. Allbaugh. Absolutely, sir. This is not just walk in the
    door, make something up, and jot it down on a newspaper. There
    has to be follow-up after the fact.
        Senator Bond. Do you do that? Are you doing the follow-up?
        Mr. Allbaugh. We have not started that yet, sir. We have a
    couple of people who have, unfortunately, been found out
    through their misdeeds, and I think prosecuted to the fullest
    extent of the law.
        Senator Bond. There is criminal prosecution for deliberate
    fraud.
        Mr. Allbaugh. Absolutely. There are 22 cases pending in New
    Mexico right now, if I remember correctly.

                      coordination of Mitigation programs

        Senator Bond. I think a couple of good prosecutions may be
    the healthiest antidote or actually preventive medicine for
    that in the future and not just remedying the past.
        Let me turn now to the hazard mitigation grant program
    because you have touched on it. This is so important. Funds are
    made available under the disaster relief fund through section
    406 for mitigation, and FEMA has been provided funds in the
    past for buy-outs. But I am concerned whether there is adequate
    coordination among these programs and other FEMA programs.
        Can you outline for us what steps you intend to take to
    assure better coordination of the mitigation activities or what
    kind of overhaul you might make generally of the mitigation
    program in FEMA?
        Mr. Allbaugh. Well, first and foremost, I think we are in
    the process of a systematic review internally of what programs
    exist in the mitigation arena. With regard to Project Impact,
    one particular pet peeve that I have, which may be not fair,
    but it seems to me that that particular program--right now
    there are 250 communities that participate out of roughly
    25,000 nationwide. I think whatever program we devise needs to
    be encouraging for all communities to participate when it comes
    to pre-disaster mitigation as opposed to meeting some very
    strict and confining criteria.
        So, I think it is first and foremost incumbent upon the
    agency to review programs internally. My goal is to devise a
    program that is easily understood by everyone and applicable to
    everyone. I have a basic theorem in life: what is fair for one
    is fair for all. We should not devise programs that may be
    operable in one State and not operable in another State. I
    think we can do this review in short order, sir.

                            National mitigation plan

        Senator Bond. As you may recall, former FEMA Director James
    Lee Witt was a big supporter of buy-outs of properties in the
    flood plain, and we had I think some very successful examples
    in Missouri. But unfortunately, despite some massive dollars
    provided by Congress for the buy-outs, FEMA still does not seem
    to me to have a coordinated, cohesive buy-out program with
    clear rules and procedures.
        I would like to know your view of the role of Federal buy-
    outs in terms of the national mitigation plan. What should the
    role of States be in the national mitigation plan in terms of
    decision making and what I believe must go along with it,
    funding responsibilities?
        Mr. Allbaugh. Well, my opinion is that we probably ought to
    be almost equal partners in that process. If there is not
    common agreement on any mitigation plan, then it will not be
    effectively carried out. It is my goal, as a part of reviewing
    all the mitigation efforts, that we more clearly define in
    short order what the national plan should be. I would like to
    share that with you at my next opportunity.

                       unspent Hazard mitigation dollars

        Senator Bond. We will be interested to find that out.
        Under the hazard mitigation program, the FEMA Inspector
    General has found some significant problems and reported it
    appears that grants are being awarded, but a significant number
    of the projects are not being completed. As of last fall, 57
    percent, or $1.2 billion, of HMGP dollars, remain obligated but
    unspent.
        Can you tell us why this is happening and does it suggest
    that maybe the States or somebody does not have the plans in
    place to spend the dollars effectively? What can you do about
    it?
        Mr. Allbaugh. I have asked that same question, sir. When I
    showed up, I noticed that in some cases some of these grants
    have been on the books for 3, 4, and 5 years. I have asked for
    everyone to take a close look at that. In fact, we have already
    shaved back some programs with respect to the amount of time
    that is available to communities to take advantage of these
    grants. I think 5 years is too much. I think possibly 4 years
    is too much. Three years might be a good average. I am not
    sure. I think it requires us to sit down with those communities
    to find out what is a reasonable time period. We just have too
    much money that we are carrying on the books.

              Hazard mitigation grants as a discretionary program

        Senator Bond. Director Allbaugh, generally I am a big fan
    of block grants and not having a lot of Federal strings
    attached to funds that we send out to State and local
    governments. But I am a little concerned the hazard mitigation
    program works almost like an entitlement program and funds are
    automatically made available as a set percentage of total
    disaster cost.
        Last year, during consideration of the Stafford Act
    amendments, I suggested the possibility of turning HMGP into a
    competitive grant program to make funds available up front for
    pre-disaster mitigation activities, most addressing national
    priorities to those States and communities that are really
    doing all they can. I would be interested in your thoughts on
    converting the hazard mitigation program into a discretionary
    program so the money does not automatically fall into the laps
    of somebody who has had a disaster, but goes to those places
    where they are willing, able, and ready to take on the
    significant obligations.
        Mr. Allbaugh. I would like to take a look at that, Senator.
    What I worry most about, quite honestly, is that sometimes we
    have the proclivity of not addressing items that should be
    addressed until after an event takes place. Oftentimes, once an
    event takes place, that gets everyone's attention in the
    community or that county or State's, and I would hate to throw
    that particular part of the program out the door because it may
    be the one incentive to bring those folks to the table to do
    something.
        I will cite you a specific example, sir. As you all know,
    we have been talking about Davenport most recently. The city
    council has before it now an issue to go forward with not only
    their own engineering study, but to go back and revisit a Corps
    of Engineers study that was done in the early 1980's. They
    probably would not have been thinking about that, quite
    frankly, until this water started rising on the Mississippi.
        So, I would like to take a look at what you are suggesting.
    I do not know enough to really have a firm idea at this point.
        Senator Bond. Well, I can tell you that it is not my normal
    procedure to suggest moving away from block grants, but I am
    delighted to hear that Davenport is really focused in on it.
    Certainly they would rank highly on a competitive grant
    program. But apparently there are some communities in some
    States that just do not get it and are not able to move
    forward. So, we look forward to discussing it with you.
        Now, Senator Johnson, thank you for your patience.

                                   Mitigation

        Senator Johnson. Thank you, Mr. Chairman. I will just very
    briefly move along, building on the questions that you and
    Senator Mikulski have asked relative to mitigation, which is an
    area of some concern of mine. I appreciate that Mr. Allbaugh
    has talked about moving on to the next level relative to
    mitigation efforts.
        But it does concern me if we are going to eliminate Project
    Impact, rather than developing better and more thorough-going
    criteria, to address the pork issue that Senator Mikulski
    raised, if we are going to do that and at the same time double
    the local costs on mitigation programs. I just am concerned
    whether the funding is going to be there to move to that next
    level, or if in fact we are going to see a retreat on the part
    of communities and their ability to prepare for serious
    problems of the future, which in the long term then cost us
    still more.
        So, on the one hand, we do not want this to become an
    irresponsible use of the taxpayers' money. I think that you are
    absolutely right that what we are doing now is just barely
    scratching the surface of the numbers of communities that
    really ought to be involved in an aggressive mitigation
    strategy. But on the other hand, it is hard to do something
    with nothing. I worry about the overall level of funding
    available in your tool box to come up with a broader, more
    aggressive strategy.
        Mr. Allbaugh. You have put the finger on my major concern
    about moving from 75/25 to 50/50. We have to be partners with
    State and local communities. I do not want to be in a position
    of penalizing those communities for something that they would
    like to do. I just met recently, as I alluded in my remarks,
    with the board members of NEMA who are very concerned about
    this funding shift. It is a concern to me. I am not so sure
    that I am there, quite frankly, but I would like to study it
    further without getting myself in too much more hot water.
        Senator Johnson. I appreciate your observations, and I
    would share again the comments of my colleagues that I would
    hope that on these mitigation issues, that you would work in
    close communication with the Governors and the mayors and the
    counties, the local government officials who oftentimes are
    dealing with very thin budgets themselves and yet are on the
    front line of trying to think ahead prior to disasters. And
    sometimes at the local level, that is very difficult to do. You
    have got all kinds of urgent crises of one kind or another
    going on, and we need to do more, I think, to encourage them to
    be fixing the roof before it rains.
        Mr. Allbaugh. Absolutely.
        Senator Johnson. So, thank you again, Mr. Allbaugh.
        Mr. Allbaugh. Thank you, Senator.
        Senator Johnson. I yield back.
        Senator Bond. Thank you very much, Senator Johnson.
        We have just had a vote called. Senator Mikulski and I are
    going to try to play tag team and keep this going as best we
    can. Now we turn to Senator Domenici for his questions.

                             Consequence management

        Senator Domenici. Thank you very much, Mr. Chairman.
        Mr. Director, let me say that many of us have been part of
    the establishment of the first responder system in the country.
    You know, the big one is 120 American cities. There are only 16
    that remain to be done under the first responder preparation.
        I think while we are sitting here today saying it is good
    that the President moved the terrorism function to you, I think
    you should know that there will be some opposition to that up
    here because the Department of Justice has a lot already going
    on and then the FBI has been in charge of crisis management.
    You are going to be in charge of the crisis consequences I
    think.
        But when will we have a description of how you are going to
    do this and when? Is this the one that the Vice President is
    going to supervise?
        Mr. Allbaugh. Yes, sir. As far as the structure of the
    office, you will have that very soon. Insofar as the overall
    plan, which incorporates the involvement of the President and
    Vice President, I think that is several months down the road.
        Senator Domenici. I wanted to suggest to you that with
    reference to terrorism, that there is a great deal of
    information, scientific and otherwise, that has been
    accumulated by the two national laboratories, Sandia and Los
    Alamos--and Livermore, the three that do nuclear weaponry --
    with reference to many of the facts that surround what can
    happen, what detection processes, chemical analysis processes.
    They have a lot of that going on, and I hope that you make note
    of it as you put your process together because right now I do
    not think there is a direct line from anyone. But they are just
    supplying the information. I think when you get into it, you
    will find it is a very valuable asset.
        Mr. Allbaugh. I appreciate your pointing that out.

                    claims and settlements for Cerro grande

        Senator Domenici. I am going to ask for the record, at your
    earliest convenience, you supply this subcommittee with the
    current facts regarding claims, settlements, and the like of
    the fire at Los Alamos.
        Mr. Allbaugh. I will be happy to do that.
        Senator Domenici. Bring us current and also give us your
    best assessment of how many remain, how many that you know
    about that are filed and not yet settled, and somebody has an
    estimate of those who still have not filed. If you would give
    us a summary.
        I think we took a chance in saying let you run this, and I
    think my good friend, the chairman, was kind of worried about
    day-to-day management by FEMA, and we want to make sure that we
    were right and that those things you have worried about are not
    going to come to fruition at Los Alamos. Will you do that for
    us?
        Mr. Allbaugh. We will do that. You will have it before the
    week is out.
        Senator Domenici. Thank you.

                       FEMA's ever expanding assignments

        Senator Bond. Thank you, Mr. Chairman. I a budgeteer at
    heart, and I just hate to see things that are spent without
    control. I am trying to reflect the discipline that you have--
    --
        Senator Domenici. What is not wasted is there under our
    system to use for better programs that are not getting funded.
        Senator Bond. Thank you very much, Senator Domenici.
        Director Allbaugh, I have been concerned over the years
    about mission creep at FEMA. For example, a few years ago, the
    former Director was named to head up a task force on the
    District of Columbia snow removal problems. I mean, snow does
    happen in the District of Columbia. In my view that is not an
    unexpected emergency. Last year for the first time, FEMA
    declared a public health emergency in two States and awarded
    funds for prevention of West Nile virus. Now, I understand FEMA
    has been asked to coordinate plans in the event foot and mouth
    disease enters into the United States.
        I have some concerns about why FEMA should be involved in
    such problems which have little to do with FEMA's principal
    role of natural disaster preparation and response for
    activities which would seem to be more logically in the purview
    of the Department of Health and Human Services or U.S.
    Department of Agriculture, even for those activities which are
    truly above and beyond the capacity of State and locals to
    respond. I know if you have a big snowfall, everybody would
    like to have the Federal Government come in and plow the snow.
        But are you taking a look at the scope of FEMA with respect
    to these new activities?
        Mr. Allbaugh. I am concerned about mission creep as you
    are. I believe that we should do what we are charged with doing
    and do it well. FEMA has a great reputation and it is because
    it is a can-do agency. The reservists, the 2,600 or so
    employees, all the volunteers have worked hard to earn that
    reputation. They deserve that reputation. At the same time, we
    suffer from the success of that reputation; if you want
    something done and you want it done right, you give it to FEMA.
    I am hoping that mission creep will slow to a crawl, quite
    frankly.
        With regard to the foot and mouth disease and the West Nile
    virus, we have been asked to participate in those responses
    primarily because we are one of the agencies that has the
    closest, most active relationships with the first responders,
    the local responders, the State and local emergency managers.
    These are relationships that have grown over the years and
    because of those relationships, some other agencies are not as
    fortunate as we. They have invited us, particularly Agriculture
    with regard to foot and mouth disease, to participate in a task
    force. Agriculture still has the lead with regard to foot and
    mouth and we are there as a resource.
        With regard to snowfall, I think the Stafford Act limits us
    to participating in snowfalls that are the record snowfalls.
    So, it is not every snowfall that we are involved in now, even
    though over the last several months, it seems as if that is the
    case.
        But your point about mission creep is well taken.

                                West nile virus

        Senator Bond. With respect to the West Nile virus, what
    about the Centers for Disease Control? Who is going to handle
    that? What is the administration's policy? I mentioned plagues
    in my opening comments, but who is going to handle those kinds
    of things? Is that FEMA's job or somebody else?
        Mr. Allbaugh. I know we are in discussions with HHS and CDC
    right now insofar as who will ultimately take the lead. We
    believe there are defined lines of authority and
    responsibility, and unless there is an absolute need for FEMA's
    participation, I would suggest that those responsibilities lie
    with those two agencies.

                   state and local preparedness for Disasters

        Senator Bond. When you were in Davenport recently, you
    raised the issue of the need for communities to take the steps
    necessary to protect themselves against the risks they face
    rather than relying on American taxpayer time, and again for
    natural disasters which can be reasonably anticipated.
        What specifically do you intend to do to improve State and
    local government accountability for disaster preparedness and
    mitigation?
        Mr. Allbaugh. FEMA has a great relationship with the State
    emergency managers, with regard to pre-disaster mitigation and
    mitigation as a whole. It is my desire, quite frankly, to meet
    more often with those individual managers who are responsible
    for that implementation, making sure that they are a full
    partner in this effort.
        Davenport is a community that has taken several steps over
    the past several years in the area of buy-outs. That is one of
    the reasons their damage is less this time around than it was
    in previous years, 1997 or even 1993, and I commend Davenport
    for having taken those steps. Many communities up and down the
    Mississippi have done exactly the same thing. What I worry
    about are not the communities so much that have taken those
    steps, but more so those communities that have not taken the
    steps to prevent future disasters.

                  measurement of State and local capabilities

        Senator Bond. That actually leads into my second question.
    The Inspector General said one of the top challenges facing
    FEMA is developing a method of assessing State and local
    capability and developing a reliable basis to implement risk
    based funding in the allocations to the State. FEMA instituted
    a process called Capability Assessment for Readiness. The IG
    seemed to suggest it is basically a self-assessment by States,
    and according to the IG, there is apathy at both the State and
    local level because of concerns that responses to the
    assessment may have an impact on funding.
        Do you think that FEMA needs to improve its measurement of
    State and local capabilities? And if you have plans to do so,
    do you believe that the State funding for pre-disaster
    preparedness activities, $135 million this year, should better
    align with risk?
        Mr. Allbaugh. We have a great relationship with the
    Inspector General, and I appreciate their comments. I happen to
    believe that we have a pretty good system for making
    assessments right now.
        My feeling is that this is more in the area of determining
    the benefits of pre-disaster mitigation; we need some ability
    to measure those benefits. We could do a better job in that
    arena. That seems to be a nebulous area that almost relies upon
    seeing it with the naked eye as opposed to any concrete,
    tangible evidence that is proven.
        Senator Bond. We need to work on that.
        Mr. Allbaugh. We do need to work on that.
        Senator Bond. Mr. Director, if you will excuse me, we are
    going to call a temporary recessed. The hearing will resume at
    the call of the chair when we have a chair, and we trust that
    members of the committee will be returning shortly. But I have
    to go vote. The hearing is temporarily recess.
        [A brief recess was taken.]
        Senator Mikulski [presiding]. I know I saw Senator Bond
    dashing for the vote as well.
        Mr. Allbaugh, let me pick up on the Project Impact issue
    for just a moment. Project Impact was my idea, but it is not my
    pet rock. So, know that I am wedded to the outcome, which is
    prevention.

                state plans for disaster prevention in Maryland

        Mr. Allbaugh. I agree.
        Senator Mikulski. Prevention of disaster, the consequences
    to families, the consequences to taxpayers we want to prevent.
        So, therefore, we are looking at other models to accomplish
    our policy objectives. In my mind, where there are repetitive
    situations that exacerbate the consequence, that some are just
    in flood plains, beach plains, a variety of things. So, we look
    forward to that.
        I just want to share with you a Maryland model, if I could,
    just for your observation. We were hit pretty badly by floods
    and ice storms a couple of years ago with terrible consequences
    to the community. There was one whole street along the Potomac
    River where we had four automobile dealerships under water. You
    understand what I am talking about.
        We did have the response of FEMA. It was excellent, but
    Governor Glendening and I put our heads together and said how
    could we avoid this again. And that is when we created
    something called the Western Maryland Task Force, and it was
    co-chaired by the head of the Baltimore Corps of Engineers, as
    well as the Speaker of the House of the Maryland General
    Assembly who lived in western Maryland. The Corps told us what
    the problems were, using flood maps and all the things that
    Corps of Engineers have at their disposal.
        Then we did an inventory of what the Feds should do, also
    what the local government should do, and also the private
    sector because there was a bridge that would fill up on the
    Potomac with debris and it acted like a dam which caused the
    flooding.
        So, you see when we went to FEMA for this new program that
    I essentially created, we were on solid ground because we had
    had solid engineering and community participation. It was not
    to get a couple of bucks to buy out something we wanted to do
    anyway.
        The reason I say this is that is why I go to State plans
    for disaster mitigation. Also, when we look at the cost
    sharing, and the concept of authentic in-kind contributions, I
    am not talking about desks and phones that they would have
    anywhere. But, for example, if you ask a railroad to help pay
    for the cost of improving a bridge that is functioning as a
    dam, those are expenditures that should count in my mind. The
    Governor says, we are going to take care of XYZ because the
    engineers say, if we do our share along the Potomac with
    certain kinds of levees, it will help. In other words, where
    the State is already going to put its own money in, that should
    also count.
        So, I am just offering that as a model and then also the
    consequences to that.
        Then the other was, we do not want this to be like
    Superfund sites that go on forever, and we do not solve the
    problem. We eat the money up. I do not know where the cleanup
    sometimes is.
        So, I just lay that out for you as we ponder this and
    analyze it because we are about to embark upon a very serious,
    new Federal policy. To date, we have been doing it piecemeal
    and I would acknowledge that--Project Impact here, et cetera.
    So, I am looking forward to further conversations on this and
    hope that we could do a rigorous analysis of Project Impact,
    what worked well and what did not.
        Do you have any comments on that?
        Mr. Allbaugh. Yes, I do. Your model may be something that
    we need to look closely at. I am a firm believer of
    periodically analyzing all programs, figuring out what works
    and what does not work, and getting rid of the part that does
    not work or making sure it evolves into something that does
    work. We are about to do that in the entire mitigation arena.
    If we do not have our act together, there is no way that we can
    go to a State to promote the pre-disaster mitigation. Again, I
    feel that those individuals at the State level, and even at the
    local level, have to become our partners, and 9 times out of
    10, they view that the same way.
        Senator Mikulski. They say all politics is local, but all
    disasters are local.

                                 Flood mapping

        Mr. Allbaugh. Sure.
        Senator Mikulski. So, I am not looking for cookie cutter
    approaches. Ours was a model. I do not say it should be the
    only model because I think one of the places where you and I
    will actually agree, because it is where I have such a great
    relationship with my colleague, is we are not government
    people. We are local people. We are problem solvers. So, we do
    not believe that one size fits all, or one plan will fit all.
    So, we will look for your good management skills.
        Where are we on the flood mapping, though? That is an
    important tool for a lot of things that you want to do.
        Mr. Allbaugh. This is the never-ending story.
        Senator Mikulski. There are a lot of things you want to do,
    including the flood insurance, et cetera. Could we talk about
    flood mapping and how we can get it done?
        Mr. Allbaugh. Well, it is a matter of money. I believe the
    figure is somewhere around $1.1 billion. We make a little money
    over a 7-year program. We make a little money from policyholder
    fees and off of sales of the maps, but not much. So, basically
    you reduce the unfunded cost by $750 million or $800 million
    over 7 years. Once you start that process, by the time you end
    that 7 years down the road, those current maps are already
    outdated.
        There are some communities who have taken it upon
    themselves, because of growth pressures, construction, and
    development, to update their own flood maps.
        Senator Mikulski. Which could count as their in-kind
    contribution.
        Mr. Allbaugh. Absolutely. I think we ought to take a close
    look at----
        Senator Mikulski. In other words, give help to those who
    practice self-help.
        Mr. Allbaugh. I am sorry?
        Senator Mikulski. Let us give credit to those who practice
    self-help.
        Mr. Allbaugh. Absolutely. I am not sure how many
    communities we are talking about, but we ought to take a look
    at those communities that have taken that initiative and see if
    those maps meet our criteria and then adopt those maps. But
    this is, as I said earlier, the never-ending story. And it is
    so important because it drives development, it drives pre-
    disaster mitigation, it drives overall mitigation and planning
    for these communities.
        Senator Mikulski. Well, I do not know why it should cost $1
    billion, but I am not disputing that. But I do know this that
    there are new technologies that are developing called
    geographic remote sensing, in which we can map our own planet,
    and there are now technological ways, new ways of simulation. I
    am not sure of all the technology, but I have seen some of the
    demonstrations tied in with NASA and even the private sector. I
    wonder if maybe there needs to be an assessment of how we can
    do flood mapping using some of the new technologies that would
    both reduce the cost and the time.
        Mr. Allbaugh. I am open to that. I ask that same question
    almost daily. I think some folks are getting tired of me asking
    that question. I am assured that we are as technologically
    current as we possibly can be. But it never does hurt to review
    an ongoing program and we will do that.
        Senator Mikulski. Again, I do not want to over-dwell on
    this, but----
        Mr. Allbaugh. Another vote.
        Senator Mikulski. I think it is a quorum, or it is the
    Office of National Preparedness at the FBI doing a drill while
    you are testifying.
        I am going to leave it there, but I do know NASA had a
    program called Landsat where it took pictures year after year
    after year after year. One of the things Senator Bond and I are
    so hot on is we love data, but we do not like data mortuaries.
    Again, I offer perhaps a suggestion to talk to Dan Goldin to
    see what is it that we have already.
        Mr. Allbaugh. I agree with that.

                           Repetitive loss properties

        Senator Mikulski. Again, we have been collecting lots of
    data through civilian means. We are talking civilian data.
        Let us go to the flood insurance. I know you are talking
    about phasing out the insurance coverage for repetitive loss
    properties. It sounds reasonable, but I am concerned about
    unintended negative consequences and also the grandfathering or
    grandmothering in where there have already been properties
    built, longstanding, et cetera, even whole communities.
        Mr. Allbaugh. I would agree with that.
        Senator Mikulski. Particularly along those coastal areas.
        Mr. Allbaugh. Yes, ma'am. This is an area we need to take a
    close look at. I know there is a proposal to reduce flood
    insurance to one additional claim and then you are out if you
    do not relocate. There is a part of that that causes me a
    little heartburn. I know there are several bills in both houses
    right now, some of which really appeal to me insofar as a way
    to address this situation.
        Senator Mikulski. Well, will you be able to alter the
    program without an authorization and do it through a budget
    appropriations process?
        Mr. Allbaugh. I am not sure of the answer to that question,
    ma'am.
        Senator Mikulski. I would strongly recommend that the
    authorizing committees be involved. This is a significant
    change, and the Stafford Act has given us enormous
    responsibility. But I do believe committees of jurisdiction
    would get prickly if we did anything new and dramatic without
    an authorization. The very process of an authorization enables
    congressional review hearings, et cetera. So, before we make
    changes in repetitive loss, I really think the authorizing
    committees need to be involved in some way.
        Mr. Allbaugh. Interestingly enough, when I started asking
    questions about repetitive loss, I learned that essentially
    what we are talking about is 10,000 properties nationwide that
    are the problematic properties year in and year out. I really
    thought that was a smaller amount than I had anticipated, to
    tell the truth.
        Senator Mikulski. Here is what I envision. People are not
    going to be happy about any changes we would do.
        Mr. Allbaugh. Of course.
        Senator Mikulski. And we get to where we have to move our
    bill, and then they are going to come running to us and say,
    how can you do this without an authorization? We are going to
    have such a complex bill this year, and I do not think we are
    going to have the appropriations that even a tight wad like
    Senator Bond will like. So, I think we really need to
    understand both the policy and the politics of this.
        I have just one last area. First of all, just a comment.
    The emergency food and shelter program is a terrific one.
        Mr. Allbaugh. Yes, ma'am.

                           support for Fire programs

        Senator Mikulski. And God bless all those groups that do
    it. It is another area where FEMA gets high marks.
        The second is the fire prevention and training. In your
    testimony, you talk about a new involvement of the Fire
    Administration. Could you elaborate on that and what resources
    you think you would need?
        Mr. Allbaugh. Well, first, thanks for recognizing that very
    important program. I think it has been in existence since 1983,
    if I am correct, providing emergency food, shelter, clothing.
    It is probably the original faith-based program in the Federal
    Government, if you think about it for a minute.
        Second, to answer your question directly about the Fire
    Administration. I have, for a long time, been an admirer of
    those men and women out there who put their lives on the line
    day in and day out. I am not so sure that I could do what they
    do. They not only fight fires, they respond to automobile
    accidents. They protect our infrastructure. I think it is
    important that we properly train and equip with the latest
    technology those individuals who are protecting our country.
    They are the ones, along with the men and women in blue, who
    will respond to the 911 phone calls when there is a disaster,
    regardless of where it is. We can never say thank you enough
    for what they do.
        In exchange for what we ask of them day in and day out, I
    think we ought to fully support them to the best of our
    ability, and I think the Fire Administration will have no finer
    friend than myself during the coming years. It is important to
    highlight what they do. It is important to educate the American
    public that they do a lot more than fight fires, and it is
    important that we support them to the best of our ability.

                               Fire grant program

        Senator Mikulski. Well, Mr. Chairman, I know we want to
    return to your questions.
        I know there was a blue ribbon panel, commissioned by James
    Lee Witt, for people involved in the fire first responder
    community to give candid assessments of both the Fire
    Administration, as well as the Fire Academy in my home State in
    Emmitsburg. I would commend you to look at these. Again, I am
    not wedded to the recommendations, but that we really see where
    we are going.
        On the fire grant program, I know that this is a new
    program, and my strong hope is that we could have a very clear
    agreement between the House and the Senate that these be
    competitive grants based on criteria you are developing. I hope
    this does not become an earmarked program because I think if we
    go down that road, it will be terrible. In other words, have
    very clear criteria, competitive grants, et cetera because if
    we get into earmarking in this Congress who gets what fire
    truck, I do not think the Nation's needs will be served.
        Mr. Allbaugh. I understand.
        Senator Mikulski. We all have to kind of shake hands. We
    are in it.
        Senator Bond [presiding]. I wholeheartedly concur with my
    ranking member.
        Now, let me finish up with just a couple of quick questions
    as the newly designated tight wad in the appropriations
    process.
        Senator Mikulski. Tight fisted.
        Mr. Allbaugh. Mr. Chairman, if I may before Senator
    Mikulski leaves, I would just like to make sure she knows that
    I am not wearing Guccis. These are Naconas. There is a big
    difference.
        Senator Mikulski. Are you talking about those boots?
        Mr. Allbaugh. Yes, ma'am. [Laughter.]
        Senator Mikulski. My idea of Gucci boots is what Senator
    Kay Bailey wore to the inaugural ball. We are still teasing her
    about that.

                            Flood insurance program

        Senator Bond. Or Jack Oliver.
        In any event, Mr. Director, I am very much concerned about
    the abysmal performance of the flood insurance program. There
    are some inherent disconnects. It encourages construction in
    high risk flood plains in coastal areas, and I understand that
    2 percent of the properties in the program account for about
    one-third of the program's claims over the lifetime of the
    program. I think that FEMA's management of this program has
    been a failure. It viewed its role primarily as a marketing
    agent, but according to GAO testimony, which we will be
    submitting today for the record and we will obviously make
    available to you, if you have not seen it, FEMA does not even
    have data on participation rates, the percentage of structures
    in flood prone areas that are insured.
        Senator Bond. How are we going to overhaul the program? How
    can FEMA implement the GAO recommendations to collect data on
    participation rates in order to gauge the success of the
    program? Where do you see us going on this thing?
        Mr. Allbaugh. Actually, Mr. Chairman, I am not really
    equipped to answer that question very well. This is day 90 for
    me. What I would like to do is study the GAO report, study our
    recommendations internally, and report back to you.
        Senator Bond. I would appreciate a well-considered answer
    for the record because I think this is vitally important.
        Mr. Allbaugh. I appreciate that.
        Senator Bond. We are going down the wrong road. Something
    is not working, and I think we owe the taxpayers better.
        On counter-terrorism, I know that we have had some
    discussions about this, and the members of the committee are
    very much interested. In past hearings, I discussed with your
    predecessor the confusion of the roles and responsibility. We
    are very pleased that the President has now focused on this,
    and it is gratifying there is significant attention to this.
        After 3 days of hearings last week, I do not want you to
    recreate those, but I would like a 90-second summary of what
    the task force is and what the mandate is and whether there
    will be funding requirements that we need to address in this
    appropriations cycle.
        Mr. Allbaugh. For the balance of this fiscal year, sir, I
    believe we have enough fudge room to absorb the office getting
    up and running.
        Senator Bond. Just be honest. Do not let it out of this
    room. If you know what you need, it might be easier to get for
    this year than for next year.
        Mr. Allbaugh. Well, that is interesting. I will take $25
    million.
        Senator Bond. Okay. Document it, designate it, prorate it,
    applicate it, justify it, and get it approved by OMB, and we
    will take a look at it.
        Mr. Allbaugh. Well, I think we can do that in short order.
        Senator Bond. Seriously, we will work with you on it.
        Mr. Allbaugh. Actually that is what I was going to suggest
    for 2002, but upon the chairman's suggestion, we will make a
    run at it for this year.
        Senator Bond. Okay. It is called budgeting out of the hip
    pocket. But we will move forward.
        A 90-second view of where are you doing, what are you going
    to do with this? You are like the dog that caught the
    Volkswagen. We caught it. We have been chasing it. This
    committee has been chasing it for years. We caught it. What are
    we going to do with it?
        Mr. Allbaugh. Well, our forte is coordination and
    facilitation. That is what FEMA does best. I am going to take a
    proposal this afternoon of what the office will look like, what
    its requirements will be, how we are going to draw upon other
    agencies for that information to provide to the Vice President,
    and he will craft in short order a calendar. During that time,
    we will review all the various programs from all the Federal
    agencies that are involved in terrorism and weapons of mass
    destruction. Then at some point in the future, I hope early to
    mid-fall, we will present to the President a plan insofar as
    how the national strategy should look, should work in the
    future for our country.
        Senator Bond. Thank you, sir. Obviously, we will look
    forward to working with you on that and all the other
    challenging issues before you. If you have further information
    on the report that you are going to make on the flood insurance
    program after reviewing the GAO report, we will hold the record
    open.

                              SUBCOMMITTEE RECESS

        There being no further business to come before the
    subcommittee today, the hearing is recessed.
        [Whereupon, at 11:57 a.m., Wednesday, May 16, 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 2002

                                  ----------

                            WEDNESDAY, JUNE 6, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:07 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Barbara A. Mikulski (chairman)
    presiding.
        Present: Senators Mikulski, Johnson, Bond, and Domenici.

                          NATIONAL SCIENCE FOUNDATION

    STATEMENTS OF:
            DR. RITA R. COLWELL, DIRECTOR
            DR. CHRISTINE C. BOESZ, INSPECTOR GENERAL
            DR. EAMON M. KELLY, CHAIRMAN, NATIONAL SCIENCE BOARD
    ACCOMPANIED BY ROBERT EISENSTEIN, ASSISTANT DIRECTOR FOR MATHEMATICAL
                AND PHYSICAL SCIENCES

                opening statement of senator barbara a. Mikulski

        Senator Mikulski. The VA, HUD Subcommittee will now come to
    order. This committee convenes the hearing on the
    appropriations for the National Science Foundation.
        Before I welcome our witnesses, I would like to say a few
    words about this auspicious moment. I would like to say to my
    colleague, Senator Bond, that I assume this chairmanship in the
    spirit of bipartisanship that has always characterized this
    subcommittee. Senator Bond has a well established reputation
    for being a leader and being effective in the U.S. Senate and
    also in his chairmanship of this committee, he has always
    operated under a spirit of bipartisanship, courtesy, and
    collegiality. That is why this subcommittee has been a very
    successful subcommittee in doing the Nation's business. Our
    staffs have worked well together.
        I really say here today that in assuming the chairmanship,
    we are going to keep the spirit and the operations of the
    committee. Again, working on a bipartisan basis, Senator Bond
    and I will have a very clear and, I believe, agreed-upon
    schedule.
        First of all, in the area of veterans health care, on this
    day that commemorates the landing at Normandy, we continue to
    pledge our support to make sure that promises made will be
    promises kept to America's veterans.
        In the area of housing, we have a bipartisan agenda that
    focuses on empowerment. We believe that public housing programs
    should not be a way of life, but a way to a better life, and we
    intend to pursue that course.
        On the environment, I will work to fund programs to ensure
    clean air, clean water, and of course, the ongoing effect of
    cleaning up the Chesapeake Bay.
        In the area of science and technology, we have really again
    focused on a bipartisan basis. Senator Bond and I believe that
    science is about ideas, not about ideology. We have supported
    our space program where we have taken it to the stars and seen
    untold discoveries.
        And in the area of the National Science Foundation, on
    which we are holding today's hearing, we have an agreed-upon
    plan in which we want to double the National Science Foundation
    budget over the next 5 years. We believe that science is about
    new ideas that lead to new products, that lead to new jobs.
        So, it is in that spirit of keeping America forward,
    working together to create a better future in this new century
    that I open this hearing today and welcome Dr. Rita Colwell.
    Dr. Colwell, we welcome you as the very able Director of the
    National Science Foundation; Dr. Kelly, the Chairman of the
    National Science Board; and also the National Science
    Foundation's very able Inspector General, Dr. Christine Boesz.
        It is fitting today the hearing should be on the National
    Science Foundation. This is an agency which we support
    wholeheartedly increasing its budget. Dr. Colwell, you are in
    the third year at the National Science Foundation as the
    Director. You come from a distinguished academic career,
    leading the biotech initiatives in the University of Maryland.
    So, you bring sound science, remarkable scholarship, and yet a
    spirit of entrepreneurship.
        So, we are interested in hearing what your thoughts are on
    the appropriations because we believe the NSF funds research
    and education in the critical fields of basic science and
    engineering. Because of the National Science Foundation
    research, we now have MRI's that are so widely used to detect
    disease and provide early detection. The NSF played a vital
    role in getting the Internet where it is today, and we are also
    now on the cutting edge views in biotechnology, nanotechnology,
    which offers whole new breakthroughs. Yet, I know that each
    year the National Science Foundation receives 30,000 proposals
    for great new ideas to be pursued and yet we can fund 9,000 of
    them at our academic centers of excellence.
        Before I go on with my statement, however, and we turn to
    you, I would like to turn to my distinguished and most esteemed
    colleague, Senator Bond, and thank him for his long-term
    interest in science and for the really outstanding way he
    chaired this committee. I look forward to working with him in
    that spirit.

                    statement of senator christopher s. Bond

        Senator Bond. Thank you very much, Madam Chair. I welcome
    you and congratulate you and say that the spirit of
    bipartisanship, cooperation, and collegiality of this
    committee, which you described, was a spirit that you instilled
    before I got here. Being smart enough to look around and find
    out what works, I followed the Mikulski path, and it has worked
    extremely well. Now we have Senator Mikulski as chair, leading
    us back along the Mikulski path. I would say that we have
    probably had the best working relationship of any ranking
    member and chair, and I am extremely pleased to be here.
        Now, I have been fat and I have been thin. I have been in
    the majority, and I have been in the minority. I would rather
    be thin and in the majority.
        Senator Mikulski. So would I, Senator.
        Senator Bond. But I have neither one. So, we are moving on.
        I am pleased to be able to play the hand I have been dealt
    with because Senator Mikulski has laid out, I think extremely
    well, the list of priorities on which we have agreed.
        I welcome Senator Johnson to the committee.
        We know that when we get this steamroller going, it is on
    the basis of bipartisan cooperation, thoroughly working out how
    to resolve the many very important and difficult issues we have
    to face whether it be assuring adequate veterans' health care,
    or making sure that housing programs work. And I have always
    said that one of my highest priorities is cleaning up the
    Chesapeake Bay.
        I am so happy that we are going to continue to work on that
    priority. Madam Chair, I have some comments about NSF. Do you
    want to make your comments about the NSF?
        Senator Mikulski. Well, Senator Bond, I think it is clear
    that we truly have bonded. I just wanted to say in terms of the
    actual NSF, this whole issue of doubling is something not only
    that you and I agree upon, but it is really something that Dr.
    Harold Varmus, the Nobel Prize winner, the former head of NIH,
    has called for, as well as Dr. Bromley, the advisor to
    President George Bush in another era. Even Alan Greenspan has
    warned that if we do not maintain strong investment in
    university based research, this country could fall behind.
        We are concerned, however, in this particular appropriation
    that the overall R&D in the NSF proposal is being reduced. We
    want to pursue this conversation. I am concerned that the
    administration has recommended cutting R&D at the NSF, and we
    need to really be able to take a look at that.
        I support the government-wide increase in nanotechnology,
    but at the same time, I am concerned that we could lose our
    cutting edge in information technology. We need to be focusing
    on the R&D budget and what we can really do to move this
    forward.
        I want to hear from the director about the new partnership
    for math and science. I want to hear about, if we work to
    double the funding of the National Science Foundation, what you
    would recommend that it be spent on, how we can not only be
    able to do the research, but how do we create the farm team for
    the next generation of science?
        I believe the farm team for science is like the farm team
    in baseball. Being an Orioles fan and supporter, I know it
    starts with the little leagues, and those little leagues are K
    through 12 where you develop a passion for the game, a passion
    for discovery, a passion for engaging in the world around you.
        So, we want to hear about those initiatives and then how
    can we support the people at the undergraduate level and the
    graduate level and at the same time make sure that those young
    people in our own country, though we welcome others who wish to
    come here to learn, really have the opportunity to pursue
    doctorates and at the same time be able to have opportunities
    for this stunning new research.
        If there had not been the National Science Foundation of 50
    years ago, I do not believe we would have the infotech and the
    new economy for the new century. So, we are looking ahead on
    how to create the farm team for the scientists for the next
    generation, as well as where we can pursue this. We need to be
    stewards of the taxpayers' funds. Yet, at the same time, we
    need to be investors in America's future.
        Senator Bond.
        Senator Bond. Thank you very much, Madam Chair. I am with
    you all the way, except I am a Royals fan and always will be a
    Royals fan. I wish your Orioles well.
        I want to second what the chair has said about doubling the
    NSF budget. We are committed. We believe the scientific
    community understands the importance of a significant increase
    in the amount of funding we put into basic research. Doctors in
    Missouri and throughout the country have told me about the
    importance of it, and Harold Varmus has said, ``Scientists can
    wage an effective war on disease only if we, as a Nation and as
    a scientific community, harness the energies of many
    disciplines, not just biology and medicine.'' Simply put, that
    means for NIH to do its job, NSF has to be adequately funded.
        I am excited about many, many of the things that NSF does.
    I am going to ask my full statement be submitted as part of the
    record, but I do want to focus just a moment on biotechnology,
    specifically, the plant genome research which is critical in
    maintaining the long-term sustainability and competitiveness of
    our Nation's agricultural interests, improving the human
    condition, and improving the environment by limiting the amount
    of chemical pesticides that we have to use.
        A good example of the benefits of biotechnology is a recent
    vaccine created through a genetically engineered potato.
    Scientists from Cornell University and the University of
    Maryland School of Medicine in Baltimore reported the success
    of this plant-based virus that would provide humans with
    immunity from the pervasive Norwalk virus, the leading cause of
    food-borne illness in the United States and much of the
    developed world.
        I am saddened that hysteria and fear, instead of reason,
    often seem to be the driving forces behind the discussion about
    biotechnology and the benefits it brings. We need to publicize
    those benefits. We also need to have the scientists who are
    willing to stand up and speak out when people make unfounded
    criticisms and charges against the technology. I appreciate the
    efforts of the Office of Science and Technology Policy and NSF
    in educating the public about biotechnology, but clearly more
    needs to be done.
        Senator Mikulski and I look forward to working with the
    administration to increase funding for NSF and keep us on a
    path of doubling the NSF budget by 2005. But I must say that
    while auditors have not identified any significant financial or
    management problems with NSF and congratulate it on its clean
    opinion, I just want to make sure that NSF is not taking on
    more responsibilities, especially when its staffing resources
    have remained flat over the past years, than it can handle.
        I have no criticisms about the NSF or its management about
    the ``Major Research Equipment'' account or other management
    issues that have drawn my attention. I believe that the
    problems that have been raised can be resolved with the
    constructive assistance from the Inspector General and the
    guidance and wisdom of the National Science Board. But I do
    think that we ought to take swift and vigorous action because,
    as we ramp up what I hope will be an escalating curve upward of
    funding, we want to make sure that everything is in place.
        One final point concerns me. I am still not convinced we
    are providing enough support for smaller research institutions.
    The smaller schools and their students, I am afraid, are not
    being caught up, and I am disappointed the administration did
    not request funding for the Office of Innovation Partnerships,
    which is an important priority of mine.
        A recent report by NAPA on the merit review process found
    that NSF was supposed to add a new element to broaden the
    participation of under-represented groups. NAPA said it is too
    soon to make valid judgments about the impact, but it found
    that NSF lacked the quantitative measurements and performance
    indicators to track the new criteria. The NAPA report suggests
    there is validity to some of the criticisms that NSF's merit
    review process is too much confined to the ``good old boys,''
    the ``haves,'' in the business who have been successful, and as
    a result, the ``have nots'' or the ``want to haves,'' many of
    whom come from States that are represented on this
    subcommittee, are not adequately represented. We look forward
    to continuing constructive discussion on that issue.
        Senator Mikulski.Well, without objection, Senator, your
    full statement will be in the record.
        [The statement follows:]

               Prepared Statement of Senator Christopher S. Bond

        Thank you, Chairperson Mikulski. These are strange times but I look
    forward to continuing our good relationship in meeting the needs of the
    Nation and especially, in the area of science and technology, a
    priority that we both share deeply. I also want to welcome Drs.
    Colwell, Kelly, and Boesz to the hearing today.
        Unfortunately, since there is no Science Advisor in place, the
    White House Office of Science and Technology Policy is not here to
    testify. However, I am very pleased that the White House recently
    selected Floyd Kvamme to be co-chair of the President's Council of
    Advisors on Science and Technology. Floyd brings a lot of experience
    and expertise on science and tech issues and will be a valuable
    resource to the Administration and this Committee.
        Before I get into some specific issues, I want to highlight the
    importance of supporting NSF. NSF plays an important and unique role in
    stimulating core disciplines of science, mathematics, and engineering
    and according to many economists, over the past half century, advances
    in science and engineering have stimulated at least half of the
    Nation's economic growth.
        That is why my good friend and colleague Senator Mikulski and I
    have led the effort to double NSF's budget and have received such wide
    bi-partisan support. I think we can all agree that investing in
    research and development is positive and critical for the economic and
    intellectual growth and well-being of our Nation.
        Support for NSF is also vital to the research being conducted in
    the biomedical field. I have heard from doctors throughout Missouri and
    the country who are alarmed by the disparity in Federal funding between
    the National Institutes of Health and the physical sciences that NSF
    mainly supports. Many medical advances could not have occurred without
    NSF-supported research. Medical technologies such as magnetic resonance
    imaging, ultrasound, digital mammography and genomic mapping could not
    have occurred, and cannot now improve to the next level of proficiency,
    without underlying knowledge from NSF-supported work in biology,
    physics, chemistry, mathematics, engineering, and computer sciences.
    Thus, the biomedical work that NIH currently supports will be hampered
    without the underpinning research supported by NSF. But don't just take
    it from me, take it from the medical experts. In the words of former
    NIH Director Harold Varmus, ``Scientists can wage an effective war on
    disease only if we--as a nation and as a scientific community--harness
    the energies of many disciplines, not just biology and medicine.''
    Simply put: supporting NSF supports NIH.
        I have also spoken to many experts in the high-tech industry who
    have voiced their concern about the federal government's support of the
    physical sciences. According to the American Association of Engineering
    Societies, the number of bachelor degrees in engineering has declined
    by almost 20 percent since 1986 while the overall number of bachelor
    degrees have increased by 18.3 percent!!! This decline has put our
    Nation's capabilities for scientific innovation at risk and, equally
    important, at risk of falling behind other industrial nations. In the
    past decade, growth in the number of Asian and European students
    earning degrees in the natural sciences and engineering has gone up on
    average by four percent per year. During the same time, the rate for
    U.S. students declined on average by nearly one percent each year.
        Thus, it is no surprise that many in the high-tech industry
    struggle to find qualified engineers and scientists and have become
    more reliant on foreign nationals to fill their positions. Further, it
    has limited the growth potential of the high-tech industries and
    allowed foreign competitors to catch up to US industry. I hope that
    people take this as a serious wake up call and recognize that our
    future economic health and competitiveness are at stake if we do not
    provide more support to NSF and other federal agencies that support the
    physical sciences.
        I am excited by the many research areas that NSF supports but my
    biggest interest is plant biotechnology. I strongly believe that
    biotechnology and namely, plant genome research is critical in
    maintaining the long-term sustainability and competitiveness of our
    Nation's agriculture industries. Plant genome research also has
    exciting possibilities for improving human health and nutrition and can
    be a very powerful tool of addressing hunger in many third world
    developing countries. I have already seen first-hand some of the
    promises of plant biotechnology in Southeast Asia and am encouraged by
    its future applications.
        A good example of the benefits of biotechnology is a recent vaccine
    created through a genetically engineered potato. Scientists from
    Cornell University and the University of Maryland School of Medicine in
    Baltimore reported the success of this plant-based vaccine that would
    provide humans with immunity from the pervasive Norwalk virus--the
    leading cause of food-borne illness in the U.S. and much of the
    developed world.
        It is sad though that hysteria and fear instead of reason often
    seem to be driving the discussion around biotechnology and the benefits
    of biotechnology such as the potato example I just cited are not being
    publicized adequately. We cannot afford to have the experts sit in
    their ivory towers. I appreciate the recent efforts of the Office of
    Science and Technology Policy and NSF in educating the public about
    biotechnology but clearly, more needs to be done.
        In terms of the budget, the Administration has requested $4.47
    billion for fiscal year 2002, an increase of $56 million or 1.3 percent
    over the fiscal year 2001 enacted level of $4.416 billion. It is my
    hope and desire that we can work with the Administration to increase
    funding for NSF and keep us on the path of doubling NSF's budget by
    2005. This is a priority of both myself and Senator Mikulski.
        Notwithstanding our budgetary issues, I continue to have questions
    about the Foundation's management capabilities, especially as its
    budget grows and it continues to handle a number of new complex program
    responsibilities. While auditors have not identified any significant
    financial or management problems with NSF, I am concerned about NSF
    taking on more responsibilities especially when its staffing resources
    have remained flat over the past several years.
        I congratulate NSF and its leadership for receiving a clean opinion
    on its financial statements audit for the third year in a row. The
    auditors also did not find any significant internal control
    deficiencies for the first time in NSF's history. Nevertheless, there
    is always room for improvement and, as the auditors found recently, NSF
    expended funds from its Research and Related Activities appropriations
    account to fund shortfalls in its Major Research Equipment
    appropriations account for the Gemini Telescope Project.
        Let me be clear: I am not here to criticize NSF or its management
    about the MRE account issue or other management issues that have drawn
    my attention. Again, in context of the overall performance of the
    Foundation, these are not major problems and I believe that we can
    resolve these problems with constructive assistance from the Inspector
    General and the National Science Board. But, I do want to stress today
    that it is critical that swift and vigorous actions are taken by the
    agency to prevent these problems from occurring again. This includes
    ensuring that an adequate corrective action plan is developed and
    implemented.
        The last point I would like to raise is the Foundation's failure to
    provide adequate support for smaller research institutions. As I have
    said over and over again, 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. I am disappointed in
    the Administration for not requesting any funds for the Office of
    Innovation Partnerships, which is an important initiative to me.
        I am also concerned about a recent report issued this past February
    by the National Academy of Public Administration on the Foundation's
    merit review process. NSF changed its merit review criteria in 1997,
    which added a new element on broadening the participation of
    underrepresented groups including minorities and smaller research
    institutions. While NAPA stated that it was too soon to make valid
    judgments about the impact and effectiveness of the new merit review
    criteria, it found that NSF lacked quantitative measures and
    performance indicators to track the new merit review criteria. In other
    words, NSF cannot determine whether the merit review process is
    addressing the need to broaden the participation of underrepresented
    groups. This report, instead, appears to validate the impression that
    NSF's merit review process is a ``good old boys'' network. I hope that
    this is not the case and NSF can assure us that the process is open and
    fair to all groups, large or small. I hope that Dr. Colwell and Dr.
    Kelly will help me in addressing this issue.

        Senator Mikulski. Senator Johnson.

                        statement of senator tim Johnson

        Senator Johnson. Well, thank you, Chairwoman Mikulski. With
    consent, I will submit a full statement, but I do want to just
    quickly make a couple observations.
        First of all, of course, I congratulate Senator Mikulski on
    assuming the leadership of this important subcommittee, and
    also I commend Senator Bond, whose leadership on this
    subcommittee has been extraordinary, not only substantively in
    terms of their work in that regard, but also with the tone that
    they have adopted for this subcommittee. It really has been a
    bipartisan effort, and I think that is something to be
    commended.
        I want to welcome Dr. Rita Colwell and Dr. Tina Boesz and
    Dr. Eamon Kelly to the subcommittee today.
        I am proud and pleased to have been a cosponsor of the
    Bond-Mikulski amendment to double funding for the NSF over 5
    years. I have also been an enthusiastic supporter of increases
    at the National Institutes of Health, and I applaud the
    progress we have made there. However, it seems to me that we
    have not matched that effort with the same kind of commitment
    on the other side of our science agenda in the United States. I
    am hopeful that we can, in fact, do some serious catch-up with
    the NSF over the coming years.
        I say that as an individual who actually secured a graduate
    degree at the University of South Dakota with an NSF grant many
    years ago.
        In the State of South Dakota, looking at things from our
    narrower perspective, the NSF is most known for two things.
    One, of course, is its EPSCoR program which has been a very key
    component of our efforts to promote research at our smaller
    institutions. And second and more recently has been the
    Underground Laboratory Committee of the NSF selecting Homestake
    Mine in Lead, South Dakota, as the premier site for a national
    underground laboratory with a focus on neutrino research, in
    particular.
        Senator Daschle and I have a great concern about this. The
    Homestake Mine is in the process of terminating the mining at
    that site, leaving an 8,000-foot shaft, and with plans to fill
    the shaft with water if no continued maintenance or alternative
    uses are found. So, this is fortuitous timing that the NSF
    would determine that this is a premier site for neutrino
    research. It is my hope that we can work with the NSF to, in
    fact, utilize the world's most extraordinary site for
    underground science and accomplish that in the course of this
    coming year.

                               prepared statement

        So, with that, Madam Chairman, I appreciate again the
    leadership that you and Senator Bond have both provided for the
    subcommittee. I look forward to working with you.
        [The statement follows:]

                   Prepared Statement of Senator Tim Johnson

        Chairwoman Mikulski, Ranking Member Bond, and other members of the
    subcommittee, I want to thank Dr. Rita Colwell, Director of the
    National Science Foundation, Dr. Tina Boesz, Inspector General,
    National Science Foundation, and Dr. Eamon Kelly, Chairman, National
    Science Board for appearing today to testify on the Budget of the
    National Science Foundation (NSF).
        As you know, I was a proud supporter of the Bond-Mikulski amendment
    which would double funding for the NSF over the next five years.
    Without continued excellence in scientific research, the United States
    most certainly will not be able to compete in the ever changing,
    technology driven world market.
        The NSF continues to play a major role in South Dakota in countless
    ways. NSF EPSCoR seeks to identify, develop, and utilize the state's
    academic science and technology resources in order to increase
    university research capabilities, provide student research experiences
    and support selected science and technology development. EPSCoR
    contributes to the educational experience for students, helps faculty
    develop and maintain expertise in their fields, builds research
    expertise in my state, and often supports economic development efforts.
        EPSCoR is improving our nation's science and technology capability
    by funding merit-reviewed research activities of talented researchers
    at universities and non-profit organizations in 18 states and Puerto
    Rico. EPSCoR helps researchers, institutions, and states improve their
    research capabilities and quality in order to compete more effectively
    for non-EPSCoR research funds. Because of intensive state involvement
    and the significant leveraging of non-federal funds, EPSCoR is
    considered a model federal/state partnership.
        Additionally, the Homestake mine in Lead, South Dakota has been
    selected as the premier site for a National underground laboratory.
    Over a year ago, NSF established an Underground Laboratory Committee to
    evaluate the potential of various North American sites to address the
    need for specialized research.
        However, I am concerned that the Homestake Company intends on
    leaving on December 31, 2001. If left unattended, the mine will
    naturally be effected by the elements, and will assuredly fill with
    water if there is no continued maintenance. We should take
    responsibility to provide resources to preserve and protect the
    integrity of the mine so it can be used as a national research
    laboratory. I want to work with NSF and my colleagues in Congress to
    ensure that this opportunity is not lost.
        The unique nature of the preexisting construction of the mine is an
    advantage to tax payers. However, this advantage also places the mine
    on a strict timeline. I would encourage the NSF to develop an interim
    plan to maintain the integrity while specific comprehensive details of
    the project are developed.
        Additionally, the NSF should recognize the existing skilled
    workforce operating at the mine, and they would be costly and difficult
    to replace. Any effort to retain services locally would be an added
    benefit to the tax payers.
        I look forward to receiving the testimony of our witnesses, and
    especially look forward a productive relationship with the NSF in the
    future. Thank you Madam Chairman, and members of this committee.

        Senator Mikulski. Thank you very much, Senator.
        Now we turn to Dr. Rita Colwell, the Director of the
    National Science Foundation, and ask her to proceed. Then I
    understand after that, Dr. Kelly, you wish to also have a
    statement. Of course, we have always looked forward to hearing
    from our Inspector General. Dr. Colwell, why do you not just
    proceed.
        Dr. Colwell. Madam Chair, Senator Bond, members of the
    subcommittee, Senator Johnson, it is an honor to be here today
    as Director of the National Science Foundation, and I welcome
    this opportunity to discuss the NSF budget request for fiscal
    year 2002. I deeply appreciate your comments of support. It is
    much appreciated.
        Let me also, just in a quick aside, say that if I look a
    little pained, it is not because of your questions. I had a
    minor back injury a few days ago, and it was either come here
    sedated and comfortable or pained and alert. I decided the
    latter was the better.
        Before I begin my testimony, let me first turn to Dr. Eamon
    Kelly, Chairman of the National Science Board, for his comments
    on our budget request. Dr. Kelly.

                        statement of dr. eamon m. Kelly

        Dr. Kelly. Thank you, Dr. Colwell. I came pained and
    sedated. Madam Chair and members of the subcommittee, I
    appreciate the opportunity to testify before you. On behalf of
    the National Science Board, I thank the subcommittee for its
    commitment to long-term investments in science, engineering,
    mathematics, and technology. Your support has enabled the
    scientific community to provide a broad base of research and
    education activities that have contributed to our Nation's
    well-being.
        The National Science Board has two roles. It serves as the
    governing board of the National Science Foundation, and by law
    it advises the President and Congress on national policy issues
    for science and engineering research and education.
        First I would like to comment on the National Science
    Foundation's fiscal year 2002 budget request, and then in the
    second role, highlight some critical policy issues affecting
    the health of the science and engineering enterprise.
        The National Science Board has approved and endorses the
    National Science Foundation's budget request for fiscal year
    2002. Adequate funding for the foundation's priority areas will
    allow the foundation to do what it does best: Nurture the
    people, ideas, and tools needed to generate new knowledge and
    new technologies. The National Science Foundation Director, Dr.
    Rita Colwell, will discuss the specifics of that budget request
    in her testimony. I commend my colleague for her far-sighted
    and energetic leadership of the broad scope of activities in
    the National Science Foundation's portfolio.
        As a policy advisory body, the National Science Board is
    also looking at the broader context for Federal investment in
    basic research and education. Critical issues that the board
    has addressed recently in that capacity include research,
    education, and assessment on the environment, the U.S. role in
    international science and engineering, the quality of K through
    16 education, and the allocation of Federal resources for
    research.
        We have just begun two important new studies: One on the
    national science and engineering infrastructure, and a second
    on national workforce policies. The latter study is examining
    the collection of policies and practices, including immigration
    and admission to higher education, that affect the composition
    and adequacy of our science and technology workforce.
        After the phenomenal 1990's, the public is increasingly
    aware that science and technology contribute to economic
    growth. Americans recognize that innovations improve the
    quality of life and that the benefits accrue to the entire
    society not just a few industries or entrepreneurs.
        It has been said that future historians will label the 21st
    century the science and technology century. Clearly we are on
    the edge of exciting discoveries and radically new technologies
    in many scientific fields. To turn this potential into reality
    requires substantial and sustained Federal investment in basic
    research.
        The new knowledge and technologies emerging today are a
    tribute to Federal research investment made years ago with
    bipartisan support. When those investments began, no one could
    foresee their future impact. Revolutionary advances, such as
    those in information technology, geographic information
    systems, genetics, and medical technologies, to mention just a
    few, remind us that although science and engineering require
    long-term, high-risk investments, they also hold great promise
    of high payoffs to the economy, the environment, and our
    national security.
        Of our $10 trillion gross domestic product, the Federal
    Government budgets $23.3 billion for basic research, which
    represents only two-thousandths of 1 percent of the gross
    domestic product. The President, the Members of Congress, both
    the Republican and Democratic Parties, even the media speak out
    in favor of investing in basic research. The support appears
    everywhere except in the budget numbers.
        Achieving a balanced portfolio investment in the basic
    sciences is also important. As the former NIH Director, Harold
    Varmus, and congressional leaders have pointed out, the success
    of the National Institute of Health's efforts to cure deadly
    diseases such as cancer depend heavily on the underpinning of
    basic research supported by the National Science Foundation.
        In addition, Federal investment in the basic sciences is
    critical for the development of the science and engineering
    workforce on which our society and economy depend. The measure
    of our success will not be just the research we support, but
    also the trained and talented workforce we develop. We need to
    produce more scientists and engineers, certainly. But even
    future workers who are not directly engaged in scientific
    endeavors will need to be scientifically literate to perform
    their tasks. And to be an informed voter will require a basic
    appreciation for scientific knowledge and method. Today we are
    losing many of our best and brightest science students to other
    fields, and our record of attracting minorities and women to
    science and engineering is poor.
        The level of Federal investment is key to the health of the
    science and engineering enterprise. But even if Federal
    investments were to increase substantially, the difficult issue
    of how to allocate the funds would remain. For the past 2
    years, at the request of the Congress and OMB, the Board has
    grappled with how the Federal Government should set priorities
    in allocating its approximately $90 billion annual budget for
    defense and nondefense research and development. That question
    is critically important, given the growing opportunities for
    discovery and the inevitable limits on Federal spending.
        On May 21 and 22, the Board's Committee on Strategic
    Science and Engineering Policy Issues hosted a stakeholders'
    symposium to discuss our preliminary findings and
    recommendations concerning priority setting. The symposium was
    highly productive and we are in the process of incorporating
    the stakeholders' views into our report, which will be
    provided, of course, to the committee at the appropriate time.

                               prepared statement

        Madam Chair, at this point, I would like to close my formal
    remarks. I thank the subcommittee for its long-time support of
    the science community, especially the National Science
    Foundation, and for allowing me to comment on critical national
    policy concerns, as well as on the Foundation's budget request.
    I look forward to future opportunities for discussion of these
    highly important national issues. Thank you.
        [The statement follows:]

                    Prepared Statement of Dr. Eamon M. Kelly

        Madam Chair 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.
        On behalf of the National Science Board, I thank the Subcommittee
    for its commitment to long-term investments in science, engineering,
    mathematics, and technology. Your support has enabled the scientific
    community to provide a broad base of research and education activities
    that have contributed to our Nation's well-being. The public is
    increasingly aware that science and technology contribute to growth of
    the economy after the phenomenal 1990s. People seem to recognize that
    innovations improve the quality of life and that benefits accrue to the
    entire society, not just to a few industries or entrepreneurs.
        The President affirmed the importance of science and technology on
    March 28, stating that ``Science and technology have never been more
    essential to the defense of the nation and the health of our economy.''
        In agreement with the President's statement, I would like to
    comment on the National Science Foundation's fiscal year 2002 budget
    request and then highlight some critical policy issues affecting the
    health of the science and engineering enterprise.
                the national science foundation's budget request
        First, in its role as governing board of the Foundation, the
    National Science Board has approved and supports the National Science
    Foundation's budget request for fiscal year 2002 and endorses the
    submission. Adequate funding for the Foundation's priority areas in
    fiscal year 2002 will allow the National Science Foundation to do what
    it does best: provide the Nation with the people, ideas, and tools
    needed to generate new knowledge and new technologies. Dr. Rita Colwell
    will discuss the specifics of that budget request in her testimony. I
    commend my colleague for her far-sighted and energetic leadership of
    the broad scope of activities in the National Science Foundation's
    portfolio.
       the health of the science and engineering enterprise: some issues
        I also want to touch briefly on the broader context for the
    National Science Foundation's activities and contributions. In addition
    to serving as the governing board of the Foundation, the National
    Science Board, by law, advises the President and Congress on science
    and engineering policy, and is responsible for assessing and making
    recommendations on national policy issues for research and education.
    In that capacity, the National Science Board has recently addressed and
    made recommendations on some critical issues affecting U.S. science and
    engineering. These include research, education, and assessment of the
    environment, the U.S. role in international science and engineering,
    and the quality of K-16 education.
        Recently, we have begun two important new studies: one on the
    national science and engineering infrastructure; a second on national
    workforce policies. The latter study is examining the collection of
    policies and practices, including immigration and higher education,
    that affect the composition and adequacy of our science and technology
    workforce.
        Now if I might turn from that broad context to a significant policy
    issue, I'd like to draw your attention to a particular Board effort,
    that is, the issue of the adequacy of our Nation's investment in
    science and engineering and the process within the Federal government
    for allocating resources to research.
    (a) Federal Investment in Science and Engineering
        It has been said that future historians will label the 21st century
    the ``science and technology century.'' Clearly we are on the edge of
    exciting discoveries and radically new technologies in many scientific
    fields. To turn this potential into reality requires substantial and
    sustained Federal investment in basic research.
        The new knowledge and technologies emerging today are a tribute to
    Federal research investments made years ago in a spirit of
    bipartisanship. When those investments began, no one could foresee
    their future impact. Revolutionary advances in these--fields such as
    those in information technology, geographic information systems,
    genetics, and medical technologies such as MRI, ultrasound, and digital
    mammography, to mention just a few--remind us that although science and
    engineering require long-term, high-risk investments, they also hold
    great promise of high payoffs. These payoffs affect all aspects of
    American life: our economy, the workforce, our educational systems, the
    environment, and our national security.
        Despite the recognition of the widespread benefits that result from
    Federally supported scientific research, we are seriously under-
    investing in basic research. Of our $10 trillion Gross Domestic
    Product, the Federal government budgets $5 billion to basic research
    and general science, which represents only five-ten thousandths of one
    percent of the Nation's Gross Domestic Product. The President, members
    of Congress, and both the Republican and Democratic parties speak in
    favor of investing in basic research.
        Balance among investments in the basic sciences through the
    National Science Foundation and other agencies is also important. As
    Congressional leaders have pointed out, the success of the National
    Institutes of Health's efforts to cure deadly diseases such as cancer
    depends heavily on the underpinning of basic research supported by the
    National Science Foundation.
        In a speech before the American Association for the Advancement of
    Science on May 3, Larry Lindsey stated that ``the average annual real
    rate of return on corporate investment in America is about 9 percent.''
    Compare that to a conservative estimate that the return on Federal
    investment in basic research is about 30 percent.
        The recently issued report by the U.S. Commission on National
    Security for the 21st Century, led by Gary Hart and Warren Rudman,
    clearly states the importance(and the current condition(of scientific
    research and education to America's world leadership. I quote:

        ``Our systems of basic scientific research and education are in
    serious crisis  . . . If we do not invest heavily and wisely in
    rebuilding these two core strengths, America will be incapable of
    maintaining its global position long into the 21st century.''

        As this Committee recognizes, the National Science Foundation is a
    major contributor both to scientific research and science education. In
    fact, the Foundation accounts for 54 percent of Federal funding for
    basic research and general science.
        Federal investment in the basic sciences through the Foundation
    have produced
      --New industries, such as E-commerce and biotechnology,
      --New medical technologies, such as MRI and genetic mapping,
      --New discoveries with great future promise in areas such as
            nanoscale science, cognitive neuroscience, and biocomplexity.
        In addition, the National Science Foundation supports innovative
    education programs from kindergarten through graduate school, educating
    the next generation of scientists and engineers and contributing to a
    more scientifically literate workforce and society.
        The link between our education system and the science and
    technology workforce is critical. Today we are losing many of our best
    and brightest science students to other fields. The science,
    mathematics, engineering, and technology education system needs to
    change, first by recognizing that the measure of success is the quality
    and quantity of the education people we produce--and not just the
    number of research papers published. Also, the pool of potential
    science and engineering students will increasingly reflect the growing
    diversity in American society. Population trends indicate that by 2010
    about two-thirds of students will be female or minority. Our future
    scientists and engineers must be drawn from this diverse pool.
        But science and technology education has a wider responsibility.
    Even our future workers who are not directly engaged in scientific
    endeavors will need to be scientifically literate to perform their
    tasks. And simply to be an informed voter will require a basic
    appreciation for scientific knowledge and method.
        Clearly, there is an important link between Federal investment in
    basic research and education through the National Science Foundation,
    the vitality of our K-12 and higher education systems in math and
    science, the talent available for the workforce, and the achievement of
    national goals that depend on a strong science and technology
    enterprise.
    (b) Allocation of Federal Resources
        But even if Federal investment were to increase substantially, the
    difficult issue of how to allocate the funds would remain. For the past
    two years, at the request of national policy makers, the Board has
    grappled with how the Federal government should set priorities and
    allocate its approximately $90 billion annual budget for defense and
    non-defense research and development. That question is critically
    important, given the growing opportunities for discovery and the
    inevitable limits on Federal spending.
        On May 21 and 22, the Board's Committee on Strategic Science and
    Engineering Policy Issues, which I chair, hosted a stakeholders'
    symposium to discuss our findings to date and evaluate potential
    approaches to Federal budget coordination and priority setting. The
    symposium was highly productive, and we are in the process of
    incorporating the stakeholders' views into our analysis and
    recommendations.
        At this stage of our analysis, based on our discussion with
    Executive branch representatives and Congressional staff, the Board
    suggests that the Federal budget process in both the Executive branch
    and the Congress would benefit from instituting a continuing advisory
    mechanism for considering U.S. research needs and opportunities within
    the framework of the broad Federal research portfolio.
        A possible process would include an evaluation of the current
    Federal portfolio for research in light of national goals and would
    draw on systematic, independent expert advice, studies of the costs and
    benefits of research investments, and analyses of available data. The
    process would identify areas ready to benefit from greater investment,
    address long-term needs and opportunities for Federal missions and
    responsibilities, and ensure world-class fundamental science and
    engineering capabilities.
        In addition to an improved process, a strategy is needed to ensure
    commitment by departments, agencies, and programs to gather timely,
    accessible data that could be used to monitor and evaluate Federal
    investments. The Federal government would need to invest in the
    research necessary to build the intellectual infrastructure in the
    higher education sector (1) to analyze substantive effects on the
    economy and quality of life of Federal support for science and
    technology and (2) to improve methods for measuring returns on public
    investments in research.
        The appropriate level of Federal investment and the allocation of
    Federal funds are keystone issues for the science and engineering
    enterprise. They are also extremely difficult, complex issues for
    policy makers.
        Madam Chair, at this point I would like to close my formal remarks.
    I thank the Subcommittee for its long-time support of the science
    community, especially the National Science Foundation, and for allowing
    me to comment on critical national policy concerns, as well as on the
    Foundation's budget request. I look forward to future opportunities for
    discussion of these highly important national issues.

        Senator Mikulski. Thank you very much, Dr. Kelly, for that
    very cogent testimony, and we will be coming back for some
    questions.
        Dr. Colwell.

                        statement of dr. rita r. Colwell

        Dr. Colwell. Before I turn to the budget, Madam Chair, I
    would like to commend you and Senator Bond and the members of
    the subcommittee for your commitment to investing in research
    and education. It is very clear that without your sustained
    support and vision, NSF and the Nation would not be enjoying
    the prosperity that we have today. Every day we see the
    benefits of these investments and the promise they hold for our
    future.
        A very good example is the Mid-Atlantic Center for
    Mathematics Teaching and Learning, which is coordinated through
    the University of Maryland. This consortium of university
    mathematicians and educators, along with the local K-12 school
    districts, is making significant strides in addressing the
    shortage of mathematics teachers in Maryland, Pennsylvania, and
    Delaware. Moreover, this effort is a model for other NSF
    centers of learning and teaching across the country.
        Similarly, we are now realizing the benefits of
    collaborations across disciplines, the interdisciplinary
    research areas. Late last year, an international team of
    biologists, computer scientists, and many others sequenced a
    complete plant genome for the first time. Now, this did not
    generate the same headlines as the human genome project, but
    its potential impact is just as profound. The major concern for
    the world's future is how to protect our planet while feeding a
    growing population and raising the standard of living. These
    are not mutually exclusive goals. Plant sciences can help us
    find the solutions that we seek.
        These examples reflect the overall NSF investment strategy:
    Providing the Nation with the people, the tools, the ideas that
    are needed to fuel innovation and economic growth. And with
    these opportunities, however, come responsibilities.
        Madam Chair, I would like to commend you for inviting Dr.
    Boesz to testify today. The NSF management has long worked in a
    close and productive relationship and partnership with the
    Inspector General to ensure the highest standards of
    stewardship, accountability, and management.
        Turning to the budget, NSF is requesting $4.47 billion.
    That is $56 million more than last year. This includes an 11
    percent increase for education and human resources and some
    solid increases for management and oversight. The research and
    related activities account will basically maintain its current
    level, and support for major research equipment will drop by a
    fifth with the conclusion of several projects in fiscal year
    2001.
        In fiscal year 2002, NSF is proud to launch the Math and
    Science Partnerships. This is part of President Bush's
    education plan, No Child Left Behind. It is a $200 million
    initiative. It will join States and local school districts with
    institutions of higher learning to strengthen K-12 math and
    science education. These activities, under the competitive
    awards program, will address some very important areas: Teacher
    quality, math and science curricula, enrollment in advanced
    math and science courses, and assessment.
        The fiscal year 2002 request will also help to ensure that
    adequate numbers of U.S. students pursue higher degrees in
    science and engineering. A survey of recent science and
    engineering bachelor's recipients finds that more than one-
    third do not consider graduate studies because of financial
    reasons. Although enrollment in U.S. science and engineering
    graduate programs did increase in 1999, after a 5-year decline,
    the students with temporary visas accounted for the entire
    upswing.
        I believe that raising stipends is one of the most
    important actions that NSF can take to invest in our Nation's
    future. Accordingly, we are seeking $8 million to increase
    graduate stipends in our key programs, from $18,000 a year to
    $20,500.
        As for our core investments, a centerpiece of fiscal year
    2002 is the $20 million interdisciplinary mathematics research
    program. Mathematics has a critical and a growing role in all
    of science and engineering, but funding for mathematics has not
    kept pace with the promise. We expect an increased emphasis on
    mathematics and statistics to spur new discoveries in diverse
    areas from how our brains function, to the prediction of
    hurricanes, to understanding our economy.
        The fiscal year 2002 request also continues our emphasis on
    four priority areas. These are familiar to you. Biocomplexity
    in the environment, information technology research, nanoscale
    science and engineering, nanotechnology, and learning for the
    21st century. Although all of these areas hold exceptional
    promise, I just have time for one example, and this is from
    nanotechnology.
        Researchers at Stanford University have developed a tiny
    silicon chip that responds to nerve impulses. It simulates the
    firing of a normal neuron. It is a meeting of microelectronics
    and neurobiology because it holds great promise for developing
    prosthetic devices for artificial limbs, and it is quite
    possible that with these advances, Christopher Reeve might,
    indeed, walk again in the future. So, this emerging field could
    change the way almost everything is designed, from medicine, to
    computers, to automobiles.
        Given the great potential of nanotechnology and the three
    other priority areas that I have mentioned, we are requesting
    increased funding for each of these in fiscal year 2002.
        In closing, the budget lays the foundation for sustained
    increases over the long term. We know that our workforce and
    our economy depend on scientific and technological knowledge
    more than at any other time in our history. This gives us the
    responsibility but also the opportunity to demonstrate the
    impact of investments in science and engineering.

                               prepared statement

        So, Madam Chair, we look forward to working with the
    subcommittee on the grander challenge, and I thank you once
    again for the opportunity to appear today. Thank you.
        Senator Mikulski. Thank you very much, Dr. Colwell. Those
    examples are really quite compelling.
        [The statement follows:]

                   Prepared Statement of Dr. Rita R. Colwell

        Chairwoman Mikulski, Senator Bond, members of the Subcommittee, it
    is an honor to be here today as Director of the National Science
    Foundation. I welcome the opportunity to discuss the NSF budget request
    for fiscal year 2002.
        Before I begin with the budget, Madam Chairwoman, I would like to
    commend you and Senator Bond for your many years of dedication to sound
    investments in research and science education. You and the members of
    the Subcommittee have shown strong leadership in stressing the
    importance of basic research to the economic wellbeing of our nation.
    Without this sustained support and vision, NSF would not be where it is
    today. I am deeply appreciative of your efforts and your wisdom.
        Now let me first lay out the big picture of what's being proposed
    for fiscal year 2002. NSF is requesting a total of $4.47 billion--
    that's $56 million more, or a 1.3 percent increase, above fiscal year
    2001. The highlight is the request for Education and Human Resources
    (EHR), which receives an 11 percent increase. We have also provided
    solid increases for administrative accounts, which are very important
    in insuring wise stewardship of tax dollars. In other areas, the
    Research and Related Activities account will basically maintain its
    current level of support, and the Major Research Equipment account will
    drop by one-fifth.
        Let me put these numbers in a different context. The fiscal year
    2002 Budget Request reflects the strength of the Foundation--a broad
    base of research and education activities that provides the nation with
    the people, the ideas, and the tools needed to fuel innovation and
    economic growth.
        In our fiscal year 2002 request, investments in people are up 13
    percent from last year. We cover kindergarten to career development.
    This investment encompasses much of our Education and Human Resources
    Directorate as well as many activities funded across the Foundation.
    NSF directly supports about 200,000 people--including teachers,
    students, researchers, postdocs, and others. Moreover, the benefits of
    NSF programs are felt throughout the population in terms of new
    discoveries, scientific and technological advances, and improved math
    and science educational opportunities that affect all of our lives.
        Now, let's look at the highlights.
                    math and science partnerships initiative
        We are particularly pleased that the President's budget has
    designated NSF to lead the Math and Science Partnerships element of the
    No Child Left Behind education initiative. At the center of the fiscal
    year 2002 request is an initial $200 million of a planned $1 billion
    over 5 years which will be used to improve K-12 science and math
    education through partnerships. NSF will provide funds for states and
    local school districts to join with institutions of higher education--
    mathematics, science, and engineering departments of local colleges and
    universities--to strengthen K-12 math and science education. The
    request includes $90 million in new funds and a redirection of $110
    million from existing EHR programs with similar strategies and goals.
        This investment will provide K-12 students with enhanced
    opportunities to perform to high standards. This important component of
    the President's education initiative will help states address teacher
    quality; math and science curricula and textbooks; enrollment numbers
    in advanced science and math courses; and assessment.
                           graduate student stipends
        The second key opportunity this request addresses is something that
    is long overdue: increasing graduate student stipends. The fiscal year
    2002 Budget provides $8 million to increase stipends for the Graduate
    Research Fellowships, the Graduate Teaching Fellowships in K-12
    Education, and the Integrative Graduate Education and Research
    Traineeship programs. Stipends will increase from $18,000 to $20,500
    for academic year 2002-2003.
        This increase is extremely important. According to an NSF survey of
    recent S&E bachelor's recipients, more than one-third stated that they
    would not pursue graduate studies because of financial reasons. We must
    work to ensure that adequate numbers of students are willing and able
    to enter graduate S&E programs.
        Although graduate student enrollment in U.S. science and
    engineering programs increased in 1999 after five consecutive annual
    decreases, students with temporary visas accounted for the entire
    upswing. If we do not boost the number of skilled U.S. workers the
    nation will certainly suffer.
                         interdisciplinary mathematics
        A centerpiece of NSF's core investments in fiscal year 2002 is the
    Interdisciplinary Mathematics Research program funded at $20 million.
    Our total investment in mathematical sciences will increase 16.5
    percent. Mathematics is a powerful tool for insight and a common
    language for science and engineering. This emphasis on the mathematical
    sciences recognizes its increasingly critical role in advancing
    interdisciplinary research. This investment will bring cutting-edge
    mathematics and statistics to address problems in the physical,
    biological, and social sciences. Some examples include studies of brain
    function, communication networks, modern economic behaviors, and the
    modeling and prediction of major weather events, such as tornadoes or
    hurricanes.
                                 priority areas
        In addition to investments in core research and education, NSF
    identifies and supports emerging opportunities in priority areas that
    hold exceptional promise to advance knowledge. The fiscal year 2002
    Budget emphasizes four priority areas--Biocomplexity in the
    Environment, Information Technology Research, Nanoscale Science and
    Engineering, and Learning for the 21st Century. All of these areas
    receive increased investment over last year's amounts.
                       biocomplexity and the environment
        The fiscal year 2002 budget request builds on past investments in
    our Biocomplexity in the Environment portfolio and increases funds by
    nearly 6 percent, to $58 million. Computational and information
    technologies, real time sensing techniques, and genomics are providing
    insight into the interactions among ecological, social, and physical
    earth systems. For example, recently investigators have been studying
    contaminant flux of the lower Mississippi River, dynamics of an
    invasive non-native species on the Pacific Coast, and marine mammal
    abundance in the western Arctic Ocean. Developing new research
    instruments and software that advance cross-disciplinary studies in the
    environment will continue to improve our understanding of the planet
    and its systems.
                        information technology research
        The Information Technology Research budget request expands
    fundamental research in another multidisciplinary area. Our requested
    $273 million investment, 5 percent over last year, allows us to explore
    ways of making large-scale networking, software, and systems more
    reliable, stable, and secure. This will permit diverse applications
    from telemedicine, to interactive education, to the remote operation of
    experimental apparatus--such as the telescope at the South Pole. Other
    research will improve our understanding of human-computer interactions
    and investigate the impact of IT on our society, on our economy, and on
    our educational system. Because the information technology sector has
    contributed significantly to recent U.S. economic growth, these
    investments remain a top priority.
                       nanoscale science and engineering
        In nanoscale science and engineering--colloquially known as
    nanotechnology--activities range from investigation of biologically
    based systems that exhibit novel properties to the study of nanoscale
    control of the structure and composition of new materials. Recognizing
    the importance of this emerging discipline, NSF is increasing its
    investment by 16.1 percent to $174 million in fiscal year 2002.
        Fundamental research programs will investigate biosystems at the
    nanoscale--such as nanoscale sensors to detect cancer. Research will
    focus on system architectures, nanoscale processes in the environment--
    for instance, the trapping and release of contaminants--multi-scale
    modeling, and large-scale computer simulation of processes at the
    molecular or atomic level. Grand challenges include major long-term
    research objectives in nanoscale electronics, nano-based manufacturing,
    and nanostructured materials by design.
                         learning for the 21st century
        Learning for the 21st Century addresses two interrelated
    challenges: understanding how we learn; and transferring that knowledge
    for use in schools, homes and other learning environments. Research,
    development, and testing of educational tools incorporating information
    technology will give us a much better understanding of how they can be
    used effectively in the classroom. Accordingly, the NSF request for
    these activities, $126 million, is a 3.3 percent increase over last
    year.
        A key component of this priority area is the Centers for Learning
    and Teaching program. Like the Math and Science Partnerships, these
    link K-12 and higher education. They allow opportunities for teachers
    to gain new skills in the use of information technology in education,
    new knowledge in science and mathematics, and--most importantly--allow
    them to integrate these with new research on learning. Applications of
    research results will increase opportunities for higher achievement
    and, ultimately, produce a workforce able to meet the challenges of
    rapid scientific and technological change.
                       other fiscal year 2002 highlights
        I'd like to bring this overview to a close by noting some other
    highlights.
        I am a firm believer in the Experimental Program to Stimulate
    Competitive Research, or EPSCoR--which enables researchers to
    participate more fully in NSF research activities. Fiscal year 2002
    funding for EPSCoR will total nearly $100 million. This includes about
    $75 million provided through the EHR appropriation and another $25
    million provided through NSF's Research and Related Activities account.
        The fiscal year 2002 budget provides about $65 million to support
    ongoing research on the genomics of plants that have major economic
    importance. The long-term goal of this program is to understand the
    structure, organization, and function of plant genomes that are very
    important to agriculture, the environment, and health.
        Along that same line, the 2010 project will support research to
    determine the functions of the 20,000 to 25,000 genes in the recently
    sequenced Arabidopsis genome.
        On another front, the fiscal year 2002 budget provides about $26
    million to initiate a new cohort of Science and Technology Centers in
    areas that span the range of disciplines supported by NSF.
        As provided in recent legislation to strengthen the technology
    workforce, approximately $144 million is anticipated from H-1B
    nonimmigrant visa application fees. These funds support Computer
    Science, Engineering and Mathematics (CSEM) Scholarships and Private-
    Public Partnerships in K-12.
        The budget request also includes $26 million for the GK-12 program.
    That will put hundreds of graduate students in K-12 classrooms to learn
    the art of teaching. They will share their research with younger
    students and serve as role models that are so important, especially in
    inner-city schools.
                            major research equipment
        Finally, the Major Research Equipment account for fiscal year 2002
    will fund three continuing projects:
        First, $24.4 million is requested for the George E. Brown, Jr.
    Network for Earthquake Engineering Simulation. This is a national
    collaboration of approximately 20 geographically-distributed, shared-
    use experimental research equipment sites that seeks to improve the
    seismic design and performance of U.S. civil and mechanical
    infrastructure systems.
        We will invest $16.9 million to continue funding the Large Hadron
    Collider, the internationally supported collaboration at CERN. This
    superconducting particle accelerator will advance our fundamental
    understanding of matter.
        Additionally, $55 million is requested to support the
    infrastructure to allow access to terascale computing systems. This
    will enable all researchers and engineers access to leading-edge
    computing capabilities.
                                   conclusion
        We know from past experience that NSF funding should cover a broad
    base of disciplines to insure constant sources of innovation. NSF
    should open the potential for every field to be connected and to
    contribute. Science and engineering today are integrated and answer
    each other's questions, and inspire future generations.
        In order for the nation to be able to use new knowledge for
    economic and social progress, we have to make a national commitment to
    support these efforts. In the current fiscal climate, this budget lays
    the foundation for sustained increases over the long term while also
    providing opportunities in all fields of science and engineering.
        We all have a responsibility to convince the public that long-term
    investments in science and engineering make our economy stronger and
    our lives easier and more rewarding. As we work more efficiently within
    budget constraints, we must plan for the future--ensuring a steady
    stream of investments. Working together, we can set the stage for
    increased investments over the long haul. Thank you.

        Senator Mikulski. Dr. Boesz.

                      statement of dr. christine c. Boesz

        Dr. Boesz. Madam Chair, Senator Bond, and members of the
    subcommittee, Senator Johnson, I appreciate the opportunity to
    appear before you today.
        The National Science Foundation, NSF, is an innovative
    agency dedicated to maintaining American leadership in
    discovery and the development of new technologies across the
    frontiers of science and engineering knowledge. As the
    scientific enterprise changes and research evolves, new
    challenges arise. Consequently, my office has worked closely
    with NSF management to identify and begin to address issues
    that are important to the success of NSF achieving its mission
    in the future. I believe that the National Science Board and
    NSF should pay particular attention over the next year to three
    areas involving the management of NSF awards.
        The first area involves basic award administration. NSF's
    mission is to promote the progress of science and advance the
    national health, prosperity, and welfare, which it carries out
    by funding science, engineering, and mathematics research and
    education. Assessing scientific progress and ensuring effective
    financial and administrative management are critical elements
    in administering NSF's grant programs. Program officers in each
    of NSF's seven science directorates are responsible for
    monitoring scientific progress, while staff within the Office
    of Budget, Finance, and Awards Management oversees the
    financial management.
        At any given time, NSF is administering as many as 30,000
    ongoing awards, relying on a staff of about 1,150 employees to
    carry out this oversight responsibility. This is in addition to
    the responsibility of soliciting approximately 10,000 grants
    and cooperative agreements annually, amounting to over $3.5
    billion.
        Given this sizable workload, NSF is challenged to
    adequately monitor its awards for scientific accomplishments
    and compliance with the award agreement and Federal laws and
    regulations. For the most part, NSF receives a variety of
    financial and programmatic reports from grantees to monitor
    progress that could lead to improved award administration.
        Thus, it is important that NSF focus on the interactions
    between its program officers and its grant and contract
    officers. Better coordination between them should lead to more
    effective management. Consequently, NSF needs improved
    procedures with more staff targeting this focus.
        As NSF extends its scope of research and education at the
    frontiers of science and engineering, some awards are made to
    institutions and organizations that increase the risks of
    compliance or performance. For example, NSF is making more and
    more awards to school districts, community colleges, and
    nonprofit organizations which may not be familiar with managing
    federally funded projects. Such awards should be identified
    early on and accorded closer oversight so that the intended
    outcomes can be achieved.
        The second area focuses on NSF's management of large
    infrastructure projects. NSF is increasing its investments in
    projects such as accelerators, telescopes, research vessels,
    supercomputing databases, and earthquake simulators. Currently
    NSF spends approximately $1 billion per year for such cutting
    edge projects, some of which cost hundreds of millions of
    dollars. Many of these are large in scale, require complex
    instrumentation, and involve partnerships with other Federal
    agencies and international science organizations. Some, such as
    the new South Pole Station, present additional challenges
    because they are sited in harsh environments. Successful
    management of these projects and programs requires a more
    disciplined project management approach.
        My office recently conducted an audit of NSF's oversight of
    one of these large projects and has made several
    recommendations for improvement. NSF has developed a corrective
    action plan to respond to our recommendations and we will be
    monitoring their progress toward meeting that plan. Further, as
    part of its plan for improved management, NSF is developing and
    implementing changes to its policies and procedures for
    managing all large infrastructure facilities and projects. We
    are pleased to have been given the opportunity to provide
    comments to NSF on these, and we expect to see implementation
    in the coming year.
        Finally, NSF needs to focus on overseeing awards requiring
    cost sharing. In accordance with congressional requirements,
    all of NSF's grantees submitting unsolicited proposals must
    share in the cost of their research projects. In addition to
    the statutory requirement, NSF sometimes requires cost sharing
    on solicited proposals. This usually occurs when NSF believes
    there is a tangible benefit to its award recipient such as
    infrastructure development or the potential for income or
    profit. When cost sharing is required for a specific award, it
    is presumed that such resources are necessary to accomplish the
    objectives of the award. The commitment to share in the costs
    becomes a condition of the award and is subject to audit. If
    promised cost sharing is not realized, then the awardee has not
    fulfilled its obligation. In such cases, NSF should have at
    least a portion of its funds returned to it.
        Our audits are increasingly finding awardees who are
    failing to meet their cost sharing obligations. Frequently we
    find that awardees lack adequate policies and procedures, they
    overvalue contributions or fail to report or certify cost
    sharing amounts.
        We are now conducting more focused audits in this area,
    covering awards at numerous institutions. But post-awards
    audits should supplement, not substitute for, an appropriate
    compliance effort undertaken at NSF.
        The challenge for NSF is to increase its oversight of cost
    sharing requirements during the life of the awards. Cost
    sharing is an important contribution from the research and
    education communities. Therefore, when it is not met, NSF
    program objectives may not be met. Consequently, improving its
    administration of awards requiring cost sharing is among the
    most important priorities for NSF management. We will continue
    through our audit efforts to work with NSF to address this
    challenge as well.

                               prepared statement

        Madam Chairman, that concludes my statement. Thank you for
    the opportunity to share this information with you. I would be
    pleased to answer any questions that you may have.
        [The statement follows:]

                  Prepared Statement of Dr. Christine C. Boesz

        Madame Chair, Senator Bond, and members of the Subcommittee, I
    appreciate the opportunity to appear before you today. The National
    Science Foundation (NSF) is an innovative agency dedicated to
    maintaining American leadership in discovery and the development of new
    technologies across the frontiers of scientific and engineering
    knowledge. As the scientific enterprise changes and research evolves,
    new challenges arise. Consequently, my office has worked closely with
    NSF management to identify and begin to address issues that are
    important to the success of NSF achieving its mission. I believe that
    the National Science Board and the NSF should pay particular attention
    over the next year to three areas involving the management of its
    awards.
                           basic award administration
        The first area involves basic award administration. NSF's mission
    is to promote the progress of science and advance the national health,
    prosperity, and welfare, which it carries out by funding science,
    engineering and mathematics research and education. Assessing
    scientific progress and ensuring effective financial and administrative
    management are critical elements in administering NSF's grant programs.
    Program officers in each of NSF's seven science Directorates are
    responsible for monitoring scientific progress, while staff within the
    Office of Budget, Finance, and Award Management oversees awardees'
    financial management.
        At any given time, NSF is administering as many as 30,000 ongoing
    awards. NSF relies on a staff of about 1,150 employees to carry out
    this oversight responsibility. This is in addition to their
    responsibility of soliciting and awarding approximately 10,000 grants
    and cooperative agreements annually amounting to over $3.5 billion.
    Given this sizable workload, NSF is challenged to adequately monitor
    its awards for scientific accomplishments and compliance with the award
    agreement and Federal laws and regulations. For the most part, NSF
    receives a variety of financial and programmatic reports from grantees
    to monitor progress that could be used to improve award administration.
    Thus, it is important that NSF focus on the interactions between its
    program officers and its grant and contract officers. Better
    coordination between them should lead to more effective management.
    Consequently, NSF needs improved procedures with more staff targeting
    this focus.
        As NSF extends its scope of research and education at the frontiers
    of science and engineering, some awards are made to institutions and
    organizations that increase the risks of compliance or performance. For
    example, NSF is making more and more awards to school districts,
    community colleges and non-profit organizations, which may be
    unfamiliar with managing Federally funded projects. Such awards should
    be identified early on and accorded closer oversight so that the
    intended outcomes can be achieved. Moreover, in addition to the risks
    involved with new awardee organizations, some of NSF's awards have
    unique management issues.
                  management of large infrastructure projects
        The second area focuses on NSF's management of large infrastructure
    projects. NSF is increasing its investments in large infrastructure
    projects such as accelerators, telescopes, research vessels,
    supercomputing databases, and earthquake simulators. Currently, NSF
    spends approximately $1 billion per year for such cutting-edge
    projects, some of which cost hundreds of millions of dollars. Many of
    these projects are large in scale, require complex instrumentation, and
    involve partnerships with other Federal agencies and international
    science organizations. Some, such as the new South Pole Station,
    present additional challenges because they are sited in harsh
    environments. Successful management of these projects and programs
    requires a more disciplined project management approach.
        My office recently conducted an audit of NSF's management of one of
    these large projects and made several recommendations for oversight
    improvement. NSF has developed a corrective action plan to respond to
    our recommendations and we will be monitoring their progress toward
    meeting this plan. Further, as part of its plan for improved
    management, NSF is developing and implementing changes to its policies
    and procedures for managing large infrastructure projects. We are
    pleased to have been given the opportunity to provide comments to NSF
    on these, and expect to see implementation in the coming year.
                                  cost sharing
        Finally, NSF needs to focus on overseeing awards requiring cost
    sharing. In accordance with Congressional requirements, all of NSF's
    grantees submitting unsolicited proposals must share in the cost of
    NSF-funded research projects. In addition to this statutory
    requirement, NSF sometimes requires cost sharing on solicited
    proposals. This usually occurs when NSF believes there is tangible
    benefit to the award recipient, such as infrastructure development or
    the potential for income or profit. When cost sharing is required for a
    specific award, it is presumed such resources are necessary to
    accomplish the objectives of the award. The commitment to share in the
    costs becomes a condition of the award and is subject to audit. If
    promised cost sharing is not realized, then the awardee has not
    fulfilled its obligation. In such cases, NSF should have at least a
    portion of its funds returned to it.
        Our audits are increasingly finding awardees who are failing to
    meet their cost sharing obligations. Frequently we find that awardees
    lack adequate policies and procedures, overvalue contributions, or fail
    to report or certify cost sharing amounts annually to NSF. We are now
    conducting more focused audits in this area, covering awards at
    numerous institutions. But post-award audits should supplement, not
    substitute for, an appropriate compliance effort undertaken by NSF. The
    challenge for NSF is to increase its oversight of cost sharing
    requirements during the life of these awards. Cost sharing is an
    important contribution from the research community. Therefore, when it
    is not met, NSF program objectives may not be met. Consequently,
    improving its administration of awards requiring cost sharing is among
    the most important priorities for NSF management. We will continue,
    through our audit efforts, to work with NSF to address this challenge.
                                   conclusion
        Madame Chair, that concludes my statement. Thank you for the
    opportunity to share this information with you. I would be pleased to
    answer any questions that you may have.

                                 Funding needs

        Senator Mikulski. Thank you very much, Dr. Boesz.
        Dr. Colwell, though the gavel has passed to a Democratic
    chair, we still have the same budget. I think there is an
    expectation, first of all, because of the tremendous support
    that Senator Bond and I both share for the National Science
    Foundation, that there is a tremendous cornucopia of
    opportunity out there. Really, our own resources are quite
    spartan as we look at the allocation we are going to get.
        But let me get to my point. I was very concerned that this
    is the first NSF budget that cuts research, and it is the first
    time in 50 years that research has been cut.
        Second, the increase is about $56 million. Now, that is not
    loose change, but as part of a doubling effort, it would have
    been $600 million, or 15 percent. We would need to be able to
    increase this at 15 percent. That would be $600 million.
        So, here is my question. Number one, what do you really
    need? In other words, is this what you wanted or is this what
    you got?
        Dr. Colwell. Senator, I view this as a transition year
    budget. And our discussions with the administration have been
    very, very positive.
        I have pointed out that there are four areas that really do
    need attention. Graduate student stipends. We must really
    address that. It is a very critical area. We do have $8 million
    in the budget to raise the stipend to $20,500, and I would hope
    that in the future we can raise it to $25,000. We are raising
    the stipend for our graduate research fellows, for our GK-12
    fellows and for our----
        Senator Mikulski. What are the other three areas?
        Dr. Colwell. The other areas would be to be able to
    address:
        1. Mathematics investment. We have a $20 million
    investment, but I would hope that in the future that this could
    be significantly increased because mathematics is fundamental
    to our being able to maintain leadership in all of science and
    engineering.
        2. I think we need to address grant size and duration, and
    the administration has requested that we look at that and we
    are in the process of doing a study.
        Senator Mikulski. I am sorry. I could not hear you.
        Dr. Colwell. Grant size and duration, the size of the
    grants and how long they are in effect, because we have a
    feeling that our principal investigators are on a treadmill.
    And we have a study underway to look at that issue.
        3. Then there are tools that we need to provide our
    investigators, the high performance aircraft is one that I
    think is badly needed, and there are other investments in
    tools.
        So, there are areas that we are looking to the future,
    indeed, for investment.

                        NSF funding needs and priorities

        Senator Mikulski. Well, let me, though, ask the question.
    Do you think that the $56 million covers what you need to do?
    Are we running a shortfall? I am concerned again about the cut
    in research and development. I am concerned about the cuts in
    the research equipment grants. As you know, for many of our
    colleges, this is a very crucial program, particularly to
    modernize laboratories. Some are quite dated, some even built
    in the 1970's. You know that as a scientist. Again, I am
    talking about keeping to basics while we expand.
        When you went to OMB, what did you think you needed to be
    able to do to be able to stay the course on these four
    priorities? Or do you not want to answer that? If you do not
    want to answer it--and I am not trying to make you feel
    awkward. I am trying to get a picture of what you need as the
    Director of the National Science Foundation.
        Dr. Kelly. Madam Chair, I would be happy to take the----
        Senator Mikulski. Dr. Kelly, maybe that is a better way.
        Dr. Kelly (continuing). Opportunity to respond to your
    question. Both sides of the aisle have clearly come forward
    recommending a doubling of the NSF budget and our basic
    research budgets. Newt Gingrich publicly came out at an NSF
    symposium for tripling it.
        Senator Mikulski. There you go.
        Senator Bond. Can I sign you up as a Newt Gingrich devotee?
        Senator Mikulski. Well, he is another one who has been fat
    and has been thin. And been in and been out.

                          importance of Basic research

        Dr. Kelly. But the fact of the matter, if you look at how
    important basic research and science is to the economy, to our
    medical life, to even solving of the social problems like the
    expansion in prisons and the way we can monitor prisoners with
    new scientific devices, the entire range, the most important
    investments this Government can make are in basic research.
    They have the highest single payoff. At the same time, we
    constantly underfund basic research because of the time lag and
    the lack of the immediate payoff.

                        Fiscal year 2002 budget guidance

        Senator Mikulski. Doctor, we understand that. What was the
    recommendation? We are under a 15-minute rule.
        Dr. Kelly. We really did not give a recommendation. But we
    are substantially underfunding all of the core disciplines, all
    of the priority areas, and several of the major facilities that
    we would have recommended were simply not feasible to recommend
    because of the guidance we had received. So, we did not try and
    come in above guidance. But that was the guidance we received.
    We lived within that, but it clearly does not meet this
    subcommittee's requirements of doubling or this Nation's
    requirement for investments in basic science.
        Dr. Colwell. Senator, as you know, doubling was important
    to us, remains important to us, and you can infer much from
    that.

                    Budget doubling goal and oversight goals

        Senator Mikulski. Well, Doctor, I think we can safely
    agree--and I think my colleague would agree--that it would be
    very hard to increase this by $600 million, which is part of
    the doubling. Doubling is a goal and that is why each year we
    need to be able to advance it.
        I want to, first of all, acknowledge also the commentary of
    Dr. Boesz. As we increase funds, we also want to increase the
    infrastructure, make sure we have the proper infrastructure to
    make wise use of the funds and provide the administrative
    oversight. In her testimony, she indicated the great
    cooperation that has come from the NSF. So, let us stick to the
    basics, and I think that is what your four tools are.
        We would like to have further conversations with you. My
    time has expired, but I am going to come back too. Let me just
    conclude with this. When we talk about the increase in
    research, because it has been cut, would you see that going in
    the areas of stipend increases, or is that in another area, or
    in grant sizes?
        Dr. Colwell. Senator, actually we are moving in the
    direction of both. The stipend increase generally increases the
    funding for the core disciplines because it is the students who
    are doing the work. But we are also, in the area of information
    technology, beginning to provide larger grants and longer
    periods of time. I think ultimately we are able to move in this
    direction.
        But I do feel that, yes, graduate student stipends,
    attracting the best and brightest into the field is primary.
    Let me give some quick facts. In the last decade, 10 percent of
    all the patents in Silicon Valley were issued to citizens of
    India who graduated from one of the Indian institutes of
    technology. Another is that in Eli Lilly's main pharmaceutical
    research laboratory, Mandarin is the primary language. We are
    not educating American citizens, and we have got to attract
    students into science and engineering. We are only able to fund
    about 10 or 12 percent of deserving proposals that come in
    because of the demand.
        We are very pleased with the support you and Senator Bond
    indicate for NSF.
        Senator Mikulski. My time is expired.
        Senator Bond. First, Dr. Colwell, I am very sorry to hear
    about your back injury. I know how painful those can be. I
    would tell you after hand surgery at the end of January, the
    first week of February I attended all the budget hearings under
    heavy sedation. You know, that is not a bad way to do it.

                                  NSF's vision

        It was about the least painful budget hearings I had ever
    been through. So, pop a few and you come in and, hey, sitting
    there all day is not that bad.
        I would say on a very serious note that your table and this
    table strongly agree that the budget is inadequate. I have
    spoken to the Director of OMB and reemphasized to him again
    that when they have an opportunity to review the budget, as I
    do not believe they had an adequate time in the short
    transition to prepare a budget, I would hope to see an
    administration recommendation to put us back on the doubling
    path. If they do not, I will be much more critical then than I
    am now.
        But I raised a point in my opening statement. It came
    essentially from the Inspector General. If we are to get back
    on this doubling path, we need to have the management skills,
    the staff, the resources, to make sure we know what we are
    getting, to make sure there is adequate review. That is very
    important.
        But let me ask you and then Dr. Kelly a much more important
    question that we would ask back home if we were back in the
    heartland of Missouri. You want to double the amount of money
    you are spending. What do we get for it? What I need to hear
    more clearly from you is not a discussion of stipends and
    researchers and infrastructure, but what is your vision for
    what the Foundation can achieve in the long term? Can you give
    us some clear-cut policy goals? I want to have some goals, some
    standards, how can we measure. Before we give you that final
    blast in the fifth year to double it, we want to see progress,
    measurable, identifiable progress, on mutually agreed upon
    goals. I would like your and Dr. Kelly's views on what that
    vision is. What are those goals?
        Dr. Colwell. The vision includes being absolutely the
    leaders in high speed, high terascale computation, having our
    civilian scientists with access to the best and the fastest
    computing capacity in order to be able to solve problems of
    weather, the environment, understanding earthquakes.
        I would like to see the future hold a rich promise
    fulfilled in biotechnology, in plant genomics----
        Senator Bond. Good, good. I was hoping that might be in
    there.
        Dr. Colwell. And I would like to see us understanding the
    complexity of the environment so that we can make wise
    decisions and have science-based decisions on how we utilize
    our resources, whether it is locating a highway or whether it
    is locating a new city, or investing in the infrastructure of a
    city; in other words, bringing science and engineering to
    improve the health and welfare of the entire Nation and
    maintaining strong economic strength of the Nation and national
    security of our Nation.
        I do agree with the report, National Security in the 21st
    Century, the Rudman-Hart report, which says, second only to
    warfare in an American city or an outbreak of strife, the
    greatest danger our Nation faces is losing leadership in
    science and math research and science and math education. I can
    go on, Senator, but I think you get the gist.

     Nanotechnology, information technology and math and science education

        Senator Bond. Yes. And nanotechnology----
        Dr. Colwell. In nanotechnology we must be a leader. The
    Japanese are investing $400 million in nanotechnology alone, so
    we must really take leadership in this area.
        Senator Bond. That is what I want to hear. But as we work
    along, I want to see some milestones and some guidelines. We
    would like to know from a management standpoint how we are
    getting there.
        Dr. Kelly, would you care to expand upon that and maybe
    fill in some areas that you see?
        Dr. Kelly. Yes, Senator. I think the Director has outlined
    them ably.
        In the next 5 years, the world is going to change
    dramatically. Things as we know them now are not going to be
    the same, and the rate of change is going to increase even more
    rapidly in the future. Say, in information technology, we are
    looking at the equivalent of infinite bandwidth and infinite
    processing power within 10 years. I really believe it is going
    to be less than that. Nanotechnology will be state of the art
    in a few years, and we will be moving on to something brand new
    that we do not even understand now.
        The miniaturization that is going to take place there is
    going to change the way we deliver medicine. It is going to
    change the way we deliver food. It is going to change the way
    we deliver information. It is going to change the nature of the
    world.
        This process is going to continue. So, that is one point
    that we can deliver in terms of what is going to happen to
    society.
        The second part is we as a society cannot in the long term
    rely on the scientific enterprise. Any field you take, 30 to 50
    percent of the scientists in that field are from a different
    country. We have to provide graduate stipends to attract our
    best and brightest students into science. We have to attract
    minorities and women, especially given the changing demographic
    composition of the workforce, into science and engineering, and
    we are not doing that.
        We also need to revitalize science and math education in
    public schools. There has to be a systemic change in all of
    public education.
        In the future, all of the other countries of the world are
    moving in this direction. The important wars that are going to
    be won are not conventional wars, but they are the wars of
    infotech, nanotech, and education. The countries that win those
    wars are going to be the countries that will maintain
    leadership in the future. We are talking impacts of what we do
    today that will not be evident next year or 2 years from now
    but in 30 years.
        But make no mistake about it. Right now we are eating our
    seed corn. We are not making those investments in people. We
    are not making those investments in basic research, and 30
    years from now, our great, great grandchildren are going to pay
    a very high price for that.
        Senator Bond. Thank you, Dr. Kelly, for a very compelling
    statement.

                         Math and science partnerships

        Senator Mikulski. This then, of course, brings us back to
    education. We talked about the farm team and the little
    leagues, acknowledging the validity of Dr. Kelly's comments.
    But I note in the request to the committee, there is a $200
    million request for a new partnership in K through 12 math and
    science education to be run by NSF. This new program gives NSF
    $90 million in new funds, but redirects $110 million in
    existing NSF funds to start this program. Now, I understand
    that this is to make grants to State and local districts to
    join with institutions of higher education to strengthen K
    through 12 math and science education.
        Now, that sounds good. I think we all agree on the goals. I
    am into not only what are the goals and the vision, but the
    how's, and is it really going to happen? From my observation,
    this is the latest in a long line of new programs to improve K
    through 12. With all due respect, just about every year I hear
    about a new program to improve K through 12, but K through 12
    does not really improve.
        We have just gone through a wrenching effort, very strongly
    bipartisan, to reauthorize the Elementary and Secondary
    Education Act. In that reauthorization, it was so clear that we
    are falling behind in science and math education and what
    could, and the need for certified teachers. I will not go
    through the laundry list, but ranging from Senator Pat Roberts
    of Kansas, a strong leader in armed services, decrying this to
    Senator Hillary Rodham Clinton both agreeing on how we could
    move to improve K through 12 science education and have the
    right teachers.
        Now, here is my question to you, Dr. Colwell. Is this just
    yet one more rearrangement of funds, and are we going to be in
    exactly the same place next year as we are this year? And how
    will this make a difference? Because it seems that we have a
    lot of starts and stops in these areas. I do not know if you
    are conducting an internal evaluation of what really works,
    what are the lessons learned.
        But quite frankly, I do not want to waste any more time on
    K through 12, and I really do not want to see more starts, more
    stops, and at the same time, we are still falling behind in the
    need to have not only the improvement of the students, but the
    single most important thing, Senator Bond, that we agreed upon
    was teacher recruitment and teacher training.
        So, could you tell me why this is going to be different
    than the others?

                     building on Education program results

        Dr. Colwell. Yes, Madam Chair. We are building on the
    programs that we have been running, and we are building on what
    we are learning from them. The programs in the math and science
    partnerships are building on the K-12 programs that we have
    been funding.
        The important point is bringing together higher education,
    the community, and the school system. The GK-12 program, which
    I described to you in a previous testimony here, is working. We
    are now getting some very good results, based on early returns
    and discussions with institutions where these efforts are in
    effect. We are linking higher education through graduate
    students who are working up to 20 hours a week teaching in
    primary, middle, and high schools.
        We also need to focus on developing centers focused on the
    science of learning, centers that bring together the kinds of
    information that is being gathered in research laboratories at
    NIH on how children learn. In discussions with Secretary Paige
    just a few days ago, we both agreed that we need to work on how
    children learn about numbers, how they do mathematics. It is
    not yet understood how children learn mathematics. We need to
    bring the research, good research, directly into the classroom.
    We have talked about technology transfer for industry, but we
    need now to focus on the technology transfer from the research
    laboratory into the classroom.
        Senator Mikulski. Dr. Colwell, are you telling me that has
    not been done?
        Dr. Colwell. Well, it needs to be done in a focused way
    that NSF can then provide transfer to math and science
    education.
        Senator Mikulski. But this has not been done at NIH in its
    neuroscience area and in its particular area of child
    development?
        Dr. Colwell. But again, the area of child development is
    also a component of the research that I have mentioned we would
    bring together.
        I think the best example would be our systemic reform
    efforts. We have had some successes in our urban, and rural,
    and inner city systemic reform programs that are underway.

            redirection of Funds and evolution of education programs

        Senator Mikulski. I agree but in this new partnership, it
    cuts it by $50 million. It also redirects money. The $110
    million comes out of cutting the programs for existing teacher
    training. So, you see?
        Dr. Colwell. Yes, but what we are trying to do is evolve
    from what we have learned in those programs and to shape them
    into more effective programs. We are in the process of
    evaluating the results of our systemic initiatives, learning
    what are the factors that correlate with success and those with
    not such good success, and go to the next step embodied in the
    No Child Left Behind partnerships.
        Senator Mikulski. So, what are we saying here? Are we
    saying that we had these programs in the past and now President
    Bush in the No Child Left Behind--and, of course, I take the
    position no child left behind and no child left out of the
    appropriations process. Essentially where these programs
    existed, are they being cut, or are you now kind of mining them
    for lessons learned and incorporating them in the new program?
    In other words, it is like a rocket ship. This one kind of
    falls off, but it keeps the momentum going.
        Dr. Colwell. Those that are in place are being retained. We
    are just not making any new starts in the old programs, but we
    are taking what we have learned from them to shape the new
    programs, the new partnerships that the schools can participate
    in along with schools of higher education.
        Senator Mikulski. Well, I really want to work with
    President Bush on this. I believe again looking at our work on
    the Education Committee, of which Senator Bond is a member--
    remember those exchanges and particularly Pat Roberts; you were
    an active participant--how can we really now operationalize
    these goals? I would like to have a more detailed description
    of what is this new program and what does it mean in terms of
    the other programs. Are they just being eliminated? Are they
    just being redirected? Or are they now evolving into this? If
    we could really get a picture of this. Again, it is not only
    the Appropriations Committee. When we go to the floor, we
    really have to demonstrate----
        Dr. Colwell. It is genuinely an evolving scenario; that is,
    we are taking that which we have learned from the programs that
    have worked and we are shaping them in the partnerships
    program.
        Senator Mikulski. Senator Bond, I note that Senator
    Domenici is here. Would you like to go another round or defer
    to him?
        Senator Bond. I would certainly defer to Senator Domenici.
        Senator Mikulski. I think it is in our interest.
        Senator Bond. I believe when he had a shot at it, he cut us
    a better deal than OMB did.
        Senator Mikulski. Absolutely.
        Senator Bond. We are looking for friends. Would you like
    some coffee, Senator Domenici?
        Senator Mikulski. We are glad to see you.
        Senator Bond. Can we fix you anything here?

                           very large Array telescope

        Senator Domenici. I brought my own.
        Incidentally, we did get about $7 billion more than the
    President for our kind of programs. There, obviously, are many
    who do not think it is enough, but we will see where it all
    comes out.
        Thank you for permitting me to ask a few questions.
        Dr. Colwell, I first want to thank you for responding to a
    question that has nothing to do with these hearings with
    reference to one of our rivers. You took of your time to go
    find out what the authentic answer was, and I appreciate
    knowing that. I was just hearing some rumbles and rumors, not
    something official.
        It is my understanding and I am quite pleased by the fact
    that funding for the expansion efforts of the very large array
    has been included in the Foundation's budget for 2002, with
    continued support expected in the future. We are all very proud
    of that array, not just New Mexicans, but it is there as one of
    the truly magnificent science achievements. And it is time to
    spend some more money there.
        What are we going to do? Do you have a quick summary of how
    we are going to spend this money?
        Dr. Colwell. The very large array is a very important part
    of the astronomy effort. What I would like to do is ask Bob
    Eisenstein to make some comments because I think this is really
    critical.
        Senator Domenici. I think it would just take a minute.
    Could he testify please, Madam Chair?
        Senator Mikulski. Certainly. Sir, would you come on up and
    take the microphone so we can hear and it also can be
    appropriately recorded?
        Dr. Eisenstein. I'm Robert Eisenstein. I'm Assistant
    Director for Mathematical and Physical Sciences at NSF, and the
    Astronomy Division is one of the divisions in my directorate.
        We have plans to expand the VLA, as you indicated, Senator.
    The first outlay will be for an R&D effort to do phase one, and
    upon successful conclusion of that R&D effort, we will
    entertain a proposal for the larger project under the major
    research equipment account at the due time.
        Senator Domenici. So, even though portions of that have
    been there for a long time, it is still a very integral part of
    astronomy in the world. Is that correct?
        Dr. Eisenstein. Absolutely. I would say that the VLA is the
    world's leading radio telescope.

                                      ALMA

        Senator Domenici. Maybe this next question is in your
    domain also. I only have one other.
        Could you speak a moment about ALMA, the Atacama Large
    Millimeter Array? It is my understanding that something is
    happening with that also that affects New Mexico.
        Dr. Eisenstein. Yes. The Atacama Large Millimeter Array
    currently is in its fourth year of R&D in 2001. We have entered
    what we think will be a very productive partnership with the
    Chilean government where the antennas will be hosted, also with
    several European nations operating through the European
    Southern Observatory. Now more recently we are entering
    negotiations with the Japanese, hoping to involve them in a
    full tripartite project to build what will be the world's first
    truly international radio telescope of unprecedented power.
        Senator Domenici. Now, does the 2002 budget request funding
    specifically for the construction of this project? I do not
    think it does.
        Dr. Eisenstein. No, it does not.
        Senator Domenici. Does that mean we are still committed to
    it, or what would we be considering as a subcommittee?
        Dr. Eisenstein. Well, we are committed to this project in
    the sense of continuing the research and development activity
    in 2002. As you know, the major research equipment account in
    the President's budget was not allowed any new starts for
    construction activity, and so we are waiting until 2003 to see
    what happens there.
        Senator Domenici. But if we have the money, the project is
    on go?
        Dr. Eisenstein. The project is prepared to commence
    construction, yes, sir.

                             WIPP versus homestake

        Senator Domenici. My last one has to do with National
    Science Foundation and WIPP, the Waste Isolation Pilot Project,
    in New Mexico. I understand that the advisory committee which
    met in New Mexico and also met in the Majority Leader's State
    with reference to an underground mine versus using the Waste
    Isolation Pilot Project underground mine. The decision was to
    go with the old marketplace mine rather than the Federal
    Government site. Are there other research activities of a
    similar type that might be considered for the Waste Isolation
    Pilot Project underground mine?
        Dr. Colwell. I would say yes, but I will again ask Dr.
    Eisenstein if there are any immediately under consideration. I
    am not sure that there are.
        Dr. Eisenstein. I actually do not know what the Department
    of Energy's plans are with respect to that, sir.
        Senator Domenici. So, there are no plans for any kind of
    projects from NSF.
        Dr. Colwell. Not at the moment.
        Dr. Eisenstein. Not from the National Science Foundation,
    no.
        Senator Domenici. I thank you very much. Thank you, Madam
    Chairman.
        Senator Mikulski. Thank you.
        Senator Bond.

                               Peer review system

        Senator Bond. Thank you very much, Madam Chair.
        We are under an approaching deadline. There are supposed to
    be votes at 11:30. I would like to ask you four bullet
    questions in hopes of four bullet answers of perhaps 60 seconds
    with the promise and expectation that you can expand upon those
    in writing because I believe they are important. I want to
    bring them up but we do not have time fully to discuss them
    today.
        Number one, the peer review system. I mentioned before NAPA
    recommended that NSF should broaden bringing in more
    participants, wider range of institutions, disciplines,
    including the ``have nots'' and under-represented minorities.
    How are you responding to NAPA's findings and recommendations?
        Dr. Colwell. In a word, we are responding. We are taking
    those recommendations into account and we are taking action to
    ensure the advisory committees include these individuals.

                              High-tech education

        Senator Bond. Thank you. We will look forward to seeing
    that information.
        Number two, high tech workers. How is NSF working with the
    private sector to deal with this shortage? The question of how
    you educate is a broad one. Senator Mikulski has raised the
    question. What specifically are we doing, can we help the
    private sector meet its needs and get the students that the
    scientific community needs?
        Dr. Colwell. We have several programs--and I can give them
    in detail to you--that train students in 2-year colleges and 4-
    year colleges in advanced technology. We have programs in
    computer science and a variety of other programs, and I would
    be very happy to provide details, sir.
        [The information follows:]

                       NSF Programs: High Tech Workforce

        The National Science Foundation's (NSF's) GPRA Strategic Plan
    (2001-2006) indicates that ``in pursuit of its mission, NSF invests in
    people to develop a diverse, internationally competitive and globally-
    engaged workforce of scientists, engineers and well-prepared
    citizens.'' Investments at the undergraduate level are critically
    important in the attainment of this outcome goal. NSF has a
    comprehensive suite of programs that prepare undergraduate students for
    entry into the workforce and entry into graduate programs. These
    programs are conducted via three strategies: (1) direct preparation of
    specific elements of the science and engineering workforce, (2)
    attention to broadening participation in the science and engineering
    workforce by groups that are currently underrepresented, and (3)
    strengthening the curricular and instructional infrastructure for
    providing high quality science, mathematics, engineering, and
    technology education to all students.
        Across the set of NSF's programs for undergraduates, a balance is
    struck between providing students with the practical skills needed to
    perform at a high level in the workplace and providing the firm
    theoretical foundations in math and science required as preparation for
    study at more advanced levels.
        The text which follows summarizes NSF's programs which either
    target or contribute to high quality education at the undergraduate
    level. Unless otherwise noted, all of the programs cited below are
    supported primarily by the Directorate for Education and Human
    Resources.
    direct preparation of specific elements of the science and engineering
                                   workforce

    Advanced Technological Education

                            [In millions of dollars]

    Fiscal Year 2001 Current Plan..................................... 39.16
    Fiscal Year 2002 Request.......................................... 39.16

        The Advanced Technological Education (ATE) Program is managed
    jointly by the Division of Undergraduate Education (DUE) and the
    Division of Elementary, Secondary, and Informal Education. The program
    promotes improvement in the education of technicians in science- and
    engineering-related fields at the undergraduate and secondary school
    levels. It particularly targets two-year colleges and encourages
    collaboration among two-year colleges, four-year colleges,
    universities, secondary schools, business, industry, and government.
    Proposals are solicited in the following three tracks:
      --Projects.--Activities may include the development of educational
            materials, courses, curricula, and laboratories; the
            preparation and professional development of college faculty and
            secondary school teachers; internships and field experiences
            for students and educators; or the dissemination of exemplary
            educational materials, curricula, and pedagogical practices
            designed by previously funded ATE centers and projects.
      --Centers.--ATE centers are comprehensive national or regional
            resources that provide models and leadership for other projects
            and act as clearinghouses for educational materials and
            methods. National Centers of Excellence engage in the full
            range of activities described above for projects. Regional
            Centers for manufacturing or information technology education
            pursue comprehensive approaches that focus on reforming
            academic programs, departments, and systems to produce a highly
            qualified workforce to meet industry's needs within a
            particular geographic region.
      --Articulation Partnerships.--These projects focus on enhancing
            either of two important educational pathways for students
            between two-year colleges and four-year colleges and
            universities. One type of Articulation Partnership focuses on
            strengthening the science, mathematics, and technology
            preparation of prospective K-12 teachers who are enrolled in
            pre-professional programs at two-year colleges. The other type
            of partnership targets two-year college programs for students
            to continue their education in four-year science, mathematics,
            engineering, and technology programs, especially programs that
            have a strong technological basis.
        Proposals in all three tracks must evidence a coherent vision of
    technological education--a vision that recognizes the needs of the
    modern workplace, the needs of students as lifelong learners, and the
    need for articulation of educational programs at different levels.
    Whenever feasible, projects are expected to utilize and innovatively
    build from successful educational materials, courses, curricula, and
    methods that have been developed through other ATE grants, as well as
    other exemplary resources that can be adapted to technological
    education.
        For More Information: http://www.ehr.nsf.gov/EHR/DUE/programs/ate/.

    Federal Cyber Service: Scholarship for Service

                            [In millions of dollars]

    Fiscal Year 2001 Current Plan..................................... 11.18
    Fiscal Year 2002 Request.......................................... 11.18

        The Scholarship For Service (SFS) program seeks to increase the
    number of qualified students entering the fields of information
    assurance and computer security and to increase the capacity of the
    United States higher education enterprise to continue to produce
    professionals in these fields. The program consists of scholarship and
    capacity building tracks:
      --The Scholarship Track provides funding to colleges and universities
            to award scholarships in information assurance and computer
            security fields. Scholarship recipients will become part of the
            Federal Cyber Service of information technology specialists who
            ensure the protection of the U.S. Government's information
            infrastructure. After their two-year scholarships, the
            recipients will be required to work for a federal agency for
            two years as their Federal Cyber Service commitment.
      --The Capacity Building Track seeks to increase the national capacity
            for producing trained information assurance professionals by
            providing support to colleges and universities interested in
            building programs, individually or in partnership.
        For More Information: http://www.ehr.nsf.gov/EHR/DUE/programs/sfs/

    NSF Computer Science, Engineering, and Mathematics Scholarships

                            [In millions of dollars]

    Fiscal Year 2001 Current Plan (est.).............................. 71.95
    Fiscal Year 2002 (est.)........................................... 85.68

    Funds allocated from H-1B Visa petitioner fee receipts.

        The NSF Computer Science, Engineering, and Mathematics Scholarships
    (CSEMS) Program provides institutions with funds to support
    scholarships for talented but financially disadvantaged students in
    computer science, computer technology, engineering, engineering
    technology, or mathematics degree programs. Through support from this
    program, grantee institutions establish scholarships that promote full-
    time enrollment and completion of degrees in higher education in the
    above fields. NSF established the program in accordance with the
    American Competitiveness and Workforce Improvement Act of 1998 (Public
    Law 105-277). The Act reflects the Nation's need to increase
    substantially the number of graduates from associate, baccalaureate,
    and graduate degree programs in these fields. The goals of this program
    are to:
      --improve education for students in the stated disciplines;
      --increase retention of students to degree completion;
      --improve professional development, employment, and further higher
            education placement of participating students; and
      --strengthen partnerships between institutions of higher education
            and related employment sectors.
        The eligibility criteria for a CSEMS scholarship recipient include
    the following:
      --status as a U.S. citizen, national, refugee alien, or permanent
            resident alien at the time of application;
      --full-time enrollment in computer science, computer technology,
            engineering, engineering technology, and/or mathematics degree
            programs at the associate, baccalaureate, or graduate level;
      --demonstrated academic potential or ability; and
      --demonstrated financial need, defined for undergraduates as
            financial eligibility under U.S. Department of Education rules
            for Federal financial aid, and defined for graduate students as
            eligibility for Graduate Assistance in Areas of National Need.
        CSEMS institutional proposers must be institutions of higher
    education that grant degrees in computer science, computer technology,
    engineering, engineering technology, or mathematics.
        For More Information: http://www.ehr.nsf.gov/EHR/DUE/programs/
    csems/csems.htm.

    Science, Technology, Engineering, and Mathematics Teacher Preparation

                            [In millions of dollars]

    Fiscal Year 2001 Current Plan..................................... 14.52
    Fiscal Year 2002 Request..........................................  6.52

        The Science, Technology, Engineering, and Mathematics Teacher
    Preparation (STEMTP) Program supports efforts to develop exemplary
    science and mathematics pre-K-12 teacher preparation models through
    partnerships involving science, mathematics, engineering, technology,
    and education faculty at two- and four-year institutions of higher
    education and local school districts. The goals of the program are to:
      --increase significantly the number of pre-K-12 teachers who are
            certified and well-qualified to teach mathematics and science,
            and
      --improve the quality of preservice education, induction, and
            continued professional growth in mathematics and science for
            pre-K-12 teachers.
        Projects must address local needs for increased numbers of teachers
    who are well qualified to teach mathematics and science by providing
    strategies for recruiting and retaining teachers in the workforce. The
    STEMTP program offers two areas of focus:
      --Baccalaureate and Five-Year Programs.--Projects are expected to
            include strategies for ensuring that preservice students
            acquire SMET content and pedagogical knowledge and skills for
            successful teaching.
      --Alternative Pathways to Teaching.--Projects design and implement
            alternative credentialing programs for SMET professionals and
            recent SMET graduates to facilitate their entry into the
            teaching profession.
        For more information: http://www.ehr.nsf.gov/EHR/DUE/programs/
    stemtp/.
     attention to broadening participation in the science and engineering
            workforce by groups that are currently underrepresented

    Historically Black Colleges and Universities-Undergraduate Program

                            [In millions of dollars]

    Fiscal Year 2001 Current Plan..................................\1\ 14.97
    Fiscal Year 2002 Request.......................................\1\ 14.97

    \1\ Includes $1M in support from the Research & Related Activities
    appropriation.

        This program seeks to enhance the quality of undergraduate science,
    mathematics, engineering, and technology (SMET) education at
    Historically Black Colleges and Universities as a means to broaden
    participation in the Nation's SMET workforce. The program provides
    support for the implementation of comprehensive institutional
    strategies to strengthen SMET teaching and learning in ways that will
    improve the access and retention of underrepresented groups in SMET.
    Typical project implementation strategies include SMET course and
    curricular reform and enhancement; faculty professional development;
    supervised research and other active learning experiences for SMET
    undergraduates; student support; scientific instrumentation to improve
    SMET instruction; and other activities that meet institutional needs.
    Eligibility Requirements
        Historically Black Colleges and Universities that currently offer
    associate, baccalaureate or master's degrees in science, mathematics,
    engineering and technology (SMET) fields, but do not offer doctoral
    degrees in SMET disciplines.
        For More Information: http://www.ehr.nsf.gov/EHR/HRD/hbcu.asp

    Louis Stokes Alliances for Minority Participation

                            [In millions of dollars]

    Fiscal Year 2001 Current Plan..................................... 26.78
    Fiscal Year 2002 Request.......................................... 26.53

        The Louis Stokes Alliances for Minority Participation (LSAMP)
    Program is designed to develop the comprehensive strategies necessary
    to strengthen the preparation of minority students and increase the
    number of minority students who successfully complete baccalaureates in
    science, mathematics, engineering, and technology (SMET) fields. This
    objective facilitates the long-term goal of increasing the production
    of Ph.D.'s in SMET fields, with an emphasis on entry into faculty
    positions.
        The LSAMP Program requires each awardee to establish meaningful
    partnerships among academic institutions, and encourages the inclusion
    of Government agencies and laboratories, industry, and professional
    organizations. It is expected that successful partnerships will enable
    the development of approaches tailored to the institutional setting for
    achievement of program goals in SMET undergraduate education.
    Activities supported include student enrichment, such as collaborative
    learning, skill development, and mentoring; academic enrichment, such
    as curricular and instructional improvement; and direct student
    support, such as summer activities.
    Eligibility Requirements
        Academic institutions with a track record of educating minority and
    other students in SMET disciplines are eligible to apply to the LSAMP
    Program. Nonprofit organizations serve as members of the alliance or
    partnership.
        For More Information: http://www.ehr.nsf.gov/EHR/HRD/amp.asp

    Alliances for Graduate Education and the Professoriate

                            [In millions of dollars]

    Fiscal Year 2001 Current Plan..................................... 11.80
    Fiscal Year 2002 Request.......................................... 11.80

        The Alliances for Graduate Education and the Professoriate (AGEP)
    Program seeks to significantly increase the number of American Indian/
    Alaskan Native (Native American), African American, Hispanic American,
    and Native Pacific Islander students receiving doctoral degrees in the
    physical and life sciences, mathematics, and engineering (SME). The
    lack of role models and mentors in the professoriate constitutes a
    significant barrier to producing minority SME doctoral graduates, and
    NSF is particularly interested in increasing the number of minorities
    who will enter the professoriate in these disciplines.
        Specific objectives of the AGEP Program are (1) to develop and
    implement innovative models for recruiting, mentoring, and retaining
    minority students in SME doctoral programs; and (2) to develop
    effective strategies for identifying and supporting underrepresented
    minorities who want to pursue academic careers.
        The AGEP Program also supports a research effort to identify major
    factors that promote the successful transition of minority students
    from (1) undergraduate through graduate study; (2) course-taking in the
    early years of the graduate experience to independent research required
    for completion of a dissertation; and (3) the academic environment to
    the SME workplace. To accomplish this objective, the research component
    will be informed by a portfolio of Federal and private efforts in this
    arena in order to identify factors underlying exemplary as well as
    unsuccessful efforts.
    Eligibility Requirements for AGEP
        Alliances consisting of SME doctoral degree-granting institutions
    are eligible to apply to the program. One institution must be
    designated as the lead institution for the project. Institutions in the
    United States and its territories that have documented success in
    graduating minority students at the Ph.D. level are strongly encouraged
    to participate. Alliances are encouraged to establish partnerships with
    minority serving undergraduate institutions to enhance recruitment
    efforts, where appropriate.
        For More Information: http://www.ehr.nsf.gov/EHR/HRD/agep.asp

    Centers of Research Excellence in Science and Technology

                            [In millions of dollars]

    Fiscal Year 2001 Current Plan.....................................  8.88
    Fiscal Year 2002 Request..........................................  8.88

        NSF recognizes that academic institutions with significant minority
    student enrollments play a vital role in conducting the research that
    contributes to our knowledge base in all disciplines and in educating
    minority students who go on to careers in the fields of science,
    mathematics, engineering, and technology (SMET).
        The Centers of Research Excellence in Science and Technology
    (CREST) Program makes substantial resources available to upgrade the
    capabilities of the most research-productive minority institutions. It
    develops outstanding research centers through the integration of
    education and research. Additionally, it serves to promote the
    production of new knowledge; increase the research productivity of
    individual faculty; and expand a diverse student presence in SMET
    disciplines. CREST centers enhance the effectiveness of related science
    and engineering activities within the project's area of research focus.
    Eligibility Requirements for CREST
        Institutions eligible to participate in CREST Research
    Infrastructure Improvement (RII) awards must have:
      --Enrollments of 50 percent or more members of minority groups that
            are underrepresented among those holding advanced degrees in
            science and engineering, e.g., Alaskan Natives (Eskimo or
            Aleut), American Indian, African American, Native Pacific
            Islanders (Polynesian or Micronesian), Hispanic or Latino;
      --Graduate programs in NSF-supported fields of science or
            engineering;
      --Demonstrated strengths in NSF-supported fields, as evidenced by an
            existing or developing capacity to offer doctoral degrees in
            one or more science and engineering disciplines;
      --A willingness and capacity to serve as a resource center in one or
            more research thrust areas;
      --A demonstrated commitment and track record in enrolling and
            graduating minority scientists and engineers; and
      --Strong collaborations in the proposed field of research.
        For More Information: http://www.ehr.nsf.gov/EHR/HRD/crest.asp

    Tribal Colleges and Universities Program (TCUP)

                            [In millions of dollars]

    Fiscal Year 2001 Current Plan.....................................  9.98
    Fiscal Year 2002 Request..........................................  9.98

        This program provides awards to enhance the quality of science,
    mathematics, engineering and technology (SMET) instructional and
    outreach programs, with an emphasis on the leveraged use of information
    technologies at Tribal Colleges and Universities, Alaskan Native-
    serving Institutions and Native Hawaiian-serving institutions. Support
    is available for the implementation of comprehensive institutional
    approaches to strengthen SMET teaching and learning in ways that
    improve access to, retention within, and graduation from SMET programs,
    particularly those that have a strong technological foundation. Through
    this program, assistance is provided to eligible institutions in their
    efforts to bridge the digital divide and prepare students for careers
    in information technology, science, mathematics and engineering fields.
    Proposed activities should be the result of a careful analysis of
    institutional needs, address institutional and NSF goals, and have the
    potential to result in significant, sustainable improvements in SMET
    program offerings. Typical project implementation strategies include
    curriculum enhancement, faculty professional development, undergraduate
    research and community service, academic enrichment, infusion of
    technology to enhance SMET instruction, collaborations, and, other
    activities that meet institutional and community needs.
    Eligibility Requirements for TCUP
        Organizations eligible include Tribal Colleges and Universities,
    Alaskan Native-serving institutions and Native Hawaiian-serving
    institutions.
        For More Information: http://www.ehr.nsf.gov/EHR/HRD/tcup.asp

    Model Institutions for Excellence (MIE)

                            [In millions of dollars]

    Fiscal Year 2001 Current Plan..................................\1\ 10.02
    Fiscal Year 2002 Request.......................................\1\ 10.02

    \1\ EHR funding is $2.52M.

        This program, administered by the Office of Integrative Activities
    is a joint venture between the National Science Foundation, the
    National Aeronautics and Space Administration, and the U.S. Departments
    of Agriculture and Interior. The MIE Program aims to increase the
    number and quality of underrepresented minorities in science,
    engineering, and mathematics (SEM) education in the nation's higher
    education institutions and particularly targets institutions that have
    a history of awarding SEM degrees to African Americans, Hispanics, and
    Native Americans. The program provides funds and technical assistance
    to help improve institution facilities and provide technical support.
    MIE-awarded schools concentrate on recruiting and retaining SEM
    students; pay special attention to counseling and academic enrichment;
    offer research opportunities; and will encourage students to attend
    graduate school. The success of these institutions will serve as models
    for high-quality SEM education that can be replicated at colleges and
    universities nationwide.

    Program for Gender Equity in Science, Mathematics, Engineering, and
    Technology

                            [In millions of dollars]

    Fiscal Year 2001 Current Plan..................................... 11.19
    Fiscal Year 2002 Request.......................................... 11.19

        The program supports research on focused interventions that are
    specifically directed toward increasing the number of women as full
    participants in the mainstream of the Nation's scientific and
    technological enterprise. The Program for Gender Equity in Science,
    Mathematics, Engineering, and Technology supports the following
    activities:
      --Research.--This area seeks to enhance the multidisciplinary
            understanding of gender differences in human learning--
            behavioral, cognitive, affective and social aspects--through
            socio-psychological, ethnographic, statistical,
            anthropological, economic, and organizational studies. The
            efforts in this area provide a research foundation for
            educational approaches, curriculum materials, and technological
            tools that are already developed or can be developed in the
            future, bridging research and educational practice in settings
            such as classrooms, informal learning sites, and technological
            learning environments. The research aims to produce cumulative,
            reproducible, sustainable and scalable results, supporting
            sustained improvement in educational practice.
      --Demonstration or ``Model'' Projects.--This area employs evaluation
            methods to determine the effectiveness of new learning tools,
            pedagogies, professional development programs, or student
            programs and services in order to produce outcomes.
            Demonstration projects apply research findings about girls'
            learning preferences in the design of new curriculum materials,
            services, pedagogy, or instructor development programs, which
            can be institutionalized and replicated if they are proven
            successful. In particular, teacher and faculty development
            demonstrations test new ways to integrate the understanding and
            awareness of gender-inclusive practices into pre-service and
            in-service professional development programs and into
            professional standards and policies. It is anticipated that
            direct participants in demonstration projects will benefit from
            the learning experience and assimilate new behaviors.
      --Information Dissemination Activities.--This area supports projects
            that focus on the dissemination of research results or the
            dissemination of strategies for reducing the barriers for women
            and girls in these fields. Activities supported include media
            (e.g., videotapes and brochures), conferences, teleconferences,
            symposia, and workshops that bring together experts to discuss
            issues, projects, policies, and research related to the
            participation and achievement of women and girls in science,
            engineering, and mathematics. Dissemination projects take
            material or model approaches or information to a significant
            national audience.
        For More Information: http://www.ehr.nsf.gov/EHR/HRD/pge.asp

    Program for Persons with Disabilities

                            [In millions of dollars]

    Fiscal Year 2001 Current Plan.....................................  5.28
    Fiscal Year 2002 Request..........................................  5.28

        This program is dedicated to increasing the number of people with
    disabilities employed in the nation's science, engineering, and
    technology work force. To accomplish this end, PPD supports projects
    designed to:
      --bring about needed changes in academic and professional climates,
      --increase the awareness and recognition of the needs and
            capabilities of students with disabilities,
      --promote the accessibility and appropriateness of instructional
            materials, media, and educational technologies, and
      --increase the availability of student enrichment resources including
            mentoring activities.
        In short, efforts are dedicated to changing the factors wherein
    neglect, paucity, and indirection historically restricted the study of
    science and mathematics by students with disabilities, and impeded the
    advancement of these individuals as they prepared themselves for
    careers in SMET fields. In support of the goals, and in recognition of
    findings from past activities, PPD is initiating support for regional
    alliances.
        For More Information: http://www.ehr.nsf.gov/ehr/hrd/ppd/.

    Presidential Awards for Excellence in Science, Mathematics, and
    Engineering Mentoring

                            [In millions of dollars]

    Fiscal Year 2001 Current Plan.....................................  0.29
    Fiscal Year 2002 Request..........................................  0.29

        The White House established the Presidential Awards for Excellence
    in Science, Mathematics, and Engineering Mentoring (PAESMEM) to
    recognize the importance of role models and mentors in the academic,
    professional, and personal development of students from groups that are
    underrepresented in these fields. The PAESMEM Program identifies
    outstanding mentors and mentoring programs that enhance the experiences
    of underrepresented students in the sciences, mathematics, and
    engineering. At the individual and the institutional levels, recipients
    of the PAESMEM award have been exemplary in their demonstration of the
    idea that the Nation must develop its human resources in these
    disciplines to the fullest extent possible through supporting increased
    access by diverse populations.
       strengthening the curricular and instructional infrastructure for
         providing high quality science, mathematics, engineering, and
                      technology education to all students

    Assessment of Student Achievement in Undergraduate Education (ASA)

                            [In millions of dollars]

    Fiscal Year 2001 Current Plan.....................................   3.0
    Fiscal Year 2002 Request..........................................   3.0
        The Assessment of Student Achievement in Undergraduate Education
    (ASA) program supports the development and dissemination of assessment
    practices, materials (tools), and measures to guide efforts that
    improve the effectiveness of courses, curricula, programs of study, and
    academic institutions in promoting student learning in science,
    mathematics, engineering, and technology (SMET). ASA seeks to support
    the use of assessment practices by SMET faculty, SMET departments, and
    institutional administrators seeking to measure student achievement in
    courses, curricula, programs of study, and the cumulative undergraduate
    experience embodying some SMET learning.
        To help ensure that project results will effectively serve the SMET
    community, at least one investigator (PI or co-PI) in a project must be
    a SMET faculty member.
        Projects can focus on one or more of the following broad areas:
      --Developing new and adapting extant assessment materials that can be
            used to improve SMET courses and curricula to achieve explicit
            learning objectives,
      --Developing methods for assessing student achievement resulting from
            a group of courses constituting a minor or major field of
            study,
      --Assessing the impact on student achievement of interdisciplinary
            learning experiences, student teams, co-curricular activities
            (e.g. service learning), increased laboratory and field
            experiences, and other forms of learning enrichment, and
      --Developing indicators of student learning within certain domains,
            and measures of institutional program quality.
        For More Information: http://www.ehr.nsf.gov/EHR/DUE/programs/asa/

    Course, Curriculum, and Laboratory Improvement

                            [In millions of dollars]

    Fiscal Year 2001 Current Plan..................................... 46.63
    Fiscal Year 2002 Request.......................................... 46.63

        The Course, Curriculum, and Laboratory Improvement (CCLI) Program
    supports projects that are expected to improve undergraduate science,
    mathematics, engineering, and technology education (SMETE) by
    increasing the availability and use of high-quality educational
    materials and the employment of effective pedagogical strategies.
    Proposals that address all levels of undergraduate education are
    encouraged; proposals to improve introductory-level courses, curricula,
    and laboratories are especially welcome.
        The CCLI Program invites proposals to improve undergraduate SMETE
    in a broad spectrum of institutions, including 2-year colleges, 4-year
    colleges, and universities. Projects may involve a single institution,
    a collaborative effort among several institutions, or a collaboration
    with business and industry partners. The CCLI Program has three major
    tracks:
      --Educational Materials Development.--Projects are expected to
            produce innovative materials that incorporate effective
            educational practices to improve student learning of SMET.
            Projects to develop textbooks, software, or laboratory
            materials for commercial distribution are appropriate. Two
            types of projects will be supported: (1) those that intend to
            demonstrate the scientific and educational feasibility of an
            idea, a ``proof of concept,'' or a prototype; and (2) those
            that are based on prior experience with a prototype that intend
            to fully develop the product or practice. Such materials are
            expected to be disseminated nationally for adoption and
            adaptation.
      --Adaptation and Implementation.--Projects are expected to result in
            improved education in SMET at academic institutions through the
            adaptation and implementation of exemplary materials,
            laboratory experiences, and/or educational practices that have
            been developed and tested at other institutions. Proposers may
            request funds in any category normally supported by NSF, or
            funds only to purchase instrumentation.
      --National Dissemination.--Projects are expected to provide faculty
            with professional development opportunities to enable them to
            introduce new content into undergraduate courses and
            laboratories; and to explore effective educational practices.
            Projects should be designed to offer workshops, short courses,
            or similar activities on a national scale in single or multiple
            disciplines.
        For More Information: http://www.ehr.nsf.gov/EHR/DUE/programs/
    ccli/.

    NSF Director's Award for Distinguished Teaching Scholars

                            [In millions of dollars]

    Fiscal Year 2001 Current Plan.....................................  1.51
    Fiscal Year 2002 Request..........................................  1.51

        The purpose of the NSF Director's Award for Distinguished Teaching
    Scholars (DTS) Program is to recognize individuals with demonstrated
    excellence and promise of future success in both scientific research
    and the education of undergraduates in science, mathematics,
    engineering, and technology (SMET). The program promotes the continued
    and expanded efforts of individuals with a history of impact on both:
    (a) the research in a SMET discipline or on SMET educational research;
    and (b) the SMET education of undergraduates, including those who are
    not SMET majors. The Director's Award is the highest honor bestowed by
    the NSF for excellence in both teaching and research in SMET fields, or
    in educational research related to these disciplines.
        For More Information: http://www.ehr.nsf.gov/EHR/DUE/programs/dts/

    National Science, Mathematics, Engineering, and Technology Education
    Digital Library

                            [In millions of dollars]

    Fiscal Year 2001 Current Plan..................................... 24.95
    Fiscal Year 2002 Request.......................................... 24.95

        The goal of the National Science, Mathematics, Engineering, and
    Technology Education Digital Library (NSDL) Program is to support the
    creation and development of a national digital library for science,
    mathematics, engineering, and technology education (SMETE). The
    resulting virtual facility--learning environments and resources network
    for SMETE--is intended to meet the needs of students and teachers at
    all levels: K-12, undergraduate, graduate, and lifelong learning, in
    both individual and collaborative settings. The NSDL Program builds on
    work supported under the multi-agency Digital Libraries Initiative (see
    http://www.dli2.nsf.gov/) and represents a synergistic collaboration of
    research and education efforts.
        The NSDL Program is currently supporting a Core Integration effort
    that coordinates and manages the digital library's holdings and
    services. To complement and further expand this Core Integration
    capacity the NSDL Program accepts proposals in the following tracks:
      --Collections.--Projects are expected to aggregate and manage a
            subset of the library's content within a coherent theme or
            specialty.
      --Services.--Projects are expected to develop services that will
            support users, collection providers, and the Core Integration
            effort, as well as enhance the impact, efficiency, and value of
            the library.
      --Targeted Research.--Projects are expected to explore specific
            topics that have immediate applicability to one of the other
            two tracks, or the Core Integration effort above.
        For More Information: http://www.ehr.nsf.gov/EHR/DUE/programs/nsdl/
                    training programs--research directorates
        Although most of the programs are within EHR, NSF does have
    investments in training in the Engineering (ENG) and Computer
    Information and Science Engineering Directorates (CISE). ENG's
    Engineering Research Centers which train graduate and undergraduate
    students in the latest cutting edge research areas plus prepare them
    for jobs which require ability to work in teams, on multidisciplinary
    topics. In addition, ENG's Engineering Education Coalitions stimulate
    reform of undergraduate engineering education to enhance the quality
    and quantity of students who earn engineering degrees. Both require
    matching funds from industry and active participation by companies to
    assure relevance.
        ENG's Action Agenda for Engineering Curriculum Innovation Program
    supports the implementation of new approaches to educate engineers and
    encourage outstanding students--particularly from underrepresented
    groups--to enter the field. The Program builds on successful
    innovations from the NSF Engineering Education Coalitions and other new
    concepts for the reform and improvement of engineering education and
    seeks to involve research-active scholars more actively in education
    innovation.
        Through its Educational Innovation program, CISE supports
    educational activities at the undergraduate level in computer and
    information science and engineering that transfer research results into
    the undergraduate curriculum. Projects supported are expected to show
    promise as a national model of excellence by acting as a prototype for
    use by a broader segment of the CISE community. Proposals may address a
    variety of educational activities, including the development of
    courses, instructional technologies, software, and other educational
    materials. A related program, Combined Research and Curriculum
    Development, in cooperation with the Engineering Directorate, supports
    multidisciplinary projects in upper level undergraduate and
    introductory graduate level curricula.
        CISE and ENG cooperate in the Course, Curriculum, and Laboratory
    Improvement (CCLI) program that improves and adds excitement to
    engineering and CS education by transferring the results of research
    into curriculum--classes, books, simulations, web pages and other
    materials. CCLI targets upper division college and beginning graduate
    level courses and has an important element of involving industry.
        The Information Technology Workforce program (http://www.nsf.gov/
    pubs/2001/nsf0133/nsf0133.htm) supports research to understand the
    reasons for low rates of participation in education and career paths in
    IT for under-represented groups, particularly women and minorities.
    This understanding will develop the basis for future actions to improve
    participation rates.
        CISE's Minority Institutions Infrastructure program provides awards
    to aid efforts that might significantly expand the numbers of minority
    students attracted to and retained in computer and information science
    and engineering disciplines. Eligible institutions must be minority
    institutions (defined by significant percentages of minority students).
    The program considers a variety of activities, including research
    programs involving minority students, curriculum development projects,
    mentoring, and outreach. Both 1-year planning grants and continuing
    grants of up to 5 years in duration are awarded. Significant matching
    for the latter (usually 25 percent) is expected.
        Also, NSF's Social, Behavioral and Economic Sciences Directorate
    grant to the Council on Competitiveness will form a new public-private
    partnership to encourage more young people, especially women and
    minorities to pursue science and engineering careers.

        Senator Bond. Thank you very much.
        Yes, Dr. Kelly.
        Dr. Kelly. Let me just say there that there is a board task
    force working on this issue. It is chaired by Joe Miller,
    former Chief Technical Officer of DuPont. This is a longer-run
    study, but specifically on this subject.

                         Nuclear engineering education

        Senator Bond. Thank you.
        Last year, Dr. Colwell, you will remember I raised concerns
    about the lack of Federal support for nuclear engineering
    education, and we asked NSF to review the academic interest in
    nuclear engineering. We just last week received the report, and
    the review of it was disappointing. There is a recognition that
    the demand for nuclear trained personnel is on the rise, but
    NSF has not provided any concrete recommendations on how it
    will respond.
        What can be done in this particular area? I would ask you,
    Dr. Colwell.
        Dr. Colwell. We have had very, very recent discussions on
    just this subject. The engineering directorate is keenly aware
    of the lack of trained, skilled talent in this area, and we are
    looking to programs for workshops and for education, the kinds
    of programs as in the technological arena. That is, we need to
    find some way to fast forward the training of these kinds of
    people.

                        Top 50 institutions versus lower

        Senator Bond. Finally, I do not want to be against
    prestigious institutions of higher education. I have had some
    association with them in the past. But NSF has been hung with
    the charge of favoring only the very well-known and well-
    established ones. At least we maintained flat funding for
    EPSCoR, but the administration eliminated funding for the
    Office of Innovation Partnerships, which is important to me,
    and it flat funded programs for minorities, such as HBCU's and
    the tribal colleges. Can you offer a rationale for that?
        Dr. Colwell. Well, I would like to point out first some of
    the successes that we have had. In the instrumentation program,
    we have, in fact, been able to fund $25 million. We had
    proposals for $50 million, so clearly there is an unmet need
    out there.
        Also in the Partnerships for Innovation, we have found that
    52 percent of the funds did go to the top 50, but 25 percent of
    the funds were awarded in the 51 to 150, and then 23 percent of
    the funds, $876 million, was awarded to institutions not in the
    top 150 receiving funds. So, obviously, this program is
    working.
        The EPSCoR program is highly successful--$65 million. We
    are finding that the principal investigators in the
    institutions are now competing very successfully, going from 25
    percent success rate in their applications to 28 percent. That
    means they are approaching 33 percent which is the average
    success rate for all principal investigators. We are making
    progress, sir.
        Senator Bond. Dr. Kelly.
        Dr. Kelly. But having to redirect $110 million of the
    education budget did not make the answers to your questions
    easier.
        Senator Bond. What the administration has directed, it is
    possible for the legislature to undirect.
        I thank you, Dr. Colwell, for your very quick and sharp and
    to-the-point responses.
        Thank you, Madam Chair.
        Senator Mikulski. Thank you, Senator Bond.
        We are really going to bring the hearing to a close because
    the votes will begin. Senator Daschle has just assumed the
    responsibility and we want to be able to move to the floor.
        Dr. Colwell, Dr. Kelly, and of course, Dr. Boesz, we want
    to thank you for your testimony. We want to reiterate many of
    the specific questions that both Senator Bond and I asked.
        Know this. I do not believe we have a worker shortage in
    this country. I believe we have a skill shortage in this
    country. We have the people, but we need to really make sure
    that they have the skills or the passion to pursue this. See, I
    believe now that every career is a science career. If you are a
    fire fighter or you are a police officer, you are using
    technology. Right now there is someone who might not be getting
    the Nobel Prize in biomedicine, but she is giving the mammogram
    that is going to save lives. So, every job right now requires
    technology.
        This is why we are very passionate about your educational
    initiatives. I would like to know from the National Science
    Foundation what they are doing to make sure we do not have a
    digital divide in the United States of America and your work
    with other agencies on this. Then we will be able to talk about
    some of these other issues. You know my very keen interest in
    the biotech and the nanotech and infotech initiatives.

                         Additional committee questions

        We really look forward, though, to very close collaboration
    between yourselves, the Department of Education. We have a lot
    of confidence in Secretary Paige. We have met with him and
    admire what he has done in Texas. We hope it goes to the
    Nation. We do believe education has to be as research driven as
    medicine. So, we really encourage the NSF to take the
    leadership in coordinating with Education and NIH so that what
    we do is really research based and we maximize our resources.
        [The following questions were not asked at the hearing, but
    were submitted to the Foundation for response subsequent to the
    hearing:]

             Questions Submitted to the National Science Foundation

               Questions Submitted by Senator Barbara A. Mikulski

                science board view on the balance of federal r&d
        Question. On March 28 of this year the Board's committee released a
    draft report which has a number of recommendations directed at the way
    the Executive Branch can improve the quality of the budget allocations
    made for science and technology. Is this the kind of allocation the
    Board envisioned when it put out its priority setting report? What do
    you think of the balance in this R&D budget plan? Is it the kind of R&D
    plan that will keep this country moving ahead of our competitors? What
    level of investment in R&D does the Board believe is necessary to
    maintain the economic health of the Nation? Is the Board concerned that
    this Administration has yet to appoint a Presidential Science Advisor?
    What impact do you think it is having on the Administration's R&D
    process?
        Answer. The report you mention has been revised following public
    comment and adopted by the Board as an Interim Report, Federal Research
    Resources: A Process for Setting Priorities (NSB 01-156). In this
    report the Board addresses the need for improving the process that
    produces the Federal portfolio for research in the Executive and
    Legislative branches. The Board makes several recommendations on
    improving advice and data to support a better process for managing the
    Federal portfolio of S&T investments, and in turn to achieve national
    goals for Federal research. The report does not take a position on
    level of funding or allocations for research within a specific budget.
        A balanced Federal portfolio of investment in basic science is
    important for the health of U.S. science and technology. Balanced
    Federal investments in basic sciences are critical for both expanding
    the knowledge base and human resources for new applications in
    industrial and other sectors, and for enabling research applications to
    achieve Federal missions, including NIH research to find cures for
    deadly diseases.
        To adequately address our role in sustaining a strong national
    science and technology enterprise we must significantly increase our
    investment in basic research. As I have testified before, we are
    seriously underfunding basic science across the frontiers of knowledge.
    The doubling strategy for civilian research by 2010, supported by the
    Senate under the Federal Research Investment Act, is an important
    contributor toward achieving sufficient Federal support. Even though
    our national investment in R&D has increased, the Federal share of that
    investment has been steadily declining from two-thirds to slightly
    above one quarter of the total. The Federal role in our national
    research enterprise is unique in many respects and cannot be taken over
    by the private sector. We must not only assure that the overall Federal
    budget for research is sufficient, but also that funds are allocated to
    research activities so as to serve national goals for Federal research
    investments.
        It is critically important that decisions on Federal support for
    research be informed by the best science and technology review,
    evaluation and advice. A credible process for scientific input to
    funding decisions for research must include an effective role for the
    Science Advisor in the annual budget process, supported by adequate
    resources inthe Office of Science and Technology Policy. The Board is
    pleased that President Bush has nominated Dr. John Marburger to be
    director of the Office of Science and Technology Policy and we look
    forward to his confirmation by the Senate this fall.
                     science board on nsf submission to omb
        Question. Dr. Kelly, it is my understanding that the Board normally
    reviews the budget proposal the Foundation intends to submit to the
    Office of Management and Budget at its August meeting. Then after Labor
    Day, the Foundation sends its proposal over to OMB. Is the budget we
    have before us anything like the budget proposal you presumably saw
    back in August? Can you give us a sense as to how it is different? Dr.
    Kelly, you said in your testimony the Board approves and supports this
    budget. Can you say the same about the Administration's outyear budgets
    for NSF which project it growing at about 2 percent per year for the
    next five years?
        Answer. The National Science Board is kept well informed and plays
    an integral part in the budget development process. Normally at its
    March meeting, the NSB discusses and analyzes issues and offers
    guidance on establishing priorities. NSF incorporates Board discussions
    into a construct for the budget, which is discussed at the May Board
    meeting. NSF then incorporates these discussions from the May meeting
    into a budget call for detail information from the program officers.
    Finally the NSB approves the budget in August, prior to its submission
    to OMB in September. Because fiscal year 2001 was a Presidential
    transition year, the fiscal year 2002 NSF budget was not submitted to
    OMB until January 2001. Nevertheless, the National Science Board was
    kept informed as the budget advanced to its final presentation.
        With very few exceptions, all discretionary programs are treated
    exactly the same concerning funding projections in the outyears.
                           nanoscience and technology
        Question. I am very interested in the nanoscience and technology
    programs. For example, being to literally design systems or devices
    atom by atom--that could improve drug delivery or function as miniature
    sensors for early detection of cancer-is the kid of cutting edge
    research that will keep this Nation not only winning the Nobel Prizes,
    but also the new global markets of the future. Tell us how you see this
    program developing--where will you place your emphasis and how will you
    work with the other agencies like NASA and DOD who also are players in
    this program.
        Answer. The NSF goals are: to create a vigorous, interdisciplinary
    activity for fundamental research in discovering novel phenomena,
    processes and tools in nanoscale science; to develop new synthesis
    methods, device concepts and system architecture appropriate to the
    unique features and demands of nanoscale science and engineering; to
    establish a balanced and flexible physical infrastructure; and to
    educate the workforce needed to exploit the opportunities presented by
    these new capabilities. NSF has been a pioneer at the national and
    international level in fostering the development of nanoscale science
    and engineering. NSF, in conjunction with other Federal agencies will
    be hosting a Nanotechnology event on September 13, 2001. This is
    another example of the high priority accorded by NSF to the nanoscale
    science and engineering arena.
        In future years, the NSF investment will develop and strengthen
    research and education in nanobiotechnology, new structures and
    phenomena, system architecture, environment, modeling and societal
    implications. In brief, NSF seeks the following outcomes in the next
    five years:

    ------------------------------------------------------------------------
          Outcomes of the Investment                 Targeted date
    ------------------------------------------------------------------------
    Fundamental discoveries addressing     Fiscal year 2002-06
     nanoscale structures, phenomena and
     quantum control; biosystems at
     nanoscale, novel device and system
     architecture, nanoscale processes in
     the environment, and multiscale-
     multiphenomena theory, modeling and
     simulation. Enhanced understanding
     of the distribution and behavior of
     nanoscale structures throughout the
     earth, atmosphere and oceans.
     Provide augmented research and
     development in fundamental research,
     grand challenges, infrastructure,
     education and nanotechnology
     societal impacts in response to open
     competitive solicitations and
     regular program reviews.
    Establish ten new centers and a        Fiscal year 2002-04
     national network with full range of
     nanoscale measurement and
     fabrication facilities. In
     collaboration with other agencies,
     establish ``vertical centers'' where
     fundamental research applied
     research, technology development,
     and prototype construction or
     clinical evaluations can be pursued
     concurrently.
    Foundations for major long-term        Fiscal year 2003-06
     challenges: nanostructured materials
     by design, nanoscale electronics,
     optoelectronics and magnetics,
     nanoscale-based manufacturing,
     catalysts, chemical manufacturing,
     environment and healthcare. Fiscal
     year 2002-06 Begin focused research
     on nanoscale experimental tools and
     manufacturing at the nanoscale
     level. Fiscal year 2002 Support for
     instrumentation and facilities for
     processing, characterization and
     manipulation at nanoscale, and for
     equipment and software for modeling
     and simulation. Nanotechnology
     Experimentation and Testing Facility
     (NEXT) will address scale-up of
     synthesis of nanostructures,
     characterization facilities with new
     instrumentation beyond the state-of-
     the art, new models and simulation
     techniques, device fabrication and
     testing for manufacturing methods.
    Foster the development of an           Fiscal year 2003-06
     education, training and information
     system and databases specifically
     for nanoscience and engineering,
     which will be available to the
     community at large to serve rapid
     development of research education in
     the field.
    Regional centers of universities,      Fiscal year 2003-06
     government laboratories, and
     industry to cultivate exploratory
     research, shared research in
     critical areas, education, and
     information flow.
    Develop quantitative measurement       Fiscal year 2004
     methods for nanodevices,
     nanomanipulation,
     nanocharacterization and
     nanomagnetics. Develop three-
     dimensional measurement methods for
     the analysis of physical and
     chemical at or near atomic spatial
     resolution.
    Ensure that 50 percent of research     Fiscal year 2005
     institutions' faculty and students
     have access to full range of
     nanoscale research facilities.
    Enable access to nanoscience and       Fiscal year 2005
     engineering education for students
     in at least 30 percent of research
     universities.
    Catalyze creation of several new       Fiscal year 2005
     commercial markets that depend on
     three-dimensional nanostructures.
    Develop three-dimensional modeling of  Fiscal year 2006
     nanostructures with increased speed/
     accuracy that allows practical
     system and architecture design.
     Fiscal year 2005 Nanoelectronics:
     first terabit psi memory chip
     demonstrated in the laboratory.
    Enable manufacturing at nanoscale for  Fiscal year 2006
     three new technologies. Fiscal year
     2006 Monitoring contaminants in air,
     water, soils with increased accuracy
     for improving environmental quality
     and reduce emissions.
    Address societal implications of       Fiscal year 2006
     nanotechnology.
    Prototypes for biomimetic thinking is  After 2006
     probably the derivation of
     artificial neural networks as an
     outgrowth of studying the cellular
     organization of the brain. After
     2006 Prototypes for incorporation of
     biological molecules into otherwise
     electronic devices, mimicking
     biological structures in fabricated
     devices, and the incorporation of
     lessons learned from biological
     signal processing into the logic of
     electronic systems.
    Nanoscale measurements on microsecond  After 2006
     time scales to provide a blueprint
     for the development of nanomachines
     and synthetic molecular processors
     that carry out complex functions.
    Improve human performance by           After 2006
     combining molecular based
     technologies.
    Photovoltaic proteins in plants that   After 2006
     extract electronic energy from light
     energy, or insect hearing organs 1
     mm apart that have highly
     directional sound source
     localization sensitivity, as models
     for, or components of nanosystems
     that accomplish other functions.
    ------------------------------------------------------------------------

        Another major goal is developing synergism through partnerships.
    NSF will collaborate with other agencies in reaching its goals,
    according to the mission and interest in nanotechnology of each agency:

    ----------------------------------------------------------------------------------------------------------------
       Agency (in order of fiscal year 2001
                    investment)                   NSF     DOD     DOE     NIH    NASA    NIST     EPA   Agencies \1\
    ----------------------------------------------------------------------------------------------------------------
    Fundamental research......................      x       x       x       x       x
    Nanostructured materials..................      x       x       x       x       x       x       x          x
    Nanoscale processing and manufacturing          x       x       x       x       x       x                  x
     (Ex: chemical fabrication, devices,
     systems, lab-on-a-chip, measurements and
     standards; manufacturing user facilities)
    Electronics and computer technology (Ex:        x       x       x               x       x                  x
     molecular electronics, spin electronics,
     quantum computing).......................
    Flight and space crafts (Ex: unmanned           x       x       x               x
     missions, nanorobotics, safe materials)..
    Energy conversion and storage (Ex:              x       x       x               x                          x
     efficient solar energy, hydrogen storage)
    Biotechnology and agriculture (Ex:              x               x                               x          x
     biosensors, bioinformatics,
     bioengineering)..........................
    Medicine and health (Ex: disease                x       x       x       x       x
     detection, drug delivery, organ
     replacement).............................
    Environment and sustainable development         x               x               x               x          x
     (Ex: water, energy, food, env. management
    Nanoscale theory, modeling and simulation.      x       x       x               x                          x
    Education, training and societal                x       x               x
     implications.............................
    Technology transfer, global trade and           x       x       x       x       x       x       x         x
     national security........................
    ----------------------------------------------------------------------------------------------------------------
    \1\ Agencies with <$5M/y in fiscal year 2001: DOA, DOJ, DOT, DOTreas, DOS, NRC.

                                astronomy review
        Question. We understand the President has called for a blue ribbon
    panel to review Federal support for astronomy and astrophysics.
    Specifically the panel will be asked to consider the pros and cons of
    transferring NSF's astronomy programs over to NASA. What caused the
    Administration to call for such a blue ribbon panel and when is the
    panel expected to release its recommendations? Has there ever been a
    case in NSF's history before where the Administration has given this
    much thought to transferring an entire scientific discipline away from
    the NSF to another agency?
        Answer. In the President's fiscal year 2002 budget to Congress for
    the National Science Foundation, the Administration identified ``three
    management reform opportunities that will help fulfill the President's
    promise to make Government more results-oriented.'' One of those areas
    for reform is titled ``Reorganize Research in Astronomy and
    Astrophysics''.
        Historically, NASA has funded space-based astronomy and NSF has
    funded ground-based astronomy facilities, as well as astronomy research
    proposals. Over the past decade there have been significant changes in
    the funding from each agency as reported in ``Federal Funding of
    Astronomical Research'' from the National Research Council (National
    Academy Press, 2000). The National Research Council also recently
    released the latest decadal survey of the state of the field and
    recommendations for the first decade of the 21st century: ``Astronomy
    and Astrophysics in the New Millennium'' (National Academy Press,
    2001). With these reports in hand, the Administration concluded that
    now is the time to assess the Federal government's management and
    organization of astronomical research.
        Thus NSF and NASA requested that the National Academy of Sciences
    convene a Blue Ribbon Panel to assess the organizational effectiveness
    of Federal support of astronomical sciences and, specifically, the pros
    and cons of transferring NSF's astronomy responsibility to NASA. In
    response, the National Research Council established the Committee on
    Organization and Management of Research in Astronomy and Astrophysics.
    The Committee is directed to report by September 1, 2001.
        To our knowledge there has never before been a case where an
    Administration has given such high level attention to transferring an
    entire scientific discipline away from the NSF to another agency.
        Question. Dr. Kelly, the Science Board has in recent years sought
    to take on science policy issues that were not just limited to the
    Science Foundation. This astronomy matter would seem to fit that
    category. What role do you expect the Board to play in this review?
        Answer. In response to the Administration's request for an external
    review, a National Research Council committee has been charged with
    evaluation of Federal support for astronomy and astrophysics and to
    consider the pros and cons of transferring NSF's astronomy program over
    to NASA. It would be inappropriate for the Board to comment prior to
    the issuance of the report by the Blue Ribbon Panel appointed to
    undertake the review, scheduled for September 1, 2001. The Board will
    work with the Director on any action necessitated by the findings of
    the Blue Ribbon Panel, within the guidance provided by Congress and the
    President.
                  decadal study in astronomy and astrophysics
        Question. Recently the National Academy of Sciences released a
    report entitled, Astronomy and Astrophysics in the New Millennium.
    Would you outline the major recommendations made in the study and NSF's
    plan and budget plan for responding to the report's recommendations and
    priorities. Assume, for the sake of this question, that NSF will retain
    its current responsibilities with respect to supporting astronomical
    research.
        Answer.
    Survey Recommendations
        The most recent decadal report made a number of major
    recommendations that impact directly on NSF's investment in astronomy.
    These are:
        1. The recommendation of the previous decadal survey to construct
    ALMA is reaffirmed.
        2. In order to achieve the full scientific potential of new
    facilities, it is essential to identify prior to construction, funds
    for full instrumentation, for operations, for the timely renewal of its
    instrumentation, and for the support of its user base.
        3. New initiatives should not be undertaken at the expense of
    individual research grants.
        4. U.S. ground-based optical/infrared, radio, and solar facilities
    should each be viewed by NSF and the astronomy community as single,
    integrated systems. Each should be managed by NSF as a unit and
    coordinated by NSF's national centers in partnership with university
    and independent observatories, with cross-disciplinary reviews held at
    approximately 5-year intervals.
        5. Integrate one or more ``theory challenges'' into most major or
    moderately sized new initiatives.
        6. Because astronomy is among the most observationally oriented
    sciences, it is essential to pursue a set of new instrumentation
    investments for the field. Prioritized within investment-scale
    categories, the ground-based instruments in the largest two categories
    are as follows:
        Major Investments.--Giant segmented mirror telescope (GSMT);
    Expanded Very Large Array (EVLA); Large-aperture Synoptic Survey
    Telescope (LSST).
        Medium Investments.--Telescope System Instrumentation Program
    (TSIP); Advanced Technology Solar Telescope (ATST); Square Kilometer
    Array (SKA) technology development; Combined Array for research in
    Millimeter-wave Astronomy (CARMA); Very Energetic Radiation Imaging
    Telescope Array System (VERITAS); Frequency Agile Solar Radio telescope
    (FASR); South Pole Submillimeter Telescope (SPST).
    NSF Response and Planning
        1. ALMA Construction: The fiscal year 2002 budget requests an
    additional year of ALMA design and development at a level of $9M.
        2. The requirement that sources of operating funds be identified in
    advance for new instruments has been a part of NSF's Major Research
    Equipment (MRE) account planning process for the better part of a
    decade. The MRE Guidelines will be available on the NSF website in the
    near future.
        3. We are aware that concerns exist in the U.S. astronomical
    community that individual grant resources have not grown adequately
    over the past decade. As a result, NSF's budget proposals for the past
    few years have reflected a determination to enhance support in this
    area in all disciplines, including astronomy. The fiscal year 2001
    budget of the Division of Astronomical Sciences (AST) was especially
    aggressive in addressing this issue, and the fiscal year 2002 budget
    request for astronomy also emphasizes individual research grants.
        4. AST is already organized along unit-structure lines in radio and
    optical-infrared astronomy, and the Division's radio astronomy
    facilities in particular have been managed as a coherent unit since
    1993. The reorganization of the National Optical Astronomy Observatory
    into separate solar and nighttime astronomy components, now underway,
    will permit a full implementation of this plan in the areas of solar
    and optical/infrared astronomy. Timely cross-disciplinary reviews in
    each area are also to be implemented.
        5. Enhanced support for theoretical work connected with and helping
    to drive major new instrumentation projects will be included as part of
    the instrument-specific support which AST is planning to bring to all
    new facilities.
        6. Of the major instrumentation investments proposed by the decadal
    survey in astronomy, only Phase I of the EVLA project is underway,
    supported by internal funding within the Division of Astronomical
    Sciences. Within the medium investment category, technology development
    for the ATST is already underway, and at least partial support of CARMA
    and LOFAR will likely be forthcoming.
        The Division of Astronomical Sciences is examining the funding that
    would be required between fiscal year 2002 and fiscal year 2010 to
    implement the instrumentation initiatives recommended by the decadal
    survey.
                    telescope system instrumentation program
        Question. The highest priority in the modern cost category of the
    decadal study in astronomy and astrophysics is for NSF to support a
    telescope system instrumentation program (TSIP). The decadal study
    suggests that for a modest amount of support, the TSIP will provide the
    instrumentation and the telescope time that will enable both national
    and private observatories to work together as a system to maximize the
    research potential of these observatories within the astronomy
    community. Does NSF view the TSIP as a potentially effective way to
    maximize our public and private astronomy observatories?
        Answer. Yes, NSF believes that TSIP is potentially of great value
    to the U.S. astronomical community. The objective of the program is to
    provide modest NSF investments in new instrumentation or other
    improvements for large new telescopes built with non-Federal funds. In
    return, some observing time on these telescopes would be made available
    to any U.S. astronomer, regardless of institutional affiliation, based
    on peer-reviewed observing proposals. The net result would greatly
    enhance the productivity of these new telescopes while making them an
    integral part of assets available for the entire community. This would
    add new capabilities to the U.S. observing ``system'' to supplement
    capabilities provided by the national observatories.
      budget request provides $1.5b for new awards with only a 1 percent
                                   increase?
        Question. In the Administration's blueprint document it says the
    budget provides approximately $1.5B for new research and education
    awards in 2002. Could you explain what you mean by that particularly
    since the increase you are requesting is only a little more than 1
    percent.
        Answer. The National Science Foundation funds approximately 20,000
    science, engineering, and education awards in a given year. These
    awards are a mix of multi-year awards that were made in previous years
    and new awards in the current year. Each year approximately one third
    of the awards made in previous years are closed, and the annual support
    required for the closed awards becomes available for new awards.
        Question. Would you provide for the record a breakout by
    directorate of the amount of each year's budget that is available for
    new awards as well as prior year awards from fiscal year 1998 to fiscal
    year 2002. If there are notable differences between directorates,
    please explain the reasons behind such differences.
        Tables containing data for fiscal year 1988 through fiscal year
    2000 are shown below. Data for fiscal year 2001 and fiscal year 2002
    will not be available until after the close of each fiscal year.

    ----------------------------------------------------------------------------------------------------------------
                                                          Actual            New         Prior year    Percent of new
                      Directorates                      obligations     obligations     obligations     obligations
    ----------------------------------------------------------------------------------------------------------------
    Fiscal year 1998 obligations:
        BIO.........................................          355.70          228.00          127.70              64
        CISE........................................          269.09          127.23          141.86              47
        EHR.........................................          633.16          252.06          381.10              40
        ENG.........................................          343.14          234.06          109.08              68
        GEO.........................................          438.02          140.47          297.55              32
        MPS.........................................          687.24          251.41          435.83              37
        OPP.........................................          223.01           24.74          198.27              11
        IA..........................................          129.84           12.03          127.81               2
        SBE.........................................          126.58           77.90           48.68              62
                                                     ---------------------------------------------------------------
          Grand Total...............................        3,205.78        1,337.90        1,867.88              42
    Fiscal year 1999 Obligations:
        BIO.........................................          392.10          281.12          110.98              72
        CISE........................................          298.55          133.48          165.07              45
        EHR.........................................          662.48          293.00          369.48              44
        ENG.........................................          370.13          240.61          129.52              65
        GEO.........................................          478.02          169.05          308.97              35
        MPS.........................................          733.65          255.00          478.65              35
        OPP.........................................          245.57           39.95          205.62              16
        IA..........................................          161.55            3.20          158.35               2
        SBE.........................................          142.02           84.75           57.27              60
                                                     ---------------------------------------------------------------
          Grand Total...............................        3,484.07        1,500.16        1,983.91              43
    Fiscal year 2000 Obligations:
        BIO.........................................          418.29          271.40          146.89              65
        CISE........................................          388.57          206.24          182.33              53
        EHR.........................................          683.58          315.72          367.86              46
        ENG.........................................          379.82          265.27          114.55              70
        GEO.........................................          487.64          178.74          308.90              37
        MPS.........................................          755.88          319.47          436.41              42
        OPP.........................................          258.33           40.00          218.33              15
        IA..........................................          129.25           22.53          106.72              17
        SBE.........................................          162.12           74.32           87.80              46
                                                     ---------------------------------------------------------------
          Grand total...............................        3,663.48        1,693.69        1,969.79              46
    ----------------------------------------------------------------------------------------------------------------

        The majority of NSF awards are made through the utilization of
    either standard or continuing grants. Standard grants are those under
    which NSF agrees to fully fund the award in a single fiscal year.
    Standard grants normally have a duration of 6 to 60 months. Continuing
    grants are those under which NSF agrees to fund the award in increments
    over more than one fiscal year, pending the availability of funds.
    Continuing grants normally have a duration of 18 to 60 months.
        There are some notable differences between the directorates. The
    reasons behind these differences lie primarily in directorate
    priorities and policies. NSF Assistant Directors are given some
    flexibility in deciding the appropriate mix of standard and continuing
    grants. NSF management regularly considers this issue and periodically
    receives input from NSF advisory committees concerning this topic.
          support for minorities in science and engineering is frozen
        Question. The budget emphasizes support for people as your ``most
    important product''. And the ``cross cut'' and numbers seem to back
    that up with an increase of nearly 13 percent over the fiscal year 2001
    level. Yet, when we look at the support for minority programs within
    this particular area of the budget, the funding is frozen with last
    year. That would seem to say that the Administration does not believe
    this part of the human resource crosscut is a high priority. What is
    behind this particular proposal?
        Answer. The NSF Budget for fiscal year 2002 attempts to balance
    various competing priorities, with the Math and Science Partnerships
    Initiative and graduate student stipends receiving the highest priority
    within the EHR account. Implementing these priorities required a modest
    reduction in the Human Resource Development (HRD) subactivity. We
    limited that reduction to only 0.3 percent ($0.25 million) in
    reflection of the strong Congressional support expressed for programs
    in this area.
        Partnerships represent a significant part of NSF's strategy. A
    major goal of Partnerships will be to close K-12 achievement gaps
    between minority and other students, so that minority students can go
    to college ready to participate fully as science, mathematics,
    engineering and technology (SMET) majors. Partnerships build on NSF's
    systemic programs, which have had great success.
        Administrative changes within HRD will result in greater leveraging
    of funds and more effective allocation of funds to increase
    significantly the measurable impact of programs. The Historically Black
    Colleges and Universities--Undergraduate Program (HBCU-UP) has been re-
    focused to devote attention to those institutions most in need of
    assistance, to strengthen the quality of their academic programs and
    enhance the ability of their faculty to offer high quality instruction.
    The Alliances for Graduate Education and the Professorate (AGEP)
    program now supports only graduate education alliances of university
    consortia or entire university systems, rather than individual
    institutions, significantly increasing the impact of programmatic
    activities. And plans are underway to re-structure the Centers for
    Research Excellence in Science and Technology (CREST) program to
    emulate the successful Experimental Program to Stimulate Competitive
    Research (EPSCoR) strategy of combining core support with active co-
    funding of proposals submitted to NSF's other research programs.
        digital divide and historically black colleges and universities
        Question. According to a new report from the Thurgood Marshall
    Scholarship Fund (entitled ``Historically Black Public Colleges and
    Universities: An Assessment of Current Information Technology Usage''
    released on April 10, 2001), historically black public colleges and
    universities are going to need about $700 million over the next five
    years to meet their information technology goals. According to the
    study, the real ``digital divide'' here is the way information
    technology is provided--or not provided, as the case maybe--to the
    students as a part of their education. What can the Foundation do to
    help these institutions strengthen their programs so that the students
    would gain better access and experience with the information technology
    skills they will need in today's global marketplace?
        Answer. NSF's Directorate for Computer and Information Science and
    Engineering (CISE) is uniquely positioned through its history of
    support for minority institutions, its role as the lead agency in the
    Information Technology Research effort, and its history of
    computational and communication infrastructure support for all fields
    of science and engineering. CISE can provide leadership in developing
    programs that will ensure not only access to state-of-the-art
    information technology, but also that the IT infrastructure is a
    centerpiece of new curriculum developments, workforce, and outreach
    programs. Currently CISE is developing a cyberinfrastructure initiative
    to address the needs of education and society, as well as researchers,
    for access to advanced computing, communication and data resources. A
    primary goal of the cyberinfrastructure initiative is to increase the
    capacity for IT research and education at colleges and universities,
    with particular attention paid to minority serving, women's and EPSCoR
    institutions.
        As an example of current CISE efforts, two programs are aimed at
    providing research and educational infrastructure and increasing the
    number of students exposed to and pursuing degrees in information
    technology fields. Both are relatively modest programs; one is new and
    one has existed for over ten years. The existing program, the CISE
    Minority Institutions Infrastructure (MII) Program, provides awards to
    aid efforts to expand significantly the numbers of minority students
    attracted to and retained in computer and information science and
    engineering disciplines. The MII program supports the purchase of
    instrumentation, software, systems and other resources required for
    research and education in CISE related fields. It also provides support
    for faculty to develop new programs and curriculum, for students, for
    mentoring and outreach programs, and other activities that help improve
    recruiting and retention. Among the institutions supported are many
    HBCU institutions as well as other minority-serving institutions.
    Current grantees include Bowie State University; Clark Atlanta
    University; Tuskegee University; Florida A&M University and North
    Caroline A&T University. Previous grantees included Fisk College;
    Morgan State College; the University of Maryland-Eastern Shore, and
    many others. MII provides planning grants as well as five-year major
    awards. The new CISE Research Resources program is open to all colleges
    and universities, but strongly encourages proposals from women,
    minorities, persons with disabilities, minority institutions and
    researchers in EPSCoR jurisdictions.
        The Historically Black Colleges and Universities--Undergraduate
    Program (HBCU-UP) led by the Directorate for Education and Human
    Resources (EHR) supports efforts by the Nation's HBCUs to implement a
    plan of action to address underrepresentation in the science,
    mathematics, engineering and technology (SMET) disciplines and
    workforce. HBCU-UP provides support for the implementation of
    comprehensive institutional approaches to strengthen SMET teaching and
    learning in ways that improve access to, retention within, and
    graduation from, SMET academic programs.
        In order to increase knowledge of and facility with advanced
    technologies in HBCUs, the Foundation will incorporate within HBCU-UP
    lessons learned this year in making the first set of awards under the
    Tribal Colleges and Universities Program (TCUP). A key component of
    TCUP is the development of a strong technological foundation for high
    quality SMET education. The TCUP program provides assistance to
    eligible institutions to bridge the digital divide and prepare students
    for careers in information technology and SMET. Applications for grant
    support under the HBCU-UP program may now also reflect this emphasis.
        The Foundation will also strengthen coordination of activities that
    provide technologically focused assistance to HBCUs and other Minority
    Serving Institutions. These include grants by the Foundation to:
      --the Council on Competitiveness (0110028) to initiate implementation
            of the recommendations of the Congressionally chartered
            Commission on the Advancement of Women and Minorities in
            Science, Engineering, and Technology;
      --EDUCAUSE (9980537) in support of Advanced Networking at Minority
            Serving Institutions; and
      --the Information Technology Association of America (0128850) to
            assist in the development and implementation of customized
            campus technology development plans and provide knowledge
            enhancements to faculty, students, and administrators.
        The National Science Foundation has a number of other programs that
    address the IT infrastructure needs of minority serving institutions.
    Examples include: the NSF-wide Major Research Instrumentation Program;
    the Centers of Research Excellence in Science and Technology (CREST)
    and the Louis Stokes Alliances for Minority Participation (LSAMP)
    programs in the Directorate for Education and Human Resources (EHR);
    and the Collaborative Integration of Research and Education (CIRE)
    program in the Office of Integrative Activities (OIA).
           elimination of innovation program for smaller institutions
        Question. In the fiscal year 2001 appropriation, this subcommittee
    provided NSF with $10 million to support a program NSF is calling
    partnerships for innovation. One of its objectives is to help in the
    transfer of research results into innovations that create new wealth in
    the local and regional economy. Recently, the Council on
    Competitiveness released a report assessing the Nation's
    competitiveness. Once of the issue the Council raised was a call to
    strengthen ``regional clusters of innovation''. What role do you think
    the Foundation could play in this regional innovation effort?
        Answer. The results from the projects supported through the two
    competitions under the Partnerships for Innovation Program will
    certainly contribute to the utilization of new scientific knowledge by
    regional clusters of innovation. For example, the Microelectronics and
    Photonics Innovation Incubator in Arkansas, established under the award
    to the University of Arkansas, and that includes as partners several
    venture capital firms and the Arkansas Science and Technology
    Authority, will facilitate the utilization by industry of new knowledge
    generated at the University. However, NSF also has a variety of other
    programs that could contribute substantially to the regional innovation
    effort.
        An Integrative Graduate Education and Training (IGERT) grant, also
    at the University of Arkansas, is providing for the multidisciplinary
    education of Ph.D.s in the area of microelectronics and photonics, with
    many of the graduate students having come from industry and intending
    to return to new jobs there. A new Materials Research Science and
    Engineering Center at the University of Arkansas (in partnership with
    the University of Oklahoma) features an interdisciplinary research
    program on semiconductor nanostructure science and applications, an
    area of substantial interest to industry.
        The Advanced Technological Education (ATE) Program is improving the
    education of the technicians who are so essential to the high
    technology industry; and the ATE centers involve close collaborations
    with local and national industry. For example, the Maricopa ATE Center
    in Tempe, AZ works closely with SEMATECH and the Semiconductor Industry
    Association in workforce development for the electronics industry, and
    also has programs for high schools to encourage a more diverse
    population to seek employment in the semiconductor and supporting
    industries.
        The Industry/University Cooperative Research Centers (I/UCRC)
    Program contributes very substantially to the translation of research
    results into products and supports centers across a very broad range of
    institutions. One I/UCRC at a smaller university is the Center for
    Lasers and Plasmas for Advanced Manufacturing at Old Dominion
    University. NSF's Science and Technology Centers also contribute to
    innovation clusters.
        One of the existing clusters of innovation that will be studied by
    the Council of Competitiveness is the Research Triangle area of North
    Carolina, where NSF's Science & Technology Center for Environmentally
    Responsible Solvents & Processes is located. The center, which involves
    the University of North Carolina, North Carolina State, and North
    Carolina A&T University as well as a number of industrial partners, is
    producing technological advances absolutely critical to the future of
    the chemical industry.
               new science board committee on budget and strategy
        Question. Dr. Kelly, I understand that earlier this year the Board
    had its annual retreat and one of the items growing out of the process
    is the establishment of a new Board committee on budget and strategy.
    Can you tell us how you expect that committee to operate and how it
    dovetails with the budget responsibility of the Director?
        Answer. Among NSB's most important responsibilities are the
    provision of budget guidance to the Foundation and the approval of the
    annual NSF budget submission to OMB. The NSB Standing Committee on
    Strategy and Budget (CSB) was established on May 23, 2001 with the
    objective of improving the Board's effectiveness in the NSF strategic
    budget process. The CSB is charged with making recommendations to the
    full NSB for the approval of strategic NSF budget directions and for
    the approval of the NSF budget submission to OMB. The CSB will analyze
    the Foundation's budget with respect to progress and consistency
    against strategic directions for the Foundation; identify strategic,
    long term issues that are critical to NSF's future; review the budget
    from the perspective of balance between initiatives and core programs;
    and take a multi-year view of strategy implementation. The Board with
    the assistance of CSB, under the leadership of Dr. Anita Jones, Vice
    Chair of the National Science Board, works closely and cooperatively
    with the Director, NSF to ensure these important objectives are met.
    The Committee is in the process of establishing its work processes.
                 math/science system reform program evaluation
        Question. It is my understanding that over the last year or two,
    there has been a pretty extensive evaluation of the NSF's systemic
    reform programs. Can you highlight briefly what those evaluations have
    concluded about the effectiveness of the systemic reform programs? Dr.
    Kelly, what is the Board's view with respect to these NSF systemic
    reform programs?
        Answer. Preliminary findings from the most thorough evaluative
    study to date of the Urban Systemic Initiatives (USI) covering the
    initial five years (1993-98) were just released this summer. The report
    is entitled Academic Excellence for All Urban Students: Their
    Accomplishment in Science and Mathematics (Systemic Research, Inc.,
    April 2001). This report presents preliminary findings related to
    improved student outcomes and system change among 22 large urban school
    districts. Findings related to improved student outcomes include: (1)
    substantial increases in enrollment rates in mathematics and science
    gate-keeping and higher-level courses; (2) greater enrollment gains for
    underrepresented minority students than their peers; (3) achievement
    test gains; and (4) increased numbers of students taking college
    entrance examinations (AP, SAT, and ACT). The general conclusion is
    that education reform is a complex, long-term process that requires
    simultaneous changes in expectations, policies, curriculum, assessment,
    professional development, student support systems, data use, and the
    allocation of resources. The Executive Summary and a downloadable
    version of this report are available at http://www.systemic.com/usi/
    booklet.htm.
        A second report was released last fall detailing the lessons that
    have been learned from Statewide Systemic Initiatives (SSI). The report
    was entitled Summary of Findings from SSI and Recommendations for NSF's
    Role with States: How NSF Can Encourage State Leadership in Improvement
    of Science and Mathematics Education (Council of Chief State School
    Officers--CCSSO, December 2000). The report indicates that half of the
    states showed impacts on classroom practice, with the highest gains in
    achievement occurring in states with intensive professional development
    linked to curriculum. A PDF copy of this report is available at http://
    www.ccsso.org/pdfs/SSIReport.pdf.
        Question. Dr. Kelly, what is the Board's view with respect to these
    NSF systemic reform programs?
        Answer. The process of evaluation of our systemic reform programs
    is ongoing, with the most recent report, Academic Excellence for All
    Urban Students: Their Accomplishment in Science and Mathematics,
    published in April 2001. The evaluation is finding a rich array of
    evidence on positive impacts of NSF's systemic programs. NSF has had
    considerable success in fostering improved teaching and learning of
    mathematics and science because it promotes various models that support
    diverse populations and schools. In Detroit, El Paso, Memphis, Chicago,
    and other cities, there are dramatic signs of improvement in student
    performance (as measured, for example, by proficiency levels in state
    science and mathematics assessments). I believe we are beginning to see
    light at the end of the tunnel of public education and NSF, together
    with many public and private sector partners, is helping to make this
    happen system-wide and for all children. However, it is important to
    understand that the process is slow and complex. The political and
    public expectations for change may be somewhat unrealistic. Impatience,
    as well as a flawed design, can undermine the course of steady reform.
    The Board has concluded that systemic reform programs have been very
    effective and should be further encouraged, and that efforts should be
    taken to educate the public on the complexity and long-term commitment
    required for success of such reforms.
     impact of new math/science partnership program on current nsf programs
        Question. The budget requests $200 million to start a new
    Partnership program in math and science education though you will have
    to redirect $110 million of your existing education budget from on
    going education programs to fund this initiative. For the record, list
    all the currently active awards being funded by the subactivities that
    will be reduced to fund the new Partnership program. For each award
    include how much the project expected to receive in fiscal year 2002
    based on the NSF award agreement and how much it will actually receive
    based on the current fiscal year 2002 budget proposal.
        Answer. To fund the Math and Science Partnerships Initiative
    (MSPI), funds will be redirected within the PreK-12 subactivity. All
    awards made in fiscal year 2001 and earlier in this subactivity will be
    funded in accordance with the original award agreements, and no funds
    will be cut from these awards (either from the initial award amount or
    from future continuing increments). The only funding redirected for
    MSPI was that set aside for new awards in fiscal year 2002.
        Question. Your budget proposal suggests that in addition to the
    funds requested, NSF will have access to an estimated $144 million,
    courtesy of the fees levied by the Federal Government for H1B visas. Of
    the $144M, $58.38 million is reserved for Private-Public Partnerships
    in K-12 education. How does this relate to the new Presidential
    Partnership Program? Are these funds in addition to the request for
    $200 million request for this new program?
        Answer. The Private-Public Partnership in K-12 Education component
    of the H-1B funds, established by the American Competitiveness in the
    21st Century Act (Public Law 106-313), supports K-12 activities in
    areas such as materials development, student externships, and math and
    science teacher professional development. These activities complement
    those anticipated for the Math and Science Partnership Initiative
    (MSPI). There is a fundamental difference in focus, however, between
    the two programs. Private-Public Partnerships will emphasize schools
    joining forces with the private sector to ensure that curricula and
    materials meet the needs of the workplace. MSPI, on the other hand, is
    a research-based program that is centered at the state and local school
    district level, in partnership with institutions of higher education.
    MSPI will mobilize the participation of mathematicians, scientists and
    engineers from institutions of higher education to address issues such
    as: raising math and science standards; providing rigorous math and
    science training for teachers; and creating innovative ways to reach
    underserved schools and students. The H-1B funds are in addition to
    funds requested for MSPI. The estimate of $144 million in H-1B receipts
    for fiscal year 2002 and 2003 appears to have been overly optimistic.
    The initial estimate for fiscal year 2001, $121 million, has since been
    revised downward to $94 million, and the actual receipts may fall short
    of that mark. H-1B receipts are scheduled to end in fiscal year 2003.
     math and science partnership programs in the elementary and secondary
                                 education act
        Question. The Senate has passed a bill to reauthorize the
    elementary and secondary education programs at the Department of
    Education. Title II of the bill includes an authorization for the
    Department to improve the performance of students in the areas of
    mathematics and science by encouraging States, institutions of higher
    education, elementary schools, and secondary schools to participate in
    partnership programs. This is remarkably similar to the NSF new
    partnerships proposal. Does the NSF proposal duplicate the program
    being authorized for the Education Department and what is NSF's
    position with respect to this part of the legislation?
        Answer. The Administration's Statement of Position with respect to
    the bills referenced above includes the following language:
        Math-Science Partnerships.--The President's Budget provides funds
    for this program within the National Science Foundation (NSF). NSF has
    effectively administered other activities related to this initiative
    and the Administration believes that NSF's expertise will be invaluable
    in ensuring a successful program. The Administration therefore urges
    the Senate to amend S. 1 to eliminate this authority from the ESEA,
    enabling NSF to administer this initiative.
        This accurately reflects NSF's position with respect to the
    legislation.
       new math and science partnership program-role of the science board
        Question. Dr. Kelly, the Board has spent considerable time on the
    issue of math and science education. For example, the Board held a
    number of field hearings last year and recently published its own
    report on math and science education called ``Preparing Our Children:
    Math and Science Education in the National Interest''. To what extent
    was the Board involved in the development of this new partnership
    program and how does it dovetail with the work the Board has been doing
    on K-12 math and science education?
        Answer. The National Science Board fully supports the objectives of
    the new partnership initiative. The Math and Science Partnership
    initiative is in complete accord with the work we have been doing on K-
    16 math and science education policy, and with the long-term NSF
    investment in state, rural, and urban systemic initiatives to reform
    math and science education at the K-12 level. As you note, the NSB has
    undertaken a study of the appropriate NSF role in K-16 education, which
    has included field hearings and the issuance of our report, Preparing
    Our Children. In that report, we focus on partnerships across sectors
    at the state and local levels to achieve a continuum of excellence in
    K-16 education. Based on these efforts, the Board is developing,
    through its Committee on Education and Human Resources, a set of
    principles that will guide us in identifying appropriate activities to
    be included in the Math and Science Partnership initiative.
                            teacher training efforts
        Question. The National Commission on Mathematics and Science
    Teaching chaired by Senator John Glenn focused on the need to upgrade
    the number and quality of K-12 teachers of math and science. With the
    redirection of some $110 million to the new Math and Science
    Partnership program, according to data in the Justification of
    Estimates, the Foundation will support 2,000 few teachers in fiscal
    year 2002. Why should we start a new K-12 science education program
    that supports less teachers?
        Answer. The need to upgrade the number and quality of K-12 teachers
    of math and science is well documented. Equally well documented is the
    need to enhance the capacity of the system to provide high quality pre-
    service and in-service teacher education in these fields. The
    anticipated drop in the number of teachers participating in NSF
    programs in fiscal year 2002 results from our efforts to intensify
    professional development for those participating in NSF programs so as
    to develop teacher leaders for future professional development efforts,
    thus enhancing the overall capacity of the system. NSF's emphasis on
    upgrading the capabilities of K-12 teachers of math and science
    continues to be strong.
                            grant size and duration
        Question. I understand that the President has called on NSF to
    complete a study to determine whether increasing the average NSF grant
    size and duration would produce greater efficiency in the research
    process. When do you expect that study to be completed? What is the
    current size of the average grant at NSF and how has it changed over
    the last 10 years? How does the average NSF grant compare in size with
    those of other research agencies who also support university research?
        Answer. The study on grant size and duration should be complete in
    the spring of fiscal year 2002. In fiscal year 2000 the average annual
    size of NSF research grants was $105,500, up from $70,500 in 1991. The
    average NIH grant, comparable in many ways to the NSF research grant
    averaged $250,000 per year in fiscal year 2000. We are in the process
    of collecting information on other agencies' research grants, but an
    initial review of other agencies involved in funding academic research
    indicated that in many cases the grants may be at least twice the size
    of grants provided by the National Science Foundation.
                                 funding rates
        Question. NSF funds about one third of the proposals it receives in
    a given fiscal year--that is 10,000 awards based on 30,000 proposals.
    Foundation-wide what percentage of the proposals you receive each year
    are judged of sufficient quality to be funded and of that amount, how
    much excellent science goes unfunded each year?
        Answer. About two thirds of the proposals received each year are of
    sufficient quality to be funded. About $1 billion worth of high quality
    proposals goes unfunded each year.
                       rebuild of the south pole station
        Question. Can you give us a status report on the work going on at
    the South Pole. I see the budget requests no new funds for the project
    in fiscal year 2002. The most recent quarterly report by the NSF
    Inspector General says that NSF and its Office of Polar Programs is
    updating and refining the estimate of the cost to completion. Provide
    the committee with the most up to date estimate and compare and
    contrast that new estimate with the estimate provided to the committee
    and contained in the so-called ``Augustine Report''. Where are we with
    respect to the schedule and budget?
        Answer. There are two projects for rebuilding South Pole Station:
    South Pole Safety and Environment Upgrades (SPSE) and South Pole
    Station Modernization (SPSM). SPSE was funded for $25 million in fiscal
    year 1997 and includes new fuel storage, garage/shops, and power plant
    facilities. All three facilities are operational, and SPSE is complete
    except for minor punch list items, which are scheduled for completion
    by January 2002. Approximately $24.7 million has been spent and the
    cost to complete is estimated at another $300,000. This will put the
    project on budget at a completed cost of $25 million.
        The second component of rebuilding South Pole Station is South Pole
    Station Modernization (SPSM). Congress appropriated $127.9 million from
    fiscal year 1998 through fiscal year 2001 for SPSM. The project
    includes new science, living, operations, and communications
    facilities. Approximately $54 million has been obligated to date.
    Because of unusually bad weather during the fiscal year 2001
    operational season, only about 60 percent of the scheduled air
    logistics support for SPSM were completed. The project is approximately
    one million pounds behind schedule in delivering material from McMurdo
    Station to the South Pole. The construction and logistics schedule has
    been revised to spread the logistic shortfall and related construction
    activities over the next four years. This rescheduling has resulted in
    extension of the project by one year. The project is now scheduled for
    final acceptance and dedication in January 2006, instead of January
    2005. A detailed analysis of all remaining activities (design,
    procurement, logistics and construction) to complete the project is 95
    percent complete. Minor adjustments to the construction and logistics
    schedule are still required to fully identify the impacts of the cargo
    delivery shortage. The cost-to-complete estimate will factor in the one
    year delay, increases on fuel cost, changes in inflation rates, and all
    other known factors. Based on the 95 percent level of completeness of
    the analysis, we are anticipating a small increase in the total project
    cost. That remains an unknown until all adjustments are made to the
    construction and logistics schedule. We will inform the Committee of
    the results of the cost-to-complete analysis as soon as it is
    completed, possibly in early fall.
        The ``Augustine Report'' recommended a budget of $120M (FY 1997
    dollars) for the SPSM project with completion in 2005. When inflated
    the $120M is approximately equal to the $127.9M budget. As stated
    above, because of poor weather in fiscal year 2001 the completion date
    has been delayed by one year to 2006.
     ig and white house critical of nsf management of construction projects
        Question. I understand the Inspector General has been reviewing the
    situation with respect to the management of large-scale construction
    projects at NSF. A key recommendation they have made called on NSF to
    develop policies and procedures specifically focused at managing these
    large-scale projects. It seems that the White House shares this same
    concern. In recent years, the number of construction research projects
    have grown and the resources going for these kinds of projects is quite
    substantial. What is the timing on the completion of this new
    construction management regime and what role is the Board playing in
    this oversight area?
        Answer. Currently, NSF invests over $1 billion annually in
    facilities and other infrastructure projects. Over time, the portfolio
    of facilities has grown and diversified to include distributed projects
    that challenge traditional management and oversight approaches.
    Emerging multidisciplinary science and engineering (S&E) opportunities
    have resulted in NSF moving towards a greater number of large projects
    that are increasingly complex and present challenging technical and
    management issues. Given the increasing complexity and scope of its
    facilities, NSF recognizes the need to mitigate attendant risks by
    ensuring that management and oversight benefit from contemporary best
    practices. Improving coordination, collaboration and learning among NSF
    staff and external partners enables this. To this end, and to comply
    with instructions in A Blueprint for New Beginnings: A Responsible
    Budget for America's Priorities (February 2001), NSF has developed a
    plan for the management and oversight of large facility projects.
        The plan outlines NSF's goals and strategies for integrating its
    current procedures and processes into a next-generation system for
    selecting, managing and overseeing large facility projects. It
    addresses improvements in four critical areas:
      --Enhance organizational and staff capabilities and improve
            coordination, collaboration and learning among NSF staff and
            external partners.
      --Implement comprehensive guidelines and procedures for all aspects
            of facilities planning, management, and oversight.
      --Improve the process for reviewing and approving large facility
            projects.
      --Practice coordinated and pro-active oversight of facility projects
            to ensure success.
        The Plan has been reviewed by OMB, NSF's Assistant Directors, the
    Office of Inspector General, and the National Science Board (NSB). On
    August 9, the NSB Committee on Programs and Plans heard an updated and
    revised report from the Deputy Director. The Committee was pleased with
    the framework and the elements set forth in that presentation and
    encouraged NSF Management to proceed with its development.
        NSF recognizes the importance of improving its systems for
    selecting, managing and overseeing its large facility projects and has
    devised an aggressive schedule for developing and implementing each of
    the major components of an improved system, some aspects of which are
    already underway. The NSB will assess NSF's progress in implementing
    the elements of the plan.
        The National Science Board has an extensive process for the
    oversight of facilities and the Board is well positioned to exercise
    this responsibility. Members of the National Science Board include
    executives from industry and presidents of universities, individuals
    who have extensive experience in managing large, cutting edge research
    facilities and instrumentation. The NSB exercises oversight of large
    facilities primarily through two standing committees that make
    recommendations to the full Board. The Committee on Programs and Plans
    (CPP) reviews MRE projects at various stages of their development. It
    makes recommendations to the Board for approval of a candidate list for
    inclusion in future budgets, for approval of specific projects, and
    finally, for awards to fund those projects. The Board receives regular
    status reports on major facilities projects. Through its committee on
    Audit & Oversight (A&O), NSB reviews specific management issues related
    to large projects. Also through the A&O Committee, NSB supervises the
    Inspector General and maintains oversight of management policy and
    management concerns through this mechanism.
                               mre status reports
        Question. Provide for the record a status report on the ongoing
    projects that are either in or have been funded through the Major
    Research Equipment account. For each project include the cost estimate
    projected by the Foundation at the inception of the project as well as
    the most recent cost estimate. Also include the original implementation
    schedule along with the actual achievement of key project milestones
    and other pertinent information. In addition, describe the NSF
    management structure and process used for the implementation of each
    project. Include a status report and cost estimate for those potential
    major research equipment projects that have been the subject of
    substantive discussion by NSF senior management.
        Answer. The table below shows the projected or actual completion
    dates, the original and current schedule estimates and the original and
    current cost estimates for each project funded through the MRE Acount.

        The figure below depicts clear lines of authority, responsibility
    and communication from the NSF Director to the NSF Program Manager to
    the awardee Project Director. In every large facility project, the NSF
    Program Manager exercises primary responsibility for all aspects of
    project management, managing the project through either a cooperative
    agreement or a contract. Working closely with the NSF Program Manager,
    the awardee designates one person--with strong management experience--
    to be the Project Director, with overall control and responsibility for
    the project in the awardee organization.

        NSF vests responsibility for monitoring business operations of
    large facility projects in the Chief Financial Officer (CFO). NSF
    personnel reporting to the CFO ensure that all policies, guidelines and
    procedures are followed and that the awardee is in compliance with
    business operations, legal and financial requirements.
        Through Project Advisory Teams (PATs), individuals from the project
    management and business oversight branches work together. For every
    large facility project, the NSF Program Manager will convene a PAT (a
    practice required for all MRE projects) to provide advice and
    assistance on planning, review and management of the project to assure
    the establishment of realistic cost, schedule and performance goals and
    to develop terms and conditions of awards for constructing, acquiring
    and/or operating the facility. Each PAT will be comprised of
    professionals with critical expertise in the relevant science and
    engineering fields, as well as management, business and legal aspects
    associated with the project.
        To enable the efficient and effective evolution of NSF's large
    facility projects from their pre-formulation through operations, NSF
    will establish a new position, Deputy, Large Facility Projects. The LFP
    Deputy will report directly to the Chief Financial Officer and will
    have extensive project management experience, including building,
    management, and oversight of large scientific and engineering
    facilities. The LFP Deputy will be supported by several permanent NSF
    staff with a mix of skills, qualifications, and extensive experience in
    project management, planning and budgeting, cost analysis and
    oversight. These personnel will represent a centralized resource to
    assist (but not supplant) NSF Program Managers with management and
    oversight responsibilities and to develop and conduct comprehensive
    post-award oversight of business operations, financial and internal
    control systems, and cost and schedule performance. They and experts
    from other NSF Divisions and Offices (e.g., Office of General Counsel;
    Budget Division; Division of Contracts, Policy and Oversight; and
    Division of Grants and Agreements) will form the LFP Business Oversight
    Team. This flexible, responsive team will work with NSF Program
    Managers to ensure that awardees are performing to the terms and
    conditions of their awards and that they are attaining cost and
    schedule goals.
        The LFP Deputy and the Business Oversight Team will facilitate
    interactions and learning across projects and PATs and, in so doing,
    will institutionalize a process for large facility projects oversight.
    To ensure that project and business teams contain the skill mix
    essential for success of large facility projects, NSF will draw upon
    its new Administration & Management plan both to provide comprehensive
    training and to recruit additional personnel, as needs arise.
         integrated graduate research and education traineeship program
        Question. This program has been going on since 1997. Tell us a
    little about its purpose and how it is managed at NSF? What is your
    view with respect to the effectiveness of this program? Do you think
    that with a little modification it could also be used as a way to
    encourage more students to pursue undergraduate degrees in science and
    engineering?
        Answer. The purpose of the Integrative Graduate Education and
    Research Traineeship (IGERT) program is to facilitate a change in the
    graduate education paradigm in the United States. Through IGERT grants,
    which were first made in 1998, universities are provided the
    opportunity to experiment with graduate education within the context of
    a multidisciplinary research environment. IGERT faculty educate and
    train graduate students to have a broader perspective on a significant
    problem-based research topic, embark on new and innovative mechanisms
    of education, provide courses and experience for personal and
    professional skills development, and provide international experiences
    that will enable graduates to be more globally aware.
        The program is managed by a coordinating committee that is composed
    of NSF program officers from each Directorate and the Office of Polar
    Programs. Daily activities, project monitoring, and follow-up
    evaluations are managed by the Division of Graduate Education within
    the Directorate for Education and Human Resources.
        Although it is too early to assess outcomes, anecdotal evidence
    from two years of annual reports and principal investigator meetings
    indicates that the program is having far more significant effects than
    envisioned. Faculty and students from disparate disciplines are
    collaborating in exciting and effective ways such as in writing
    multidisciplinary publications and grant proposals. The few students
    who have graduated report that they have a distinct advantage over
    their peers in the breadth of their knowledge base and perspective and
    in their experience in collaborating across disciplines. Grantees are
    overcoming the hurdles within their universities and are demonstrating
    that the resulting research is valued by funding agencies and that
    graduates are sought by employers. As a result, we see sustained and
    enormous proposal pressure for these awards. This strong and continued
    interest is made more remarkable by the fact that IGERT grants do not
    directly support faculty or their research.
        The IGERT model could be used in at least three ways to encourage
    undergraduates to pursue science and engineering degrees. First and
    simplest would be for current IGERT projects to be expanded in scope
    and level of support to include more undergraduate students. Such
    students could be actively recruited to receive support for a summer or
    a term in order to join an existing IGERT team of faculty and graduate
    students on the interdisciplinary research problem. It is widely
    believed that undergraduates involved in the research enterprise as
    early as the sophomore year are often exhilarated by the experience,
    and they may be more likely to choose an academic major or a career
    path to build on the research experience. Second, when faculty have
    become comfortable with a new model of graduate education, they may
    adopt some of their approaches and techniques in their undergraduate
    teaching. Some faculty have reported this sort of transformation, but
    it has been a serendipitous byproduct of IGERT and NSF is only just
    beginning to encourage this sort of ``ripple effect.'' A third
    possibility is to develop an Undergraduate IGERT program that would
    stimulate faculty and undergraduates to embark on new multidisciplinary
    activities and curriculum at the bachelor's level. We believe that one
    of the attractions of IGERT projects for students is that the problem
    being studied is often set in a ``real world'' context, and students
    grasp the concepts and become excited about solving a problem with
    somewhat immediate application. The excitement of this sort of
    experience might be particularly effective at the undergraduate level,
    when people are still formulating their career goals.
                         undergraduate student support
        Question. Dr. Colwell, in your testimony you say ``If we do not
    boost the number of skilled U.S. workers the Nation will surely
    suffer''. One way to increase the number of U.S. students pursuing
    degrees in science and engineering is to focus on the undergraduate
    level of education. We continue to hear reports that it is at the
    undergraduate level where the real drop-off occurs. If we need to focus
    more on undergraduate science education--including the two year and
    community colleges--why is NSF cutting support for undergraduate
    programs by 6 percent, or $8.4 million, freezing the community college
    program, and reducing by 9000 the number of undergraduates supported by
    your research programs?
        Answer. Achieving an adequate number of skilled U.S. workers will
    require the delivery of high quality education in science, mathematics,
    engineering, and technology along the entire educational continuum.
    Within the continuum, the undergraduate sector is central. It is the
    sector to which the pre-Kindergarten through grade 12 (preK-12) sector
    delivers its students and from which the preK-12 sector receives its
    teachers. Similarly, the undergraduate sector delivers its graduates to
    graduate education and receives from the graduate sector faculty who
    teach undergraduates. Along all the major transition points--preK-12 to
    undergraduate, undergraduate to graduate, and post-graduate there is
    entry into the workforce, with the most significant entrance occurring
    after completion of undergraduate study after two or four years of
    study.
        The NSF Budget for fiscal year 2002 attempts to balance various
    competing priorities, with the Math and Science Partnerships Initiative
    and graduate student stipends receiving the highest priority within the
    EHR account. Implementing these priorities required a modest reduction
    in the Division of Undergraduate Education (DUE). We limited that
    reduction to only 5.9 percent or $8.4 million. Of this reduction $8.0
    million represents a re-direction of funds from Teacher Preparation in
    support of similar activities within the President's Math and Science
    Partnerships Initiative. The National Science, Mathematics,
    Engineering, and Technology Education Digital Library is reduced by
    $350,000, consistent with a planned phase-down of support under this
    activity toward a steady-state level of support for the final system.
        With respect to the number of undergraduates supported by our
    programs, our current estimates indicate that NSF will support about
    31,840 undergraduates in fiscal year 2002, an increase of about 800
    students over fiscal year 2001. These numbers refer to ``direct''
    financial support only.
        We expect to pursue highly leveraged partnership activities that
    will increase the measurable impact of our undergraduate programs. For
    example, the EHR Division of Undergraduate Education co-sponsored a
    workshop on technology with the Directorate for Mathematical and
    Physical Sciences. Collaborations with the Directorates of Geosciences
    and Engineering have also provided valuable investments in
    undergraduate education. This year, NSF engaged in a pilot
    collaboration with the Department of Energy (DOE) in order to provide
    research experiences in ten national laboratories to student
    participants in five NSF grant programs.
                emergency medical evaluation from the antarctic
        Question. What kind of medical screening procedures do you have in
    place and how does NSF enforce the screening procedures? Do you think
    any changes need to be made in the screening procedures or in the
    medical facilities and personnel in the Antarctic?
        Answer. We operate and maintain medical clinics at all of our year-
    round stations in Antarctica. These clinics are comparable to
    ambulatory care facilities in rural areas in the U.S., with
    capabilities supplemented with tele-medicine technologies.
        Every person traveling to Antarctica under the auspices of NSF's
    United States Antarctic Program undergoes a medical screening process
    prior to deployment. Specific medical screening criteria are utilized
    to identify individuals with existing medical conditions that require
    care beyond the capabilities of our medical clinics, conditions that
    would be exacerbated by the unusually harsh environment, or conditions
    that would otherwise put them at risk in Antarctica. Those screening
    criteria have evolved over the program's 40+ years of operational
    experience and are refined periodically using the experiences of other
    groups sending personnel to remote locations (e.g., U.S. Navy
    submariners, Peace Corps volunteers, Department of State Foreign
    Service Officers, NASA astronauts). The medical screening criteria are
    reviewed annually by a panel of physicians to ensure currency and
    relevancy and are modified accordingly. However, they are only as
    sensitive and selective as current medical science allows. As our
    recent experiences at South Pole demonstrate, that screening program is
    not foolproof.
        After our experience two years ago at the South Pole Station, we
    expanded our medical capabilities at our medical clinics at McMurdo and
    South Pole Stations by introducing ultrasound equipment and improving
    telecommunications capabilities to leverage our on-ice medical staff
    with medical specialists back in the United States (i.e., ``tele-
    medicine''). In addition, this past year we added an additional mid-
    level health care provider to complement the physician on-station at
    the South Pole. Those improvements were instrumental in our ability to
    diagnose the medical problem experienced by the South Pole individual
    in April of this year, and allowed us to assess the risks to the
    individual if he remained on-site for the duration of the austral
    winter.
        Even with appropriate screening, improved medical facilities, and
    expanded diagnostics, medical emergencies do arise. To deal with these
    situations, we intend to continue investing in telecommunications
    infrastructure to further leverage our on-ice capabilities with medical
    specialists in the U.S. At the present time, the South Pole Station
    wide-bandwidth communications capability adequate for tele-medicine
    consultations is only available six to seven hours each day. We
    consider it essential to increase that coverage to 24-hours per day,
    seven days per week at all three stations. Similar limitations are also
    present at Palmer Station. We believe that the leveraging of our on-
    continent medical care staff with specialists in the U.S. via increased
    telecommunications and tele-medicine is a cost-effective approach and
    should be expanded.
                           graduate student stipends
        Question. Dr. Colwell, you make a passionate case that we have to
    attract more U.S. students into graduate science and engineering
    programs. Part of this budget includes an increase in the stipend
    levels for graduate fellowships and traineeships as a first step in
    that effort. NSF supports 5 times as many graduate students through its
    research grants (20,000) as it does through its fellowship and
    traineeship programs (5,000). What is NSF doing in the research
    programs to increase graduate stipend levels so that they too can be
    used to attract and retain more U.S. students into graduate education
    in science and engineering. What constrains the Foundation from setting
    a minimum level of graduate student and post-doc stipend support within
    research awards?
        Answer. Approximately 20 percent of graduate students supported by
    NSF are supported through the agency's Graduate Research Fellows (GRF),
    Integrative Graduate Education and Research Traineeships (IGERT) and
    NSF Graduate Teaching Fellows in K-12 Education (GK-12) programs. By
    increasing stipends in these programs, NSF seeks to attract and retain
    a larger, more diverse group of talented U.S. students to graduate
    education in science and engineering.
        Historically, the agency has allowed stipend levels for graduate
    students supported on other NSF-funded awards to be determined locally
    by our grantee institutions. This provides our partner institutions
    with the flexibility to accommodate local cost of living differences
    and differences by field of study.
        Nonetheless, the agency does anticipate that raising stipends in
    the GRF, IGERT and GK-12 programs will have systemic impact on graduate
    student stipends around the country, since stipend levels for students
    on other NSF-supported projects have generally tracked NSF Fellow and
    Trainee stipend levels.
                            unexpected energy costs
        Question. In light of surging energy prices in the country today,
    are their any particular programs or projects supported by NSF that
    have--or are likely to--encounter major unanticipated energy costs now
    and in the future? Examples of such high energy consuming projects
    might include the U.S. Antarctic Program, ship operations for the
    academic fleet, the operations of national facilities such as the
    National Center for Atmospheric Research, the National High Magnetic
    Field Laboratory, and others. Assess the potential impact on each of
    those programs that require significant levels of energy use to fulfill
    their missions and provide the Committee with these energy estimates
    for each program for fiscal year 2001 and fiscal year 2002.
        Answer. Economic factors including energy prices has and will
    continue to have an impact on a number of NSF programs and activities
    in fiscal year 2001 and fiscal year 2002; these include:
      --Even with current efforts at conservation and alternative energy
            sources, rising fuel prices are impacting and will continue to
            impact the U.S. Antarctic Program. Fuel costs have risen $5
            million over fiscal year 2000/01. The USAP currently utilizes a
            number of methods to reduce fuel costs by use of alternative
            energy sources and reduction of fuel consumption, including
            wind turbines, photovoltaic arrays, solar heating panels, and
            waste heat utilization. Waste heat utilization in particular
            has proven to be extremely successful in saving fuel. The
            McMurdo Station waste heat recovery project captures radiator
            waste heat for use as space heat in nearby buildings. Annual
            savings have grown to 300,000 gallons of fuel (approximately
            $378,000). Plans are in progress to expand the system and save
            an additional 200,000 gallons, and waste heat utilization is
            included in planning for the new South Pole Station. The other
            methods are used to a lesser extent, but given the improving
            technology, the USAP hopes to expand the use of wind turbines
            in the future--especially at the new South Pole Station.
            Additional efficiencies in fuel usage could be achieved but
            would require substantial investments. Fiscal year 2001 fuel
            consumption by the USAP totaled over 10 million gallons;
            consumption in fiscal year 2002 will be comparable. Increased
            fuel costs have also influenced the rates we pay the Air Force
            for C-141, C-5, and C-17 aircraft support and the rate we pay
            the Military Sealift Command for our annual cargo ship.
      --Two areas in the NSF Arctic Sciences Program very susceptible to
            fuel cost variations are costs of airlift and sealift. The U.S.
            Coast Guard Cutter Healy is likely to experience a similar
            increase in operating costs over the planned reimbursement
            rate. Aviation in Alaska also will be affected. The total
            increase in Arctic operations from all of these areas has
            totaled approximately $0.5 million between fiscal year 2000 and
            fiscal year 2001.
      --Ocean Drilling Program--Operating the JOIDES Resolution, the ship
            used for the Ocean Drilling Program, requires about 8,000
            metric tons of fuel per year. Historically, the cost of that
            fuel has been around $205/MT. The average quotes this fiscal
            year have been running closer to $320/MT or an increase of
            about $1,000,000 above original estimates.
      --Academic Research Fleet--Operating the Academic Research Fleet has
            also become more costly. There was roughly a 50 percent
            increase in fuel cost/day between 1999 and 2000, with prices
            seemingly stabilized at this new higher level. For the large
            ships, which consume on average, between 2,500 and 3,000
            gallons of fuel per day, the increase in price per day is
            between $750-$900. With most of the large ships operating 300+
            days per year, the increased cost due to fuel prices is
            expected to be between $2.5 and $4.5 million this year and
            next.
      --Increased fuel cost is not expected to be a significant factor at
            the National Center for Atmospheric Research in fiscal year
            2001, but is expected to add approximately $200,000 to the cost
            of operations at that facility in 2002.
      --The National High Magnetic Field Laboratory projected energy usage
            and cost is increasing at a rate of 2.5 percent per year. For
            2001 the projected cost was $1.9 million while the actual cost
            is estimated to be $2.5 million, which reflects an increase of
            $587,000 or 30.3 percent. For 2002, the original projected cost
            was nearly $2 million while the new projected cost is $2.5
            million, or 25 percent higher. In 2001, the cost per megawatt
            hour increased from $31 to $44 and the fuel adjustment charge
            increased from almost nothing to nearly $13 per megawatt hour.
      --Power costs for the NSF Physics Programs at the CESR, MSU/NSCL, and
            LIGO facilities are expected to increase in fiscal year 2002
            over fiscal year 2001. The fiscal year 2001 power costs were
            $3.3 million for these facilities and estimated fiscal year
            2002 power costs is anticipated to be $3.9 million, an increase
            of $580,000, or 17.7 percent. The unexpected increase in
            program operations due to power costs is $180,000.
      --The power costs at the Cornell Electron Storage Ring (CESR) in New
            York appear stable for the moment, while at the National
            Superconducting Cyclotron Laboratory (NSCL) in Michigan costs
            are estimated to increase 10 percent in fiscal year 2002 due
            largely to a 50 percent increase in the cost of coal over
            fiscal year 2001. The power costs in Hanford, Washington are
            also going up by 50 percent. The power costs in Livingston are
            anticipated to be about flat in fiscal year 2002. While their
            power costs are state-regulated, the surcharge that covers fuel
            represents 50 percent of the total cost, and fuel cost
            fluctuations by 15 percent have occurred in the past year. The
            net result for Livingston power costs could easily be a 10
            percent increase over the next several years, but not in fiscal
            year 2002.
      --Other facilities, such as observatories, have observed little or no
            increase in energy costs. In some cases the cost for energy is
            imbedded within the annual lease costs for buildings and is
            difficult to break out.
                              senior nsf vacancies
        Question. In September 2000 NSF announced it was initiating a
    search for a new Assistant Director for Education and Human Resources.
    The stated intent was to fill the position by January 1, 2001. What is
    the current status of the search for the Assistant Director for
    Education and Human Resources and when do you expect to be able to
    announce the results of the search process? Please provide the status
    of all other NSF Assistant Director vacancies including the length of
    time they have been vacant, when the search process for a successor was
    started and when you expect to fill the vacant position.
        Answer. On July 12, NSF named Judith A. Ramaley as the Foundation's
    new Assistant Director for Education and Human Resources (EHR). The
    appointment was effective August 1, 2001. Dr. Ramaley is a biologist
    who served most recently as president of the University of Vermont.
        The positions of Assistant Director for Computer and Information
    Science and Engineering and Assistant Director for Engineering will
    become vacant on August 31st and September 4th, respectively. National
    searches are currently in process for both positions.
                         education and human resources
        Question. Provide the record the NSF fiscal year 2002 budget
    request for the Education and Human Resources (EHR) account that was
    submitted to OMB in January 2001. Include a breakout of that request by
    subactivity and program element within each subactivity along with a
    brief description of what each program element was going to focus upon
    in fiscal year 2002. Also include similar data for fiscal years 2000
    and 2001 for each EHR subactivity and program element.
        Answer. The Foundation's budget is based on a number of factors.
    The early part of the planning process is largely science-driven, with
    the participation of the research and education communities and other
    interested groups. Content of this phase of planning is shaped
    primarily by advice and information from the external community. This
    period results in the identification of many program opportunities and
    provides useful guidance about priorities within programmatic fields
    and scientific disciplines. NSF senior management reviews these
    spending plans and determines the dollar amounts to be requested based
    on resource limitations, policy concerns, long range strategic plans,
    and balance across a broad and expanding science and engineering
    frontier.
        The second part of the process occurs within the Executive Branch.
    It is at this point that resource limitation and policy considerations,
    as well as the Government Performance and Results Act requirements, are
    overlaid on the many possible budget options which have been produced
    by the earlier planning. These priority decisions are shaped by many
    considerations such as scientific readiness, technical feasibility,
    response to national needs, affordability, performance goals and
    results, and balance with other programs of NSF and other agencies.
        OMB's role is to hold discussions on our proposed plans, review
    opportunities across all Federal agencies, and determine the
    appropriate budget request funding levels for the Foundation in the
    context of the President's overall budget. The final choices are made
    by NSF staff and management, the National Science Board, and OMB, and
    are then presented to the Congress.

    ----------------------------------------------------------------------------------------------------------------
                                                                        Fiscal year     Fiscal year     Fiscal year
                             EHR Subactivity                           2000 Request    2001 Request    2002 Request
    ----------------------------------------------------------------------------------------------------------------
    Educational System Reform.......................................          114.20          109.51           45.25
    Office of Innovation Partnerships...............................           48.41           48.41           74.81
    Elementary, Secondary and Informal Education....................          193.72          191.50          165.61
    Undergraduate Education.........................................          116.60          140.56          132.60
    Graduate Education..............................................           69.65           89.45           95.50
    Human Resource Development......................................           73.68           81.88           90.44
    Research, Evaluation and Communication..........................           61.74           67.70           68.20
    Math and Science Partnerships...................................  ..............  ..............          200.00
                                                                     -----------------------------------------------
          Total, EHR Request........................................          678.00          729.01          872.41
    ----------------------------------------------------------------------------------------------------------------

                       reduction in ``core'' disciplines
        Question. Provide for the record a quantitative and qualitative
    analysis of the $45.5 million reduction to the ``core'' contained in
    the fiscal year 2002 request for the science and engineering research
    directorates--by activity, subactivity, and program element within each
    subactivity. Include the number of awards that won't be made, the
    number of scientific personnel (senior scientists, post docs, graduate
    and undergraduate students) who won't be supported as a result of this
    reduction.
        Answer. NSF's fiscal year 2002 Request for Research and Related
    Activities (R&RA), which funds the science and engineering research
    directorates, is $3.33 billion. Of this amount, over $300M supports
    People, $2.1 billion supports Ideas, and over $900 million supports
    Tools. The $45.5 million reduction identified by this question is for a
    category described as Disciplinary Research. Disciplinary Research is
    within Ideas, which overall decreases by $31 million. Therefore, the
    $45.5 million reduction is offset by other increases in basic research
    and does not truly represent a reduction to the ``core''. ``Core''
    research also takes place within the Education and Human Resources
    appropriations account.
        The following table shows Disciplinary Research by R&RA activity.

        For the agency in total, it is estimated that in fiscal year 2002,
    NSF-supported programs and activities--funded at a total level of $4.47
    billion--will support 20,770 awards and directly involve 192,900 senior
    researchers, postdoctoral associates, graduate and undergraduate
    students, and K-12 students and teachers. Compared to fiscal year 2001,
    it is estimated that in fiscal year 2002 NSF will make 180 fewer awards
    and the number of people involved in NSF-supported activities will be
    approximately 800 fewer.
                                  cost sharing
        Question. The NSF Inspector General reported in its October 2000
    semi-annual report that cost sharing commitments are often not met by
    grantees. A few years ago, NSF and the Board acted to clarify cost
    sharing requirements to grantees. Outline NSF's cost sharing policy as
    it now stands, what efforts are being made to be sure that NSF
    grantees, principal investigators, and NSF staff all understand the
    cost sharing policy and requirements and what is NSF doing to enforce
    cost sharing requirements among NSF grantees?
        Answer. In June 1999, an ``Important Notice'' was sent to
    Presidents of Universities and Colleges and Heads of other National
    Science Foundation Grantee Organizations, which transmitted the
    ``National Science Foundation Policy Statement on Cost Sharing'',
    approved by the Board. In addition to providing a definition of cost
    sharing, the policy statement sets forth that (1) NSF-required cost
    sharing is considered an eligibility rather than review criterion; (2)
    NSF cost sharing requirements beyond the statutory requirement (1
    percent) will be clearly stated in the program announcement,
    solicitation or other mechanism which generates proposals; (3) for
    unsolicited research and education projects, only statutory cost
    sharing will be required; and, (4) any negotiation regarding cost
    sharing will occur within NSF stated parameters. This ``Important
    Notice'' was also distributed to appropriate NSF staff. During the past
    year, NSF has held several training sessions on cost sharing for NSF
    staff and conducted sessions on cost sharing for NSF clientele at
    regional conferences, seminars and workshops.
        In fiscal year 2000, almost 75 percent of cost sharing were on
    awards made through the NSF Directorate of Engineering (ENG) and the
    Directorate for Education and Human Resources (EHR). ``Outreach''
    sessions are being conducted with program staff in these directorates
    to ensure they are aware of NSF policy and what is expected of grantees
    when cost sharing is made a condition of an award.
        The Foundation recently conducted an analysis of grantee audits,
    which contain findings related to cost sharing. The problem seems to be
    more that grantees do not have financial and accounting systems which
    can ``readily'' identify cost sharing realized rather than the fact
    that grantees are not actually providing required cost sharing. To
    ensure that grantees are able to appropriately document cost sharing in
    their financial and accounting systems, NSF is conducting more pre-
    award reviews of grantee financial and accounting systems to assess
    grantee's capability to support cost sharing prior to award. NSF has
    also instituted a policy requiring cost sharing certification when cost
    sharing is in excess of $500,000.
        The NSF Inspector General first reported cost sharing findings in
    their semi-annual report to Congress for the period ended March 31,
    1997. Over half of the cost sharing findings reported (both in number
    of audit reports and dollar amount of findings cited) up to the last
    semiannual period, were for grantee organizations which are not the
    ``traditional'' NSF type grantee (i.e., city board of education, public
    school systems, state governments, etc.). NSF is currently developing
    an appropriate strategy for reviewing cost sharing proposed by these
    type of grantee organizations, effectively evaluating their systems and
    providing outreach and instruction as necessary.
              candidates for the major research equipment account
        Question. Provide for the record documentation that describes the
    process the Foundation goes through to consider and select projects to
    be funded out of the Major Research Equipment account. Provide a time
    line on the decision-making process, the criteria used to make
    decisions--particularly among and between competing proposals, the
    roles and responsibilities of the program staff, the relevant Assistant
    Director, the Office of the Director, the National Science Board and
    the OMB. Document the way projects are developed, planned, executed and
    managed by NSF once construction or acquisition begins. Document the
    management structure within the Foundation used during the
    construction, commissioning, and operational phases of the project.
        Answer.

        This chart describes NSF's process for the review and approval of
    large facility projects considered for funding through the MRE account.
    The first step in the process is the early identification of an MRE
    Pipeline Project as such. These potential projects are conceived of in
    the science and engineering community, often as a result of emerging
    science and engineering opportunities, and are often many years in
    development following initial conceptualization.
        Developed projects are then proposed by an NSF Originating
    Organization(s) for consideration by the MRE Panel. These projects may
    be based on a proposal already submitted and evaluated using NSF's
    merit review process. The MRE Panel considers the projects on the basis
    of the review criteria specified earlier and makes recommendations to
    the Director. Using the review criteria, the Director selects
    candidates for NSB consideration. The NSB then approves, or not,
    projects for inclusion in future budget requests. The Director then
    selects from the group of NSB-approved projects those appropriate for
    inclusion in a budget request to OMB, and after discussion with OMB, to
    the Congress.
        Following the appropriations process, the Director allocates funds
    to the relevant projects. If necessary, a program solicitation or RFP
    is prepared and, following receipt and merit review of the proposals,
    one or more awards are made.
               nsf inspector general review of the epscor program
        Question. The EPSCoR program was recently reviewed by the Inspector
    General. Provide a summary of the IG's findings and what, if any, NSF
    response is required to improve the management of the program.
        Answer. The Office of the Inspector General (OIG) reviewed EPSCoR
    to assess the program's compliance with selected NSF requirements and
    NSF-wide and program-specific goals. The OIG review included
    consideration of program administration at NSF and project
    administration in two states, Mississippi and Maine. A general report
    was published on March 12, 2001 and is available at the OIG web site
    (http://www.oig.nsf.gov/oig012002.pdf). The report found that EPSCoR:
    played a role in building a ``research culture'' at universities that
    lack the physical facilities and institutional practices that
    facilitate research. Many such universities build research
    infrastructure by funding groups composed of a critical mass of
    researchers with similar interests. Institutional leadership plays a
    crucial role in identifying and developing promising niches.
        The report also examined how NSF's EPSCoR Office administered its
    large infrastructure awards and found ``widespread agreement that NSF
    project monitoring was reasonable, that proposal review had been
    constructive, and that more NSF site visits could improve project
    performance.''
        OIG Findings--The OIG report contained seven recommendations to
    improve performance, three of which specifically referred to NSF's
    management of the program. The OIG recommendations and the NSF
    responses to the three specific program issues are shown below.
    OIG Programmatic Recommendations
        EHR and the EPSCoR Office, in conjunction with higher levels of NSF
    management and NSF's research directorates, should develop an
    administrative mechanism to ensure that EPSCoR co-funding dollars are
    targeted at their original purpose and do not support, either directly
    or indirectly, researchers who have moved to non-EPSCoR states. (OIG
    01-2002, p. 23).
      --NSF Action.--EPSCoR staff have met with state Project Directors and
            discussed this issue, and have their agreement to strongly
            encourage support of the Inspector General's position, unless
            constrained by broader institutional policies. The EPSCoR staff
            is also meeting with the Directorate co-funding coordinators to
            explain this issue.
        EHR and the EPSCoR Office should decide whether, as part of future
    infrastructure awards, NSF should require broader or more formal
    participation in Mississippi's EPSCoR committee by representatives of
    the private sector and public sector organizations outside higher
    education. (OIG 01-2002, p. 28)
      --NSF Action.--EPSCoR has met with the Mississippi State EPSCoR
            Committee and strongly supported the Inspector General's
            position. Mississippi EPSCoR has indicated that they will
            strengthen their Committee membership.
        EHR and the EPSCoR Office should decide whether to adopt general
    criteria to determine EPSCoR eligibility, rather than merely publishing
    a list of eligible states. (OIG 01-2002, p. 37)
      --NSF Action.--EPSCoR has operated in five states for 20 years and in
            the other states for from 1 to 15 years. During fiscal year
            2001, two additional states (Hawaii and New Mexico) became
            EPSCoR participants. In response to recommendations made in the
            reports issued by the fiscal year 2000 Committee of Visitors
            and the fiscal year 2001 report of the Office of the Inspector
            General, EPSCoR has established criteria governing
            participation in the program. These criteria were approved by
            NSF Director Dr. Rita Colwell and will be incorporated into a
            new EPSCoR program solicitation that will describe the July
            2002 Research Infrastructure Improvement (RII) grant
            competition, for which awards are scheduled to begin in
            February 2003. The EPSCoR staff have reviewed these eligibility
            criteria with the state EPSCoR Project Directors and received
            their comments and suggestions before finalizing the language
            that will appear in the solicitation. The proposed eligibility
            criteria are given below.
        --Eligibility to participate in EPSCoR competitions will be based
                on the level of NSF research funding. Each year, the EPSCoR
                Office will compile and publish summary data for the
                preceding 3 years of NSF research funding by state.
        --Eligibility to participate in EPSCoR competitions would be
                restricted to those jurisdictions that received 0.7 percent
                or less of the total NSF research funds to all sources
                within a state averaged over the three-year period. In the
                few cases where a single large NSF-funded facility skews
                the data, an adjustment will be made. For example, West
                Virginia's funding data will be adjusted so that the
                Greenbank Observatory is not included in the state NSF
                research funding data used to calculate EPSCoR eligibility.
        --Any current EPSCoR state that did not meet the eligibility
                criteria would continue to be eligible for EPSCoR co-
                funding and EPSCoR Outreach for a period of three years. In
                these cases, the EPSCoR Office would also exercise
                flexibility with respect to the support of the state's
                EPSCoR administration. Quite often, the state office
                supports multi-agency EPSCoR efforts; some of these
                agencies do not provide administrative support.
          Any state that becomes eligible for the first time would be
            required to follow the existing process for entering the
            program. A suitable state committee would have to be created
            before a state could first request an EPSCoR Planning Grant to
            determine research barriers, areas of focus, areas of
            opportunity, etc. These steps are consistent with activities
            that other EPSCoR states have been required to undertake prior
            to competing in EPSCoR competitions.
                                 digital divide
        Question. What is NSF doing to help bridge the digital divide that
    exists in our inner city schools when it comes to access to the
    internet and other new educational technologies? How does the NSF urban
    and rural education reform programs help local communities acquire
    computers and internet access for use in K-12 math and science
    education? How does NSF integrate the training of teachers in science
    and math with the use of new technologies and what special efforts are
    being made for those school districts confronting high levels of
    poverty? How does NSF work with the Department of Education to help
    bridge the digital divide when it comes to the use of advanced
    technologies in K-12 education?
        Answer. NSF helps to bridge the digital divide primarily through
    the development of curricula materials that utilize the new
    technologies and through the training of teachers to use the curricula
    materials effectively. NSF does not generally provide support for the
    purchase of computers or internet access for local communities, but
    instead provides the content for science and mathematics courses and
    the teacher training, so that the technologies can be effectively used.
    NSF seeks to maximize its investment in education technology research
    by ensuring that every child can benefit from its investments. The
    applications of technology to underserved populations and plans for
    teacher training are critical components in the evaluation of every
    proposal dealing with educational technologies. NSF works with the
    Department of Education and the National Institutes of Health in the
    management of an interagency education research initiative addressing
    the effective use of technology in K-12 reading, mathematics, and
    science instruction.
                        public understanding of science
        Question. Both the National Science Board and the Public Affairs
    Advisory Committee have provided the Foundation with advice and
    recommendations concerning its outreach and public affairs activities.
    Provide a copy of each of these reports for the record and summarize
    the various recommendations each report provided the Foundation. What
    effort is the Foundation making to respond to these recommendations?
    How much does the fiscal year 2002 budget request for implementing the
    recommendations? Please provide a detailed listing by NSF office and
    directorate of each activity being carried out in response to these
    reports and the resources budgeted, by account, for each activity.
    Describe the process by which these activities will be evaluated in
    terms of benchmarks and outcomes over the next 3 to 5 years.
        Answer. In August 2000 the National Science Board approved its
    report, Communicating Science and Technology In the Public Interest
    (NSB-00-99), enclosed. It includes three recommendations and associated
    actions to be taken by the Foundation. The NSB identifies specific
    actions for implementing each recommendation.
        Recommendation #1.--The NSB directs NSF to regularly provide
    requested information to public information groups to support their
    outreach efforts. NSF's Office of Legislative and Public Affairs (OLPA)
    responds to information requests from the public and Congress on an
    ongoing basis.
        Recommendation #2.--The NSB requests that NSF pursue a coordinated,
    agency-wide effort to assess the effectiveness of new communication
    technologies in reaching broader audiences, identify best practices in
    communicating science and engineering, increase exchange of information
    with higher education organizations, support training in science
    communication, and develop metrics for assessing the effectiveness of
    NSF public understanding and outreach activities. The NSB requests that
    NSF develop programmatic responses to these suggestions and report
    progress to the Board.
        Recommendation #3.--The NSB requested that NSF provide NSB members
    with materials about key issues in science and engineering research and
    education, including selected speeches and visual presentations by the
    Director and Deputy Director. Speeches and visual presentations are
    posted to the NSF Web site, together with new releases and media
    advisories on NSF-funded research.
        The Public Affairs Advisory Group (PAAG) was established by the NSF
    Director to provide guidance and suggest broad strategies for improving
    NSF communications and outreach to its major constituents--the public
    and Congress. The members of the PAAG drew on their broad and diverse
    professional experience--in journalism, television, public affairs,
    business, and academia--to recommend broad strategies to improve the
    effectiveness of NSF communications and outreach efforts.
        The PAAG report to the Director, completed in January 2001, notes
    the increasing dependence of U.S. economic and social prosperity on
    fundamental research and education in science and engineering, and
    technological innovation. Improving public awareness of these links can
    contribute to increasing public support for improved science and
    mathematics education, encouraging more young people to choose science
    and engineering careers, and creating a citizenry knowledgeable about
    science and technology and capable of making informed decisions about
    civic issues.
        The PAAG recommended five strategies to accomplish these
    objectives.
      --Educating the public and government leaders about the important
            connections among scientific and engineering research,
            technological innovation, and our ability to prosper as a
            ation.
      --Strengthening NSF's relationship with the traditional broadcast and
            print media in order to establish NSF as a leading resource for
            science and engineering information, news, and expertise.
      --Outreach to the Nation's opinion leaders to enlist their help in
            raising awareness of the importance of science, engineering,
            and technology.
      --Focus on the relevance of science and engineering to the well being
            of the U.S. public, and the practical value of investments in
            fundamental research.
      --Build and sustain an effective communications and outreach program,
            including a significantly improved Internet presence, and
            consolidate its many, often uncoordinated, efforts into a
            coherent and efficient public information strategy.
        Within the limitations imposed by the annual budget cycle, $400,000
    in additional funding for communications and outreach activities was
    allocated to the Office of Legislative and Public Affairs (OLPA) in
    June for fiscal year 2001. No NSF Directorates will receive additional
    funds for these activities. Within OLPA a full time staff person has
    been assigned to develop a program of outreach to state and local
    government officials. NSF has published an RFP for an external audit
    and analysis of OLPA staff and activities. The audit will provide
    advice on the mix of skills and effective structures needed to
    accomplish OLPA objectives.
        NSF has established a working group to identify strategies, assess
    needs, and develop a work plan preparatory to improving and expanding
    the delivery of science and engineering information to the public on
    the Internet. Appropriate metrics for assessing the impact of these
    various activities on both the public and Congress will also be
    considered. The first in a series of daylong forums designed to provide
    the media and interested public with accessible information on cutting-
    edge science and engineering research is scheduled for September 2001.
    The forum will survey nanoscale science and technology.
                            planning and evaluation
        Question. What activities are being supported in fiscal year 2001
    within the planning and evaluation function? Please describe each
    distinct activity and the level of funding for each activity in fiscal
    year 2001. Provide similar information for fiscal year 2000 and 1999.
    Also, provide a breakdown of planning and evaluation activities--
    including the funding by activity--for fiscal year 2002. Why doesn't
    the Justification of Estimates include information on the planning and
    evaluation function?
        Answer. The planning and evaluation function provides funding to
    several recurring activities. Items funded consist of activities of the
    National Science Board (NSB) Office, the Office of Legislative and
    Public Affairs (OLPA), the Office of Integrative Activities (OIA) as
    well as other NSF staff offices. Total funding for this function is as
    follows: fiscal year 1999--$5.9 million, fiscal year 2000--$8.6
    million, and fiscal year 2001 (estimate)--$10.0 million. The estimate
    for fiscal year 2002 will be developed over the next few months.
    Specific examples of recurring activities include OLPA's support of
    National Science and Technology Week and the Bayer/NSF Award for
    Community Innovation; the NSB Offices' support of activities related to
    the Medal of Science; the Waterman award; the Vannevar Bush award; and
    development costs associated with NSF externally focused information
    technology projects, such as FastLane. Non-recurring activities include
    funding for the congressionally mandated Commission on the Advancement
    of Women and Minorities in Science and Engineering Technology, NSF's
    50th Anniversary activities, and evaluation contracts for NSF
    initiatives and large programs.
        Prior to fiscal year 1985, planning and evaluation funds were
    included in the budget justification in the Scientific, Technological
    and International Affairs (STIA) activity, within the Research
    Initiation and Improvement Subactivity. In fiscal year 1985 the STIA
    activity was reorganized, and as stated in the fiscal year 1985
    Justification of Estimates, ``. . . funds for Foundation-wide
    activities in planning and evaluation will be provided as needed from
    the discipline-oriented research activities . . .'' In addition, the
    Presidential Young Investigators Research Awards, the Undergraduate
    College Research Support, and EPSCoR were also to be provided from the
    discipline-oriented research activities.
        In fiscal year 1985, Planning and Evaluation provided ``. . .
    information and analyses on matters of concern to NSF management and
    the National Science Board, including national scientific and
    engineering needs, opportunities and problems; budgeting, planning and
    program management; and program evaluation.''
                                     ______

               Questions Submitted by Senator Christopher S. Bond

                               funding priorities
        Question. What did the Clinton Administration propose for NSF's
    fiscal year 2002 budget and what areas of research did it highlight?
        Answer. The Clinton Administration did not develop a fiscal year
    2002 budget. Instead, OMB calculated a current services baseline for
    fiscal year 2002, based on a set of economic assumptions approved by
    the Administration and baseline calculations defined in law. This
    current services baseline budget did not contain any new policies or
    programs.
        Question. If we are able to increase the Foundation's budget by
    $675 million, or even $200 million, how would you allocate these funds
    and how would allocate these funds and how would you prioritize the
    funding? Could you specify what particular areas of research such as IT
    or nano and what new major research equipment projects you would
    support funding? Lastly, do you support putting additional resources
    into programs that broaden participation of underrepresented groups
    such as the Partnerships for Innovation, EPSCoR, and HBCU programs?
        Answer. NSF's fiscal year 2002 Request represents an overall
    increase of 1.3 percent over fiscal year 2001 and funds all our most
    significant priorities. The fiscal year 2002 Budget Request:
      --Increases NSF's investments in education by 11 percent over fiscal
            year 2001. The request includes $200 million in fiscal year
            2002, and $1 billion over five years, to begin the President's
            Math and Science Partnerships Initiative to establish
            partnership agreements between States and institutions of
            higher education, with the goal of strengthening math and
            science education in grades K-12. I believe the Administration
            is making an important statement as to the value of what NSF
            brings to the larger education reform effort.
      --Increases graduate stipends by nearly 15 percent in the Graduate
            Research Fellowship, the Graduate Teaching Fellowships in K-12
            Education, and the Integrative Graduate Education and Research
            Traineeships programs to help attract the best students to
            pursue careers in science and engineering.
      --Provides a $20 million, or 17 percent, increase in mathematical
            sciences to initiate an effort in multidisciplinary mathematics
            research to enhance America's preeminence in this important
            area.
      --Increases NSF priority areas of Information Technology Research by
            $13 million, or 5 percent, to $273 million and Nanoscale
            Science and Engineering by $24 million, or 16 percent, to $174
            million.
                               staffing resources
        Question. Has NSF reviewed its short- and long-term staffing needs
    based on its growing workload? Do you believe this is a serious
    concern?
        Answer. NSF management shares that concern and initiated the
    process to prepare its workforce for the significant changes in NSF
    business practices. These result from technological changes along with
    the increasing complexity of science and engineering opportunities and
    challenges.
        NSF is developing a five-year workforce plan to reflect the
    agency's short-term and long-term workforce needs. The plan's
    objectives include the implementation of a complete workforce
    restructuring study to review workforce position requirements and
    competencies. The centerpiece of the agency's strategic workforce
    development activity is the development of the NSF Academy. Underpinned
    by the agency's strategic plan, the Academy will provide a
    comprehensive suite of education, training and career development
    opportunities. Succession planning is being built into the skill
    development curriculum, to provide all employees with the opportunity
    to gain the skills and knowledge necessary to operate effectively and
    efficiently in a state-of-the-art electronic business environment, and
    to compete for leadership and management roles both within and outside
    NSF. These activities are expected to ensure the agency is well
    positioned to meet its growing opportunities and challenges.
                               high-tech workers
        Question. I am concerned about the decline of American students and
    workers in the physical sciences and engineering. Could you lay out how
    the Foundation is responding to the shortage of U.S.-born engineers and
    scientists? I would also like to hear how NSF is working with the
    academic community to encourage more students to pursue science and
    engineering degrees and how NSF is working with the private sector to
    ensure that these students develop the necessary skills to meet the
    needs of the high-tech industry.
        Answer. NSF has a comprehensive suite of programs that prepare
    undergraduate students for entry into the workforce and into graduate
    programs. These programs utilize three strategies: (1) direct
    preparation of specific elements of the science and engineering
    workforce (e.g., Advanced Technological Education, Computer Science,
    Engineering, and Mathematics Scholarships); (2) attention to broadening
    participation in the science and engineering workforce by groups that
    are currently underrepresented (e.g., Historically Black Colleges and
    Universities-Undergraduate Program, Louis Stokes Alliances for Minority
    Participation, Tribal Colleges and Universities Program); and (3)
    strengthening the curricular and instructional infrastructure for
    providing high quality science, mathematics, engineering, and
    technology education to all students (e.g., Course, Curriculum, and
    Laboratory Improvement, Graduate Teaching Fellows in K-12 Education,
    National Science, Mathematics, Engineering, and Technology Education
    (SMETE) Digital Library).
        Across the set of NSF's programs for undergraduates, a balance is
    struck between providing students with the practical skills needed to
    perform at a high level in the workplace and providing the firm
    theoretical foundations in math and science required as preparation for
    study at more advanced levels.
                                  plant genome
        Question. Recent advances in technology have made it economically
    feasible and technically possible, finally, to survey sequence the gene
    rich regions of large, complex plants, such as corn. However, projects
    to survey sequence the gene rich regions of large, complex plants could
    be accommodated with the current funding level of the plant genome
    program without eliminating all other research despite the support from
    the Interagency Working Group on Plant Genomes and the Maize Genetics
    Community.
        First of all, do you support additional funding for the plant
    genome program and would NSF be able to utilize fully additional funds
    if the increase were focused, primarily, on new initiative to provide
    sequences and draft sequences of the gene rich regions in plants and to
    provide other focused, high throughput genome sequencing efforts?
        Answer. NSF is prepared to support proposals that address a new
    strategy for survey sequencing of large plant genomes, if quality
    proposals were received and recommended for funding by reviewers.
                             information technology
        Question. Could you give us an update on the information technology
    research initiative? Specifically, can you describe the type of
    proposals being submitted for the IT initiative? To what extent are you
    providing awards to proposals that are risky and innovative?
        Answer. In fiscal year 2000, the NSF ITR program stressed
    fundamental research in information technology. In fiscal year 2001 an
    additional focus area was applications in all disciplines. In fiscal
    year 2002 focus will expand to include research in multidisciplinary
    areas.
        In fiscal year 2001, ITR received a large number of proposals.
    These proposals cover areas such as software design, use and
    reliability, human-computer interaction, information management, large
    scale networking, educational and social effects of IT, and many more.
    All reviews have been completed, and fiscal year 2001 ITR awards are in
    process.
        Both mail and panel reviews for proposals were used. Around 25
    percent of the proposals were co-reviewed in more than one panel, each
    representing information technology research in a broad scientific
    discipline. NSF program managers assessed proposals for risk and
    innovation and funded high risk, high payoff efforts, where
    appropriate. Program managers are able to assess the risk of an entire
    portfolio of research investment and accept a degree of higher risk.
        Awards from fiscal year 2000 are listed on web site http://
    www.itr.nsf.gov. Awards from fiscal year 2001 will also be listed there
    upon completion of the awards process. Of the fiscal year 2000 awards
    one particularly exciting award was made to the University of Colorado
    to research how interaction with intelligent agents can teach deaf
    children how to speak. At Stanford University researchers are working
    on how to make on-line information far more effective and efficient to
    use than it is currently by data mining and knowledge synthesis. Other
    innovative and risky projects include an effort to rewrite the air
    traffic control software; building a tactile display for the blind;
    computing with optical devices; and computer networks based on
    biological models.
        Many of the ambitious projects involve the combination of IT with
    other sciences. For example, one researcher wants to study the way
    humans recognize objects with electrodes sensing brain activity, and
    then build computer vision systems that work the same way. Health care
    experts are combining with computer scientists to design robotic
    assistants to help the elderly. Finally, in a combination of three
    widely separated intellectual areas, researchers in computer graphics
    are using ideas from art and psychology to create new kinds of displays
    to help medical experts visualize and understand blood flow and neuron
    diseases.
                               peer review system
        Question. At the Subcommittee's request, NAPA recently completed a
    review of NSF's peer review system. NAPA found that NSF is unable to
    assess the criteria to encourage a broader range of institutions or
    greater participation of underrepresented minority researchers. In
    other words, while NSF claims to be making efforts to assist smaller
    research institutions and minorities, in practice, this does not occur.
    NAPA recommended that NSF should institute broader-based review panels-
    this means brining in participants from a wider range of institutions,
    disciplines, and underrepresented minorities. It appears that NAPA's
    finding supports the belief that the peer review system is still a
    ``good old boys'' network and hampers the ability of smaller research
    institutions from participating in NSF programs.
        How is NSF responding to the NAPA findings and will it follow
    NAPA's recommendations?
        Answer. NSF agrees with the principal finding of the NAPA report;
    i.e. that it is too soon to make valid judgments about the impact and
    effectiveness of the review criteria. Hence, we do not believe that
    NAPA's finding supports the assertion that the peer review system is
    still a ``good old boys'' network.
        The NAPA report also highlighted the need to (1) improve the
    conceptual clarity of the criteria, (2) better communicate with
    proposers, reviewers and NSF staff about how the criteria are to be
    used, and (3) improve quantitative measures and performance indicators
    to track the objectives and implementation of the review criteria. We
    have already taken some steps to address these recommendations and we
    intend to pursue other actions suggested in the report.
        At the May 2001 meeting of the National Science Board (NSB), the
    Committee on Programs and Plans, along with the Education and Human
    Resources Committee, discussed the NAPA report and the implementation
    of the merit review criteria. Three action items were identified and
    are currently being implemented:
      --An NSB resolution on the importance of both merit review criteria
            may be prepared and issued to the science and engineering
            community;
      --NSF will develop a set of examples to illustrate the application of
            the broader impacts criterion (the second criterion). These
            examples will be placed on the NSF website and made easily
            available to the proposers and reviewers.
      --NSF will prepare and implement a plan for better communicating the
            importance and use of both of the merit review criteria to the
            S&E community.
        In fiscal year 2000, NSF added new language to its program
    solicitations and announcements, and its Grant Proposal Guide. This
    language requires the Principal Investigators (PIs) to specifically
    address each of the merit review criterion in their proposals to NSF.
    For fiscal year 2001, different on-screen pages have been provided in
    FastLane, NSF's electronic data system, so reviewers can address each
    merit-review criterion separately. This responds to NAPA's
    recommendation that NSF improve performance indicators to permit better
    tracking of the impact of the review criteria. Thus far, over 75
    percent of proposal reviews submitted to NSF in fiscal year 2001 have
    addressed the broader impacts criterion. This demonstrates that NSF is
    continuing to improve on the implementation of its criteria.
        The NAPA report compared proposal reviews conducted in fiscal year
    1997 and fiscal year 1999 (i.e., before and after the implementation of
    the new review criteria). NSF has and will continue to make
    improvements in the implementation of the review criteria but the
    impacts of these improvements will not be measurable for at least
    another year. The NAPA assessment can help NSF establish a baseline for
    the next assessment of our performance in this area.
                              nuclear technologies
        Question. Last year, I raised concerns about the lack of Federal
    support for nuclear engineering education. In response, as directed by
    the fiscal year 2001 Senate VA, HUD appropriations report, NSF was
    directed to review the academic interest in nuclear engineering
    education and to provide recommendations on how NSF can support this
    area. Last week, I received your report and frankly, I was a bit
    disappointed by the response. Your report even recognizes the need for
    nuclear engineers by stating that the demand for nuclear-trained
    personnel is on the rise, yet, NSF provides no concrete recommendations
    on how it will respond to this problems.
        Do you have any specific recommendations where NSF can be more
    directly involved in addressing the need for increased Federal support
    for nuclear engineering education?
        Answer. We are supporting a planning grant to Dr. James Duderstadt
    at the University of Michigan to engage the leading industry
    representatives, faculty and chairs of nuclear engineering departments.
    The project will include:
      --A market survey to better understand the interests of prospective
            employers, the attractiveness of study to potential students,
            the perspectives of colleges and universities;
      --The preliminary design of new curriculum in nuclear engineering by
            a national team of faculty and industrial experts;
      --A needs assessment for supporting resources;
      --The design of a summer practicum experience for students;
      --The development of financial estimates for the development,
            distribution, and ongoing support of the new curriculum;
      --The development of contacts with credentialling bodies, practicum
            sites and other potential sponsors for the planned activities.
        NSF will work closely with Dr. Duderstadt and his colleagues as the
    planning proceeds. Through these cooperative outreach efforts, we hope
    that faculty at nuclear engineering departments will better understand
    the NSF programs and vice-versa with the result that we receive a
    larger number of proposals which are competitive in the merit review
    process.
                                 nanotechnology
        Question. Last year, the Congress provided a significant sum of
    money to jump-start the new nanotechnology initiative.
        Could you give us a status on how the new program is being
    implemented? I would especially like to know how this program is being
    coordinated across the various participating agencies.
        Answer. Implementation.--The fiscal year 2001 Nanoscale science and
    engineering program was implemented for single investigators through
    the core programs and by a NSF-wide solicitation for integrative
    activities including interdisciplinary teams, exploratory research, and
    nanoscale science and engineering centers. New topics were supported in
    six research and education themes: Biotechnology, Nanostructure by
    design and novel phenomena, Device and system architecture,
    Environmental Processes, Multiscale and multiphenomena modeling,
    Societal implications and Improving human performance. A balance and
    flexible infrastructure was developed by supporting: 6 new centers and
    10 existing centers, 4 large facilities, multidisciplinary teams, and
    over 700 individual projects. Over 3,000 students and teachers were
    supported.
        Coordination.--NNI coordination is achieved though the NSTC's
    Nanoscale Science, Engineering and Technology Subcommittee, direct
    interactions among program officers within the participating agencies,
    periodic management meetings and program reviews, and joint science and
    engineering workshops. The NSET Subcommittee will coordinate joint
    activities among agencies that create synergies or complement the
    individual agencies' activities to further NNI goals. Communication and
    collaborative activities are also facilitated by the NNI website
    (http://www.nano.gov/) as well as by the agencies' sites dedicated to
    NNI. Examples of NNI coordination include identification of the most
    promising research directions, encouraging funding of complementary
    fields of research across agencies that are critical for the
    advancement of the nanoscience and engineering field, education and
    training of the necessary workforce, and establishing a process by
    which centers and networks of excellence are selected.
        The NNI coordination process began in 1999 with the organization of
    a widely-attended exploratory conference and subsequent preparation of
    the report: ``Nanotechnology Research Directions: IWGN Workshop
    Report.'' In the spring of 2000, NSET Subcommittee (formerly IWGN)
    members took part in planning activities at each agency. In addition, a
    survey is being conducted in all agencies participating in the NNI to
    identify opportunities for collaboration and areas where duplication
    can be avoided. Discussions are being held regarding joint exploratory
    workshops (such as those on molecular electronics, quantum computing,
    and nanobiotechnology) and agreements on specific interagency funding
    programs. Improved internal coordination in large agencies, concurrent
    with interagency collaboration, has also been noteworthy in the
    planning process.
        Examples of major collaborative NNI activities planned by the
    participating agencies are (DOS is contributing to international
    aspects on all topics):

                                      TABLE 1.--AGENCY INTERESTS IN NANOTECHNOLOGY
    ----------------------------------------------------------------------------------------------------------------
       Agency (in order of fiscal year 2001
                    investment)                   NSF     DOD     DOE     NIH    NASA    NIST     EPA   Agencies \1\
    ----------------------------------------------------------------------------------------------------------------
    Fundamental research......................      x       x       x       x       x
    Nanostructured materials..................      x       x       x       x       x       x       x          x
    Nanoscale processing and manufacturing          x       x       x       x       x       x                  x
     (Ex: chemical fabrication, devices,
     systems, lab-on-a-chip, measurements and
     standards; manufacturing user facilities)
    Electronics and computer technology (Ex:        x       x       x               x       x                  x
     molecular electronics, spin electronics,
     quantum computing).......................
    Flight and space crafts (Ex: unmanned           x       x       x               x
     missions, nanorobotics, safe materials)..
    Energy conversion and storage (Ex:              x       x       x               x                          x
     efficient solar energy, hydrogen storage)
    Biotechnology and agriculture (Ex:              x               x                               x          x
     biosensors, bioinformatics,
     bioengineering)..........................
    Medicine and health (Ex: disease                x       x       x       x       x
     detection, drug delivery, organ
     replacement).............................
    Environment and sustainable development...      x               x               x               x          x
    Nanoscale theory, modeling and simulation.      x       x       x               x                          x
    Education, training and societal                x       x               x
     implications.............................
    Technology transfer, global trade and           x       x       x       x       x       x       x          x
     national security........................
    ----------------------------------------------------------------------------------------------------------------
    \1\ Agencies with <$5M/y in fiscal year 2001: DOA, DOJ, DOT, DOTreas, DOS, NRC.

                           math and science education
        Question. I remain concerned about math and science education in
    this country. Our high school students are performing poorly in math
    and science as reported by the Third International Mathematics and
    Science Study. Also, there has been a significant decline in bachelor
    degrees awarded in engineering, math, and computer science degrees.
    Further, the U.S. is now lagging behind other countries in the
    percentages of undergraduates earning degrees in natural sciences and
    engineering. Lastly, the Board reported recently that enrollment in
    graduate school science programs are declining. Can you lay out for me
    how the Foundation is responding to these troubling facts? Please
    specify what you are doing to improve K-12 math and science education,
    undergraduate education, and graduate school education.
        Answer. We share your concern that individual indicators of
    science, math, engineering and technology (SMET) education are not as
    positive as we would want them to be. By the same token, we see various
    positive signs that progress is being made, and that strategies
    developed under NSF programs can be transported to a wide range of
    institutions to provide real opportunities for improvement. The
    centerpiece of NSF's strategy to improve SMET education is to examine
    whole systems rather than individual components. This research-based
    approach has been shown to be effective in identifying promising
    system-wide strategies that can make a real difference. The evaluation
    of the systemic initiatives makes it clear that this approach is
    effective in raising achievement levels and creating system-wide
    improvements that affect all students.
        In PreK-12 education, a recent evaluation of the Urban Systemic
    Program found improved student outcomes and system change among 22
    large urban school districts, especially among minority students.
    Findings related to improved student outcomes include: (1) substantial
    increases in enrollment rates in mathematics and science gate-keeping
    and higher-level courses; (2) greater enrollment gains for
    underrepresented minority students than their peers; (3) achievement
    test gains; and (4) increased numbers of students taking college
    entrance examinations (AP, SAT, and ACT). In an evaluation of the
    Statewide Systemic Initiatives, half of the states showed impacts on
    classroom practice, with the highest gains in achievement occurring in
    states with intensive professional development linked to curriculum.
    The National Science Board has concluded that systemic reform programs
    have been very effective and should be further encouraged, and that
    efforts should be taken to educate the public on the complexity and
    long-term commitment required for success of such reforms. The
    President's new Math and Science Partnerships Initiative (MSPI) will
    also add resources and focus to improving PreK-12 SMET education.
        At the undergraduate level, NSF has a comprehensive suite of
    programs that prepare SMET undergraduate students for entry into the
    workforce and into graduate programs. These programs utilize three
    strategies: (1) direct preparation of specific elements of the SMET
    workforce; (2) attention to broadening participation in the SMET
    workforce by groups that are currently under-represented; and (3)
    strengthening the curricular and instructional infrastructure for
    providing high quality SMET education to all students.
        Across the set of NSF's programs for undergraduates, a balance is
    struck between providing students with the practical skills needed to
    perform at a high level in the workplace and providing the firm
    theoretical foundations in math and science required as preparation for
    study at more advanced levels.
        The methods used to strengthen undergraduate SMET education include
    inquiry-based learning, integration of learning technologies, faculty
    development, teacher preparation, and curricula reform. A new emphasis
    on strengthening student outcomes, focusing on educational ``end
    results,'' is being explored. NSF also plans to explore the coupling of
    undergraduate activities with the Centers for Learning and Teaching
    (CLT) Program (a PreK-12 program), which partners universities, school
    districts, state education agencies, and business and industry. Joining
    the CLT to undergraduate activities is another example in which real
    improvement can occur when synergies are created between educational
    levels.
        At the graduate level, NSF support consists of fellowships awarded
    to individual students, traineeships awarded to institutions, and
    support for graduate students on research grants. A major priority in
    the fiscal year 2002 budget is to increase student stipends to make
    SMET graduate study more attractive.
                              multi-year budgeting
        Question. In our Senate Committee Report on the fiscal year 2001
    appropriations, NSF was required to provide multi-year budgets for
    major multi-disciplinary initiatives such as ITR, biocomplexity, and
    nanotechnology. NSF's fiscal year 2002 Budget Justification, however,
    does not contain multi-year funding data. Please submit this
    information.
        Answer. The following table shows the multi-year budgets for the
    selected priority areas in the NSF fiscal year 2002 Budget
    Justification.

    ----------------------------------------------------------------------------------------------------------------
                                                                            Fiscal year--
                                               ---------------------------------------------------------------------
                                                            2001      2002
                                                  2000      plan     request    2003      2004      2005      2006
    ----------------------------------------------------------------------------------------------------------------
    Biocomplexity in the Environment..........    $50.00    $54.88    $58.10    $70.57    $83.31  ........  ........
    Information Technology Research...........    126.00    259.43    272.53    285.00    297.74  ........  ........
    Nanoscale Science and Engineering.........  ........    149.68    173.71    186.18    198.92    224.98  ........
    Learning for the 21st Century.............  ........    121.46    125.51    137.98    150.72    176.78  ........
    ----------------------------------------------------------------------------------------------------------------

                                   post-docs
        Question. What is NSF doing in response to complaints by some
    postdocs that they spend too much time in postdoc positions because
    there is insufficient funding and/or employment opportunities for new
    researchers who want to begin their careers independently?
        Answer. The transition from postdoc to researcher is often
    difficult for science, engineering and mathematics postdocs. Outreach
    efforts aimed at reaching the most talented young members of the SMET
    research to promote awareness of NSF research opportunities are
    continually advanced by program staff at scientific meetings,
    conferences and conventions. These efforts, along with frequent
    workshops on proposal preparation, provide the Foundation with the
    opportunity to recruit and encourage creative and innovative proposals
    from new investigators.
        NSF also offers substantial opportunities to new investigators
    through its Faculty Early Career Development (CAREER) program. CAREER
    is a Foundation-wide activity that offers the National Science
    Foundation's most prestigious awards for new faculty members. The
    CAREER program recognizes and supports the early career-development
    activities of those teacher-scholars who are most likely to become the
    academic leaders of the 21st century. CAREER awardees will be selected
    on the basis of creative, career-development plans that effectively
    integrate research and education within the context of the mission of
    their institution. NSF encourages submission of CAREER proposals from
    new faculty at all CAREER eligible institutions. Such plans should
    build a firm foundation for a lifetime of integrated contributions to
    research and education.
                                   astronomy
        Question. The National Research Council (NRC) recently issued a
    study called Astronomy and Astrophysics in the New Millennium, which
    provided a number of recommendations to strengthen ground-based
    astronomy programs. For example, NRC recommended that NSF set up a
    procedure to obtain ``regular expert advice'' for its AST program.
    Other recommendations included: (1) improving coordination between NSF
    and NASA and (2) requiring NSF to develop management plans for large
    astronomy projects. How is NSF responding to these recommendations?
        Answer. NSF conducts its science-driven planning activities in a
    highly collaborative manner, seeking advice from a rich diversity of
    NSF stakeholders. Of course, the astronomy community has set an
    excellent stakeholder example, demonstrating an ability to prioritize
    its compelling scientific needs and opportunities through the Decadal
    Survey, as the referenced NRC study is called. NSF gives very serious
    consideration to the recommendations in the Decadal Survey. The
    community's recommendations are considered within the context of the
    agency's overall responsibility for advancing frontiers across the
    science and engineering enterprise.
        Scientific opportunities demand the forging of new partnerships, to
    include public and private, domestic and international, ground- and
    space-based partners. Future facilities of unprecedented scale and
    power will call for new linkages between resources, enabled by the
    enormous potential of computer and information science and engineering
    technologies to collect, communicate, store and analyze vast amounts of
    information. To meet these opportunities, NSF will increase its
    interaction with NASA and with the Department of Energy--to better
    coordinate, plan and assess research and education activities of common
    interest. The goals also include sharing programmatic information and
    technology, and to develop and implement a scientific planning process
    that defines areas of opportunity and associated infrastructure needs.
        Over the past 50 years, NSF has enjoyed a successful track record
    of providing large-scale, state-of-the-art facilities for the
    astronomical sciences. At the Foundation-level, we now invest over $1
    billion annually in large-scale facilities and infrastructure projects.
    Our portfolio has recently grown and diversified to meet emerging
    science and engineering opportunities, and it now includes shared-use
    research platforms and distributed user facilities that challenge
    traditional management approaches. To accommodate these new approaches,
    the agency is currently developing a Facilities Management and
    Oversight Plan that will be submitted to OMB in September of this year.
        Question. The Administration is considering the consolidation of
    NSF and NASA astronomy programs. Why do you believe this that this
    proposal was made?
        Answer. In the President's fiscal year 2002 budget to Congress for
    the National Science Foundation, the Administration identified ``three
    management reform opportunities that will help fulfill the President's
    promise to make Government more results-oriented.'' One of those areas
    for reform is titled ``Reorganize Research in Astronomy and
    Astrophysics''.
        Historically, NASA has funded space-based astronomy and NSF has
    funded ground-based astronomy facilities, as well as astronomy research
    proposals. Over the past decade there have been significant changes in
    the funding from each agency as reported in ``Federal Funding of
    Astronomical Research'' from the National Research Council (National
    Academy Press, 2000). The National Research Council also recently
    released the latest decadal survey of the state of the field and
    recommendations for the first decade of the 21st century: ``Astronomy
    and Astrophysics in the New Millennium'' (National Academy Press,
    2001). With these reports in hand, the Administration concluded that
    now is the time to assess the Federal Government's management and
    organization of astronomical research.
        Thus NSF and NASA requested that the National Academy of Sciences
    convene a Blue Ribbon Panel to assess the organizational effectiveness
    of Federal support of astronomical sciences and, specifically, the pros
    and cons of transferring NSF's astronomy responsibility to NASA. In
    response, the National Research Council established the Committee on
    Organization and Management of Research in Astronomy and Astrophysics.
    The Committee is directed to report by September 1, 2001.
                                     epscor
        Question. The NSF Office of Inspector General recently released a
    report on the Experimental Program to Stimulate Competitive Research
    (EPSCoR). The OIG questioned the rationale of EPSCoR-funded researchers
    taking their funding with them when they move to institutions in non-
    EPSCoR states.
        What is NSF doing to satisfy this concern and other criticism
    raised by the OIG?
        Answer. In its review of the EPSCoR program, the Office of the
    Inspector General (OIG) recommended that EHR and the EPSCoR Office, in
    conjunction with higher levels of NSF management and NSF's research
    directorates, develop an administrative mechanism to ensure that EPSCoR
    co-funding dollars are targeted at their original purpose and do not
    support, either directly or indirectly, researchers who have moved to
    non-EPSCoR states. (OIG 01-2002, p. 23) In response, EPSCoR staff have
    met with state Project Directors and discussed this issue, and have
    their agreement to strongly encourage support of the Inspector
    General's position, unless constrained by broader institutional
    policies. For example, the principal investigator's institution
    generally acts as the fiscal agent on NSF awards. Thus the award is
    governed by institutional policies regarding capital equipment and
    intellectual property. The EPSCoR staff is also meeting with the
    Directorate Co-funding coordinators to explain this issue.
        Of the seven recommendations contained in the OIG report, two other
    recommendations specifically referred to NSF's conduct of the program:
        EHR and the EPSCoR Office should decide whether, as part of future
    infrastructure awards, NSF should require broader or more formal
    participation in Mississippi's EPSCoR committee by representatives of
    the private sector and public sector organizations outside higher
    education. (OIG 01-2002, p. 28)
      --NSF Action.--EPSCoR has met with the Mississippi State EPSCoR
            Committee and strongly supported the Inspector General's
            position. Mississippi EPSCoR has indicated that they will
            strengthen their Committee membership.
        EHR and the EPSCoR Office should decide whether to adopt general
    criteria to determine EPSCoR eligibility, rather than merely publishing
    a list of eligible states. (OIG 01-2002, p. 37)
      --NSF Action.--EPSCoR has operated in five states for 20 years and in
            the other states for from 1 to 15 years. During fiscal year
            2001 two additional states (Hawaii and New Mexico) became
            EPSCoR participants. In response to recommendations made in the
            reports issued by the fiscal year 2000 Committee of Visitors
            and the fiscal year 2001 report of the Office of the Inspector
            General, EPSCoR has established criteria governing
            participation in the program. These criteria were approved by
            Director Colwell and will be incorporated into a new EPSCoR
            program solicitation that will describe the July 2002 RII grant
            competition, for which awards are scheduled to begin in
            February 2003. The EPSCoR staff have reviewed these
            ``eligibility criteria'' with the state EPSCoR Project
            Directors and received their comments and suggestions before
            finalizing the language that will appear in the solicitation.
            The proposed eligibility criteria are given below.
        --Eligibility to participate in EPSCoR competitions will be based
                on the level of NSF research funding. Each year, the EPSCoR
                Office will compile and publish summary data for the
                preceding 3 years of NSF research funding by state.
        --Eligibility to participate in EPSCoR competitions would be
                restricted to those jurisdictions that received 0.7 percent
                or less of the total NSF research funds to all sources
                within a state averaged over the three-year period. In the
                few cases where a single large NSF-funded facility skews
                the data, an adjustment will be made. For example, West
                Virginia's funding data will be adjusted so that the
                Greenbank Observatory is not included in the state NSF
                research funding data used to calculate EPSCoR eligibility.
        --Any current EPSCoR state that did not meet the eligibility
                criteria would continue to be eligible for EPSCoR co-
                funding and EPSCoR Outreach for a period of three years. In
                these cases, the EPSCoR Office would also exercise
                flexibility with respect to the support of the state's
                EPSCoR administration. Quite often, the state office
                supports multi-agency EPSCoR efforts; some of these
                agencies do not provide administrative support.
          Any state that becomes eligible for the first time would be
                required to follow the existing process for entering the
                program. A suitable state committee would have to be
                created before a state could first request an EPSCoR
                Planning Grant to determine research barriers, areas of
                focus, areas of opportunity, etc. These steps are
                consistent with activities that other EPSCoR states have
                been required to undertake prior to competing in EPSCoR
                competitions.
                                h1-b visa funds
        Question. The H1-B non-immigrant petitioner receipts are projected
    to be about $144 million in fiscal year 2002. How are these funds
    utilized at NSF? Has NSF evaluated the effectiveness of the use of
    these funds in addressing the shortage of U.S.-born high-tech workers?
        Answer. Prior to October 16, 2000, H-1B funds, in accordance with
    the American Competitiveness and Workforce Improvement Act of 1998
    (Public Law 105-277), were used for:
      --Computer Science, Engineering, and Mathematics Scholarships
            (CSEMS)--annual, merit-based scholarships of up to $2,500 for
            up to two years for low-income individuals pursuing associate,
            undergraduate, or graduate degrees in the specified disciplines
            at institutions of higher education;
      --Grants for Mathematics, Engineering, or Science Enrichment Courses
            (ASCEND)--opportunities for students to enroll in year-round
            academic enrichment courses in the specified disciplines; and
      --Systemic Reform Activities--supplement rural systemic reform
            activities.
        After October 16, 2000, in accordance with the American
    Competitiveness in the 21st Century Act (Public Law 106-313), H-1B
    funds were to be used for:
      --CSEMS--maximum scholarship duration was extended to four years, and
            annual stipend was raised to $3,125; and
      --Private-Public Partnerships in K-12--establishes private-public
            partnerships in such areas as materials development, student
            externships, and math and science teacher professional
            development.
        To date, no formal evaluation (either by evaluation report or
    Committee of Visitors) has been performed.
        The projected total of $144 million of H-1B funds in fiscal year
    2002 appears to have been optimistic. The initial estimate for fiscal
    year 2001 of $121 million has been reduced to $94 million, and actual
    receipts may fall short of that mark. H-1B funds are scheduled to end
    in fiscal year 2003.
                                     ______

                               nsb strategic plan
        Question. When we met briefly a couple of weeks ago, you mentioned
    an effort by the National Science Board to develop a strategic plan on
    the allocation of scientific resources and you recently held a
    symposium with a number of experts from academia, industry, and the
    Federal government. Where is this plan going and what are your next
    steps with this plan?
        Answer. The Board has approved an Interim Report, Federal Research
    Resources: A Process for Setting Priorities, which includes its
    recommendations on improving the process for setting priorities for the
    Federal portfolio of research investments. Its recommendations address
    the need for evaluation of the portfolio in light of national goals for
    Federal research and for improvements in data and analytical techniques
    to monitor the Federal portfolio and understand and communicate the
    benefits of Federal investments to society. It identifies the need for
    an improved process for research budget coordination and priority
    setting in both the White House and Congress, and suggests how an
    improved process might be implemented. The Committee is preparing a
    final report for consideration by the Board for approval at the October
    10-11 NSB meeting, after which it will be released to the public,
    disseminated to Congress, the White House, and the scientific and
    science policy communities, and followed up with formal discussions on
    the NSB recommendations.
                               high-tech workers
        Question. I am concerned about the decline of American students and
    workers in the physical sciences and engineering. Could you lie out how
    the Foundation is responding to the shortage of U.S.-born engineers and
    scientists? I would also like to hear how NSF is working with the
    academic community to encourage more students to pursue science and
    engineering degrees and how NSF is working with the private sector to
    ensure that these students develop the necessary skills to meet the
    needs of the high-tech industry.
        Answer. NSF has a comprehensive suite of programs that prepare
    undergraduate students for entry into the workforce and into graduate
    programs. These programs utilize three strategies: (1) direct
    preparation of specific elements of the science and engineering
    workforce (e.g., Advanced Technological Education, Computer Science,
    Engineering, and Mathematics Scholarships); (2) attention to broadening
    participation in the science and engineering workforce by groups that
    are currently underrepresented (e.g., Historically Black Colleges and
    Universities--Undergraduate Program, Louis Stokes Alliances for
    Minority Participation, Tribal Colleges and Universities Program); and
    (3) strengthening the curricular and instructional infrastructure for
    providing high quality science, mathematics, engineering, and
    technology education to all students (e.g., Course, Curriculum, and
    Laboratory Improvement, Graduate Teaching Fellows in K-12 Education,
    National Science, Mathematics, Engineering, and Technology Education
    (SMETE) Digital Library).
        Across the set of NSF's programs for undergraduates, a balance is
    struck between providing students with the practical skills needed to
    perform at a high level in the workplace and providing the firm
    theoretical foundations in math and science required as preparation for
    study at more advanced levels.
                              nuclear technologies
        Question. Last year, I raised concerns about the lack of Federal
    support for nuclear engineering education. In response, as directed by
    the fiscal year 2001 Senate VA, HUD appropriations report, NSF was
    directed to review the academic interest in nuclear engineering
    education and to provide recommendations on how NSF can support this
    area. Last week, I received your report and frankly, I was a bit
    disappointed by the response. Your report even recognizes the need for
    nuclear engineers by stating that the demand for nuclear-trained
    personnel is on the rise, yet, NSF provides no concrete recommendations
    on how it will respond to these problems.
        Do you have any specific recommendations where NSF can be more
    directly involved in addressing the need for increased Federal support
    for nuclear engineering education?
        Answer. We are supporting a planning grant to Dr. James Duderstadt
    at the University of Michigan to engage the leading industry
    representatives, faculty and chairs of nuclear engineering departments.
    The project will include:
      --A market survey to better understand the interests of prospective
            employers, the attractiveness of study to potential students,
            the perspectives of colleges and universities.
      --The preliminary design of new curriculum in nuclear engineering by
            a national team of faculty and industrial experts.
      --A needs assessment for supporting resources.
      --The design of a summer practicum experience for students.
      --The development of financial estimates for the development,
            distribution, and ongoing support of the new curriculum.
      --The development of contacts with credentialling bodies, practicum
            sites and other potential sponsors for the planned activities.
        NSF will work closely with Dr. Duderstadt and his colleagues as the
    planning proceeds. Through these cooperative outreach efforts, we hope
    that faculty at nuclear engineering departments will better understand
    the NSF programs and vice-versa with the result that we receive a
    larger number of proposals which are competitive in the merit review
    process.
                           math and science education
        Question. I remain concerned about math and science education in
    this country. Our high school students are performing poorly in math
    and science as reported by the Third International Mathematics and
    Science Study. Also, there has been a significant decline in bachelor
    degrees awarded in engineering, math, and computer science degrees.
    Further, the U.S. is now lagging behind other countries in the
    percentage of undergraduates earning degrees in natural sciences and
    engineering. Lastly, the Board reported recently that enrollment in
    graduate school science programs are declining.
        Can you lay out for me how the Foundation is responding to these
    troubling facts? Please specify what you are doing to improve K-12 math
    and science education, undergraduate education, and graduate school
    education.
        Answer. We share your concern that individual indicators of
    science, math, engineering and technology (SMET) education are not as
    positive as we would want them to be. By the same token, we see various
    positive signs that progress is being made, and that strategies
    developed under NSF programs can be ported to a wide range of
    institutions to provide real opportunities for improvement.
        In PreK-12 education, a recent evaluation of the Urban Systemic
    Program found improved student outcomes and system change among 22
    large urban school districts, especially among minority students.
    Findings related to improved student outcomes include: (1) substantial
    increases in enrollment rates in mathematics and science gate-keeping
    and higher-level courses; (2) greater enrollment gains for
    underrepresented minority students than their peers; (3) achievement
    test gains; and (4) increased numbers of students taking college
    entrance examinations (AP, SAT, and ACT). In an evaluation of the
    Statewide Systemic Initiatives, half of the states showed impacts on
    classroom practice, with the highest gains in achievement occurring in
    states with intensive professional development linked to curriculum.
    The National Science Board has concluded that systemic reform programs
    have been very effective and should be further encouraged, and that
    efforts should be taken to educate the public on the complexity and
    long-term commitment required for success of such reforms.
        The President's new Math and Science Partnerships Initiative (MSPI)
    also promises to add resources and focus to improving PreK-12 SMET
    education.
        At the undergraduate level, NSF has a comprehensive suite of
    programs that prepare undergraduate students for entry into the
    workforce and into graduate programs. These programs utilize three
    strategies: (1) direct preparation of specific elements of the SMET
    workforce; (2) attention to broadening participation in the SMET
    workforce by groups that are currently underrepresented; and (3)
    strengthening the curricular and instructional infrastructure for
    providing high quality SMET education to all students.
        Across the set of NSF's programs for undergraduates, a balance is
    struck between providing students with the practical skills needed to
    perform at a high level in the workplace and providing the firm
    theoretical foundations in math and science required as preparation for
    study at more advanced levels.
        The methods used to strengthen undergraduate SMET education include
    inquiry-based learning, integration of learning technologies, faculty
    development, teacher preparation, and curricula reform. A new emphasis
    on strengthening student outcomes, focusing on educational ``end
    results,'' is being explored. NSF also plans to explore the coupling of
    undergraduate activities with the Centers for Learning and Teaching
    (CLT) Program (a PreK-12 program), which partners universities, school
    districts, state education agencies, and business and industry.
        At the graduate level, NSF support consists mainly in fellowships
    awarded to individual students. A major priority in the fiscal year
    2002 budget is to increase student stipends to make SMET graduate study
    more attractive.
        The centerpiece of NSF's strategy to improve SMET education is to
    examine whole systems rather than individual components. This research-
    based approach has been shown to be effective in identifying promising
    system-wide strategies that can make a real difference. The evaluation
    of the systemic initiatives makes it clear that this approach is
    effective in raising achievement levels and creating system-wide
    improvements that affect all students. Joining the CLT to undergraduate
    activities is another example in which real improvement can occur when
    synergies are created between educational levels.
                            long-term vision for nsf
        Question. Dr. Colwell, you have stated publicly that you supported
    our effort to double NSF's budget in five years. I have heard you
    discuss the importance of increasing the grant size and duration of NSF
    awards and I am personally sympathetic to that goal. But it is still
    unclear to me what scientific goals or vision you would like the
    Foundation to achieve in the long-term.
        Could you give me some sense of what policy goals you would like
    the Foundation to pursue? I would especially like to hear what specific
    research areas and education and human resource development goals you
    envision for the Foundation.
        After Dr. Colwell's response, I would also like to hear Dr. Kelly
    provide some comments.
        Answer--Dr. Colwell. The drivers of NSF's investments--training the
    next generation of scientists and engineers, strengthening core
    activities, exploiting new opportunities, building human and physical
    infrastructure--all focus on strengthening U.S. leadership in today's
    global, information-driven economy.
        The U.S. devotes only about 2.7 percent of its GDP to research and
    development--which ranks only sixth among major industrialized Nations.
    The Federal share of that total investment has shrunk, raising
    additional concerns. This lack of public investment in the basic
    sciences and engineering could erode the Nation's leadership position.
    Similarly, the latest results of international testing confirm that we
    need to strengthen math and science education at all levels. Securing
    U.S. world leadership in science and technology has never been more
    important to the future of the Nation.
        The NSF budget request identifies four priority areas for fiscal
    year 2002 funding: Information Technology Research, Biocomplexity and
    the Environment, Nanoscale Science and Engineering, Learning for the
    21st Century. Other priorities in the fiscal year 2002 include the
    President's Math and Science Partnership Initative, as well as
    increased investment in NSF's core, notably in mathematics.
        These investment priorities are vital to growth and innovation in
    key industrial sectors and across society. In the automotive and
    aeronautics industries, we can foresee nanoparticle reinforced
    materials for lighter bodies, external painting that does not need
    washing, cheap non-flammable plastics, and self-repairing coatings and
    textiles. Terascale computing systems offer similar promise: in
    biotechnology, terascale systems will reduce the processor time
    required to simulate protein folding from 40 months to one day. New
    insights into complex systems are essential to such areas as weather
    forecasting, economic modeling, and environmental regulation. NSF's
    investments in education and human resource development--such as the
    Math and Science Partnerships, ADVANCE, CAREER, and the Science of
    Learning Centers--focus directly on broadening participation in science
    and engineering and achieving excellence at all levels of education.
        Public investments in scientific research and education, combined
    with native intellectual talent and the resourcefulness of the private
    sector, have made the U.S. science and technology enterprise the most
    envied in the world. Yet there is ample evidence that the U.S. is not
    keeping pace with expanding opportunities for scientific progress. Nor
    are we doing enough to develop the talent that will keep this Nation at
    the forefront of science and technology well into the future. Doing
    both requires a level of public investment that reflects the increased
    importance of science and engineering to economic prosperity and social
    well being.
        Answer--Dr. KelIy. I agree completely with the objectives noted
    above by Dr. Colwell. NSF is critical to development of human resources
    for science and engineering and for support of transforming research.
    The Board is strongly supportive of the Foundation's special interests
    in Nanotechnology, Biocomplexity and the Environment, Information
    Technology, Learning for the 21st Century, and the President's Math and
    Science Partnership. The Board is committed to adequate support for
    people and a robust agenda for scientific discovery, both of which are
    essential to the advancing the U.S. economy and quality of life in the
    future.
                               funding priorities
        Question. The Administration's budget request for fiscal year 2002
    falls short of our goal of increasing NSF's budget by at least 15
    percent in order to keep us on pace for doubling NSF's budget by 2005.
    Depending on our final allocation, it my strong hope and desire that we
    will be able to increase significantly NSF's budget.
        Assuming for a moment that we were able to increase the
    Foundation's budget by $675 million, or even $200 million, how would
    you allocate these funds and how would you prioritize the funding?
    Could you specify what particular areas of research such as IT or nano
    and what new major research equipment projects you would support
    funding? Lastly, do you support putting additional resources into
    programs that broaden participation of underrepresented groups such as
    the Partnerships for Innovation, EPSCoR, and HBCU programs?
        Answer--Dr. Colwell. NSF's fiscal year 2002 Request represents an
    overall increase of 1.3 percent over fiscal year 2001 and funds all our
    most significant priorities. The fiscal year 2002 Budget Request:
      --Increases NSF's investments in education by 11 percent over fiscal
            year 2001. The request includes $200 million in fiscal year
            2002, and $1 billion over five years, to begin the President's
            Math and Science Partnerships Initiative to establish
            partnership agreements between States and institutions of
            higher education, with the goal of strengthening math and
            science education in grades K-12. I believe the Administration
            is making an important statement as to the value of what NSF
            brings to the larger Education Reform effort.
      --Increases graduate stipends by nearly 15 percent in the Graduate
            Research Fellowship, the Graduate Teaching Fellowships in K-12
            Education, and the Integrative Graduate Education and Research
            Traineeships programs to help attract the best students to
            pursue careers in science and engineering.
      --Provides a $20 million, or 17 percent, increase in mathematical
            sciences to initiate an effort in multidisciplinary mathematics
            research to enhance America's preeminence in this important
            area.
      --Increases NSF priority areas of Information Technology Research by
            $13 million, or 5 percent, to $273 million and Nanoscale
            Science and Engineering by $24 million, or 16 percent, to $174
            million.
        Answer--Dr. Kelly. NSF provides the core, broad-based support for
    science and engineering that enables advances in science and technology
    in many areas critical to the Nation's future. It is imperative that we
    continue to work together to significantly increase the NSF budget to
    address more adequately our priorities in research and education. Right
    now we are eating our seed corn. We are not making the investments in
    people and in basic research that we need for the future. There has
    been a bipartisan effort to double the Federal funding for basic
    science and science budgets over a five-year period, which I support,
    to sustain the Nation's long-term economic health, quality of life, and
    security. I concur with the priorities for the Foundation identified by
    Dr. Colwell. Increased funding for Nanoscale Science and Engineering
    and Information Technology Research is especially critical, as is our
    investment in people. With regard to programs to broaden participation
    of underrepresented groups, the Board strongly supports the
    Foundation's statutory responsibility to encourage diversity in
    participation in science and engineering research and education at all
    levels to promote the full use of human resources in science and
    engineering and to insure the full development and use of the
    scientific and engineering talents and skills of our population.
                               staffing resources
        Question. With the growing program responsibilities, I am concerned
    about whether NSF has the necessary resources to manage its programs.
        Has NSF reviewed its short- and long-term staffing needs based on
    its growing workload? Dr. Boesz, do you believe this is a serious
    concern?
        Answer. Yes, it is a serious concern for NSF for several reasons.
    First, I believe NSF has stretched its existing management and support
    services close to the limit, and any increases in funding for science
    and engineering research and infrastructure projects will require
    proportionate increases in staffing resources to ensure that the grant
    award process and other program initiatives are managed in an efficient
    and timely manner. Like other organizations, NSF has benefited from
    increased productivity due to technology advancements over the past
    decade, and NSF should be commended for its efforts in applying those
    advancements to keep overhead costs to a minimum. I believe, however,
    that the current level of management and support staffing is
    approaching the breaking point, and additional staffing will certainly
    be required to handle expanded funding responsibilities.
        Second, any objective assessment of the skill mix of NSF's staff is
    likely to identify important deficiencies. Recent audits conducted by
    my office, for example, found inadequate oversight of large projects
    and a corresponding need for staff with training and experience in
    managing such efforts. NSF is currently assessing its workforce needs,
    and my office is planning a review of NSF's human resource management
    and planning early in the next fiscal year. We will focus on the
    business risks confronting NSF and whether its workforce planning
    adequately addresses those risks. As the size and number of capital
    projects grow and the amounts and duration of grants are increased, the
    need for appropriate management and monitoring skills becomes even more
    urgent.
        Third, NSF faces many of the same problems other agencies will
    confront in the anticipated wave of baby-boomer retirements and the
    potential loss of valuable expertise and institutional knowledge. The
    problem may be mitigated to some extent for NSF by its substantial use
    of the Intergovernmental Personnel Act to rotate staff from the
    academic and private sectors, as well as by the fact that scientists
    and researchers often continue to work to a later age. Nevertheless, in
    an agency that has already spread its management and support staff very
    thin, it does not take many departures of key personnel to seriously
    disrupt operations. In the absence of staffing depth, the efficient
    transfer of knowledge from departing employees also becomes critical. A
    rapid growth in NSF's workload as its budget increases in coming years
    will intensify NSF's need to attract and retain the right skills,
    provide the training necessary to sustain productivity, and strengthen
    its staffing levels to meet the requirements of prudent management and
    oversight.
                    assisting smaller research institutions
        Question. Dr. Colwell, I remain troubled by the Foundation's
    response to my concern about broadening NSF's participation to smaller
    research institutions. Some of my fellow policymakers in the Senate
    still believe that NSF is an agency for the elite schools such as
    Stanford, Michigan, and MIT. While I appreciate your efforts to at
    least maintain flat funding for EPSCoR, I am troubled by the
    Administration's decision to eliminate funding for the Office of
    Innovation Partnerships, which is an important initiative to me, and
    flat fund programs for minorities such as the HBCUs and the Tribal
    Colleges program.
        Dr. Colwell, could you please explain the rationale behind this?
        Answer. In determining its budget request, NSF attempts to balance
    various competing priorities. In fiscal year 2002, the Math and Science
    Partnerships Initiative (MSPI) and graduate student stipends were the
    Foundation's highest priorities. Implementing these priorities,
    unfortunately, often requires reductions in other programs. Eliminating
    fiscal year 2002 funding for the Partnerships for Innovation program
    (PFI) was viewed as a funding pause during which we could assess how
    the program should be focused for optimum results. Overall, PFI was
    viewed as a lesser priority than MSPI, student stipends, and
    maintaining near level funding for important programs such as the NSF
    diversity portfolio.
        Our concern for maintaining a strong portfolio of programs for
    underrepresented groups is reflected in administrative changes within
    NSF that will result in greater leveraging of funds and more effective
    allocation of funds to increase the measurable impact of programs. The
    Historically Black Colleges and Universities--Undergraduate Program
    (HBCU-UP) has been re-focused to devote attention to those institutions
    most in need of assistance to strengthen the quality of their academic
    programs and enhance the ability of their faculty to offer high quality
    instruction. The Alliances for Graduate Education and the Professoriate
    (AGEP) program now supports only graduate education alliances of
    university consortia or entire university systems, rather than
    individual institutions, significantly increasing the impact of
    programmatic activities. And plans are underway to re-structure the
    Centers for Research Excellence in Science and Technology (CREST)
    program to emulate the successful Experimental Program to Stimulate
    Competitive Research (EPSCoR) strategy of combining core support with
    active co-funding of proposals submitted to NSF's other research
    programs.
        NSF operates a range of programs that target small institutions. In
    addition to EPSCoR, HBCU-UP, and CREST, these programs include the
    Tribal Colleges and Universities Program (TCUP), the Rural Systemic
    Initiatives (RSI), the Model Institutions of Excellence (MIE), and many
    others. NSF continues to be concerned that program offerings and awards
    reflect the full range of institutions in the United States, and that
    NSF activities encompass small institutions and those in underserved
    areas.

                              subcommittee recess

        Senator Mikulski. So, we conclude this hearing. I want to
    thank Senator Bond for his graciousness today. We have said a
    lot of kind words to each other. We actually do believe them
    and we are ready to really move this appropriation forward. So,
    thank you very much and we will be back in touch.
        Dr. Colwell. Thank you, Senator.
        Senator Mikulski. We recess until we have the EPA hearing
    on Wednesday, June 13th.
        [Whereupon, at 11:26 a.m., Wednesday, June 6, 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 2002

                                  ----------

                            WEDNESDAY, JUNE 13, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met, at 10:08 a.m., in room SD-138,
    Dirksen Senate Office Building, Hon. Barbara A. Mikulski
    (chairman) presiding.
        Present: Senators Mikulski, Leahy, Kohl, Johnson, Bond,
    Burns, Craig, Domenici, and Stevens.

                        ENVIRONMENTAL PROTECTION AGENCY

    STATEMENT OF CHRISTINE TODD WHITMAN, ADMINISTRATOR

                opening statement of senator barbara a. Mikulski

        Senator Mikulski. Good morning. The subcommittee of VA-HUD
    will convene and today we will take testimony from
    Administrator Christie Todd Whitman of the Environmental
    Protection Agency. I would like to thank the Administrator for
    being so flexible in the change of time and our schedule. We
    were trying to do a Coast Guard hearing and several other
    things, and we are trying to get caught up in our hearings.
    Anyway, so thank you for your flexibility.
        I want to welcome you to your first hearing before this
    subcommittee. You know that we feel very strongly in this
    committee that EPA serves a very important mission of
    protecting human health and the environment. I was pleased to
    support Administrator Whitman's nomination to lead the agency,
    because I think she brings great expertise. First of all, a
    long history of being an advocate for the environment, and the
    administrative skills of being the chief executive of a State,
    as well as having to also work with Federal agencies from the
    gubernatorial level, and I look forward to working with her.
        New Jersey and Maryland are confronted by many of the same
    problems, whether it's brownfields redevelopment, coastal water
    quality, and air pollution from their highways, byways,
    expressways and roadways.
        I think that with adequate resources, the agency can
    benefit from her experiences in New Jersey, so I am so glad
    that she is here today to answer our questions about EPA's
    budget. I must say, Administrator Whitman, I am puzzled and
    troubled by some aspects of the budget and look forward to our
    conversation with you.
        The 2002 budget for EPA totals $7.3 billion. That is a $500
    million dollar decrease from 2001. This is more than a 6
    percent cut. Now we have been told that this decrease is
    because the new Administration cut what we would call
    congressionally directed initiatives, otherwise known as
    earmarks. But I am concerned that it also could cut programs to
    protect water quality, clean air, enforcement of environmental
    laws and of course the whole issue of scientific analysis.
        In the area of enforcement, I am troubled by this year's
    request. I understand the budget cuts 270 environmental
    enforcers, kind of like the environmental cops on the beat, and
    most of these cuts would be at the regional level where EPA
    works to deter polluters from ignoring those laws.
        At the same time, the budget would fund a new State grant
    program. I know that a lot of enforcement goes on at the State
    level and there is no way the Federal Government could, nor
    should it be the sole enforcer, but I am concerned about what
    is the proper balance and what is this new State grant program.
    I certainly do not want to have a shift in policy that would
    send the wrong message to polluters, and so I am puzzled about
    how this change will be made, and also, does it require an
    authorization.
        Now let us go to clean water infrastructure. Communities in
    Maryland and all across the Nation are confronted with enormous
    costs to upgrade old and failing sewer systems, and this has
    tremendous impact on its leakages into groundwater or into, in
    my case, the Chesapeake Bay. In Maryland, these projects are
    critical because this is part of what is causing the nutrient
    discharges into the bay, and we have been working on a
    bipartisan basis to save the bay.
        So once again, I am puzzled by the proposed cuts to the
    Clean Water State Revolving Loan Fund. There has been a request
    of $850 million which is $500 million lower than the amount we
    appropriated last year. We also have a $450 million request for
    new sewer grant programs and frankly, I do not know what that
    means, but we thought we were funding clean water at 1.3, now
    it's 850, so it is less and we are going into a competitive
    program instead of a funded program, and I would believe as a
    governor, you would like the previous program because you could
    rely on, you thought you could rely upon these funds, and I
    would like to have more on that.
        Then, we must raise the issue of arsenic in drinking water.
    The recent decision not to revise the acceptable level of
    arsenic in drinking water as required by the law written by
    this subcommittee, the current standard was set in 1942, and we
    know a lot more about public health and arsenic and yet I am
    concerned that you delayed rolling that into February, when the
    committee who confronted this last year set a June 22 date.
        Climate change is something that I want to know what is the
    Administration proposing, because I found the President's
    recent remarks confusing. It sounds like we will be doing more
    and more research, but I am not sure where the recommendations
    go, where does research end and action begin.
        Sound science. I know this is something you and I have
    talked about, and I am absolutely committed to the concept and
    also operationalizing the concept of sound science, but again,
    I understand this has been cut by several million dollars, so I
    would like to talk about that.
        And again in the brownfields, I really like the brownfields
    initiative and I think for our communities, really, the old
    industrial sites of the northeast and midwest, and I also
    believe that in States like Montana and Utah, that there are
    these, and other western States, that the brownfields are both
    an environmental problem, but they are an economic development
    opportunity and I really look forward to moving that.
        Of course, you know my devotion to the Chesapeake Bay. The
    Chesapeake Bay Program was started by Senator Charles Mathias,
    my predecessor, and we look forward to really making sure we
    stay the course on the cleanup of the bay.
        Finally, I am going to reiterate that I am working with my
    colleague Senator Bond, and I would say this to the committee,
    say it at my own caucus, urge my colleagues to say it, this
    bill should not be a vehicle for environmental riders, and if
    the Administration and the House and the Senate could work
    together in a bipartisan basis, this would be terrific. I would
    like the focus of our floor debate and then the focus of the
    conference to be in how best can we help EPA serve the Nation
    in public health and protecting the environment and not the
    hours we spent last year, really most of our discussion on EPA
    was----
        Senator Bond. It was.
        Senator Mikulski. They were broadly supported but
    nevertheless, riders become authorizing by proxy, and we would
    prefer that this really be dealt with in some sort of directive
    or order.

                               prepared statement

        So that concludes my statement, I look forward to
    proceeding with the hearing, and now I would like to turn to
    our ranking member, Senator Bond.
        [The statement follows:]

               Prepared Statement of Senator Barbara A. Mikulski

        I welcome Administrator Whitman to her first hearing before the
    Subcommittee.
        EPA serves the very important mission of protecting human health
    and the environment, and I was pleased to support Administrator
    Whitman's nomination to lead the agency. New Jersey and Maryland are
    confronted by many similar environmental challenges--brownfields
    redevelopment and coastal water quality to name a few--so I look
    forward to working with Administrator Whitman.
        I think that with adequate resources, the agency can benefit from
    her experiences in New Jersey. I am glad she is here today to answer
    our questions about EPA's budget request, because I am puzzled and
    troubled by many aspects of this budget.
        The 2002 budget request for EPA totals $7.3 billion, a $500 million
    decrease from the 2001 level. This is more than a 6 percent cut. We
    have been told that this decrease is because the new Administration cut
    earmarks. But what this really means is cuts in programs to protect
    water quality, infrastructure, clean air, enforcement of environmental
    laws, and scientific analysis.
                       enforcement of environmental laws
        I am troubled by this year's request for enforcement. The budget
    cuts 270 environmental cops on the beat. Most of these cuts would be at
    the regional level where EPA works to deter polluters from ignoring the
    law.
        At the same time, the budget would fund a new State grant program.
    Boosting State enforcement programs is important, but we should not
    weaken our Federal enforcement efforts. We need both strong Federal and
    State enforcement efforts to achieve compliance with our environmental
    laws--not one or the other.
        This fundamental shift in policy may send the wrong message to
    polluters, and I am puzzled about how this change can be made without
    authorization. I would like to know how it is possible that this budget
    can keep the Federal enforcement role strong even though it cuts
    resources.
                           clean water infrastructure
        Communities in Maryland and all across the nation are confronted
    with enormous costs to upgrade old and failing sewer systems. In
    Maryland, these projects are critical because they will help preventing
    sewage and nutrient discharges into the Chesapeake Bay.
        So I am troubled by the proposed cut to the Clean Water State
    Revolving Loan Fund. We have a request of only $850 million which is
    $500 million lower than we have appropriated in recent years.
        We also have a $450 million request for the new sewer grants
    program. But I am puzzled why this budget ignores Congress' direction
    to fully fund the Clean Water fund first.
                           arsenic in drinking water
        I am also puzzled by the recent decision not to lower the
    acceptable level of arsenic in drinking water, as required by a law
    written by this Subcommittee. The current standard was set in 1942, and
    we now know that arsenic causes cancer. What exactly is the
    Administration's policy on this issue?
                                 climate change
        On this issue of Climate Change, I want to know exactly what the
    Administration is proposing, because I have found the President's
    recent remarks very confusing. It sounds like we will be doing more and
    more research, but no real recommendations have been made. Where is the
    Administration going with this important issue? How does EPA fit in?
    We've had 10 years of solid study. We now need to take this important
    issue to the next level. When will we get there?
                                 sound science
        One of the aspects of this budget that I find most baffling is the
    cuts in sound science programs. During the campaign, President Bush
    said ``efforts to improve our environment must be based on sound
    science, not social fads.'' The new Administration has said many of
    EPA's past actions--like lowering the level of arsenic in drinking
    water--have not been based on sound science. So we should expect the
    new Administration to increase funding for sound science programs. So I
    am puzzled why the budget cuts EPA's science and technology account by
    $56 million.
                                  brownfields
        The budget includes $98 million for brownfields activities, a
    slight increase over 2001. The Senate recently passed S. 350, the
    Brownfields Redevelopment Act, which would authorize a substantial
    increase in brownfields funding--up to $250 million.
        This will create new jobs and increase the tax base in our
    communities, and I want to thank Administrator Whitman for her support
    for this important legislation. I hope EPA will work to get the House
    to act on this bill, so hopefully our Subcommittee can provide the
    additional resources.
                             chesapeake bay program
        The budget also cuts many regional water programs, like the
    Chesapeake Bay program. The request for the Chesapeake Bay is $2
    million lower than the Page 5 2001 level. I want to know the
    consequences of this cut, and what it will mean to this important
    program.
                              environmental riders
        Finally, I also want to reiterate that Senator Bond and I have
    always taken the position that the VA-HUD bill should not be a vehicle
    for environmental riders. And I hope that as we move a bill through the
    Committee this year, we will continue this policy.
        Now let me turn to our Ranking Member, Senator Bond, for his
    comments.

                    statement of senator christopher s. Bond

        Senator Bond. Thank you very much, Madam Chair, and it is a
    pleasure to welcome EPA Administrator Whitman to testify on the
    budget. Madam Administrator, you have one of the toughest jobs
    in government, but I think you are the right person for the
    job. I do not know why you took it, but I am glad you did. EPA
    is quickly becoming one of the most important agencies in the
    government as we map out a strategy to assess and address many
    of the critical questions and concerns impacting the Nation and
    world, whether it is changes in climate as well as the primary
    responsibility of EPA in meeting basic environmental standards
    and requirements in this country.
        We have had a number of problems and concerns in the past
    over the ability of EPA to administer its programs effectively,
    including the inability to meet work force demands, a lack of
    information and accountability, failure properly to monitor and
    insure the appropriate use of grants, and these will continue
    to be serious challenges for you. I assure you we will work
    with you in taking on steps to address the broader issues such
    as climate changes, there are no easy answers or simple
    solutions, but I certainly agree with the chair that sound
    science must be the touchstone for environmental issues, and
    most especially the large international issues and decisions,
    and we need to address global climate change based on what we
    know, with the firm understanding of how our decisions will
    impact the climate, the economy, and our relationship with
    other Nations of the international community.
        Skipping on down to the statement, and I ask Madam Chair,
    that my full statement be accepted into the record.
        Senator Mikulski. Without objection.
        Senator Bond. I want to highlight several things the chair
    has noted, such as the decision of the Administration to
    eliminate funding for what they dismiss as earmarks but what we
    know are individual water and sewer grants to communities with
    special needs. The people who have benefitted from these grants
    really understand how important they are to the environment and
    quality of life, and I hope that you will help us explain to
    OMB the importance of these grants and the fact that I don't
    believe the admonition of the OMB is going to be well received.
        I too am deeply disturbed that this Administration has
    apparently decided to carry on the tradition of the previous
    one by proposing to slash funding for the Clean Water State
    Revolving Fund down to $850 million.
        I recognize the Administration is proposing a new sewer
    overflow control grants program at $450 million. You know,
    there is merit to it, but I believe we need to continue funding
    of the Clean Water State Revolving Fund, at least at $1.35
    billion. It is a pressing need.
        In light of the most recent EPA gap analysis, the United
    States will need to spend over the next two decades some $200
    billion to replace existing water infrastructure systems, which
    means by the year 2020, the United States will need to spend
    some $21 billion annually to meet capital expenditures for
    wastewater treatment, as opposed to about $9.4 billion being
    spent annually now.
        I should note that I understand that the sewer overflow
    control grants program activities are also eligible under the
    Clean Water State Revolving Funds and I do have some concerns
    about how this new program would be administered to meet the
    most critical needs in the States.
        I am not a supporter generally of EPA boutique programs,
    but I do note that you propose to make 25 million dollars in
    grants available to States to improve their own enforcement
    efforts consistent with their environmental priorities and
    also, you propose making 25 million dollars in grants available
    to improve environmental information systems. While, we have
    had some problems with that in the past, I understand that you
    have significant experience as governor in the use of
    environmental information systems and will be able to assure us
    that these would be effectively administered.

                               prepared statement

        In any event, I look forward to working with you on the
    many exciting and important challenges you face at EPA, and I
    think that your experience in New Jersey as well as your broad
    range of public service will make you a very effective
    administrator and we are delighted to have you.
        [The statement follows:]

               Prepared Statement of Senator Christopher S. Bond

        Thank you, Madam Chair. I am happy to welcome EPA Administrator
    Christie Todd Whitman to testify on the EPA's budget for fiscal year
    2002. This is one of the toughest jobs in the Government, but I believe
    that you are the right person for this job. In particular, the EPA is
    quickly becoming one of the more important agencies in the Government
    as we begin to map out a strategy to assess and address the many issues
    and concerns that are impacting this Nation and the world through
    changes to the climate as well as for meeting the EPA's primary mission
    to maintain basic environmental standards and requirements. As we
    continue to evaluate the impact of human and industrial activity on the
    climate and the environment, the EPA will play a larger and larger role
    as both a guardian and mediator of environmental policies and issues
    for this country and, in many ways, the world.
        We have had a number of problems and concerns in the past over the
    ability of the EPA to administer its programs effectively, including an
    inability to meet workforce demands, a lack of information
    accountability and a failure to properly monitor and ensure the
    appropriate use of grants. These remain serious concerns and a great
    challenge to you as the new EPA Administrator. In addition, the EPA is
    the primary agency at the center of a storm of issues including how to
    address air quality standards without undermining critically needed
    energy production, what to do about the gasoline additive MTBE, and how
    states will set ``total maximum daily loads'' (TMDLs) of pollution to
    ensure that water quality standards are attained. I promise that we
    will work with you to address the many challenges facing the EPA.
        I also assure you that we will work with you on taking the next
    steps to address the larger issues of climate change as it impacts the
    entire world. There are no easy answers or simple solutions in trying
    to meet national environmental goals in an international context. The
    Federal Government invests billions of dollars each year through the
    EPA alone to meet air and water quality standards as well as to address
    the environmental damage resulting from decisions made in the past
    during the industrial growth of this Nation. However, sound science
    needs to be the touchstone for all environmental issues and most
    especially these larger international environmental issues and
    decisions--we need to address global climate change based on what we
    know with a firm understanding of how our decisions will impact the
    climate, the economy and our relationship with the other Nations of the
    international community.
        Moving on to the budget request before us today, EPA is requesting
    a $7.3 billion budget for fiscal year 2002, a decrease of $500 million
    from the fiscal year 2001 level. This reduction reflects the
    Administration's decision to eliminate any funding attributed to what
    is often described as ``earmarks'' but what I prefer to describe as
    individual water and sewer grants to communities with special needs.
    And I assure you these communities and the people and families of these
    communities appreciate the difference that these grants make to the
    quality of life in their communities. I look forward to working with
    you in making the Administration understand how important many of these
    grants are to these communities.
        Unfortunately, the Administration also has carried on the tradition
    of the last administration by proposing to slash the funding for the
    Clean Water State Revolving Fund from some $1.35 billion in fiscal year
    2001 to $850 million in fiscal year 2002. Instead, the Administration
    is proposing to fund a new Sewer Overflow Control Grants program at
    $450 million. While I believe that this new sewer grants program has
    merit and is designed to address a critical local need, I strongly
    support the continued funding of the Clean Water State Revolving Fund
    at $1.35 billion in fiscal year 2002, the same level as fiscal year
    2001. This need is especially relevant since the most recent EPA GAP
    analysis indicates that the United States will need to spend over the
    next 2 decades some $300 billion to replace existing water
    infrastructure systems, which means, by the year 2020, the United
    States will need to spend some $21 billion annually to meet capital
    expenditures for wastewater treatment as opposed to the some $9.4
    billion being spent annually now. In addition, I understand that the
    activities that are eligible under the proposed Sewer Overflow Control
    Grants program are also eligible under the Clean Water State Revolving
    Fund. Finally, I have many concerns about how this new Sewer Overflow
    Control Grants program will be administered to meet the most critical
    needs among states and localities.
        I am glad that the EPA is focusing on its primary programs rather
    than creating a series of new programs and responsibilities for an
    agency that is already strapped with many internal problems. In
    addition to the Sewer Overflow Control Grants program, the EPA is
    requesting funding for 2 new programs that emphasize the role of states
    in managing their environmental responsibilities. In the first program,
    the EPA would make $25 million in grants available to states to improve
    their own enforcement efforts consistent with their environmental
    priorities. The second program would have the EPA make $25 million in
    grants available to states to improve their environmental information
    systems. While I am not a strong supporter of boutique programs, these
    programs are going in the right direction by bolstering the
    relationship of the EPA with the states. Again, however, I am concerned
    about implementation issues; in particular, how these grants will be
    awarded, under what criteria and how the EPA will judge results.
        Administrator Whitman, I look forward to working with you on the
    many challenges that will face you at the EPA. Again, I believe that
    you, both as a former governor and a committed public servant, are the
    right person for this very challenging job.
        Thank you, Madam Chair.

        Senator Mikulski. Senator Johnson, I will turn to you, but
    I note that the ranking member of the full committee is here.
    Did you wish to make a statement at this time?
        Senator Stevens. You are very gracious, but I have come to
    hear the governor and I have no statement.
        Senator Mikulski. Thank you. Senator Johnson.

                        statement of senator tim Johnson

        Senator Johnson. Thank you, Madam Chairman, for holding
    this very timely hearing, and welcome to Administrator Whitman.
    I think your choice was an excellent one on the part of the
    President, and I just want to say congratulations as well as
    condolences, but nonetheless, we are glad that you are here. I
    will submit a full statement and be very brief as to opening
    statement.
        The EPA deals with some of our most difficult and most
    tractable problems in America, fundamentally important
    problems. Global warming, air pollution, safe drinking water,
    health of our rivers and contaminated sites. In the State of
    South Dakota, we are particularly concerned with this, as I
    shared with you yesterday, and I want to again express my
    appreciation for your coming by and hearing some of the
    concerns of South Dakota yesterday.
        The issue of earmarks has been raised, and while I am not a
    defender of every earmark that comes down the road, I would
    share an observation with the Administration that the
    chairwoman has noted and Senator Bond has noted, and that is
    because elected officials in Washington determine how to use a
    small portion of funds as opposed to nonelected officials at
    the State level, that does not necessarily mean that these
    decisions are inferior or are an unsatisfactory use of limited
    resources we have available. So I would hope that we would have
    a constructive effort on how best to utilize our resources and
    that both Federal and State level officials would be involved.
        I want to applaud EPA for its recent decision not to grant
    a waiver on oxygenation of gasoline sold in the State of
    California. I am pleased that that decision has been made. We
    are going to maintain our clean air in this Nation, and
    obviously I look forward to working with the EPA in that
    regard.
        I have cosponsored legislation with my good friend Senator
    Chuck Hagel, bipartisan legislation I am going to call the
    Renewable Fuels Security Act of 2001. This legislation would
    require that by 2008, all transportation fuel in the United
    States would have to be comprised of renewable fuels, at least
    in 5 percent by 2016. This is ambitious legislation.
    Nonetheless, I believe it dovetails nicely with the decision
    made by the EPA, and I look forward to working with both you
    and with Congress in general on a vigorous effort at developing
    and implementing a rule for fuel standards.
        I also want to express appreciation for your work on
    brownfield legislation. We have a long ways to go here and
    again, I would emphasize as I did the other day, the reality is
    that we have brownfield problems in rural areas as well as
    urban, even though the urban needs urgent attention and that's
    where most people think of when they think of brownfield
    problems, but they are serious issues in our rural areas as
    well.
        So thank you again for joining us today for discussion of
    your budget and Madam Chairman, I will submit a statement to
    more fully announce my views.
        Senator Mikulski. Senator Burns.

                               prepared statement

        Senator Burns. Thank you, Madam Chairman. I will just put
    my statement in the record. It is getting late and I think the
    visit with the Administrator will be long and detailed.
        Senator Mikulski. Thank you. Without objection, it will be
    accepted.
        [The statement follows:]

                   Prepared Statement of Senator Conrad Burns

        Thank you Madam Chairman, for this opportunity to speak today. I
    welcome Administrator Christine Todd Whitman and thank her for being
    with us today to share the goals and views of the Environmental
    Protection Agency as they relate to appropriations priorities for
    fiscal year 2002.
        The EPA Administrator has an important and tough job, because the
    responsibilities of her agency can so easily reach beyond protecting
    the environment and instead infringe on the freedoms of the American
    citizen. I know, because one of the reasons I ran for Senate in 1988
    was because of a dispute I had been involved in with the EPA on behalf
    of Yellowstone County when I was commissioner there. The EPA is charged
    with enforcing our federal environmental regulations, which is a very
    important job. Whether you agree with them or not, we all know that the
    laws we pass here in Congress aren't worth the paper they're written on
    unless they're enforced. However, in Montana I know that the State
    Department of Environmental Quality is responsible for almost all
    enforcement actions, so I am interested to hear from the Administrator
    how her agency will continue to improve that working relationship with
    the States.
        Another place where the EPA has a very important role in the
    detection and clean up of environmental health hazards. As you know,
    folks in Lincoln County and Libby Montana are having a very tough time
    dealing with the contamination of asbestos throughout the community.
    People have died, others are ill, still others may become ill, and the
    area has suffered socially and economically as well. Clean-up of
    tremolite asbestos from the vermiculite mine that operated there for
    many years is on-going and I certainly appreciate the hard work that
    has gone on there. Still, there is understandable concern about how
    long the clean up will take and folks are wanting to know if EPA will
    be there to complete the job. This is one thing I would like to find
    out about today.
        One issue that I am interested in visiting with the Administrator
    about today deals with the arsenic standard in drinking water. The
    standard had been changed from 50 parts per billion to 5 ppb in the
    final days of the Clinton Administration, but as I understand that
    level is being reviewed, and I applaud that decision. I agree that any
    new standard should be based on sound science, but I would add that the
    cost of the standard for small water systems should also be a factor.
    Setting an unreasonably low level for arsenic could be detrimental for
    rural water systems in Montana and all over the West where there is a
    high level of naturally occurring level of arsenic. Additionally, the
    cost of treating water could be so burdensome that at the local level,
    scarce dollars could be pulled from other important health and
    education programs. This is a decision that needs to be made
    thoughtfully, and I trust that Administrator Whitman is listening.
        I look forward to hearing your testimony today and to working with
    you in the future.

                      statement of senator larry E. Craig

        Senator Mikulski. Senator Craig.
        Senator Craig. Thank you. I have questions I am going to
    submit for the record and to you, Director Whitman. Thank you
    for coming, I have enjoyed my meetings with you and the issues
    that we are working on are critically important to all of us.
        I will mention one before I go because in it is an
    invitation. I want you to come to our beautiful State of Idaho.
    The reason I would like to have you come is that I would like
    to have you submerse yourself in probably one of the largest
    Superfund sites in the Nation, and the Coeur d'Alene basin. Now
    this is a Superfund site that has a pristine lake in it, the
    tourists come and travel through, and find one of the most
    beautiful areas in the world, and yet it is by definition a
    Superfund site, some 21 square miles, Madam Chairman.
        The problem we have has been the length of time and the
    phenomenal costs involved, but cleanup has proceeded. That's
    problem one.
        Problem two is that the regional EPA out of Seattle in
    their studies are trying to determine whether to expand the box
    from 21 square miles to as much as 1,500 square miles in a
    Superfund site. Now that is about all of north Idaho.
        I would also suggest to you, that is one of the number one
    tourist sites in the Nation, it is a great site by a most
    pristine lake, near a world class resort that says swim in the
    water, it is clean. It is safe, but the EPA thinks it is a
    Superfund site. That is why I think it would be important for
    you to come, the Idaho delegation would love to have you out,
    but I think it is important to understand priorities.
        EPA in many instances, I believe, has lost its priorities
    and has not appropriately targeted, and clearly, the direction
    that you are offering I think begins to speak to those
    important issues. Superfund ought to be real, it ought to clean
    up problems, it ought to eliminate the litigation and the
    timeliness, and the waste of money involved, we all know that,
    you are very well aware of it.
        But anyway, I want to extend that invitation to you today.
    I have to run to another meeting as many of us do, and we know
    there are other issues, many have been mentioned. Climate
    change, TMDL, arsenic. Thank you for doing the right thing, the
    correct thing in getting us to the best science that will be
    most cost effective. I come from a State with very high arsenic
    levels in our drinking water because of the geography of my
    State. Hundreds of millions of dollars could have been spent.
    It was a political trip wire placed in the right place for the
    wrong reasons. You did the right thing in my opinion, and are
    now going to address it in the appropriate fashion from the
    best science, and out of that, we will get the best standards.
    Thank you.
        Senator Mikulski. Thank you, Senator Craig, and we will
    ensure that your questions are inserted for Administrator
    Whitman.
        Senator Kohl, do you have a statement?
        Senator Kohl. Yes, I have a few questions.
        Senator Mikulski. We are not at questions yet. Do you have
    an opening statement?
        Senator Kohl. No, I'm fine, thank you.
        Senator Mikulski. Then Administrator Whitman, why do you
    not proceed and give us your first testimony here.

                      statement of christine todd Whitman

        Ms. Whitman. Certainly, Madam Chair, I am delighted.
    Members of the subcommittee, thank you for giving me the
    opportunity to be here today to discuss fully the EPA budget.
        If it's all right with the Chair, I would like to submit a
    fuller statement, however, but I will read a very brief one
    that touches on major points.
        Senator Mikulski. Without objection.
        Ms. Whitman. I am pleased to report that the President's
    budget does in our view provide the funding necessary to enable
    the Environmental Protection Agency to carry out its mission
    effectively and efficiently. The fiscal year 2002 request is
    $7.3 billion, a $56 million increase over last year's request.
        The President's budget request for EPA reflects a
    commitment to building and strengthening partnerships across
    America, partnerships that we need in order to be able to
    achieve our goal of making America's air cleaner, our water
    purer, and our land better protected. The budget encourages the
    development of innovative environmental programs and embraces
    the expertise and experience of States, local governments and
    Native tribes, while providing them with greater flexibility
    with which to pursue our shared goals.
        America's States and tribes receive $3.3 billion in this
    proposed budget, $500 million more than requested by the
    previous Administration. Included in these funds is a $25
    million grant program for State enforcement programs. Each
    year, as the Chair noted, the States perform about 95 percent
    of the Nation's environmental compliance inspections and 90
    percent of the enforcement actions. This program will allow the
    States to enhance their enforcement efforts in ways that will
    increase accountability for results and will provide
    flexibility for meeting and addressing their unique needs.
        The President's proposed budget also includes $25 million
    to improve the States' environmental information systems. By
    helping States and EPA exchange information electronically, we
    will improve accuracy and provide for better decision making
    with better information.
        For the continued cleanup of toxic waste sites, the
    President's budget requests $1.3 billion for Superfund. This
    will allow us to continue to work to address the cleanup of the
    1,200 sites that remain on the Federal national priority list,
    while also supporting the Department of Defense's effort to
    clean up sites that were part of the base realignment and
    closure process.
        I am also pleased to report that the proposed budget
    increases funding for the brownfields program by $5 million
    above last year's enacted budget, to $98 million. This program
    will provide for additional support for the State voluntary
    cleanup programs and brownfields assessment demonstration pilot
    programs. It's an excellent demonstration, as the chair
    mentioned, of the partnership between the Federal Government
    and the States.
        With respect to America's water infrastructure, the
    President's budget proposal includes $2.1 billion in grants to
    States to insure that every American community enjoys safe and
    clean water. The Administration's proposal of $1.3 billion in
    wastewater infrastructure grants to the States includes $450
    million in new programs to help communities address combined
    sewer overflows and sanitary sewer overflows. Also included is
    $850 million for the continued capitalization of the Clean
    Water State Revolving Fund.
        Overall, the President's request for infrastructure is $500
    million greater than last year's request.
        In this budget proposal, we have sought to strike the
    appropriate balance between the needs for infrastructure
    funding for both the Clean Water SRF and the new grant
    programs, and the exercise of judicious fiscal restraint. Our
    proposal of $850 million for the Clean Water SRF and $450
    million for the Wet Weather Act achieves these important goals
    which the Administration shares with the Congress.
        The President's budget also fully maintains EPA's support
    for the core water quality programs, programs that help States
    manage their water quality programs and address non-point
    source pollution. We will be working with the States to develop
    TMDL's for their most impaired waters, as well as to provide
    technical assistance in the adoption and implementation of new
    drinking water standards. We also maintain support for the
    development of beach monitoring and notification programs by
    States and local governments.
        With respect to drinking water, the President's budget
    proposes to maintain capitalization of the drinking water State
    revolving fund at the current level of $823 million. The
    President's budget will continue to provide States with
    flexibility to transfer funds between their clean water and
    drinking water State revolving funds, helping them address
    their most critical needs.
        I am also pleased that the President's budget request
    maintains current funding for EPA's clean air program. This
    will allow us to build on the progress we have made since the
    passage of the Clean Air Act in 1990. It will also allow us to
    strengthen our relationship with our States, tribes and local
    partners by providing $220 million to help them carry out their
    clean air responsibilities.
        Despite the fact that much progress has been made, much
    remains to be done. More than 150 million tons of air pollution
    was released into the air of the United States in 1999. More
    than 62 million of our fellow Americans live in counties where
    monitor data shows unhealthy air for one or more of the six
    common pollutants.
        By using EPA's authority to set standards that will clean
    the air and protect public health, authority that was recently
    reaffirmed by the Supreme Court, we will continue to work with
    the States to reduce transported emissions of smog producing
    pollutants, and we will seek to expand the existing nine-State
    market based allowance trading system to additional States.
        With respect to global climate change, the Administration
    is requesting $145 million in fiscal year 2002 to strengthen
    our partnerships with business, organizations and consumers, to
    achieve voluntary reductions in greenhouse gas emissions. These
    efforts are expected to result in an annual reduction of more
    than 73 million metric tons of carbon equivalent, reduce energy
    consumption by more than 85 billion kilowatt hours, which will
    save consumers more than $10 billion in energy costs and help
    develop a new generation of efficient cleaner cars and trucks.
    As business and individuals purchase new vehicles and equipment
    over the coming decade we want to do all we can to insure that
    these purchasers have smarter, cleaner and more efficient
    options available to them. Therefore, this budget supports our
    voluntarily efforts to promote the development of such
    equipment and vehicles.
        As important as the air we breathe is the safety of the
    food that we eat. The President's proposed budget supports the
    important work of using the strongest science to insure that
    industrial chemicals and pesticides meet today's food safety
    standards. Both our pesticides and chemicals program seek to
    work with all stakeholders to insure that the products used to
    protect against insects and other threats to crops are safe,
    not just for the food we eat, but for the environment as well.
        In all the work we do at EPA, I am committed to insuring
    that the policies we set are based on the best scientific
    information available. To insure the availability of solid
    scientific analysis, the President's budget supports a strong
    rigorous research program, including a proposed $535 million
    for the Office of Research and Development, a $5 million
    increase over last year's budget request.
        In addition, the President's budget proposal includes $110
    million for the Science to Achieve Results or STAR program.
    This program is one which gives EPA access to the best
    environmental scientists and engineers from outside the Agency
    so that we can always be insured we are relying on the
    strongest science available.

                               prepared statement

        Taken together, I believe the President's budget helps
    communities across America address their most pressing
    environmental priorities. It provides funds and it sets
    priorities. My Agency needs to meet its mission of protecting
    our environment and safeguarding the public health. It is this
    Administration's first installment on our pledge to leave
    America's air cleaner, water purer, and land better protected
    than when we came into office.
        Thank you, Madam Chair, and I would be happy to take
    questions.
        [The statement follows:]

                  Prepared Statement of Christine Todd Whitman

        Madam Chair and Members of the Subcommittee, I am pleased to be
    here to discuss President Bush's request for EPA. The President's
    budget provides the necessary funds for the Agency to carry out our
    mission efficiently and effectively--to protect human health and
    safeguard the environment. The fiscal year 2002 request is $7.3
    billion, a $56 million increase above last year's budget request.
        The President's budget request for EPA reflects a commitment to
    increase partnerships across America to develop innovative
    environmental programs that ensure stewardship of our land, air, and
    water for generations to come. This request provides the resources and
    vision necessary to reach our nation's environmental mission to protect
    the environment and human health.
        Each day, America's communities are developing environmental
    experience and expertise. Sharing this expertise with the Agency will
    help us fulfill its mission. The states and tribes receive about half
    of EPA's budget, because they are the innovators and energizers and are
    on the front line in implementing and enforcing our environmental
    statutes. The fiscal year 2002 request for states, tribes and EPA
    partners is $3.3 billion, almost $500 million more than was requested
    by the previous Administration.
        The President's request for EPA reflects a commitment to provide
    more flexibility to states and local communities to craft solutions to
    meet their unique environmental needs.
                         new enforcement grant program
        The President's Budget for fiscal year 2002 includes $25 million
    for grants to state enforcement programs. Each year, the states conduct
    about 95 percent of the nation's environmental compliance inspections
    and take about 90 percent of the enforcement actions. This grant
    program will benefit the national environmental enforcement program by
    providing states much-needed funds to enhance their enforcement efforts
    in delegated environmental programs. EPA envisions a program which
    includes three ingredients: a program for which there is accountability
    for results, flexibility to use the dollars to address state
    environmental priorities, and a program that is simple and efficient to
    administer. Over the next several months, EPA plans to work with the
    states to develop specific guidelines for the grant program. As we
    proceed through this process, we will keep the Subcommittee informed of
    our progress.
                          information exchange network
        The budget request also includes a $25 million program intended to
    improve the states' environmental information systems. This program
    will help states and EPA create the necessary infrastructure to
    efficiently exchange information electronically, which will reduce
    burden, improve accuracy and inform decision-making. This request
    reflects two years of collaboration with the states, with whom EPA has
    created a Network blueprint to improve the nation-wide exchange of
    environmental information. As an example of our ongoing efforts with
    the states in this area, in June 2001 all states will have the
    opportunity to begin submitting their Air Emissions Inventory data
    using the Information Exchange Network, demonstrating the progress made
    so far.
                                   superfund
        This budget continues a commitment to clean up toxic waste sites
    with $1.3 billion for the Superfund program. The Agency's Superfund
    program responds to the needs of states, communities and the public to
    address contamination from uncontrolled releases of toxic wastes that
    threaten human health, the environment and local economies. The
    Superfund program not only protects human health and the environment
    through the cleanup of toxic waste sites, but works with both public
    and private partners to promote redevelopment of Superfund sites. The
    President's budget proposes funding Superfund at the fiscal year 2001
    appropriated level.
        Cleanup construction is under way or completed at 92 percent of the
    1,458 sites on the Federal National Priority List (NPL). In fiscal year
    2002, the Superfund program and its partners will complete construction
    at 65 private and Federal sites. This target reflects funding
    reductions in prior fiscal years and the number of large, complex sites
    now entering the construction phase of the Superfund pipeline. By the
    end of fiscal year 2002, EPA will have undertaken more than 6,800
    removals at hazardous waste sites to immediately reduce the threat to
    human health and the environment.
        Working with our Federal partners to clean up Federal Facilities,
    the fiscal year 2002 budget includes resources to support continuing
    cleanup oversight, technical assistance and property transfer at
    Federal NPL and Base Realignment and Closure (BRAC) sites. Efforts to
    support the Department of Defense's (DOD's) BRAC property transfer
    program have created jobs and accelerated the availability of more than
    350,000 acres for reuse.
                                  brownfields
        In the President's fiscal year 2002 budget, the brownfields program
    request is increased by $5 million above last year's enacted level, for
    a total of $98 million. These resources will be used to provide
    additional support for State Voluntary Cleanup Programs and the
    Brownfields Assessment Demonstration Pilot program. The fiscal year
    2002 funding request provides the resources necessary to award 38
    communities new Brownfields Assessment Demonstration Pilots, 29 new
    Brownfields Cleanup Revolving Loan Fund pilots, and 10 new job training
    pilots. The request includes supplemental funding for all three
    existing pilot programs, the existing 28 Showcase communities, and for
    state/tribal voluntary cleanup programs.
        President Bush has made the clean up and redevelopment of
    brownfields and the enactment of brownfields legislation a priority.
    The brownfields program is an important urban redevelopment tool that
    provides an alternative to the development of greenfields, and plays a
    key role in the Administration's goal of building strong and healthy
    communities for the 21st century. The Agency estimates that the
    brownfields program has leveraged more than an estimated $2.9 billion
    in cleanup and redevelopment funds. Through the EPA program, states,
    tribes and local communities have assessed more than 2,500 sites.
                          water infrastructure funding
        The President's budget includes $2.1 billion in grants to states
    for water infrastructure to ensure that safe and clean water is
    supplied in every American community. With respect to wastewater
    infrastructure, the Administration proposes $1.3 billion for grants to
    states in fiscal year 2002, $500 million more than the previous
    Administration's fiscal year 2001 request. Included in the wastewater
    infrastructure request is a new $450 million grant program to assist
    local communities in addressing infrastructure needs related to
    Combined Sewer Overflows (CSOs) and Sanitary Sewer Overflows (SSOs) to
    address the largest remaining municipal wastewater problem, and $850
    million for continued capitalization of state Clean Water State
    Revolving Loan Funds (CWSRF). The CWSRF investment keeps EPA on track
    with our commitment to meet the goal for the CWSRF to provide $2
    billion average in annual financial assistance over the long-term even
    after Federal assistance ends.
                     supporting core water quality programs
        The President's request fully maintains support for EPA's core
    water quality programs, including $170 million in grants to states
    under Clean Water Act Section 106 to manage water quality programs and
    $237 million for grants under the Section 319 nonpoint source program
    to address polluted runoff. We recommend the elimination of the cap on
    Section 319 grants to Indian Tribes. This budget includes $2 million
    for ``BEACHES'' grants to support the development of beach monitoring
    and notification programs at the state and local level.
        In addition, the budget maintains support for EPA's most critical
    core programs including efforts to:
      --Work cooperatively with states to develop Total Maximum Daily Loads
            (TMDLs) for the states most impaired waters;
      --Train and provide technical assistance to states to aid in the
            adoption and implementation of new drinking water standards;
      --Reduce the backlog of expired wastewater discharge permits under
            the National Pollutant Discharge Elimination System (NPDES);
            and
      --Work to ensure that states have protective, up-to-date water
            quality standards in place.
        The budget also maintains funding of $75 million to address
    priority water and wastewater infrastructure needs along the U.S.-
    Mexico border, and $35 million to support much needed water and
    wastewater projects in Alaska rural and Native Villages. Also, in
    recognition of the lack of basic wastewater infrastructure that exists
    in much of Indian Country, the President is proposing to extend
    authority granted by the Congress for the current fiscal year that
    allows the Agency to reserve up to one-and-a-half percent of funds
    appropriated for the Clean Water SRFs for wastewater grants to tribes.
                               drinking water srf
        With regard to drinking water, the Administration proposes to
    maintain capitalization of the drinking water SRF at current levels in
    fiscal year 2002, $823 million. By the end of fiscal year 2002, state
    drinking water SRFs will have awarded 2,400 loans, with about 850 SRF
    funded projects having initiated operations by that date.
        In addition, the Safe Drinking Water Act Amendments of 1996
    included a provision that allows states flexibility to transfer funds
    between their clean water and drinking water SRFs in order to address
    their most compelling infrastructure needs. Under the President's
    Budget, the Administration is proposing to allow states to continue to
    exercise this important flexibility.
        Taken together, the Administration's budget will help communities
    across the country address their most critical clean water and drinking
    water priorities.
                               ensuring clean air
        The President's fiscal year 2002 budget request maintains current
    funding for EPA's clean air program, allowing us to continue the
    progress of past years. Almost $220 million or 40 percent of the $565
    million in our budget request would go to our state, tribal, and local
    partners to help them carry out their responsibilities under the Clean
    Air Act.
        In 1990, Congress passed the Clean Air Act Amendments with
    overwhelming support, setting ambitious air pollution reduction goals.
    Since then, the nation has achieved unprecedented success in cleaning
    our air and protecting public health. Working with state, tribal, and
    local partners, we have achieved these successes through rulemakings,
    voluntary measures, market mechanisms, and stakeholder consultation.
    Despite the substantial progress, many challenges remain.
        Examples of Clean Air Act successes include the fact that the air
    in our cities is cleaner than it has been in a long time. Nationally,
    average air quality levels have improved for all five of the six common
    pollutants subject to air quality standards. There have been dramatic
    increases in the number of areas with clean air and more areas will
    come into compliance with national clean air health standards in fiscal
    year 2002.
        Our cars and fuels are cleaner. The average new car is 90 percent
    cleaner (in terms of emissions) than in 1970; over 30 percent of the
    nation's gasoline is now cleaner-burning, reformulated gasoline. We
    will implement the tightest emissions standards ever for cars, gasoline
    and the first tailpipe standards that apply equally to cars, as well as
    sport utility vehicles (SUVs), pick-up trucks and minivans.
        We have issued technology-based air toxics rules, or MACT
    standards, that by 2002 we believe will cut industrial air toxics by a
    cumulative 40 percent from 1993 levels or 1.5 million tons per year.
    Through fiscal year 2000, emissions of air toxics have declined 30
    percent since MACT and the auto emission standards that began to be
    implemented in 1993. The fiscal year 2002 budget request includes the
    resources needed to complete the last round of MACT standards.
        In the Acid Rain Program, electric utilities have cut sulfur
    dioxide (SO2) emissions by approximately 28 percent or 5
    million tons and have cut rainfall acidity in the East by up to 25
    percent. When Title IV is fully implemented in 2010, SO2 and
    nitrogen oxide (NOX) reductions will provide health
    benefits, mostly from a reduction in annual cases of premature
    mortality. Acid rain control will also produce significant benefits in
    terms of improved visibility, lowered surface water acidity, and less
    damage to high elevation forests and materials. However, recent
    ecological studies show that acid rain is still a problem. We look
    forward to working with the Congress on a multi-pollutant strategy to
    require power plants to further reduce emissions of SO2 and
    NOX.
        Although substantial progress has been made, it is important not to
    lose sight of the magnitude of the air pollution problem that still
    remains. Over 150 million tons of air pollution were released into the
    air in 1999 in the United States, and approximately 62 million people
    lived in counties where monitored data showed unhealthy air for one or
    more of the six common pollutants.
        In fiscal year 2002 we will continue our work with states to reduce
    transported emissions of nitrogen oxides that contribute significantly
    to urban smog in downwind areas. Currently, 15 of the 19 states subject
    to the NOX SIP call have plans that EPA has approved or
    expects to approve. When fully implemented, the NOX SIP call
    will achieve nearly a million ton reduction in NOX
    emissions. One of the other key measures will be an expansion of the
    existing nine-state, market-based allowance trading system to
    additional states. During fiscal year 2002 we will be re-engineering
    the information technology support structure for the allowance and
    emissions tracking systems to provide for improved public access and
    timely exchange of data with state partners.
                           addressing global warming
        To address the challenge of global warming, we are requesting $145
    million for voluntary and climate change science programs for fiscal
    year 2002. Under this budget, EPA will continue its partnership efforts
    with businesses, organizations, and consumers to achieve greenhouse gas
    reductions by taking advantage of the many voluntary opportunities to
    reduce pollution and energy bills by fostering energy efficient
    programs, products, technologies, and cost-effective renewable energy.
        As a result of work already under way, EPA's performance goals with
    fiscal year 2002 funding are to:
      --reduce greenhouse gas emissions annually by over 73 million metric
            tons of carbon equivalent, offsetting about 20 percent of the
            growth in greenhouse gas emissions above 1990 levels;
      --reduce other forms of pollution, including reducing NOX
            emissions by about 180,000 tons;
      --reduce U.S. energy consumption by more than 85 billion kilowatt
            hours, contributing to over $10 billion in energy savings to
            consumers and businesses; and
      --contribute to developing a new generation of fuel efficient and
            low-polluting cars and trucks.
        The opportunity to save on our nation's $600 billion annual energy
    bill over the next decade while reducing air pollution is tremendous.
    The opportunity to reduce greenhouse gas emissions is also large. We
    currently expect that more than half of the nation's greenhouse gas
    emissions in ten years from now will come from equipment that will be
    purchased between now and then. Fully funding EPA's voluntary energy
    efficiency programs will help capitalize on this tremendous opportunity
    for consumers, businesses, and organizations to make smarter equipment
    purchasing and investment decisions leading to a significant reduction
    of U.S. greenhouse gas emissions and air pollutants. In addition, EPA
    will expand its voluntary partnership efforts in the transportation
    sector. Voluntary initiatives to reduce vehicle miles traveled have
    enormous potential to provide near-term reductions in energy
    consumption, air pollution and greenhouse gas emissions.
      ensuring safe food and protecting the public from harmful chemicals
        The President's 2002 Budget request supports the important work of
    applying the latest science to ensure industrial chemicals and
    pesticides meet today's safety standards. The budget also supports the
    complementary protections brought through pollution prevention and
    voluntary partnerships.
        For our pesticides programs, we have carried forward earlier
    increases, maintaining the registration program at $41 million to keep
    a steady flow of new pesticides coming onto the market, many of which
    are based on innovative and safer chemistry. Likewise we maintain our
    commitment to reviewing older pesticides, ensuring they meet Food
    Quality Protection Act (FQPA) standards while at the same time working
    with growers and the agricultural industry to help make a smooth
    transition to safer pesticides. In August 2002 we expect to meet our
    second statutory deadline for tolerance reassessments, completing an
    additional 2,527 and meeting the 66 percent of the 9,721 reassessments
    required in the law.
        This budget request includes $46 million for our new and existing
    chemicals programs. Chemicals are in all the products and services we
    enjoy in our daily lives. The $14 million High Production Volume
    Chemical Challenge program aims to gather health and safety information
    for the public to make better informed choices. As part of the HPV
    voluntary program, 469 companies committed to provide basic information
    about 2,155 chemicals. The budget request of $20 million will support
    partnerships with states and private industry on pollution prevention
    projects, reducing use or exposure to chemicals to reduce potential
    risks most especially those chemicals that persist in our environment,
    collect or bioaccumulate in our bodies, and have adverse or toxic
    effects in the environment and on human health.
        In both the pesticide and the chemical programs we continue to
    place special emphasis on reducing potential risks to children and
    other vulnerable populations. Emerging science is focusing our
    attention on chemicals that may harm animal or human endocrine systems,
    and we are working with the scientific community to find ways to
    identify those chemicals as part of our endocrine disruptor program.
        Let me mention here that the budget assumes no impediment to
    promulgating the final pesticide tolerance fee rule in 2002, and you
    will see that the request levels for the reregistration and the
    tolerance reassessment programs reflect that change, namely from a
    reregistration maintenance fee to a tolerance fee. These two critical
    programs are fully supported with $52 million in appropriated funds if
    a new fee is in place in 2002 and we will be working with you on this
    issue over the coming months.
                                 sound science
        Environmental policy should always be based on the soundest
    information available. The role of environmental science has become
    more critical than ever in making policy decisions, thereby, improving
    our ability to sustain natural resources while maintaining public trust
    and the integrity of our world's ecosystem. Science has played a vital
    role in improving America's environment--from targeting priority
    chemicals concerns, better characterizing sources of pollution and
    designing control strategies. While we must also realize that science
    and public policy proceed along fundamentally different time lines, we
    will continue to use the best available science and scientific analyses
    to aid in the development of environmental policy.
        EPA's fiscal year 2002 President's budget supports a strong and
    rigorous research program. The fiscal year 2002 request includes $535
    million for the Office of Research and Development (ORD), reflecting an
    increase of $5 million over the previous administrations fiscal year
    2001 request. This request will allow the Agency to support a research
    program focused on addressing key environmental concerns such as the
    health effects of small particles in order to assure promulgation of
    standards that protect human health, and heightened interest in better
    addressing in Agency decisions the unique susceptibilities of children
    to potential environmental health threats. The Agency's request will
    also continue to support the Global Change research program focusing
    efforts on assessment activities examining the potential consequences
    of global change and climate variability on human health, air quality,
    water quality and ecosystem health.
        In addition to supporting a strong intramural science program at
    the Agency, the fiscal year 2002 request provides $110 million for the
    Science to Achieve Results (STAR) program which includes competitively
    awarded grants and fellowships. The STAR program continues to
    successfully engage the best environmental scientists and engineers
    from academia through a variety of competitive, peer reviewed grants.
    In addition, the Agency will continue its highly successful
    Postdoctoral program to hire scientists and engineers who provide a
    dynamic infusion of intellectual energy and state-of-the-science
    expertise, as well as assist the Agency in addressing long range
    research workforce planning needs.
                                    summary
        Madam Chair and Members of the Subcommittee, the President's fiscal
    year 2002 Budget for EPA provides the resources and vision necessary to
    reach our Nation's environmental mission to protect the environment and
    human health. This budget represents this Administration's commitment
    to work with our environmental partners to develop innovative
    environmental programs that ensure stewardship of our land, air, and
    water for generations to come. This concludes my prepared statement. I
    would be pleased to answer any questions that you may have.

                           Clean water infrastructure

        Senator Mikulski. Thank you very much for your testimony,
    and to my colleagues, we are going to try to follow with the
    first round so that everybody gets an opportunity, and then we
    will go to a second round as well.
        Madam Administrator, my first question will go to clean
    water infrastructure. When I travel through my State of
    Maryland and visit my counties, they always ask me for two
    things. One, can I get a fiber optic network, and number two,
    can I get them water and sewer money, and that is usual and
    customary. This is also a significant issue in the
    environmental community. Just in my own state alone, I have
    gotten close to $50 million worth of requests that are not
    outrageous, and you know, I do not have to elaborate on this,
    you have met with Governor Glendening, and we are appreciative
    of your efforts.
        I am concerned about this reduction in Clean Water
    infrastructure to $850 million, because our target has been
    $1.3 billion and we even think that is modest when there is all
    kinds of reports that estimate there is $140 billion in
    outstanding needs. Then we've got this $450 million program for
    newly authorized wet weather, which is sewer, but we are up
    there instead. That is making an addition to, not in lieu of
    clean water.
        Now, having said that, and the problems, isn't this budget
    robbing Peter to pay Paul by cutting the clean water fund to
    pay for the new wet weather program, and why does this budget
    really ignore the trigger that the clean water fund should get
    $1.3 billion before the wet weather program will kick in? Will
    you comment please?
        Ms. Whitman. Certainly. Senator, I recognize the fact that
    the intent was to have $1.3 billion in the Clean Water SRF
    State Revolving Fund program, prior to implementation of the
    wet weather program. However, it was our feeling that the
    importance of the wet weather program made it imperative that
    we start to move forward precisely because of the needs that
    you have outlined.
        The $850 million in the Clean Water State Revolving Fund
    program will allow that fund to revolve at a stabilized base of
    $2 billion a year, that was the intended long-term revolving
    level for the State revolving fund. In fact, it will revolve at
    about $3 billion this year and $2 billion per year over the
    long-term which we feel is the amount of money that was
    initially intended to be in that revolving loan fund. As you
    pointed out, the needs are much greater, but we don't know what
    they now all are.
        The importance, however, of the combined sewer overflow and
    the sanitary sewer overflow needs was such that we wanted to
    get that program started, and that's why we proposed taking
    $450 million and putting it towards that program. In regards to
    that new program, in the first year, the $450 million will be
    given directly to the States, as a grant, according to the SRF
    formula. The States will be able to then competitively give
    grants to the communities that they feel have the most need for
    that money. There is some certainty for the States, because the
    grants will be allocated using the Clean Water SRF formula.
        This proposal is different from the intent of Congress,
    which said that in the first year the grants would go to the
    communities directly and in the second year to the States. We
    propose making the grants to the States in the first year.
        We do think this is an important program. We are working on
    a better understanding of what the needs are. You stated a
    figure, Senator Bond, of $380 billion. My guess it's anywhere
    from $450 billion to over a trillion dollars in need.

                                $500 million cut

        Senator Mikulski. Well, Administrator Whitman, let me say
    this, because this is going to take a lot more conversation.
    Number one, I really firmly disagree with the Administration on
    this. And we want to, I think we really need to have some
    ongoing conversations about this.
        When your budget was cut by $500 million, the
    Administration said it was because of earmarks. Now, these $500
    million earmarks weren't for a gold plated something or
    another. Almost every single one of those earmarks was related
    to water and sewer, and that's why they line up to see Senator
    Bond and I to talk about that. So that $500 million comes from,
    those earmarks come from people in local communities who
    approach my colleagues in the same way they come to me, or my
    constituents come to me.
        If OMB, and working with you, wanted to cut us by $500
    million for earmarks, they should have taken that $500 million
    and put it into clean water or used that $500 million to start
    the wet weather project. I fundamentally disagree with the
    priorities. I can understand, every administration doesn't want
    us to have earmarks, that's an ongoing battle, but that $500
    million is only for a very specific area.
        So I fundamentally disagree with this approach and I'm
    going to work with my colleagues on this and also with you. We
    don't want to be in a big fight with you, but this one program,
    the reduction to $850 million, the elimination of the money
    that we use for congressionally directed projects, which come
    off, indeed, consistently have to come off of a State priority
    list. It isn't because one of the senators is Uncle Charlie,
    who was a local commissioner who ran for sheriff. I mean, this
    is really very serious.
        And on the wet weather, we do not in any way minimize the
    importance of it, but essentially we feel it was cut twice, one
    by eliminating the earmarks and then by taking $500 million and
    putting it into wet weather. So we have to think about how we
    can solve this issue because it's really probably one of the
    most important programs that we have that goes out to the
    States.
        Ms. Whitman. Senator, if I might, while I don't disagree
    with you, I would just point out that the $1.3 billion, if you
    put the two programs together, total $1.3 billion, and what we
    have done is separated it out. However, I would be happy to
    work with you on that as we move forward, because this is an
    enormous issue.
        Senator Mikulski. Absolutely. One is a formula program and
    one is a grant program. And also then, the loss of $500 million
    is a reduction of $500 million, ostensibly to get rid of pork.
    This is not pork.
        Ms. Whitman. I wouldn't argue that one with you. I know as
    a governor, we did the same thing in the sense of putting the
    priorities in for the administration and then recognizing what
    the legislators saw. Almost all of them were very very good
    programs and had something justifiable behind them. It was just
    a question of setting the budget priorities in the
    Administration.
        Senator Mikulski. Well, I have used my 5 minutes, so
    Senator Bond.

                        Clean water state revolving fund

        Senator Bond. Thank you, Madam Chair. I had a number of
    questions about this new program and taking money out of the
    Clean Water State Revolving Fund and we need to continue to
    discuss this, but my basic question is when you have a program
    like the State revolving fund, which basically is the seed
    corn, what is the justification for taking money out of it and
    saying eat the seed corn with a grant program, take some money
    out of the revolving fund, and gives it out as a one-time shot.
    It doesn't continue as the State revolving funds have, to feed
    back into the ongoing needs that the States will have in future
    years.
        Ms. Whitman. That program was established before I came
    here. The intent as I understand it was to have a revolving
    loan fund of $2 billion. That is in fact, what the State
    revolving loan fund will revolve at in the long-term. This year
    it will be higher than that, but it will continue at that $2
    billion revolving level over the long-term. So there is a
    continuing stable high base for the revolving loan fund that
    will continue.
        We do not anticipate that the wet weather program will go
    away in a year, it's going to be an ongoing program. But I
    would suggest, just as the Chair and you have mentioned, we
    need to engage as the Administration and Congress, in a very
    thorough discussion of how we are going to address these
    infrastructure needs, because it could be 25 times our budget,
    were we to fund everything that we think is needed, and should
    the Federal Government have to pick up all the costs. We need
    to have a very comprehensive discussion of water infrastructure
    needs. I believe this is one of the most pressing problems that
    we're going to face from now until the next decade.

                              Enforcement program

        Senator Bond. Well, I would agree with you on that.
        Let me turn now to questions, other questions on the
    enforcement program. The budget request redirects $25 million
    from Federal enforcement to State enforcement programs and I as
    a former governor myself, I like to see the States taking
    responsibility, but we need to be watchful that the Federal
    Government is able to fulfill its important responsibilities.
    Are you confident that the remaining funds are sufficient to
    insure a robust Federal enforcement program?
        Ms. Whitman. Absolutely, Senator, that is our commitment. I
    have said a number of times that we want to extend the carrot
    where possible, but the stick is certainly not retired. We have
    had recently a number of very, I won't say positive because
    that would be pejorative, but certainly large settlements where
    we have come down on those polluters who need to see some
    enforcement action.
        We believe that we can do this. What we are doing here is
    maximizing the role of what the States are already doing in
    compliance assistance and enforcement. They do, as I indicated,
    95 percent of the compliance reviews and they do about 90
    percent of the enforcement actions. We will still have a very
    vigorous enforcement program, particularly for those actions
    that are multistate and places where States do not have the
    ability to bring enforcement action. We will still be ready and
    very able to bring enforcement actions, and able to target our
    work on the ones that fall to the Federal agency.

                                 AIR POLLUTION

        Senator Bond. Moving to air, the Administration has pledged
    to continue with the current litigation against utilities and
    refineries who may be violating new source review air
    regulation, but how is the Administration exploring ways to
    improve the program by removing this incentive for energy
    producers or suppliers or refiners to update their facilities
    with more efficient higher capacity technology? How, what can
    you do to make sure that we have the sources for energy
    available?
        Ms. Whitman. Well, Senator, we're very sensitive to those
    concerns for emissions, and we are currently undertaking a
    review of the new source review program. We have reached out to
    our regions, we have reached to those who have been involved in
    it to ask for their input on what kinds of things could we do
    to help improve the new source review and insure that we are
    actually reaching the goal that we all have of cleaning the
    environment but not injuring business from doing business
    because of the way that it is implemented.
        When we have completed our process and review, we will then
    obviously reach out to stakeholders by asking for input from
    others. Then we can present to everyone a comprehensive
    reevaluation of new source review that continues to preserve
    and protect the environment, but also allows us to insure that
    we are moving forward with addressing our energy needs.
        Senator Bond. Well, we as consumers need it. I thank you,
    Madam Administrator, and Madam Chair.
        Senator Mikulski. Senator Kohl.

                            ENFORCEMENT IN MILWAUKEE

        Senator Kohl. Thank you, Madam Chairman. Administrator
    Whitman, today it was reported that the EPA is considering
    enforcement actions against Milwaukee for dumping untreated
    sewage into Lake Michigan.
        Senator Mikulski. Senator Kohl, excuse me. Could you pull
    your microphone closer?
        Senator Kohl. Okay. I will start over again. Today it was
    reported that EPA is considering enforcement actions against
    the city of Milwaukee sewer district for dumping untreated
    sewage into Lake Michigan. While no one of course favors such
    pollution, this enforcement seeks to punish a district that is
    working as fast as it can to fully comply with the law.
        The Milwaukee sewage district has been working hard and
    investing many resources to update its sewage system. In the
    early 1990s Milwaukee spend $3 billion in additional capacity
    and Milwaukee is in the midst of a $320 million update to
    alleviate the very problem that EPA is concerned about, leaking
    pipes and inadequate storage.
        And so, it seems counterproductive to fine a district that
    is already working trying to get itself to comply with the law,
    while other districts are continuing to dump significantly more
    pollution. So, are you aware that among similar sized cities,
    Milwaukee has the best record in terms of reductions in
    separate and combined sewer overflows, and should Milwaukee be
    held up as an example of what can be done to improve water
    quality in an effective partnership between local and Federal
    Government, and will you examine reaching a compliance
    agreement instead of imposing what I understand might be a
    $25,000 a day fine?
        And does the Administration, finally, support additional
    visible grant dollars in addition to loans for water
    infrastructure to help communities like Milwaukee?
        Ms. Whitman. Senator, it is our objective to work
    cooperatively with the State and the city and the surrounding
    communities to try to address this issue. There is no lawsuit
    at the present time, and we will continue to work
    cooperatively.
        In fact, the last part of your question of providing the
    additional dollars is why we decided to break up the $1.3
    billion to have $850 million for the State Revolving Loan Fund
    and $450 million to go towards combined and sanitary storm
    sewer overflows to start to reach these infrastructures and
    begin to address them. The wet weather act really targets those
    particular needs, but we are intent to work in a collegial way
    with the State, the city and the surrounding communities to
    address the unique problems that the city of Milwaukee has.

                              cleanup of Fox river

        Senator Kohl. I thank you. Administrator Whitman, I am also
    concerned about the cleanup of the Fox River. As you know, EPA
    and the State of Wisconsin have been concerned with the Fox
    River and the impact of PCB contamination for some time.
    Currently we are waiting for a decision on the cleanup plan,
    completion of the proposed plan, and the regional plan should
    be out in late July. This plan will be reviewed by EPA I
    understand very soon.
        Is the Administration going to have any changes to the
    plan, and if so, will there be delays or extra time to conduct
    an examination so that a cleanup plan can begin soon? During
    the past Administration, Wisconsin was allowed to take the lead
    on the cleanup, including moving the Fox River off the
    Superfund list while the State worked on its program to resolve
    the problems.
        Also, the EPA during the previous Administration, with the
    support of Senator Feingold and others regarding this issue, it
    was stated in writing that the State could continue to take the
    lead. Will this relationship continue in the future and can the
    State count on EPA's continued cooperation?
        Ms. Whitman. The State can certainly count on EPA's
    cooperation. I can't comment on the final proposals in the
    plan, simply because we haven't seen it. We need to review the
    plan, but we will do that in an expedited way and we will work
    closely with the State and insure that it is an appropriate
    plan that reaches all our goals.

                                    ARSENIC

        Senator Kohl. Thank you. Moving on to the subject of
    arsenic, as the chairman of the Agricultural Appropriations
    Subcommittee, I see more and more rural communities come to the
    USDA for rural development assistance to meet their drinking
    water needs. They are worried about the arsenic standard but
    they are also faced with old systems that are wearing out.
        Many of these communities are graying, so many of their
    inhabitants are living on fixed incomes and cannot afford
    either higher taxes or steeper water bills.
        In Wisconsin alone, the needs for drinking water
    infrastructure are valued at $1.8 billion. Drinking water
    systems are sorely needed, and many of them are faced with new
    demands on systems that are wearing out. As part of the
    Administration's review of the arsenic standard.
        Will you consider providing additional funding to small and
    disadvantaged communities to meet the new standards?
        Ms. Whitman. Senator, that is part of why I asked for the
    additional time to review the standard, to insure that we had
    thoroughly identified the fiscal needs of the small and midsize
    water companies that would be particularly hit by this, so that
    we didn't see unintended consequences of people not being able
    to afford their water bills, water companies going out of
    business, and people sinking wells and then getting water that
    has no protection in place.
        We have two studies going on. One is with the National
    Academy of Sciences. I have asked them to, rather than say as
    they did initially that 50 is not safe, bring that level down
    and take a tighter look. I asked them to tell me between 3 and
    20, which is what the original record was based upon, where
    they felt the science told them was a safe level, because of
    the enormous consequences of this decision.
        We also have asked an outside advisory panel to take a look
    at what the cost implications are for the water companies in
    implementing whatever standard is reached. That will give us an
    idea of what we need to do as far as additional dollars. What
    is going to be required in order to help small and midsize
    water companies meet the requirements?
        I have also even had discussions with the Secretary of
    Agriculture as to what kind of Agriculture money might be
    available to help our rural communities. That's one of the
    things that we want to take into account when we make the final
    decision.
        Senator Kohl. I want to thank you for your interest, and I
    thank you, Madam Chairman.
        Senator Mikulski. Thank you. Ordinarily, we have been
    rotating, but Senator Domenici, I understand you will yield to
    Senator Leahy.
        Senator Leahy. Thank you, Madam Chairman, and thank you,
    Senator Domenici.
        Senator Domenici. You're welcome, Senator.

                               New source review

        Senator Leahy. It's good to have you here. I tried to reach
    you a couple times yesterday and thank you for your fiscal year
    2002 budget.
        I want to mention in New England, Lake Champlain. It is a
    unique piece of water, it has a watershed larger than the state
    of Massachusetts, but it faces the kind of development problems
    that any growing area in the northeast does, and your Agency
    has helped Vermont and New York citizens protect the lake, and
    we appreciate you doing that.
        The Region 1 staff has been superb in working with the
    States on environment issues. I know that I hear from everybody
    in Vermont how proud they are of the professionals in the
    Region 1 office as being responsive, and I invite you to come
    up and see this part of the world, you probably have anyway,
    but in your capacity as Administrator.
        On May 23, some of the other Senators and I sent you a
    letter regarding the Administration's intent to review new
    source review or NSR regulations of the Clean Air Act. It
    raised some red flags in my mind because I know some of the
    concerns we had, and some of the Midwestern power plants and
    others that have been grandfathered under that Act, and it
    would cause a great deal of problems for us. But we had asked
    for specific language in the Administration's national energy
    plan report that represents that the President direct you and
    Secretary Abraham and others to conduct a 90-day review of NSR
    regulations, including both the administrative interpretation
    and implementation of the provisions.
        Now as I read that, it looked to me like there was a call
    in this review in saying the Administration believes the NSR
    regulations are currently misinterpreted and incorrectly
    implemented, which would contradict what you and Attorney
    General Ashcroft have said when you strongly commended EPA
    legal actions against violators of NSR regulations.
        You were quoted as saying, the result of legal settlements
    provide Americans with cleaner and healthier air, and I agree
    with you. So my letter, I wish you would look at that.
        Let me ask you just one basic simple one. Why was this
    language even necessary? Why is an EPA review necessary if the
    provision is undeniably responsible for EPA's success in
    achieving cleaner air and more healthy air?
        Ms. Whitman. Senator, the review is to see what we can do
    to make things better. The new source review permits review can
    take up to 18 months. We don't feel this is necessarily in the
    best interest of either the public or the particular business
    or industry that has made the application. We need to insure
    that we have a common understanding of what is subject to new
    source review and what is not.
        What we have found in some instances actually is that as
    cases have been brought forth, are an attempt to clarify new
    source review through the legal process, which in my mind is
    never the best way to do it. The intent needs to be clarified
    at the administrative and legislative level, not in the courts.
    The new source review is an attempt to insure that we have the
    program working in the best way possible so that it does what
    the intent is, that we do it more effectively and better.

                  enforcement of New source review regulations

        Senator Leahy. Well, I just want to make sure that we're
    not reviewing just for the sake of reviewing, because I
    remember somebody from another administration, used to
    reorganize the enforcement division about every 6 or 7 or 8
    weeks, and there were no real enforcement actions, they were
    always in the process of reviewing it.
        And I might ask you, what kind of personnel and budget
    resources are going to be used to uphold and enforce the NSR
    regulations?
        Ms. Whitman. We are fully committed to enforcement and our
    enforcement efforts. We believe that this budget allows us to
    continue the type of enforcement we had in the past. But I will
    also mention, Senator, that I have had a lot of anecdotal
    stories about new source review actually hindering our ability
    to improve air quality because of the way it has been
    interpreted.
        One instance, and I can't tell you exactly where, as I
    don't remember, but I remember the management coming in and
    saying they had a proposal to put a new form of scrubber on one
    of their facilities that would capture two of the three major
    pollutants in which we had an interest. However, they had
    another way at another part of their plant to bring them into
    compliance with the third pollutant. In fact the two and that
    one were going to be below what we were requiring. Because all
    three weren't captured with the one, we wouldn't grant new
    source review.
        It was an instance where we weren't being smart about how
    we were looking at new source review. My feeling here is we
    just want to make sure that it is working the way Congress
    intended that it should work, and we have seen it work.
        Senator Leahy. But you understand my concern.
        Ms. Whitman. Oh, I absolutely do.

                                Enforcement cuts

        Senator Leahy. We talk about these cuts in enforcement, and
    as an old prosecutor, I always like the idea of having the law
    on the books, and while I know that everybody is pure as
    angels, they want to follow the law, every so often, a little
    devil sneaks in there and sometimes we don't have enforcement.
    But cuts are going to result in the loss of 270 personnel
    nationwide, about 90 percent of EPA enforcement staff, and
    about 80 percent of the cuts are going to come from regional
    EPA offices.
        I know we have always tried in Vermont to appeal to upwind
    States for stronger emission controls, because they send the
    emissions into the air and they seem to come down through
    mercury and other problems in our lakes and our streams and our
    soil. Their State enforcement agencies say gee whiz, we will
    look into that, but they don't do anything, and the only thing
    that might happen is if there is Federal enforcement of the
    clean air law.
        So, I'm happy to see new State based enforcement
    initiatives that may help, but I'm really worried if we are
    going to do that by cutting out Federal enforcement things,
    because I do not think a State like mine is going to be able to
    do diddly squat, and that's a professional prosectorial term,
    in stopping these pollutants in coming into our water.
        So I will look very closely at that and I will be very
    happy, any answer you might want to give here, or a more
    detailed answer to put in the record, why are there all these
    cuts in enforcement.
        Ms. Whitman. Certainly. First of all, Senator, of those
    cuts, 144 are funded vacancies and have been vacant for a year,
    so that it is not a cut in current enforcement action. Those
    are funded vacancies that have been vacant for a year. We are
    redeploying some people, which is over half of the total number
    of the remaining number of people to which you refer.
        Senator Leahy. We will not have a lot of vacancies like
    that when an administration changes?
        Ms. Whitman. They have been vacant for a year or better. We
    are redeploying some people, about 65, and some of them are
    being put into criminal enforcement. We are looking at criminal
    enforcement, and at our Title VI problems that we have at the
    Agency, and we're beefing up or redirecting some staff to those
    areas. The rest we will reach through attrition, and we will
    watch the attrition over the year. If attrition doesn't account
    for all of them, we are not going to come in and cut. Our
    commitment here is not to have anyone lose their job, but in
    fact to insure that we are doing it through attrition and
    through intelligent redeployment.
        We are redeploying to the areas that we think need the
    extra bodies. Civil rights is an important one for the Agency,
    and we are redeploying people there. We are redeploying people
    to TMDL management, which is another important part in disputes
    resolution.
        So while there will be cuts as it appears, more than half
    of those are due to funded vacancies today.
        Senator Leahy. My time is about up, but we will discuss
    this further, because I do want to make sure that----
        Senator Mikulski. Senator, I think we do want to discuss it
    further. I think if you turn around and look at those----
        Senator Leahy. Madam Chairman, you told me to turn around,
    so I will.
        Senator Mikulski. But you can see where there is a decline,
    but I'm going to turn to my colleagues who have been waiting
    patiently, but you can see that really the northeast and
    midwest is what's going to lose, as well as Texas, a bulk of
    the enforcement, so I think this is important. But I will turn
    it over to Senator Domenici.
        Senator Domenici. Thank you, Madam Chairman.
        Senator Leahy. Thanks again, Pete.
        Senator Domenici. You're welcome.
        Madam Chairman, you know that I am a new member of, as old
    as I am, I am a new member of your subcommittee.
        Senator Mikulski. I know, and we are happy to have you.

                                 Kyoto protocol

        Senator Domenici. And I am happy to be here. I did not
    think we would have as many exciting things right off as we are
    having, so I am glad to be here today.
        First off, let me say to the head of the Environmental
    Protection Agency, I am very confused about what is going on in
    your department. That may even be an understatement for you.
        First, did not the U.S. Senate vote on the sense of the
    Senate as to whether or not we would choose as a body to ratify
    the Kyoto Agreement?
        Ms. Whitman. Yes. The U.S. Senate, voted 95 to 0 against
    the implementation of what was then the proposed Kyoto
    Protocol.
        Senator Domenici. Well, the point of it is, that is a
    treaty and if the United States was ever going to enforce it,
    it has to be ratified by the U.S. Senate. So what is the big
    deal? Since the U.S. Senate has already said it would not
    ratify it, why is the President having to answer up on this
    issue when as a matter of fact, Congress has said don't send it
    to us because if you do, we will kill it. And when I say we, I
    am not talking about Republicans, I am talking about everybody
    in the Senate. It was led by a bipartisan group as I recall,
    the Senator from Nebraska, Hagel, the Senator from West
    Virginia, Byrd, with every Senator voting we will not implement
    it. Do you have any idea why we would have said that, Madam
    Secretary?
        Ms. Whitman. Senator, I can't explain why some people seem
    to be rethinking their position. The Europeans took the
    President's statement that as an indication from the President
    that he did not feel global climate change was an issue of any
    sort, and he no longer wanted to engage with Europe or the rest
    of the world in solving the problem. That was not the case.

                             New arsenic standards

        Senator Domenici. I just want to make the point for the
    record one more time, and I choose to make it wherever I can,
    that the issue with reference to the Kyoto Agreement was
    already rendered void by the U.S. Senate saying we will not
    ratify it.
        Now how in the world can he proceed at the executive level
    implementing it, negotiating further about it when we have
    already said as a treaty, we will not accept it? Now frankly, I
    think that right off, that you all dropped the ball on that
    one, okay? The President should never have gotten himself in
    this predicament when you consider the facts.
        The facts are that all you had to do was invite senators
    over to a meeting and they would have said there is no Kyoto
    Agreement because we will not ratify it. With no embarrassment,
    no concern, bipartisan, every single senator.
        Now, having said that, let me talk about another issue of
    very big importance to me and to the world, and to you. If I
    were in your shoes in the middle of an environmental crisis in
    the United States, with the world wanting to grow, and China
    wanting to become a prosperous Nation in the world, India
    wanting to, all poor countries wanting to get rich, which I am
    for, and America saying we must continue to grow and prosper,
    if I were in your shoes, I would be advocating a course with
    reference to energy that said is there a way that we can
    produce substantially more energy for ourselves and the world
    and pollute the air less than we are today.
        And I would have asked who can tell me how to do that, and
    you know, there would have been only one answer. Of course
    there would be some minor answers about, if we make solar big
    enough, that would be the answer. But the one answer would be,
    if you develop a game plan to use nuclear power in the poor
    countries and in America to some extent in the future, you will
    end up with less pollution and more energy, and what a great
    achievement of leadership that would have been.
        I want to say to you that that is how I feel. We are going
    to vote on that soon, so there is going to be a 30-year plan to
    produce less pollution as part of the implementation of our
    energy policy, but I want to tell you right now, I believe the
    Environmental Protection Agency has come perilously close in
    the middle of a presidential desire to move with nuclear, you
    have come perilously close to saying it will not happen.
        Now let me ask you a question. I am reading a press release
    of yours, the bottom of the first page, it says, referring to
    your new standards, surface standards with reference to
    potential water pollution in the middle of a desert. And you
    say, under these standards, the new ones, future generations
    will be securely protected, and now I underline the following:
    Our standards require that a person living in the vicinity of
    Yucca Mountain and drinking untreated water at the site 10,000
    years from now, will have less radiation exposure than we get
    today in about two round trip flights from New York to Los
    Angeles.
        Now I might ask you, are you interested in restricting the
    round trip flights from New York to Los Angeles?
        Ms. Whitman. No, of course not, Senator.
        Senator Domenici. Why not? It has the same radiation
    exposure as does your new standard with reference to the site
    10,000 years from now. Are there two different standards for
    us, one for this--is there a standard for this site and another
    standard that lets Americans die from this?
        Ms. Whitman. This is a consistent drinking water standard.
    It's applied throughout the United States and is applied at the
    other sites where there are nuclear facilities, and it's a site
    that has that same standard in place.
        Senator Domenici. Well, I am going to seek advice from
    wherever I can get it, and find out whether we can test your
    new standards in terms of whether a license will be issued,
    because that is the test, that is the issue, not the issue of
    putting something on the books, but can you ever license a
    facility under those standards.
        You in your meetings have been told it is an acceptable
    standard. I worked on that, from what I can tell, longer than
    almost anybody sitting around your table, and I contend that
    there will never be a license issued, because you cannot prove
    beyond a reasonable doubt, and that is the test when you apply
    for a license, you cannot prove beyond a reasonable doubt that
    you will meet those new standards 10,000 years from now. It
    cannot be done.
        So essentially if I am right, we have to find another way
    to dispose of the waste, or we have to say to the President of
    the United States, you cannot have as part of your plan, a
    significant nuclear component.
        Now, you are free to comment. That is my feelings and if
    you think differently, you can say it now or you can say it
    whenever you come to my office, and I will accept it as your
    statement.
        Ms. Whitman. Senator, I would be happy to repeat for the
    record that this is a stringent standard, that 10,000 years is
    what's required by the Nuclear Regulatory Commission's
    requirement for its approval. We believe that this is a fair
    standard that will protect the public, and our job is to
    protect the public. We need it to insure that we have that
    protection there. The standard is one that is tough but can be
    met. We believe in the importance of protecting the public
    health and that's why we went forward with it.
        Senator Domenici. Well, I want to repeat, I believe we
    should start national hearings on whether we should abolish
    flights between New York and Los Angeles, because a logical
    standard for radiation should be the same one that you put in
    with reference to a desert site 10,000 years from now.
        Now having said that, I want to make sure the committee
    understands a very serious problem for western States,
    including mine, and the Secretary is aware of it. I want to
    insert in the record, Madam Chairperson, a chart showing what
    it will cost States like New Mexico to implement the new
    arsenic standards.
        We understand we have been living with arsenic from time
    immemorial. This is a natural component that comes from rocky
    structures. We have far more than the 5 milligram, or 5 percent
    or the 20 that is being suggested, and they have never shown an
    incident of resulting illness from it in our State. But it will
    cost, if we go all the way down to 5, it will cost us for the
    replenishment of large and small systems, a total of $1.52
    billion if we have to meet the 5 milligram test, 375 if we have
    to meet the 10, and 127 if we have to meet the 20, to redo the
    plan and replace.
        Senator Mikulski. Are you asking that the chart be entered
    in the record?
        Senator Domenici. I am asking that.
        Senator Mikulski. Frankly, Senator, I would like to see the
    chart, and without objection, it certainly will be entered into
    the record.
        [The information follows:]

                              Arsenic study group

        Senator Domenici. Now, I want to ask one favor of you,
    which I am certainly less than entitled to based on my comments
    here today about your department, but I would like you to make
    sure that somebody is on this study group for arsenic that
    represents one of the three States that will be economically
    deprived, either New Mexico, Arizona or Utah. I would think you
    would want somebody on it from the affected State, and Montana,
    so I would ask if you have appointed the group, I would ask
    that you open it and put someone on, and if you haven't closed
    it, I think in fairness you ought to put someone on. Thank you,
    Madam Chair.
        Senator Mikulski. Thank you, Senator Domenici. This arsenic
    and water is really a complicated issue. I think this is one of
    the areas I wanted to discuss and I think there is a question
    of what is public health and also the cost of compliance, and
    not creating an unfunded Federal mandate.
        But Senator Burns, I would like to----
        Ms. Whitman. Just so the Senator knows, there is someone
    from Arizona on that panel, I just wanted you to know that.
        Senator Domenici. What?
        Ms. Whitman. There is someone from Arizona on that study
    group.
        Senator Domenici. Then might I inquire why you did not put
    someone from New Mexico with them. We are the most adversely
    affected of the States.
        Senator Mikulski. Are we okay?
        Ms. Whitman. We're okay. I just wanted to make sure he knew
    that.

                   Price of farm chemicals: canada vs. u.s.a.

        Senator Mikulski. Senator Burns.
        Senator Burns. Thank you very much, Madam Chairman. I just
    have a couple of questions.
        As you know, we have already discussed it, about Lincoln
    County and Libby, Montana, and the asbestos situation up there,
    and your commitment that you gave to that area up there on the
    cleanup, and we appreciate that very much.
        But I also am concerned about a situation on the Canadian
    border. We have a situation where there is a great price
    disparity between farm chemicals between what it costs to
    produce in Canada and the producers in the United States, and
    basically it is the same farm chemicals. And I feel like right
    now, we have to take some of the irritant off of that border to
    really make our free trade agreement work, and we cannot do
    that unless we normalize those labels on farm chemicals.
        And my question today, I know you have not been in that
    chair very long, what plans you have made or are making to deal
    with that situation, how do we normalize those labels?
        Ms. Whitman. Senator, we are very aware of the problem of
    normalization of pesticides, particularly as it impacts the
    many farmers in the northwest, because they are the closest to
    the border and able to see the price disparity that exists. We
    are working with both the Department of Commerce and Trade, as
    well as within our own Agency and the Department of Agriculture
    to see what we can do to address that issue. It's a serious one
    and it's one that we know that we need to address.
        We have seen progress made under NAFTA in some of these
    areas. Roundup is probably the most egregious at this point,
    and we need to direct ourselves to that one and so we will
    continue to pursue efforts of normalization in a way that's
    consistent with what our standards require.
        Senator Burns. Am I not correct that you are the final say,
    though, on the chemicals?
        Ms. Whitman. We are the final say on the chemicals and the
    makeup.
        Senator Burns. Now don't just limit it to the pesticides,
    so go to the herbicides and the rest of them too, because it
    seems to me that right now Canada uses I think six or seven
    different chemicals on their production of canola. We have only
    got labels of I think around three, yet all the canola that is
    harvested in Canada ends up in the market in the United States.
    Now there is a disparity there, and we also ought to take a
    look at that, not only the normalization of the label but also
    what can be applied and what cannot be applied and still enter
    the United States market.
        So those are the areas where--and Libby, of course, is
    still a concern on the asbestos, that situation up there, and
    those are my concerns, but I look forward to working with you
    on these other situations and as we work our way through this,
    I feel it is very very important. And thank you, Madam
    Chairman, I appreciate that very much.
        Senator Mikulski. Senator Bond, I know that you have a
    radio show, so I will let you go next so you can go down and
    participate.
        Senator Bond. Madam Chair, thank you very much, that will
    be a real thrill.
        Senator Burns. He has a face for radio.

                           Genetically modified foods

        Senator Bond. Thank you, Madam Chairman. I would like to
    ask the Administrator, one of my priorities in this committee
    is the National Science Foundation. We work together to develop
    safe genetically modified foods, because I think this may be
    the key to healthy feeding and assisting the world population
    in dealing with problems of chemical pollution, pesticide
    pollution in the environment.
        I know the EPA is working with other Federal agencies to
    insure that these food products and related products are
    regulated to insure the highest level of safety that we as
    human beings can achieve, but my question is, how do we deal
    with the fears and hysteria whipped up by European
    protectionists as well as others with special interests, and
    some people with legitimate concerns, but how can we address
    the fear factor that is being fanned that is really
    devastating, both to increasing investment in this area and the
    use of these products which have tremendous benefit for the
    world population and our environment?
        Ms. Whitman. Senator, as you pointed out, the genetically
    modified or altered crops and ways of farming are as old as
    farming itself. We have looked at finding pest resistant crops
    and a better variety of tomatoes or corn or wheat, and this has
    been going on forever. You have touched on what is really
    driving a lot of the concern.
        People are very nervous when they hear genetically modified
    crops. It implies something to them that is akin to the
    Frankenstein of the old movies. We need to do a better job of
    insuring that the science is real behind anything that is
    approved. Also, we need to insure that we do not make a mistake
    in the future, as I think everyone in the Agency will admit we
    made in the past in trying to help with a genetically modified
    product and to thinking that we could somehow separate
    something that is used for crops and animals from the human
    food chain.
        We need to understand that anything that we approve for one
    has to be approved for the other because it's too difficult to
    keep them separate. We need to be able to enter into a dialogue
    with farmers to insure best practices are used and to be able
    to reassure to the world bodies that in fact best practices do
    exist and can protect the food supply.
        There is a concern obviously about transparency. As a
    country we have been at the forefront of insuring transparency
    as we move forward. There is a concern in the European
    community about labeling. We have a concern about labeling
    because it raises the fear somehow that there's something wrong
    with it because it says genetically modified.
        We feel that the transparency in the process of development
    is even more important. We are working actively with the
    Department of Agriculture to see what we can do to try to
    insure the community that their food is safe. We want to assure
    safe food no matter what.

                                 New farm bill

        Senator Bond. It is the safest food supply in the world and
    we need to continue, and I look forward to working with you on
    that.
        I stepped out just a few minutes ago to meet with the
    leadership of one of the leading farm cooperatives in Missouri,
    and they are up here and I said what is your concern, and they
    said they are concerned about the new farm bill, but what they
    are really worried about is the new feed lot pollution
    regulations. And they wanted to know how we could be sure that
    your new CAFO/AFO, TMDL, do not make it impossible for the
    small farm operator to stay in business.
        They say, you know, if you have to guarantee that there
    will be no overflow when there is a 25-inch rain, we are out of
    business. You are going to run the small farm, the small hog
    producer out of business. They want to make sure that their
    operations are clean. There are a lot of things that can be
    done, but they want to have some assurance from EPA that you
    are not just going to shut them down and run them out of
    business.
        Ms. Whitman. Senator, we have heard their concerns. That's
    why we have extended the comment period on the CAFO
    regulations. For the TMDL regulation, we have two studies going
    on, one on the science and one on the costs, to insure that we
    can reach those standards that are protective of the
    environment but don't have the consequence of running out the
    small family owned farm, and those are the ones that tend to be
    most impacted by the standard.
        There is some flexibility that was proposed in the original
    regulations, but there are many who are afraid that it is not
    sufficient to protect the small family farm. Before we are
    ready to make final recommendations, we will be encouraging
    more public participation and public input. We have been
    listening to small farmers. I met with them the other day and
    encouraged them to make sure they avail themselves of the
    comment period which closes at the end of July. We want to do
    our very best to incorporate all the concerns before arriving
    at these two resolutions.

                       FTE reduction: enforcement program

        Senator Bond. Madam Chair, if I may, just one last one.
    There is some suggestion that there is a reduction of 269 FTEs
    in the operating programs. As I understand it, there are only
    65 actual enforcement FTEs who will be redeployed in the
    expectation that States will be able to meet environmental
    enforcement needs. I think the question that all of us want to
    know is what will EPA do to insure that overall quality of
    enforcement, the assurance we need to provide to everyone that
    enforcement will not be lessened by this change, the
    redeployment and the reliance on the State enforcement.
        Ms. Whitman. Senator, the intent here is for the opposite
    to be true. The plan is to leverage the dollars and the
    enforcement personnel that we have. The States are on site and
    know what's happening in their regions, who the bad actors are
    and where to go. States perform 95 percent of the inspections
    in compliance outreach now, and 90 percent of the actual
    enforcement actions. They are very active.
        We have not finalized the program yet, but the intent is to
    insure that we help those States that are already doing a great
    deal with some extra money to really ratchet up their program,
    and that's our goal. We will maintain our responsibility to
    insure that where a State can't enforce, EPA is there
    enforcing. Where there is a multistate enforcement issue, we
    are there enforcing.
        In the redeployment, we are insuring that we have people
    addressing the issues that we find to be troubling for the
    Agency. We are moving some people to civil rights, which has
    been an issue of concern at the Agency. We are moving people to
    TMDL development to insure that we have the right number of
    people there to help with that effort.
        The request of $475 million in the budget for compliance
    and enforcement efforts is in fact an increase of $10 million
    over fiscal year 2001. Included in that increase is a $1.5
    million increase for compliance assistance and a $1 million
    increase for criminal enforcement, which we feel are priorities
    for redeploying and redirecting personnel.
        We believe in the States. The States will need help and we
    are initiating the $25 million enforcement program to the
    States. We are going to be watching that program very very
    carefully as it is our responsibility to insure enforcement and
    we will continue to do that.
        Senator Bond. Thank you very much, Madam Administrator.
    Thank you, Madam Chair.
        Senator Mikulski. Thank you. Well, Administrator Whitman,
    this leaves it to you and I, one on one.
        Ms. Whitman. Wonderful.

               coordination with other agencies to Solve problems

        Senator Mikulski. But let me first of all give some
    comments and then some wrap-up questions.
        Just some general comments. One of the key issues, I
    believe with EPA, is really devoted to coordinating with other
    agencies and we are really counting on your executive ability
    because that is what an executive does, to see how all the
    agencies fit together to solve a problem.
        And just a few observations for, as you continue your
    stewardship. One, on brownfields, in the interest of time I am
    not going to go into the brownfields questions, but I think you
    and I both agree that brownfields is a tremendous opportunity,
    and HUD has money and EPA has money, and we want to make sure
    that there is leverage there and there is coordination. We have
    certainly enjoyed our very cordial relationship with Secretary
    Martinez, and I am not sure of their problems in Florida, but
    they certainly have a lot of environmental issues. I hope that
    your team would be coordinating with them so that as we clean
    up brownfields, that it goes then the next step, that is, from
    environmental, it goes from brownfields to greenfields, so
    that's one thing.
        The second, as you know, one of my highest priorities will
    always be the Chesapeake Bay and again, for the cleanup of the
    bay it is not only the bay programs, but it is also the work of
    the USDA and NOAA, and I would hope again, there will be close
    coordination with USDA and NOAA. As you know, the causes of
    pfisteria are controversial. You dealt with that on the New
    Jersey shores. I don't like to finger point, I like to pinpoint
    solutions. We have quite a bit of research and other activity
    going on with the blue crab species, et cetera. So we really
    need, again, coordination, but I hope you would make a note to
    really insist that those agencies are working together.
        The other that I think could give us all problems is the
    Army Corps of Engineers. Now I love the Corps, and you can't
    have the Port of Baltimore without the Corps of Engineers. But
    they are now talking about changing their wetlands policy.
    Administrator Whitman, I don't want you to recommend
    controversies, and to open that door again to relax permits and
    so on really gives me pause.
        I'm going to be talking with General Flowers about this,
    but in the early days of the new Administration, with all the
    challenges we have, even with some of the criticisms of the
    Administration, let's not go to undoing the wetlands policy. I
    don't think--I really hope that General Flowers and I can talk
    about this, so that again, the Corps has what it needs to do to
    be the Corps of Engineers, but if they relax their standards,
    it is going to come back to you, it is going to come back to
    the Congress, and we are going to have the wetlands fight all
    over again, and I do not think people want to do it.
        I think people have gotten used to the rules, and you know,
    the whole Eastern Shore is a wetland, because of the very
    nature of the bay on one side and the ocean on the other. And
    so you know where I stand, I really think that like in war,
    early warnings and sound intelligence would hope that we will
    not get into that, so would you?
        Ms. Whitman. Certainly.

                           working with our Partners

        Senator Mikulski. I do not know if you were aware of that.
    Were you aware of the wetlands issue?
        Ms. Whitman. Yes, Senator, I am aware of the wetlands
    issues and I am aware of the concerns surrounding what is being
    talked about. We obviously have a deep commitment at the Agency
    to protecting the Nation's wetlands and we will continue to
    have that.
        I couldn't agree with you more on your emphasis on
    partnership. While I will take your words to heart on meeting
    with General Flowers, I haven't done that yet, but I will
    assure you Secretary Veneman and I meet on a regular basis both
    informally and formally with staff to identify issues of
    concern. The Chesapeake Bay is one that we were just talking
    about yesterday, and where our mutual areas coincide we need to
    be working together.
        With brownfields, you're absolutely right, the next step is
    going to be equally important, clean them up and then we need
    to have the right kind of policies. I have an additional
    interest in insuring that we have a good working relationship
    with Housing because, of course, I would like to see and insure
    that as Housing provides dollars for low to moderate income
    housing that they insure they are as energy efficient as
    possible. There are many new technologies now that allow us to
    bring housing in at appropriate cost levels that have the best
    in energy efficiency and are sustainable for the people who
    live in those houses.
        Senator Mikulski. Well, this is the subcommittee to talk to
    and we would hope that the partnership that Secretary Martinez,
    and since Senator Bond and I have kind of a concept or
    something, which we continue.
        Ms. Whitman. Okay.

                       Region 3: enforcement redeployment

        Senator Mikulski. Let me go over again my questions. I am
    not going to go into great detail over the enforcement issue,
    it is not a great concern to me, but you can see Region 3 loses
    quite a bit of people, as well as 1, 2, 4 and the others. We
    have been very satisfied with the enforcement in Region 3 and
    what I am concerned about is, one, that we maintain adequate
    enforcement.
        Second, and I am going to submit questions for the record
    here, because I think we will proceed better here and then
    before we do our markup, I am sure that you and I will be
    talking again. I just want you to understand that Senator Bond
    and I are working on a bipartisan basis with this.
        Ms. Whitman. I know that.
        Senator Mikulski. But States have mixed enforcement records
    and my concerns would be, who is going to use the money and how
    are they going to use the money, and how will EPA work with the
    States that have poor records, particularly if regional staff
    resources are cut?
        Region 3, I think has a culture of environmental
    stewardship. It includes Delaware, Maryland, you know, et
    cetera, but I am concerned that not everybody has put that in,
    so we really need to look at this. And as I heard how you are
    going to redeploy your people in criminal issues, in others,
    which obviously are very important, but it seems to me that
    enforcement is just making sure that they ensure change, that
    you need them in the areas where you are redeploying, but we
    also leave them in these areas. So we would really like to have
    an ongoing analysis of doing that. Do you have any comments?
        Ms. Whitman. Well, I can certainly comment. We have not
    allocated cuts across regions yet. We will look closely at the
    issue.
        Senator Mikulski. Well, I got this from the Environment and
    Public Works Committee.
        Ms. Whitman. I have seen that chart before, but we haven't
    gone to that level yet to allocate those cuts by region. You
    are not wrong, Senator, and the point that you make about not
    all States being equal is one that I also take very seriously.
    As we look at the implementation of the new program, $25
    million enforcement program is something that is going to be at
    the forefront.
        The point here is to put the money where it will do the
    most good and leverage the dollars we already have and insure
    that we retain the ability to provide the enforcement where we
    know States don't have that ability. This is not a flat across
    the board increase where everybody gets the same thing.
        Senator Mikulski. Well, we want to hear more about this.
        Ms. Whitman. Certainly.

                       mandate for new Arsenic standards

        Senator Mikulski. Let me now go to the arsenic and drinking
    water. First off, I am very mindful of the cost, but we are
    going to have some real issues on our hands. First of all, I am
    truly troubled at the standard of 50 ppb. That is the same
    standard as Bangladesh, Bolivia, and China. The European
    community has 10, Japan has 10, but I am not a biochemist so I
    am not going to say what the standard should be.
        What I am concerned about is two things, number one, we had
    a mandate for June 22, 2001, for there to be new arsenic
    standards. I do not know what authority you have to move that,
    but you moved it. Do you think you have authority?
        Ms. Whitman. No, Senator, we will not make the date. I
    don't want to say that's a common practice at the Agency,
    unfortunately it's done all too often. However, we have no
    statutory authority. We have asked for the Congress to consider
    an extension, given that we want to insure we have the very
    best data, the most current data, and the best standard
    possible to safeguard the people.
        But what we are not changing is the enforcement date of
    2006, which is the same as what was contemplated under the
    Clinton Administration proposal. There will be a new standard,
    it will be dramatically lower, and it will be enforceable by
    the year 2006.
        Senator Mikulski. Can you tell me if you can, according to
    your announcement, the EPA would delay this until February 22.
    Am I correct?
        Ms. Whitman. I'm hoping to get it done faster.
        Senator Mikulski. What are you delaying?
        Ms. Whitman. The final rule is what's being delayed. Before
    we have a final rule in place, we have to indicate what the
    rule would be and have it out for public comment, and fulfill
    the other requirements of the rule making process. It will take
    until February to have a final rule in place, but the
    implementation and enforcement date will be 2006.

                 Sound science: Arsenic drinking water standard

        Senator Mikulski. When I chaired this committee in the
    early 1990s, I actually commissioned a study by the National
    Association of Public Administration on where EPA was in terms
    of its science, and did it have the infrastructure and were
    they able to do it. I worked off that NAPA study and I know my
    colleagues did, and I also then note that there has been a cut
    in the science and technology account by $56 million. And
    again, this is not meant to be a provocative or an
    argumentative question of you.
        I want to make sure that the Agency uses sound science, so
    I want to ask you, what kind of science are you using now for
    the arsenic drinking water standard that was not used before to
    get at it, and then second, how can we have sound science if we
    are cutting it by $56 million, and could we come to an
    agreement by an operational definition of sound science?
        Ms. Whitman. That will probably be more difficult.
        Senator Mikulski. I am going to at least have this probably
    for the next 18 months, and I really know Senator Bond is
    passionate about sound science too, and we want to help you get
    there. And rather than every time there is a dispute, everybody
    criticizes the science, so I would like to----
        Ms. Whitman. Well, our Office of Research and Development
    actually has an increase in its budget. Science is done across
    the Agency in a number of different places. Our Office of
    Research and Development, the office where we look to get the
    best science, has a proposed increase. What we're doing with
    arsenic is that we are looking at all the scientific work that
    was done in the Agency. I have asked the National Academy of
    Sciences to conduct a scientific review. When they did the
    initial review they said that they were troubled that 50 parts
    per billion was too high. They did not indicate what would be
    an appropriate lower level.
        Senator Mikulski. So they did not give you a bottom line.
        Ms. Whitman. They didn't give us a bottom line, so I asked
    them to relook at this. There have been about three new studies
    subsequent to the proposal that was done in January that
    actually indicate increased problems from arsenic.
        I said look at those new studies, look at everything else,
    between 3 and 20, because that was where the original record
    was built. I didn't want to set everything back by simply
    ignoring the old record. Can you give us a better indication of
    what is a safe standard in drinking water? Is it that you're
    safe at 10 and not 11, you're safe at 20 and not at 21? Can
    they do it? I don't know if they can. Science unfortunately is
    never as precise as we would like, but I asked them to do that
    and to incorporate the new studies that have come to fore and
    been printed since that time.
        We are also asking an outside group, and one of the
    senators indicated he was not altogether happy with the makeup
    of the group, although we did try to find a very balanced
    group, to look at what the cost implications are for
    implementation to the small and midsize water companies.
        Senator Mikulski. Particularly for the western States.
        Ms. Whitman. Yes. We have a number of western State
    representatives, and we have a scientist who has worked on
    arsenic from the southern part of California, an area that has
    high naturally occurring arsenic. They are not all from New
    Mexico, but we do have representation and we tried for balance.
        I am going next week to a regular public meeting of the
    National Academy of Sciences to ask for an update as to where
    they are, how they are moving on the request we made of them to
    reexamine the science and try to give us a better number. I am
    taking a personal interest in this and I want to make sure we
    get it right.

                        Science and technology reduction

        Senator Mikulski. Well, we are going to--I hope we do not
    have more bias in this, because this really is a good fight,
    and we tried to come up with a solution here. Now I agree, and
    perhaps the instructions to the National Academy study were not
    as clear as they should be, but we are not going to do this
    through a rearview mirror. We really do need a standard to be
    in place by 2006. We also, while we establish the standard, not
    only look at the cost of compliance with the standard, but look
    at how we are going to do it.
        I really acknowledge the validity of the concerns that were
    raised by my colleagues and as Senator Kohl said, many of our
    communities are the graying communities and they are usually
    older core areas, areas where there are failing sewers and
    failing septic systems, as there are on the New Jersey shore.
    So I really want to get that.
        Now second, I am concerned about the cut in the science and
    technology account, and I do not know what the consequences of
    that are. So we would like to know what this means.
        And then last but not at all least, and this is long range,
    was when we turn to EPA and we want sound science, what does
    that really mean and how are we going to get it? This is a long
    range conversation, we do deal with appropriations, and we do
    not want to be authorizers by proxy, but it is now a buzz word
    often used to delay rather than something I think you and I are
    in absolute agreement on.
        So this is a longer range conversation, what is the
    operational definition of sound science? When is good, good
    enough science? And then how do we get there and who does it?
    In other words, is it an in-house thing, is it for the national
    laboratories, do we essentially turn to the National Academy on
    particularly high profile issues? I'm not sure of what is the
    best way, but I am going to work with you to find what is the
    best way so that at the end of next fiscal year, that we really
    have the framework that I think meets what scientists would
    agree, and then those of us responsible for setting public
    policy would be conscientious of.
        Ms. Whitman. Senator, I look forward to that. Most of our
    studies, or almost all of them actually, are subjected to peer
    review which I think is an important way to assure sound
    science when you get some outside look. I have asked one of my
    offices to supply me with recommendations as to how we can
    insure that at the beginning of the regulatory process, we
    incorporate science into the ideas that we're moving forward
    and build, science and policy at the front end rather than at
    the back end.
        I expect those recommendations as to how I can within the
    Agency redirect and insure that we are having and putting sound
    science at the front end of any regulatory decision we make and
    that we start to get the science in place before we determine
    the outcome. That unfortunately has not always been the case. I
    want to make sure that everyone understands that is going to be
    the case.
        Senator Mikulski. I would really like you to think about
    this and also, maybe the National Academy has to advise us on
    how to get science, maybe that is one of their sets of
    recommendations.
        But again, I am not saying what the method ought to be, I
    am just telling you the outcome, and I think you would like
    very much that outcome.
        Ms. Whitman. I agree.
        Senator Mikulski. And so, I look forward to working with
    you.

                         Additional committee questions

        Well, I think this hearing has been very informative and
    instructive, and we look forward to more conversation as we
    move forward. We expect to be marking up our bill in mid-July
    at the subcommittee level. We are going to really try to meet
    our Congressional mandated schedule this year, so everybody has
    to get ready to kind of move it.
        [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

                             compliance assistance
        Question. What is the status of each Aiming for Excellence Report
    task and milestone in Actions 4 and 5? Provide an explanation of the
    delay for any milestones behind schedule.
        Answer. In the ``Aiming for Excellence Report,'' the Office of
    Enforcement and Compliance Assurance's (OECA) Office of Compliance is
    responsible for completing three tasks under Action 4 and three tasks
    under Action 5. The Office of Compliance has completed the milestones
    associated with each task. Information on these accomplishments is
    provided in Attachment A.

                                  Attachment A

    aiming for environmental excellence: additional reinvention actions at
      epa to encourage stewardship and accelerate environmental progress
      implementation plan (office of compliance progress as of july 2001)
        This Implementation Plan contains a list of the Tasks and
    Milestones for the Office of Compliance's implementation of Actions 4
    and 5 listed in the ``Aiming for Excellence Task Force Report.'' The
    Actions and Tasks are cross referenced by number to the ten actions and
    corresponding tasks in Appendix 3 of the report. The milestones present
    the steps EPA is taking to be accountable for carrying through the
    report's recommendations.
        Action 4.--Support a network of public and private sector
    organizations that provide assistance on environmental compliance.
        Lead.--Office of Enforcement and Compliance Assurance, Office of
    Prevention, Pesticides, and Toxic Substances, Office of Water, Office
    of Policy, Economics and Innovation, Region 4.
        Task 1.--We will convene a national compliance assistance forum to
    share information with participants on recently developed compliance
    assistance materials, get stakeholder input in setting priorities for
    new compliance assistance materials, and exchange compliance assistance
    tools. We will also use the forum to help identify industry sectors
    that have special compliance assistance needs.
      --Milestone 1.--Establish a small workgroup of state representatives
            to assist EPA in planning the forum (see also Action 4, task 4;
            Action 5, task 2).
        --Date.--September 1999 (completed)
      --Milestone 2.--Establish Agency-wide workgroup on compliance
            assistance.
        --Date.--September 1999 (completed)
      --Milestone 3.--Establish a multi-stakeholder group through NACEPT
            (National Advisory Council on Environmental Policy and
            Technology) to assist EPA in planning the forum ( see also
            Action 4, task 4; Action 5, task 2).
        --Date.--November 1999 and meet as needed (completed)
      --Milestone 4.--Convene a compliance assistance forum.
        --Date.--March 2000, March 2001, and periodically thereafter
                (completed). The next Forum is planned for the Fall of
                2002.
        --Discussion.--March 2000 Forum was attended by approximately 200
                participants representing states, trade associations,
                industry, federally-recognized Indian tribes, and community
                groups. Gathering focused on building partnerships between
                compliance assistance providers. Forum 2001 Forum attracted
                approximately 300 participants representing over 25 states,
                trade associations, industry, federally-recognized Indian
                tribes, and community groups. Focused on sharing innovative
                models for delivering compliance assistance tools and
                delivery and identifying compliance assistance needs of
                providers.
        Task 4.--We will create a clearinghouse of compliance assistance
    materials and tools. This clearinghouse will include information from
    federal, state, tribal, and local governments and from private
    providers, such as trade associations. EPA will add information to the
    clearinghouse in phases.
      --Milestone 1.--Begin design of clearinghouse.
        --Date.--October 1999 (completed)
      --Milestone 2.--Seek broad stakeholder input on design.
        --Date.--March 2000 (completed)
      --Milestone 3.--Clearinghouse operational.
        --Date.--December 2000 (completed)
        --Discussion.--The Clearinghouse, a new and innovative web site
                that EPA developed with the States and other stakeholders
                provides comprehensive links to EPA's environmental
                compliance assistance materials as well as materials from
                all 50 States and other organizations. Its cutting-edge
                features allow users to directly interact with EPA and its
                use enhances communication and collaboration among
                compliance assistance providers. EPA chose to extend the
                milestone to further enhance Internet security.
        Task 5.--We will distribute and market compliance assistance tools
    to organizations that are likely to have contact with regulated groups.
      --Milestone 1.--Will be planned as tools are developed.
        --Date.--On-going
        --Discussion.--EPA continues its broad use and distribution of
                compliance assistance tools designed to reach the regulated
                community. EPA funds trade association and educational
                institutions to operate 10 Compliance Assistance Centers
                (the 10th, for Federal Facilities, opened in fiscal year
                2000) which are designed to help small businesses and small
                governmental entities understand and comply with their
                environmental obligations. Currently, the Centers are
                visited over 1,200 times a day by small and large
                businesses, farms, governments, and the public and interest
                in these Centers continues to increase. In a recent survey,
                over 70 percent of the company and local government
                respondents said they took one or more actions as a result
                of the Center use (e.g., changing the handling of waste,
                obtaining a permit). In addition to the Centers, EPA
                continues to develop other tools such as industry sector
                notebooks, plain language compliance guides, training
                models and compliance checklists. In fiscal year 1999, EPA
                completed 10 sector guides and more than 30 other outreach
                documents for industries such as food processing and
                chemical manufacturing. EPA is currently refining existing
                compliance assistance tools to reach out to federally-
                recognized Indian tribes.
        Action 5.--Deliver compliance assistance information for new
    ``economically significant'' rules when and where it is needed.
        Lead.--EPA National program offices that prepare regulations,
    Office of Enforcement and Compliance Assurance (OECA)
        Task 1.--We will develop compliance assistance guides and/or self-
    audit checklists for economically significant rules that apply to
    companies and/or government facilities (or rules that were
    ``substituted'' because of greater benefit), typically within 90 days
    of issuance. Extensions beyond this time frame will be subject to
    approval by the Deputy Administrator. EPA also may produce compliance
    materials for additional rules that do not meet the economically
    significant threshold, within budget limitations.
      --Lead.--EPA National program office that prepares regulation, with
            assistance from the Office of Enforcement and Compliance
            Assurance
      --Milestone 1.--Identify the economically significant rules under
            development.
        --Date.--June 1999 (completed)
      --Milestone 2.--Finalize initial set of rules for which compliance
            assistance materials will be developed.
        --Date.--October 1999 (completed)
        --Discussion.--Typically, the guides will be issued within 90 days
                of rule issuance. Extensions are allowed because of factors
                such as resource constraints, providing for greater
                stakeholder involvement, or demands of other work.
      --Milestone 3.--For subsequent years, use the annual compliance
            assistance plan (see Task 2) to identify the regulations
            appropriate for compliance guides.
        --Date.--Annually in May (no longer applicable--see below)
        --Discussion.--The plan will no longer be used as the method for
                identifying regulations but will still include descriptive
                information on the planned guides. The list of economically
                significant rules for which compliance guides are to be
                developed are being tracked on a on-going basis using EPA's
                Rule and Policy Information and Development System (RAPIDS)
                data-base. The RAPIDS data-base, established by the Office
                of Policy, Economics and Innovations, will also be used to
                track the development of the compliance guides themselves.
        Task 2.--We will develop an annual compliance assistance plan, in
    consultation with state, tribal, and other compliance assistance
    providers, to ensure that compliance assistance resources are focused
    on areas where they are most needed. Based on their input, we will
    consider developing compliance assistance tools for other new rules
    that do not meet the economically significant threshold or for existing
    rules known to have compliance problems.
      --Milestone 1.--Begin consultation with stakeholders.
        --Date.--September 1999 (completed)
      --Milestone 2.--Circulate draft plan to stakeholders.
        --Date.--February 2000 and annually thereafter (completed)
      --Milestone 3.--Send draft plan to the Deputy Administrator
            highlighting issues raised by stakeholders
        --Revised Date.--November 2000 (completed)
        --Discussion.--EPA has worked in consultation with States, tribes,
                the small business community and other stakeholders to
                develop this plan. As a result of stakeholder comment and
                discussions with the Compliance Assistance Advisory
                Committee, EPA made several significant improvements to the
                draft plan prior to its submission to the Deputy
                Administrator such as including additional appropriate
                projects. The process is allowing EPA to identify
                opportunities for collaboration, eliminate duplications,
                create partnerships, and identify gaps for future efforts.
      --Milestone 4.--Issue final plan.
        --Date.--April 2001 (completed)
        --Discussion.--The fiscal year 2001 Plan catalogues 368 compliance
                assistance activities and provides analysis and policy
                background for compliance assistance activities. The fiscal
                year 2001 Plan also outlines upcoming federal rules and
                anticipated rule-related compliance guides.
      --Milestone 4.--Begin developing fiscal year 2002 Plan
        --Date.--On-going
        --Discussion.--EPA is currently placing information into the Plan
                database. Publication of the draft fiscal year 2002 Plan to
                seek public comments in the Federal Register is scheduled
                for July 2001.
        Task 3.--We will field test certain compliance assistance tools
    before issuing them. For one or two rules, the Agency will also develop
    special software to guide facility operators through regulations and
    provide answers on applicability, deadlines, and what must be done to
    comply.
      --Lead.--EPA National program office that prepares regulation, with
            assistance from Office of Enforcement and Compliance Assurance
      --Milestone 1.--Identify 1-2 regulations that are appropriate for
            software development (expert system).
        --Date.--May 2000 and annually thereafter (completed). The TRI-ME
                (Toxics Release Inventory Made Easy) expert system has been
                developed by the Office of Environmental Information to
                help prospective reporters understand and comply with the
                EPCRA section 313 (TRI) reporting requirements.
      --Milestone 2.--Identify appropriate staff to support development of
            software development (expert system).
        --Date.--May 2000 and annually thereafter (completed)
        --Discussion.--Office of Environmental Information staff are
                developing the system.
      --Milestone 3.--Establish schedule for developing and field testing
            software (expert systems). Date:Spring 2001 (see below)
            Discussion: The first version of TRI-ME was released as a pilot
            distribution to 6,000 facilities in the Spring of 2001, for use
            in completing the TRI forms for calendar year 2000 that were
            due by Monday, July 2, 2001. Depending on future funding and
            user feedback, EPA anticipates that a new version of TRI-ME
            will be released for each TRI reporting year as part of the
            annual TRI Reporting Forms and Instructions. Beginning with
            reporting year 2001, in which reports will be due by July 1,
            2002, the Agency expects to distribute TRI-ME to all facilities
            subject to EPCRA section 313. Each version of TRI-ME will be
            updated to reflect the most current regulations and guidance.
            Further, with each version of TRI-ME the Agency will strive to
            improve the user interface, as well as the ``expert
            intelligence'' incorporated into the software.
        Question. What are the rules currently considered economically
    significant for the purposes of developing compliance assistance tools?
    Provide the rule finalization date and the status of any tools
    development for rules finalized or to be finalized by December 2001.
        Answer. As outlined in the ``Aiming for Excellence Report,'' EPA
    may develop compliance assistance tools for rules that have an economic
    impact of $100 million or more on companies and/or government
    facilities or other rules, as appropriate. EPA also develops compliance
    tools for rules that have a significant economic impact on a
    substantial number of small entities as defined under the Small
    Business Regulatory Enforcement Fairness Act.
        The potential universe of regulations for which compliance guides
    may be developed is continually changing based on changes to specific
    provisions of a regulation and subsequent economic analysis. Also,
    changes in rule finalization dates alter the compliance tool schedule.
    Extensions in developing compliance tools are allowed because of
    factors such as resource constraints, providing for greater stakeholder
    involvement, or demands of other work.
        For the purposes of this response, Attachment A contains
    information, as of July 5, 2001, on the ten rules finalized or expected
    to be finalized by December 2001.

                                  Attachment A

                  ECONOMICALLY SIGNIFICANT REGULATIONS--COMPLIANCE ASSISTANCE TOOLS AS OF JULY 5, 2001
    ----------------------------------------------------------------------------------------------------------------
                                                                                                           Estimated
                  Regulation                    Projected/Actual Final      Projected/Actual Compliance   Compliance
                                                   Publication Date             Tool Completion Date       Tool Cost
    ----------------------------------------------------------------------------------------------------------------
    Office of Air and Radiation:
        Rulemakings for the Purpose of      September, 2001..............  December, 2001...............      $4,800
         Reducing Interstate Ozone
         Transport (Contact: D. Grano, 919-
         541-3292).
        Heavy-Duty Engine Emission          January 18, 2001.............  March, 2002 \1\..............          NA
         Standards and Diesel Fuel Sulfur
         Control Requirements (Contact: T.
         Wysor, 734-214-4332).
        Tier II Light-Duty Vehicle and      February 10, 2000............  March, 2002 \2\..............          NA
         Light-Duty Truck Emission
         Standards and Gasoline Sulfur
         Standards (Contact: T. Wysor, 734-
         214-4229).
        NESHAP: Chemical Recovery           January 12, 2001.............  September, 2001 \3\..........     $60,000
         Combustion Sources (Contact: G.
         Wood, 919-541-5272).
        Control of Emissions of Air         October 6, 2000..............  January, 2001................     $20,000
         Pollution from 2004 and Later
         Model Year Heavy-Duty Highway
         Engines and Vehicles; Revisions
         of Light-Duty Truck Definition
         (Contact: J. Guy, 202-564-9276).
    Office of Prevention, Pesticides and    January 5, 2001..............  April, 2001..................      $7,700
     Toxic Substances: Lead:
     Identification of Dangerous Levels of
     Lead Pursuant to TSCA Section 403
     (Contact: D. Topping, 202-260-7737).
    Office of Water:
        National Pollutant Discharge        December, 1999...............  March, 2000..................      $5,000
         Elimination System Regulations
         for Revision of the Water
         Pollution Control Program
         Addressing Storm Water Discharges
         (Contact, J. Faulk, 202-564-0768).
        National Primary Drinking Water     January 22, 2001 \4\.........  NA \5\.......................          NA
         Regulations: Arsenic and
         Clarifications to Compliance and
         New Source Containment Monitoring
         (Contact: I. Dooley, 202-260-
         9531).
        National Primary Drinking Water     December 16, 1998............  August, 2001 \6\.............      $6,000
         Regulations: Stage 1 Disinfectant/
         Disinfection By-Products Rule
         (Contact: T. Grubbs, 202-260-
         7270).
    Office of Environmental Information:    November, 1999...............  July, 2001...................     $71,000
     TRI; Reporting Threshold Amendment
     for Certain Persistent and
     Bioaccumulative Toxic Chemicals
     (Contact Gail Froiman, 202-260-0697).
    ----------------------------------------------------------------------------------------------------------------
    \1\ Guide development is underway following consultation with the regulated community to ensure key issues are
      addressed and that EPA uses the most appropriate method of conveying information.
    \2\ Guide development is underway following consultation with the regulated community to ensure key issues are
      addressed and that EPA uses the most appropriate method of conveying information.
    \3\ Issuance date extended to assess the extent of litigation on the regulation.
    \4\ Regulation currently under review.
    \5\ Schedule for development of small system compliance guide will follow rule development schedule.
    \6\ Issuance date extended to address technical corrections.

        Question. Provide the name of the person in each program office
    currently responsible for ensuring that compliance assistance tools are
    developed for each economically significant rule.
        Answer. Attachment A for question Bond-002 contains the name of the
    person in each program office currently responsible for ensuring that
    compliance assistance tools are developed for each economically
    significant rule. If any additional information is needed please
    contact Peter Pagano with the Office of Congressional and
    Intergovernmental Relations at 564-3678.
        Question. Provide an estimate of the cost of developing compliance
    assistance tools for each economically significant rule finalized or to
    be finalized in 2000 and 2001?
        Answer. The costs associated with developing compliance assistance
    tools for economically significant rules vary significantly. Cost
    variations are based on the type of technical issues associated with
    the substantive requirements of a rule, the degree of experience that
    the regulated community has in dealing with environmental rules, and
    the diversity of the regulated community (e.g., need for bilingual
    assistance materials). In addition, cost variations occur because of
    the multiple ways in which information exchanges occur with the
    regulated community, including face-to-face training and delivery of
    information via computer-based technology. Cost variations are also
    associated with whether EPA develops a compliance guide within the
    agency or uses contractor assistance to develop the guide. Finally,
    cost fluctuations are affected by timing of the tool development; it is
    often more cost efficient for the rule developer to prepare the
    compliance guide at the time, or soon after, the final rule is
    promulgated. Attachment A contains information on the estimated cost
    associated with each completed compliance guide.
        Question. How is EPA transforming the compliance assistance
    activity plan from a list of compliance activities into a planning tool
    describing needs, goals, and actions necessary to address those needs
    and goals?
        Answer. In April 2001, EPA published the Compliance Assistance
    Activity Plan (the Plan) for fiscal year 2001. This first Plan is a
    compilation of 368 compliance assistance activities agency-wide for
    fiscal year 2001. The projects in the Plan were identified as part of
    the planning and budget development process which began in the Spring
    of 1999 and they were finalized after the agency received its fiscal
    year 2001 appropriations. The fiscal year 2001 Plan established a base-
    line of agency compliance assistance activity. As a planning tool, it
    helped compliance assistance providers by: identifying opportunities to
    partner; highlighting planned projects that were duplicative; and
    providing the opportunity to better utilize and leverage limited
    resources. The Plan also identifies EPA's 2001 priorities and the
    regulation-specific compliance assistance tools being developed for
    economically significant rules and for rules that have a significant
    economic impact on a substantial number of small entities as defined
    under the Small Business Regulatory Enforcement Fairness Act.
        From the experience of developing the fiscal year 2001 Plan, EPA
    has made refinements to the Plan development process and how the agency
    intends to use the Plan in order to enhance its usefulness as a
    planning tool. For instance, the Office of Compliance (OC) is
    undertaking a ``gap analysis'' to identify whether planned compliance
    assistance projects match the agency's identified programmatic and
    regional priorities. OC will provide this analysis to program and
    regional offices to advise them in future planning efforts. In
    addition, EPA is incorporating a variety of stakeholder outreach
    efforts into the Plan development process. To better determine the
    highest priority compliance assistance needs, this year EPA regions and
    headquarters are holding additional stakeholder meetings with states,
    tribes and other groups that will augment the feedback received from
    stakeholders and assistance providers at the Compliance Assistance
    Providers Forum held in March 2001. The agency is also soliciting
    comment on its proposed fiscal year 2002 compliance assistance projects
    via a Federal Register notice this summer. All the comments received
    through the Forum, stakeholders meetings and Federal Register notice
    will be reviewed by all regional and relevant headquarters program
    offices and considered in the development of the agency's fiscal year
    2002 operating plans.
        Question. Provide a ranking of the top 10 compliance assistance
    needs and identify the criteria used for the ranking such as risk of
    environmental damage or susceptibility of the problem to compliance
    assistance techniques.
        Answer. Office of Enforcement and Compliance Assurance (OECA) does
    not have a ranked list of the top 10 compliance activity needs.
    However, the Memorandum of Agreement (MOA) between EPA's Headquarters
    and EPA Regional offices establishes a clear focus and a set of
    priorities for compliance assurance activities within EPA for a two
    year cycle as well as ongoing ``core'' responsibilities. The MOA also
    guides our partners in the States and local jurisdictions. The MOA
    Guidance for fiscal year 2002 and 2003 outlines the following priority
    areas: wet weather (Clean Water Act), anti-microbial rules (Safe
    Drinking Water Act), New Source Review/Prevention of Significant
    Deterioration and Toxics (Clean Air Act), permit evaders (Resource
    Conservation and Recovery Act), petroleum refining sector. Within these
    priority areas, compliance assistance projects will be implemented, as
    appropriate, based on the environmental problem or environmental risk
    to be addressed.
        Question. Describe how future Compliance Assistance Activity Plans
    will direct EPA actions and resources to meet those priority needs?
        Answer. It is anticipated that future Compliance Assistance
    Activity Plans will reflect EPA's continuing efforts to better identify
    the priority needs for compliance assistance, improve the process for
    obtaining stakeholder input, engage in dialogue on how best to meet the
    identified needs, and provide guidance on how to direct resources to
    the highest priority needs. In addition, EPA is undertaking an effort
    to better identify how compliance assistance resources are being
    utilized by using the Plan to help identify the funding sources for the
    planned fiscal year 2002 activities. It is not anticipated, however,
    that the Plan will be used to specifically direct EPA actions and
    resources; the agency's Strategic Plan and annual operating plans and
    budget are the principal mechanisms for this effort.
        Question. How is EPA holding rule development officials accountable
    to ensure their new rulemakings include consideration of compliance
    assistance tools from the earliest possible point?
        Answer. EPA recognizes the importance of providing regulated
    entities with information to assist them in understanding and meeting
    their compliance obligations. Throughout the rulemaking process, we
    actively seek input from the states and the regulated community so that
    rules are crafted to be clear and understandable. In addition, through
    the development of EPA's annual Compliance Assistance Plan, EPA
    assesses the need for compliance assistance tools across the programs
    with a specific focus on compliance assistance tools to implement new
    regulatory requirements. That said, EPA acknowledges that its
    rulemaking development can be improved. Accordingly, on March 10, 2001,
    the Administrator formed a task force comprised of the then Acting
    Assistant Administrators to evaluate the Agency's current rulemaking
    process and make recommendations for improvement. EPA's senior
    management has transmitted it recommendations to the Administrator for
    her review and approval. We will supplement our answer to this
    question, as appropriate, upon the Administrator's decisions on
    improving the regulatory process.
        In addition, EPA has established a goal to develop compliance tools
    within 90 days of promulgating the final rules for the two types of
    regulations for which the Agency has committed to providing compliance
    guides. EPA has committed to develop compliance guides for federal
    regulations that have a ``significant economic impact on a substantial
    number of small entities'' as defined under the Small Business
    Regulatory Enforcement Fairness Act (SBREFA). EPA has also committed to
    develop either a compliance guide or a self-audit checklist for federal
    regulations with an ``economically significant'' impact of $100 million
    or more on companies and/or government facilities as outlined in EPA's
    Aiming for Excellence report. The Agency is ensuring accountability by
    closely tracking the implementation of these efforts and widely
    publicizing its progress through various efforts, including the annual
    Compliance Assistance Activity Plan.
        Question. How could EPA comprehensively analyze its upcoming
    regulatory requirements and determine where new compliance assistance
    tools could most effectively increase compliance with those
    requirements?
        Answer. EPA has established a program for continuing the compliance
    assistance needs discussions with its partners through EPA's National
    Compliance Assistance Forum. Discussions and information provided at
    these forums has been used to identify compliance assistance needs and
    provide input on EPA's National Compliance Assistance Activity
    Clearinghouse and the Annual Compliance Assistance Activity Plan.
    Another vehicle for assessing compliance assistance needs comes from
    EPA's work with the Compliance Assistance Advisory Committee (CAAC)
    which is a component of the National Advisory Council for Environmental
    Policy and Technology (NACEPT). These efforts not only support the
    development of compliance assistance tools, but they also provide a
    forum to assess the effectiveness of EPA's compliance assistance
    efforts. Through all of these activities EPA is comprehensively
    analyzing forthcoming regulatory requirements to identify which are
    best suited to compliance assistance.
        Based on discussions with stakeholders, EPA has also decided to
    identify, through the rule development process, which rules have an
    ``economically significant'' impact on the regulated community, defined
    as $100 million or more, and that EPA will develop compliance guides
    for those rules. Similarly, as mandated by the Small Business
    Regulatory Enforcement Fairness Act (SBREFA), based on the regulatory
    flexibility analysis conducted early in the rule development process
    EPA develops plain English compliance assistance guides for all SBREFA
    rules. In addition, EPA has established a goal to develop compliance
    tools within 90 days of promulgating the final rules for the two types
    of regulations for which the Agency has committed to providing
    compliance guides.
        Question. How could EPA comprehensively analyze current regulatory
    requirements to determine where new compliance assistance tools could
    most effectively increase compliance with those requirements?
        Answer. EPA recognizes the need to ensure compliance with current
    regulatory requirements and routinely conducts compliance analyses and
    outreach to identify areas of significant noncompliance. This analysis,
    in conjunction with analysis by various EPA program offices, is used to
    develop preliminary national compliance assurance priorities, including
    compliance assistance priorities and candidates for compliance
    assistance tools. These draft priorities are shared with various
    stakeholders including EPA Regions, States and Tribes for further
    refinement. In addition, in order to increase the focus and
    effectiveness of its compliance program, and to assure maximum
    stakeholder input into how EPA utilizes its compliance assistance
    resources, EPA has begun a process of seeking public comment on its
    preliminary national enforcement and compliance priorities through
    publication of a Federal Register Notice. EPA uses national meetings
    like the Compliance Assistance Providers Forum to identify regulatory
    requirements and sectors in need of compliance assistance. Toward these
    same goals, EPA is also working with the Compliance Assistance Advisory
    committee (CAAC), a multi-stakeholder working group, of the National
    Advisory Council for Environmental Policy and Technology (NACEPT) to
    identify priority areas for compliance assistance activity. When
    appropriate, EPA also works with other groups to identify and develop
    focused compliance assistance tools such as the recent EPA/CMA effort
    to determine the root causes of non-compliance in the chemical industry
    sector. Finally, this year OECA has requested that each Region hold
    sessions with stakeholders to solicit input on compliance assistance
    needs and priorities.
        Question. Estimates of the printing industry show that up to 90
    percent of all printers will never be visited by an environmental
    inspector or face following enforcement actions. What are other
    industries which have a low likelihood of being subject to traditional
    enforcement techniques?
        Answer. All facilities must comply with the regulatory requirements
    that apply to their operations and may be inspected at any time.
    However, most industry sectors composed of small businesses are less
    likely to be the subject of a Federal inspection or enforcement action.
    State or local environmental agencies may have more frequent
    interaction with small businesses. Compliance assistance has generally
    been EPA's preferred approach for helping small businesses better
    understand their regulatory obligations. EPA also offers compliance
    incentives in the form of waived or reduced penalties to businesses
    that voluntarily identify, correct and disclose violations in a timely
    manner as stated in its Small Business Compliance Policy and the Audit
    Policy (for facilities that do not meet EPA's definition of a small
    business).
        Question. How could EPA analyze the scope and extent of its
    enforcement activities to determine areas where compliance assistance
    might fill the gaps where the enforcement program does not currently
    reach?
        Answer. EPA continues to measure and analyze the effectiveness of
    its compliance assistance and enforcement efforts and determine which
    tools are most effective in particular situations. The agency has been
    moving to an approach that identifies and addresses environmental
    problems using innovative integrated initiatives or strategies that
    combine compliance assistance, incentives, monitoring and enforcement
    to address the priorities of the enforcement and compliance assurance
    program. EPA's experience has shown that use of these tools in a
    strategic, targeted way helps address noncompliance and uses resources
    more efficiently and effectively. Once EPA has determined the
    appropriateness of an integrated strategy, it is implemented in
    partnership with states through the EPA regional/state planning process
    to address the problem or priority.
        EPA has also determined that small businesses, as a category, are
    often most in need of assistance to understand their regulatory
    obligations and are less likely to be subject to federal inspections or
    enforcement actions. Therefore, much of our compliance assistance
    efforts have been directed to this group.
        Finally, it should be noted that the agency has devoted, and will
    continue to devote, resources to measure the effectiveness of different
    types of compliance and enforcement tools. In the past two fiscal
    years, EPA provided nearly two million dollars to fifteen states to
    develop and implement outcome based compliance assistance measures. In
    addition, the Office of Enforcement and Compliance Assurance has
    provided funds to the regions to conduct compliance assistance projects
    with a measurement component and is undertaking a number of
    statistically valid studies to determine industry sector compliance
    rates. It is through the continuation of these and similar activities
    that the agency can build a body of knowledge of the efficacy of all of
    the compliance and enforcement tools.
        Question. How is EPA documenting and measuring environmental
    improvements from compliance assistance activities?
        Answer. EPA is documenting and measuring environmental improvements
    from its compliance assistance activities in several ways. In 1998, the
    Office of Compliance developed a PC-based database, the Regional
    Compliance Assistance Tracking System (RCATS), to track regional and
    headquarters compliance assistance outputs. RCATS was revised in fiscal
    year 2000 to capture outcome measures in three broad areas: (1)
    awareness and understanding of regulatory requirements; (2) changes
    within the regulatory community to improve environmental performance;
    and (3) direct reduction of emissions/discharges. The methods used to
    evaluate activities have included: mailed/faxed, Internet posted and e-
    mailed surveys, phoned interviews, pre and post-tests for workshops and
    training sessions, and on-site revisits, where appropriate.
        This year, the Office of Compliance will be exploring the
    feasibility of collecting outcome data using a statistically-valid
    methodology so that broader conclusions based on representative samples
    can be made about the environmental improvements that result from
    compliance assistance activities.
        Other efforts to document and measure environmental improvements
    from compliance assistance include conducting regional compliance
    assistance measurement pilots for the past two years, providing grants
    to states for developing compliance assistance measures and documenting
    environmental outputs, and working with a group comprised of EPA and
    state representatives to develop compliance assistance data standards
    so that EPA and states share more uniform data on compliance assistance
    activities.
        Question. What is the status of EPA efforts to determine total
    resources devoted across the agency to compliance assistance
    activities?
        Answer. The Senate Small Business Committee has requested EPA to
    provide agency-wide compliance assistance information. In response to
    this request, the Agency has established a Compliance Assistance key
    program that each EPA program office will use to identify compliance
    assistance resource information. The Annual Planning and Budget
    Division (APBD) is continuing to work with the Agency's programs to
    validate the compliance assistance resource information and plans to
    provide this information to the Senate Small Business Committee by the
    end of August 2001.
        Question. How is EPA adopting a broad, holistic approach to
    environmental assistance recognizing that compliance assistance is part
    of a much larger spectrum of environmental activities?
        Answer. In order to promote a holistic approach to providing
    environmental assistance, the Office of Enforcement and Compliance
    Assurance (OECA) has been working with a variety of other assistance
    providers to ensure that compliance assistance is integrated into the
    full range of activities designed to improve the environment. For
    example, OECA has partnered with industry, academics, environmental
    groups and other agencies to establish ten sector-based Compliance
    Assistance Centers (Center). The Centers provide not only easy to
    understand compliance information but also information on pollution
    prevention and best management practices. As another example, OECA has
    worked closely with EPA's pollution prevention staff, media program
    staff and industry groups to incorporate pollution prevention and
    technical assistance in the series of sector notebooks that it has
    developed and continues to develop. There has also been extensive
    collaboration between OECA and the network of small business assistance
    providers within and outside the agency to deliver the full range of
    environmental assistance information to small businesses.
        Question. How is EPA making an explicit commitment to compliance
    assistance in its Strategic Plan?
        Answer. The Office of Enforcement and Compliance Assurance (OECA)
    has made compliance assistance a significant part of its strategic
    planning efforts. Goal 9 of the Agency's Strategic Plan, ``A Credible
    Deterrent to Pollution and Greater Compliance with the Law'', dated
    September 2000, sets as an objective for the Agency that, ``EPA and its
    state, tribal and local partners will promote the regulated community's
    compliance with environmental requirements through voluntary compliance
    incentives and assistance programs.'' Through this objective OECA hopes
    to increase ``the understanding of environmental requirements through
    the development, distribution and use of compliance assistance tools.''
        To implement this strategic objective, OECA has included in the
    Annual Performance Plans for fiscal years 2001 and 2002, Annual
    Performance Goals and Performance Measures to assure that compliance
    assistance is developed and made available to assistance providers and
    the regulated community.
        An important note is that for fiscal years 2001 and 2002, OECA has
    committed under Annual Performance Measure PM 258, to developing 150
    compliance assistance tools described in its fiscal year 2001
    Compliance Assistance Activity Plan. This plan is also referenced in
    OECA's national work planning guidance for the ten regional offices,
    the fiscal year 2002/2003 Memorandum of Agreement (MOA) Guidance. The
    linkages between the Strategic Plan, the Annual Performance Plan, the
    Compliance Assistance Activity Plan, and the MOA Guidance ensure a
    strong commitment to compliance assistance.
        Question. How is EPA more widely seeking and incorporating into its
    planning process feedback on compliance assistance from stakeholders
    and communities?
        Answer. The Office of Enforcement and Compliance Assurance (OECA)
    is taking a two track approach to expanding the opportunities for
    stakeholder input into its planning process. OECA develops national
    work planning guidance for the regional compliance and enforcement
    program every two years. For the fiscal years 2002/2003 national
    program guidance, released June 19, 2001, stakeholder involvement began
    in March of 2000. The ten regional offices were requested to solicit
    suggestions for national compliance and enforcement priorities from
    their state, tribal and local regulatory partners. OECA received over
    150 suggested priorities. Similar suggestions were grouped, background
    information developed on these groups and on September 28, 2000 EPA
    published a Federal Register Notice (FR Notice) describing 15 potential
    compliance and enforcement priorities and soliciting citizen input. On
    November 15, 2000 OECA hosted a national priorities meeting with
    Agency, state, tribal and state association representatives to discuss
    the results of regulatory and citizen input into planning process. The
    draft national guidance contained six national compliance and
    enforcement priorities which had been described in the September FR
    Notice. These six priorities were recently announced as OECA's
    priorities for fiscal year 2002/2003.
        The second track for greater stakeholder involvement in the OECA
    planning process is through a greatly expanded Compliance Assistance
    outreach effort. For example, OECA has hosted two national Compliance
    Assistance Activity Forums, national gatherings to share innovative
    approaches and discuss current strategies, successes and lessons
    learned. The two forums have been attended by over 500 individuals
    representing states, tribes, communities, community activist groups,
    industry, assistance providers and trade associations. At Forum 2001,
    EPA solicited input on compliance assistance priorities from
    stakeholders for the drafting of the fiscal year 2002 Compliance
    Assistance Plan. OECA has also established a Compliance Assistance
    Advisory Committee as a standing subcommittee of the National Advisory
    Council on Environmental Policy (NACEPT). This group was establish
    under the aegis of the Federal Advisory Committees Act (FACA) and was
    created to advise OECA on how to better provide compliance assistance
    and develop a comprehensive Compliance Assistance Activity Plan. The
    first plan, released in 2001, catalogues over 350 compliance assistance
    activities; provides analysis and policy background on compliance
    assistance; and outlines anticipated and pending Federal rules and
    rules related compliance guidance. The national work planning guidance
    to the ten regional offices references the Compliance Assistance
    Activity Plan. For the fiscal year 2002 Plan, each regional office is
    holding sessions with stakeholders to solicit their input on compliance
    assistance needs and priorities for the draft fiscal year 2002 Plan.
        Question. How are program offices and regions addressing in their
    strategic plans how compliance assistance and compliance incentives
    will be implemented?
        Answer. EPA program offices address compliance assistance and
    incentives as part of their annual planning processes. It is during
    this planning that specific assistance programs or compliance tools are
    identified that respond to a particular environmental protection
    objective in the strategic plan. EPA Regions address compliance
    assistance in their MOAs with Office of Enforcement and Compliance
    Assurance, as described in response to Question number 006.
        Question. How is EPA senior management providing specific guidance
    to all staff levels regarding the role of compliance assistance in the
    agency's mission?
        Answer. EPA senior management has conveyed a clear commitment to
    staff about the role of compliance assistance by: (1) emphasizing
    assistance in objectives under Goal 9 of the Agency Strategic Plan; (2)
    including goals and measures on assistance in Office of Enforcement and
    Compliance Assurance's (OECA) Annual Performance Plan; (3) utilizing
    assistance tools to address various national priorities identified by
    OECA; (4) implementing various initiatives described in the Aiming for
    Excellence Report to help other assistance providers; (5) providing
    $315,000 in fiscal year 2000 and $476,000 in fiscal year 2001 for
    Regional and state compliance assistance initiatives; and (6) awarding
    $1.2 million to 10 states for compliance assistance outcome
    measurement.
        Question. What is the status of EPA designation of a National
    Compliance Assistance Director within Office of Enforcement and
    Compliance Assurance and a Compliance Assistance Coordinator in each
    program office and regional office?
        Answer. After conducting an internal program review and receiving
    feedback from stakeholders, the Office of Compliance created a new
    division, the Compliance Assistance and Sector Programs Division, to
    provide the agency with a focal point for advancing the practice of
    compliance assistance. To advance the compliance assistance program,
    this division has established a compliance assistance work group
    comprised of contacts in each EPA program office and regional office to
    assist in developing the annual Compliance Assistance Activity Plan and
    planning for the annual Compliance Assistance forum.
        Question. How is EPA encouraging sector-based and problem-based
    approaches to compliance?
        Answer. To facilitate sector-based and problem-based approaches to
    compliance by EPA Regions and state programs, Office of Enforcement and
    Compliance Assurance has: improved the capacity of single-media data
    systems to analyze compliance trends by industry sector and identify
    areas of potential noncompliance; solicited ideas from state regulatory
    partners about environmental risks and noncompliance patterns which
    should be considered national priorities; developed on-line targeting
    information tools that analyze noncompliance on a geographic or
    facility basis; and created partnerships with trade associations to
    develop sector-based compliance assistance centers to provide
    information about compliance problems.
        Question. How is EPA developing integrated targeting strategies
    that incorporate all environmental assistance approaches?
        Answer. In recent years, EPA has improved its capacity to apply the
    full range of tools (compliance assistance, incentives for self-
    auditing such as pollution prevention tools, inspections, and
    enforcement actions) in combinations tailored to specific risks or
    noncompliance patterns. One area where Office of Enforcement and
    Compliance Assurance (OECA) has developed such an integrated strategy
    is for addressing compliance assistance needs associated with
    Concentrated Animal Feeding Operations (CAFOs). In addition, OECA's
    final fiscal year 2002/2003 Memorandum of Agreement (MOA) Guidance
    provides direction to the regions on how to use each of these tools in
    addressing the six national MOA priorities. Through the Compliance
    Assistance Clearinghouse, the Annual Compliance Assistance Activity
    Plan, the Compliance Assistance Providers Forum, and other mechanisms,
    EPA has a more comprehensive understanding of the available assistance
    techniques which can be applied to specific environmental problems.
        Question. How is EPA developing operation guidance defining the
    Agency's role as compliance assistance ``wholesaler?''
        Answer. EPA recognizes that its co-regulators, state, local and
    tribal governments provide the bulk of direct compliance assistance.
    EPA recognizes this and is attempting to better serve the significant
    efforts of these agencies as well as the network of private compliance
    assistance providers. At this time, the agency is working closely with
    states and various provider communities to better understand and
    discuss the appropriate roles and responsibilities for different
    organizations providing compliance assistance. Clearly, there is not
    one single model for addressing all compliance assistance needs.
    Solutions to the development and delivery of compliance assistance will
    need to be developed on a case-specific basis. We are continuing to
    enhance the agency's ``wholesaler'' functions through the annual
    Compliance Assistance Activity Plan. We are also clarifying our role as
    a compliance assistance ``wholesaler'' through dialogue with various
    stakeholders at venues such as the National Compliance Assistance
    Providers Forum, regional stakeholder meetings, the Compliance
    Assistance Advisory Council, and the Small Business Development Centers
    and Small Business Assistance Program conferences.
        Question. How is EPA ensuring that the analytic blueprint for each
    new regulation includes a compliance assistance analysis?
        Answer. Pursuant to the Small Business Regulatory Enforcement
    Fairness Act (SBREFA), EPA has committed to develop compliance guides
    for Federal regulations that have a ``significant economic impact on a
    substantial number of small entities.'' The Agency also develops either
    a compliance guide or a self-audit checklist for federal regulations
    with an ``economically significant'' impact of $100M or more on
    companies and/or government facilities. As of July 5, 2001, there are
    ten rules finalized or expected to be finalized by December 2001 for
    which a guide or checklist is scheduled to be developed.
        More generally, Agency guidance requires program offices
    responsible for ``Tier 1 and Tier 2'' regulatory actions (i.e., those
    that require participation of the Administrator's office and those that
    need cross-media or Assistant Administrator-level involvement) to
    develop an ``analytic blueprint.'' An analytic blueprint is a plan for
    the analyses, consultation and other activities that support the
    regulation. Among other things, the blueprint is intended to:
      --Identify the potential regulated universe and compliance/
            enforcement issues for each group within the universe;
      --Identify compliance/enforcement issues for different regulatory
            options; and
      --Identify the outreach and technical support needs for rule
            implementation.
        Use of an analytic blueprint should help rule developers focus, at
    any early point in the process, on what compliance assistance would be
    appropriate for that particular rule.
        The Administrator recently charged an Agency task force with
    developing recommendations on how to improve EPA's regulatory
    development process.
        Question. How is EPA ensuring that each rulemaking working group
    perform an assessment of the compliance assistance needs associated
    with the various regulatory options, including an assessment of the
    resources needed for implementation?
        Answer. EPA examines the need for compliance assistance through
    several different mechanisms throughout the rule development process.
    The Small Business Regulatory Enforcement Fairness Act (SBREFA)
    requires EPA to develop compliance guides for Federal regulations that
    have a ``significant economic impact on a substantial number of small
    entities.'' The Agency also develops either a compliance guide or a
    self-audit checklist for Federal regulations with an ``economically
    significant'' impact of $100M or more on companies and/or government
    facilities. As of July 5, 2001, there are ten rules finalized or
    expected to be finalized by December 2001 for which a guide or
    checklist is scheduled to be developed.
        With regard to SBREFA's compliance guide requirements, the Agency's
    ``1999 Revised Interim Guidance for EPA Rulewriters: Regulatory
    Flexibility Act as Amended by the Small Business Regulatory Enforcement
    Fairness Act,'' prescribes the conditions and criteria for preparing
    small business compliance guides. This guidance directs regulatory
    workgroups to begin developing compliance assistance guides as early in
    the process as there is enough information to do so, with a goal to
    publish the guides within two months of promulgation of the rules. The
    guidance further states that ``it remains EPA policy that program
    offices should assess the direct impact of every rule on small entities
    and minimize any adverse impact to the extent feasible, regardless of
    the magnitude of the impact or number of small entities affected.''
        Question. How is EPA ensuring that each rulemaking working group
    include a description of the compliance assistance tools that will be
    developed for the selected regulatory option when preparing its rule
    for Federal Register publication?
        Answer. EPA is required to develop compliance guides for federal
    regulations that have a ``significant economic impact on a substantial
    number of small entities'' as defined under the Small Business
    Regulatory Enforcement Fairness Act (SBREFA). In addition, EPA has
    committed to develop either a compliance guide or a self-audit
    checklist for federal regulations with an ``economically significant''
    impact of $100 million or more on companies and/or government
    facilities as outlined in EPA's ``Aiming for Excellence'' report. For
    purposes of determining if we will issue Compliance tools, program
    offices in EPA have the lead in undertaking the analysis which will
    determine if a rule falls under SBREFA or is economically significant.
    Information regarding program office plans to develop compliance guides
    is available to the public through the annual Compliance Assistance
    Activity Plan (the Plan). On or about July 25, 2001, a Federal Register
    notice will announce the availability of the draft Plan inventory for
    fiscal year 2002 for public review and comment.
        Agency interim guidance for EPA rulewriters, regarding implementing
    the Regulatory Flexibility Act, as amended by the SBREFA, dated March
    29, 1999, advises rulewriters to integrate development of compliance
    assistance guides into the rulemaking process. Rulewriters are advised
    to begin on compliance assistance guides as soon as there is enough
    information to do so. The Office of Compliance is working with the
    Office of Policy, Economics and Innovation to improve tracking of
    compliance guide development during the regulatory process.
        Question. How is EPA better targeting compliance assistance to
    constituencies which have not traditionally participated in compliance
    assistance activities?
        Answer. EPA is taking numerous steps to draw more diverse
    constituents into compliance assistance activities. In particular, EPA
    is soliciting more input from our stakeholders. The Office of
    Enforcement and Compliance Assurance (OECA) sponsors the Compliance
    Assistance Advisory Committee (CAAC), a multi-stakeholder working group
    of the National Advisory Council for Environmental Policy and
    Technology to provide input and guidance into the national compliance
    assistance program. OECA also broadly solicits input into its
    compliance assurance priorities by holding stakeholder meetings and
    issuing a Federal Register Notice prior to its selection of priorities.
    EPA also seeks out new constituents through holding the annual
    Compliance Assistance Providers Forum which brings together an array of
    compliance and environmental assistance providers and industry to
    collaborate and identify compliance assistance priorities.
        In addition, EPA is partnering with third parties who can expand
    the reach of the agency's ``wholesale'' compliance assistance efforts.
    EPA recognizes that its co-regulators, state, local and tribal
    governments, trade associations and other assistance providers have
    direct access to and, often, the trust of the regulated community. The
    agency is attempting to better serve the efforts of other assistance
    providers by undertaking ``wholesale'' compliance assistance functions:
    developing a web-based National Compliance Assistance Clearinghouse,
    holding an annual Compliance Assistance Providers Forum, developing an
    annual Compliance Assistance Activity Plan, creating compliance
    assistance tools that can be distributed locally by other assistance
    providers.
        Another example of how partnering with third parties can expand the
    reach of compliance assistance to new constituencies is the compliance
    assistance centers. Eight of the ten compliance assistance centers that
    EPA supports are run by third parties. These centers are a degree
    removed from EPA and thus can reach sources that, in the past, may have
    been uncomfortable approaching EPA for assistance, or may deal
    primarily with their trade association. EPA is also establishing a
    partnership with the National Center for Manufacturing Sciences that
    will provide logistical support in the form of computer hardware,
    software and web support which will make it possible for new industry
    sectors to establish their own compliance assistance centers and reach
    new segments of the regulated community.
        Finally, the Office of Enforcement and Compliance Assurance is
    using non-traditional as well as traditional data sources to identify
    industry sectors with environmental problems that could, in part, be
    addressed by compliance assistance. These efforts should enable the
    agency to identify problems and provide compliance assistance to
    constituencies that in the past, may have not been addressed by the
    agency.
        Question. How is EPA developing a voluntary national compliance
    assistance providers' measurement collection system?
        Answer. The Office of Compliance has developed its own internal
    tracking system, Reporting for Compliance Assistance Tracking System
    (RCATS). Compliance assistance staff in the regions and headquarters
    report on their output and outcome data through this system. Because
    RCATS is on a platform (Lotus-Notes) that is not often used by states
    and because states' reporting needs may differ from ours, in fiscal
    year 1999 OC funded the efforts of the Northeast Waste Management
    Officials Association, to develop a state version of RCATS. The
    National Advisory Council for Environmental Policy and Technology's
    (NACEPT) Compliance Assistance Advisory Committee has also been
    discussing measuring compliance assistance outcomes and is expected to
    make recommendations to the Agency on measurement collection. Most
    recently, Office of Enforcement and Compliance Assurance (OECA) is
    developing ICIS, the Integrated Compliance Information System, that
    will replace RCATS and will serve both EPA and state reporting needs.
    ICIS will incorporate data elements of the Annual Agency Compliance
    Assistance Plan, RCATs, and the other compliance assistance output and
    outcome measures that are relevant to EPA as well as states. In
    developing the compliance assistance functions for ICIS, the Agency
    will build on the work begun by the joint EPA/State Data Standards
    project co-chaired by OECA, Office of Environmental Information (OEI)
    and Environmental Council Of States (ECOS) to identify the data
    elements and outcome measures for the compliance assistance program and
    conduct analyses of ongoing measurement projects. The system will be
    made available to states and facilitates EPA and the states sharing
    data on compliance assistance activities.
        Question. How is EPA testing methods for understanding the direct
    impact of compliance assistance on compliance and environmental
    performance at regulated activities?
        Answer. The Office of Compliance (OC) has focused its assistance
    efforts on small business/communities that have not had much exposure
    to traditional enforcement and therefore may not be fully aware of
    their compliance obligations. The bulk of such activities are
    undertaken through EPA's regional offices and commonly include:
    hotlines, workshops/seminars/training, development of compliance guides
    (e.g., plain-language explanations of regulations, videos), and on-site
    visits.
        Over the past few years, EPA has conducted over 50 surveys to
    determine the impacts of its compliance assistance program in three
    broad areas: (1) awareness and understanding and regulatory
    requirements; (2) changes within the regulatory community to improve
    environmental performance; and (3) direct reduction of emissions/
    discharges. The methods used to evaluate activities have included:
    mailed/faxed, Internet posted and e-mailed surveys, phoned interviews,
    pre and post-tests for workshops and training sessions, and on-site
    revisits, where appropriate. For the last two years, the Office of
    Enforcement and Compliance Assurance (OECA) has asked each Region to
    undertake a compliance assistance measurement project and report back
    on the results. In addition, the Office of Compliance has funded eight
    Regional projects in fiscal year 2000 and ten projects in fiscal year
    2001 that are designed to measure the effectiveness of workshops,
    Internet information, user guides and on-site visits, as well as
    finding new tools to enhance the effectiveness of compliance
    assistance. In addition to evaluating compliance assistance tools, the
    projects also used various measurement techniques (i.e., surveys,
    website hits, pre- and post-test) to begin to evaluate the best way to
    generate defensible outcome measures for these important activities.
        In fiscal year 1999 OECA funded 5 states: Texas, Connecticut,
    California, New Hampshire and Colorado, to develop and implement
    outcome based compliance assistance measures ($778,000) and funded 10
    states in fiscal year 2000: Iowa, Maryland, New York, Michigan, New
    Mexico, Ohio, Massachusetts, and Missouri ($1,270,541).
        In fiscal year 2001, OECA is embarking on a pilot project to
    determine the feasibility of collecting statistically-valid outcome
    information. OECA will be comparing the cost and feasibility of
    collecting statistically-valid outcome data through on-site visits
    versus mailed surveys for three regulated sectors: metal finishers,
    marinas and salvage yards. By exploring the feasibility of collecting
    outcome measures in a statistically-valid manner, EPA hopes to further
    improve its ability to measure outcomes from its compliance assistance
    efforts.
        Question. Provide the dollars and FTE for activities under the
    Compliance Assistance and Centers Key Program. In meeting this request,
    provide resource levels from the fiscal year 2001 budget request,
    fiscal year 2001 enacted, fiscal year 2001 actuals, and fiscal year
    2002 request. Organize the information by appropriation, Goal,
    Objective, Sub-objective, Office or Region, and Activity.
        Answer. The table below provides the dollars and FTE under the
    Compliance Assistance and Centers Key Program for the Office of
    Enforcement and Compliance Assurance (OECA). The key program database
    does not contain information for fiscal year 2001 actuals. Therefore,
    this information is not included in the following table.

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                Fiscal year 2001  Fiscal year 2001  Fiscal year 2002
                                                                     request           enacted           request
                 Approp/Goal/Obj/HQ Office/Region              -----------------------------------------------------
                                                                Dollars    FTE    Dollars    FTE    Dollars    FTE
    ----------------------------------------------------------------------------------------------------------------
    EPM.......................................................     24.0    212.2     25.1    206.0     26.5    213.0
    0501......................................................      0.4      4.0      0.5      3.9      0.5      3.9
    Ofc of Site Remed. Enforce................................      0.4      4.0      0.5      3.9      0.5      3.9
    0902......................................................     23.6    208.2     24.6    202.1     26.0    209.1
    Immediate Office..........................................      0.3      0.0      0.4      0.0      0.4      0.0
    Ofc of Compliance.........................................      4.3     22.9      6.4     25.4      6.2     25.4
    Ofc of Reg. Enforce.......................................      2.1     16.7      0.0      0.0      0.0      0.0
    Federal Facilities Enforcement Office.....................      0.8      3.1      0.8      3.1      0.8      3.1
    Ofc of Enf. Capacity & Outreach...........................      0.4      3.7      0.3      3.0      0.0      0.0
    Ofc of Planning, Policy Analysis, & Communications........      0.0      0.0      0.0      0.0      0.3      3.0
    Regions...................................................     15.7    161.8     16.7    170.6     18.3    177.6
    Oil Spills Response.......................................      0.3      1.8      0.3      1.8      0.3      1.8
    0502......................................................      0.3      1.8      0.3      1.8      0.3      1.8
    Ofc of Site Remed. Enforce................................      0.2      0.9      0.2      0.9      0.2      0.9
    Ofc of Compliance.........................................      0.1      0.9      0.1      0.9      0.1      0.9
    Superfund.................................................      0.1      0.8      0.0      0.0      0.0      0.0
    0902......................................................      0.1      0.8      0.0      0.0      0.0      0.0
    Ofc of Enf. Capacity & Outreach...........................      0.1      0.8      0.0      0.0      0.0      0.0
    ----------------------------------------------------------------------------------------------------------------

                                  enforcement
        Question. In the face of attrition to its Regional enforcement
    FTEs, how is EPA ensuring that the enforcement staffs in each Region
    are sufficient to handle the enforcement needs in that given Region?
        Answer. Agencies routinely face attrition in their program and use
    their resources to focus on their most pressing problems. The fiscal
    year 2002 budget provides EPA's enforcement and compliance assurance
    program sufficient resources to carry out the appropriate federal role,
    focusing on federal cases involving multi-state or multi-facility
    corporations, environmental programs which cannot be delegated to
    states due to statutory prohibition, or issues for which EPA can
    provide specialized expertise.
        The President's focus is helping states conduct their enforcement
    activities while maintaining a federal enforcement level that was set
    in fiscal year 2000.
        Question. In reassigning enforcement FTE to non enforcement
    positions as proposed by the President's Budget, how will EPA ensure
    that enforcement staff in each Region are sufficient to handle the
    enforcement needs in that Region?
        Answer. If such reassignments are necessary, Regional managers will
    make reassignments only after taking into consideration the need to
    address high priority risks and noncompliance patterns in their region.
    The fiscal year 2002 budget provides sufficient resources to the
    enforcement and compliance assurance program, both headquarters and
    regions, to address multi-state, multiple facility, and cases that
    cannot be delegated to states.
        Question. How will the proposed reduction of enforcement FTE and
    additional state enforcement resources impact enforcement outputs--
    federal, state, and local?
        Answer. We expect improved national enforcement results. Already 90
    percent of inspection activities are conducted by States. The
    Administration's proposal to give States greater resources will enhance
    their ability while reducing the overlap of State and Federal efforts.
        Question. How will the proposed reduction of federal enforcement
    FTE and additional state enforcement resources impact national
    environmental indicators, such as clean air and clean water?
        Answer. The Agency believes that the resources in the enforcement
    program are sufficient to continue achieving significant reductions in
    pollution through enforcement and compliance assurance activities at
    the federal level. Additional resources to the States will enable them
    to better achieve their delegated duties. The Administration's shift of
    resources from Federal enforcement to State level enforcement is
    designed to enhance compliance, not detract from it.
        Question. How will EPA ensure that geographic areas subject to a
    decrease in federal enforcement personnel realize an increase in state
    enforcement resources?
        Answer. Although we expect that states will take a number of
    enforcement actions made possible by the use of the grant funds, we do
    not expect that there will be a one-to-one correspondence overall, or
    geographically, between reductions in federal enforcement actions, and
    increases in state enforcement actions. Instead, states will use the
    grant funds to address important environmental risks and noncompliance
    patterns through strategies that utilize enforcement actions,
    inspections and investigations, incentives for facility self-auditing,
    and compliance assistance in appropriate combinations.
        Question. How will EPA avoid imposing matching requirements for the
    $25 million in new enforcement grants on states which may already have
    too few environmental resources?
        Answer. EPA does not intend to incorporate matching requirements in
    the new enforcement grant program. Through EPA's consultation with
    states and tribes, we determined that matching requirements would be a
    burden that might deter states and tribes from participating in the
    program.
        Question. Will acceptance of multiple proposals from states for the
    $25 million in new enforcement grants reward states which have the
    resources to submit numerous high quality proposals.
        Answer. Based on feedback from states and tribes EPA will likely
    require a lead agency within a state or tribe to submit a single,
    consolidated proposal. Agencies other than the lead agency will remain
    eligible to receive grants funds if they are included in the proposal.
        Question. How will EPA compare future outcome improvements expected
    from the new state enforcement grants to the immediate loss of output
    activities from the FTE decrease?
        Answer. There will likely not be a one-to-one correspondence
    between reductions in federal activities (outputs and outcomes) and
    state and tribal activities that will result from use of the new grant
    funds. Instead, the goal is to ensure that states and tribes are
    focusing on high priority environmental problems, and are held
    accountable for measuring and reporting results.
        Question. Will states receive the entire $25 million from the new
    enforcement grant program or will EPA use some of that money?
        Answer. EPA will distribute the entire $25 million to states,
    tribes, and other eligible entities.
        Question. How will EPA obtain information from states measuring
    their outputs or outcome from usage of the new $25 million?
        Answer. States will be approved for grant funding only if their
    grant proposal includes specific plans to measure and report on their
    performance in achieving results. For example, states will need to
    define performance measures for determining whether they are having an
    impact on the environmental risk or noncompliance pattern they are
    addressing with the grant funds. EPA will establish required reporting
    intervals for states to provide performance information that can be
    reviewed by EPA on a regular basis.
        Question. Will the information EPA obtains from states on their use
    of the $25 million be sufficient for EPA to determine whether the
    environment was hurt by the enforcement FTE cuts?
        Answer. Information gathered from states and tribes on their use of
    grant funds will allow the Agency to determine the impact they are
    having on the environmental problems they chose to address.
        EPA's performance information about its own programmatic outputs
    and outcomes will be used to determine whether there is a non-
    compliance pattern or emerging environmental risk that needs to be
    addressed. As we have in previous years, EPA will continue to monitor
    information about program performance to ensure we are focusing on
    important problems, and achieving the right results and outcomes.
        Question. How will EPA articulate a new vision for national
    enforcement which includes appropriate balance, roles and
    responsibilities between state and federal enforcement agencies?
        Answer. The grant program will provide opportunities to improve and
    expand our enforcement partnerships with states. These opportunities
    will allow EPA and states to further clarify their respective roles and
    responsibilities.
     enforcement: breakout of federal enforcement activities between multi-
                         state and single-state actions
        Question. What is the breakout for federal enforcement activities
    between multi-state and single-state actions?
        Answer. For the most recently completed fiscal year, fiscal year
    2000, there were a total of 5,609 settled administrative and judicial
    actions (data from EPA's Enforcement Docket Data System). Of the 219
    judicial actions, five involved multiple states; of the 5,390
    administrative actions, 42 involved multiple states.
        The attached chart identifies some of the significant multi-state
    cases to date in fiscal year 2001. Specifically, the chart shows multi-
    state cases with consent decrees or publicly announced agreements in
    principle that have been lodged in fiscal year 2001.

           EPA OFFICE OF ENFORCEMENT AND COMPLIANCE ASSURANCE FISCAL YEAR 2001--SIGNIFICANT MULTI-STATE CASES
    ----------------------------------------------------------------------------------------------------------------
                                                      Injunctive     Environmental
                Company                Number of        Relief      Project(s) \1\     Penalties      Environmental
                                      Facilities       ($1,000)        ($1,000)        ($1,000)         Benefits
    ----------------------------------------------------------------------------------------------------------------
    BP Amoco \2\..................               8         500,000         ( \3\ )          10,000  40,000 tpy \4\
                                                                                                     (SO2, NOX)
    Koch \2\......................               3          80,000         ( \5\ )           4,500  6,000 tpy (SO2,
                                                                                                     NOX)
    Motiva \2\....................               9         400,000           5,500           9,500  50,000 tpy (SO2,
                                                                                                     NOX)
    MAP \2\.......................               7         265,000           6,500           3,800  23,000 tpy (SO2,
                                                                                                     NOX)
    Cinergy \6\...................              10       1,400,000          21,500           8,500  500,000 tpy
                                                                                                     (SO2, NOX)
    Morton International \2\......              24          44,000          16,000          22,000  400 tpy of
                                                                                                     hazardous waste
                                                                                                     properly
                                                                                                     disposed
    Nucor \2\.....................              14          85,000           4,000           9,000  9,400 tp (NOX
                                                                                                     and VOC) over
                                                                                                     the life of the
                                                                                                     agreement
    Safety-Kleen Corp \2\.........             130           3,000         ( \5\ )          221.25  Improved
                                                                                                     financial
                                                                                                     assurance
    VEPCO \6\.....................               8       1,600,000          13,900           5,300  250,000 tpy (SO2
                                                                                                     and NOX)
    Willamette \2\................              13          74,000           8,000          11,200  27,000 tpy (VOC,
                                                                                                     PM, and CO)
    Palm Harbor Homes (EPCRA Part               10           163.5         ( \5\ )         ( \5\ )  19 violations
     22 Administrative Action) \2\.                                                                  for failing to
                                                                                                     file Form R
                                                                                                     reports for
                                                                                                     diisocyanates
                                                                                                     processed when
                                                                                                     manufacturing
                                                                                                     homes.
    Preston Engravers and Roto-Die               3             245         ( \7\ )         ( \5\ )  Not yet
     Co \2\.                                                                                         available--CDS
                                                                                                     not yet
                                                                                                     complete
    Walmart \2\...................              17           4,500         ( \5\ )           1,000  Not available
    Amtrak \2\....................               9         ( \7\ )             900             500  Not available
    Air Liquide \2\...............              22         ( \7\ )             500           4,500  Not available
    ----------------------------------------------------------------------------------------------------------------
    \1\ Rounded to the nearest million.
    \2\ Settlement--Lodged or Entered.
    \3\ Not yet quantified.
    \4\ tpy (tons per year)
    \5\ None.
    \6\ Agreement in principle.

        Question. What types of actions are most appropriate for state
    enforcement agencies?
        Answer. States are well equipped to handle most violations of the
    delegated enforcement programs they administer. States already conduct
    more than 90 percent of inspections and can often respond more quickly
    to routine violations than EPA. Because states handle most permitting
    responsibilities, EPA coordinates closely with states on any Federal
    enforcement action that affects a program administered by states.
        Question. What types of actions are most appropriate for EPA versus
    state enforcement agencies?
        Answer. For obvious reasons--such as lack of effective state
    jurisdiction--multistate cases are well suited to federal enforcement.
    EPA works closely with states in developing and negotiating such cases,
    and states often join the federal government as parties to the final
    consent decree. Global settlements may offer companies an efficient way
    to settle many violations at once, and may help to preserve a level
    playing field in a competitive marketplace.
        Other cases appropriate for EPA involvement involve violations
    leading to interstate transfer of pollutants, e.g., the long-range
    transport of air emissions like nitrogen oxides and sulfur dioxides.
    Such pollutants are the target of the Agency's lawsuits for violations
    of the Clean Air Act New Source Review provisions, which require
    companies to install pollution controls on grandfathered plants when
    they are expanded in a way that increases their capacity to emit.
    Interstate pollution may arise under other statutes, e.g., when
    pollutants from an industrial discharger in one state flow downstream
    to affect water quality in another. Still other examples of appropriate
    federal cases, more difficult to categorize, involve environmental
    violations that are technically complex or otherwise beyond the
    capacity of the state to address. Finally, EPA remains responsible for
    certain programs in some states, while others, such as the Toxic
    Substances Control Act, wetlands enforcement, pesticide registration or
    right-to-know laws are either not delegated to states or cannot be
    under the law.
        Question. How would any changes to the current balance of roles and
    responsibilities between federal and state enforcement agencies improve
    environmental protection?
        Answer. Any reexamination of federal and state roles and
    responsibilities would be designed to ensure that federal and state
    enforcement and compliance assurance resources are focused on the most
    important environmental problems. The partnerships enabled by the grant
    program will lead to clearer identification of these problems, and the
    most appropriate combination of federal and state resources to
    effectively address them.
        Question. How can EPA modify its audit policy to encourage more
    reporting of environmental violations versus purely paperwork or
    reporting violations?
        Answer. To date, over 5,000 facilities have entered EPA's audit
    program and disclosed all types of violations under nearly every
    federal environmental statute that EPA administers. 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, for example,
    can have tragic consequences, such as the death of firefighters unaware
    of the presence of hazardous chemicals. EPA believes that the benefits
    to public health and the environment of statutes like the Emergency
    Planning and Community Right to Know Act, which was enacted by Congress
    in the wake of the Bhopal tragedy, should not be minimized. Since
    monitoring and reporting violations represent a significant amount of
    environmental violations in general, it is not surprising the
    violations disclosed under the audit program reflect a similar pattern.
        In addition, EPA has had success in using targeted integrated
    strategies to increase the quality and breadth of disclosures. For
    example, EPA has undertaken several efforts over the past 2 years to
    encourage the disclosure and correction of violations of emission and
    discharge limits. These include a compliance partnership agreement to
    encourage controlling volatile organic compounds (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 which are
    expected to reduce sanitary sewer overflows by improving maintenance
    and expanding capacity; and voluntary audits by airlines of compliance
    with fuel standards.
        EPA is seeing an increase in the breadth of disclosure types
    through use of corporate auditing agreements--agreements that allow
    companies to plan corporate-wide audits with an advance understanding
    between the company and EPA regarding schedules for audits, disclosures
    and corrections. Most recently, EPA is entering into audit agreements
    for voluntary review and corrections relating to the handling, use and
    disposal of chlorofluorocarbons (CFCs); meeting air emissions standards
    under the New Source Review program and national emission standards for
    hazardous air pollutants; use, disposal, storage and marking of PCBs;
    operating standard and corrective action requirements for underground
    storage tanks; and illegal injection of hazardous substances into
    underground wells.
        The Audit Policy as it exists currently is providing a meaningful
    incentive for companies to participate in the program, as is evidenced
    by the fact that participation in the program has doubled nearly each
    year since the policy's inception.
        Question. How is EPA measuring the outcome improvements to the
    environment resulting from use of the Audit Policy?
        Answer. EPA reports successes of Audit Policy use in a quantitative
    measure, consistent with reporting requirements under the Government
    Performance and Results Act. In addition, last year, in recognition of
    the significant growth in the audit program and to better reflect the
    Agency's focus on environmental and health improvements that result
    from its settlements, EPA began tracking its audit cases in a modified
    system that will allow for input regarding case results, similar to
    EPA's enforcement cases. We are hopeful that additional information
    will be available this year.
        Question. How can EPA modify the use of its enforcement discretion
    to encourage activities, such as in the reinvention area, which bring
    about improvements to the environment?
        Answer. In order to encourage innovative projects promising
    superior environmental results, EPA made clear it would consider the
    use of tailored compliance mechanisms, such as enforcement discretion.
    See 62 Federal Register 19872, 76-77 (April 23, 1997). In fact, EPA has
    used enforcement discretion for innovative projects in a number of
    instances, e.g., International Paper Co. XL Project (flexibility
    provided to exceed Clean Air Act permit limits to develop and calibrate
    Predictive Emissions Monitoring System model); New York State
    Department of Environmental Conservation XL Project (flexibility
    provided to ``bridge'' the gap between the effective dates of a Federal
    project-specific rule and the equivalent State project-specific rule);
    New England Universities Laboratories (time-limited enforcement
    discretion used to ``bridge'' the gap between the effective dates of
    the Federal project-specific rule and the equivalent Massachusetts
    rule); and OSi XL Project (EPA agreed in advance to issue an
    administrative compliance order putting OSi on an 18-month compliance
    schedule in event project testing alternative RCRA Subpart CC controls
    is terminated). In addition, EPA offers incentives involving
    enforcement discretion, to those facilities participating in the
    National Environmental Performance Track Program (Performance Track).
    Performance Track is a recognition program designed to motivate and
    reward companies and other entities that are top environmental
    performers. These incentives include lowered priority for inspection
    targeting, access to Audit Policy penalty mitigation and recognition of
    good faith participation in the program in discretionary penalty
    assessment.
        Question. How are EPA Regions improving their monitoring of
    enforcement agreements to determine compliance with those agreements,
    as examined by the EPA's Inspector General (IG)?
        Answer. As the IG noted in their report, the actions already taken
    by Office of Enforcement and Compliance Assurance (OECA) and the
    Regions will resolve most of the IG's recommendations. OECA has used
    the report for reminding the Regions of the need to follow existing
    requirements and guidance for tracking compliance milestones, analyzing
    violations of judicial and enforcement instruments, and prioritizing
    them for response. In addition, at OECA's request, the Regions revised
    the region-specific enforcement instrument compliance tracking and
    enforcement plans covering, both judicial consent decrees and
    administrative orders. OECA can provide the full response to the IG's
    report if requested.
        Question. How is EPA improving its reporting of environmental
    achievements to accurately reflect actual pollution reductions achieved
    from enforcement actions versus reporting projected results?
        Answer. In fiscal year 1996, Office of Enforcement and Compliance
    Assurance (OECA) developed a method to estimate the anticipated
    reductions achieved through enforcement actions at the time of
    settlement. In the future, OECA intends to make clear in its public
    documents that those pollutant reductions through enforcement actions
    are estimates, made at the time of settlement, assuming the injunctive
    requirements in the underlying enforcement instruments are implemented.
    In addition, OECA has taken steps to improve the accuracy of pollutant
    reduction estimates by providing guidance and training to regional
    offices about estimation techniques.
        Question. How is EPA establishing performance measures for ensuring
    that facilities under a formal enforcement action return to compliance?
        Answer. Beginning in fiscal year 2002, Office of Enforcement and
    Compliance Assurance (OECA) intends to develop and implement an annual
    performance measure for each region, requiring regular updating of the
    Consent Decree Enforcement Tracking Subsystem (CDETS) in DOCKET, or an
    appropriate alternative database, to reflect key schedules/milestones
    and actions taken to ensure compliance with judicial cases.
        Question. How is EPA verifying and validating that actual
    accomplishments resulted from EPA enforcement activities?
        Answer. Office of Enforcement and Compliance Assurance (OECA)
    currently reports pollutant reduction estimates for enforcement actions
    at the time of settlement. OECA is investigating several options for
    verifying actual pollutant reductions resulting from an enforcement
    action based on the estimates reported. Resource constraints will make
    it virtually impossible to physically verify that the pollutant
    reduction amount estimated has actually been realized in all of EPA's
    enforcement cases; however, we expect in most cases the estimation
    techniques would be adequate.
                                     grants
        Question. How many different non-profit recipients received non-
    construction grant awards in the last 3 years?
        Answer. Between fiscal year 1998 and fiscal year 2000 EPA awarded
    grants to approximately 1900 different non-profit recipients.
        Question. How many dollars did EPA award to non-profit recipients
    in non-construction grants in the last 3 years?
        Answer. Between fiscal year 1998 and fiscal year 2000, EPA awarded
    $756,394,243 to non-profit recipients.
        Question. List the top twenty non-profit EPA grant recipients by
    number of awards in fiscal year 2000. Provide also the number of awards
    and total dollar amount awarded.
        Answer.

         FISCAL YEAR 2000 TOP 20 NON-PROFIT GRANTEES BY NUMBER OF AWARDS
    ------------------------------------------------------------------------
                                                      No. of      Dollars
    Rank                Name/City/State               Awards      Awarded
    ------------------------------------------------------------------------
       1National Older Worker Career Center,            89     $14,912,002
         Washington, DC
       2National Caucus & Center on Black Aged,         84       8,315,158
         Washington, DC
       3National Senior Citizens Ed & Rsch Ctr,         64       8,226,948
         Silver Spring, MD
       4Natl Asian Pacific Center for Aging,            38       6,257,258
         Seattle, WA
       5The Environmental Careers Organization,         28       7,213,689
         Boston, MA
       6National Academy of Science, Washington,        25       5,983,972
         DC
       7National Council on Aging, Washington, DC       23       4,141,298
       8National Association for Hispanic Elderly,      20       4,534,076
         Pasadena, CA
       9International City/county Mgmt. Assoc.,         10       2,066,540
         Washington, DC
      10Environmental Law Institute, Washington,         9         887,538
         DC
      11Northeast States for Coordinated Air Use         8       1,924,353
         Mgmt., Boston, MA
      12Inter Tribal Council of Arizona Inc.,            8       1,171,944
         Phoenix, AZ
      13Research Triangle Institute Research,            7       2,409,300
         Triangle, NC
      14Center for Watershed Protection Inc.,            7         334,500
         Ellicott City, MD
      15Lake Michigan Air Directors Consortium,          7       1,946,140
         Des Plaines, IL
      16Center for Clean Air Policy, Washington,         7         888,233
         DC
      17National Association of Counties,                7         971,000
         Washington, DC
      18The Environmental Council of the State,          6         876,991
         Washington, DC
      19WV University Research Corporation,              6       5,291,063
         Morgantown, WV
      20Natl Conference of State Legislatures,           5         424,439
         Denver, CO
    ------------------------------------------------------------------------

        Question. List the top twenty non-profit EPA grant recipients by
    total amount of funds awarded in fiscal year 2000. Provide also the
    number of awards and the total dollar amount awarded.

          FISCAL YEAR 2000 TOP 20 NON-PROFIT GRANTEES BY DOLLARS AWARDS
    ------------------------------------------------------------------------
                                                      No. of      Dollars
    Rank                Name/City/State               Awards      Awarded
    ------------------------------------------------------------------------
       1North American Development Bank, San             1     $41,000,000
         Antonio, TX
       2National Older Worker Career Center,            89      14,912,002
         Washington, DC
       3National Caucus & Center on Black Aged,         84       8,315,158
         Washington, DC
       4National Senior Citizens Ed & Rsch Ctr,         64       8,226,948
         Silver Spring, MD
       5National Rural Water Association, Duncan,        3       8,114,800
         OK
       6The Environmental Careers Organization,         28       7,213,689
         Boston, MA
       7Natl Asian Pacific Center for Aging,            38       6,257,258
         Seattle, WA
       8Health Effects Institute, Cambridge, MA          1       6,000,000
       9National Academy of Science, Washington,        25       5,983,972
         DC
      10WV University Research Corporation,              6       5,291,063
         Morgantown, WV
      11America's Clean Water Foundation,                1       4,749,750
         Washington, DC
      12National Association for Hispanic Elderly,      20       4,534,076
         Pasadena, CA
      13American Water Works Association Research,       2       4,205,100
         Denver, CO
      14National Council on Aging, Washington, DC       23       4,141,298
      15Lovelace Biomedical & Envir. Res                 2       3,334,400
         Institution, Albuquerque, NM
      16Canaan Valley Institute, Davis, WV               4       3,222,096
      17National Fish & Wildlife Foundation, San         1       2,931,301
         Francisco, CA
      18Water Environment Research Foundation,           1       2,778,600
         Alexandria, VA
      19Border Environmental Cooperation Comm., El       1       2,500,000
         Paso, TX
      20Rural Community Assistance Programs In.,         3       2,497,716
         Leesburg, VA
    ------------------------------------------------------------------------

        Question. How many bench reviews did EPA conduct of non-profit non-
    construction grantees in fiscal year 2000? List by region.

                                                        Bench Reviews Fiscal
            Regional Grants Management Office                      Year 2000
    I.......................................................................
    II......................................................................
    III...............................................................     3
    IV......................................................................
    V.......................................................................
    VI................................................................     2
    VII.....................................................................
    VIII....................................................................
    IX......................................................................
    X.......................................................................
    HQ................................................................    15
                                                                      ______
          Total.......................................................    20

        Question. How many onsite reviews did EPA conduct of non-
    profit non-construction grantees in fiscal year 2000? List by
    region.
        Answer. As noted in the following table, EPA Grants
    Management Offices conducted a total of 26 administrative
    onsite reviews of non-profit non-construction grantees in
    fiscal year 2000.

                                                      On-site Reviews Fiscal
            Regional Grants Management Office                      Year 2000
    I.................................................................     2
    II................................................................     3
    III...............................................................     1
    IV......................................................................
    V.................................................................     2
    VI......................................................................
    VII.....................................................................
    VIII....................................................................
    IX................................................................     5
    X.......................................................................
    HQ................................................................    13
                                                                      ______
          Total.......................................................    26

        Question. How many Full Time Equivalents (FTE) are devoted to
    conducting onsite reviews of grantees?
        Answer. 3 FTEs.
                              information burden:
        Question. What steps did EPA take to correct the misleading
    reporting burden reduction information reported to OMB, as documented
    by the General Accounting Office in its report on this subject last
    year?
        Answer. The General Accounting Office (GAO) review 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 changes and program adjustments. We believe this finding is
    too narrow because it does not represent the full range of burden
    reduction activities that EPA has pursued.
        EPA has acted aggressively to reduce burden through a variety of
    innovative activities that provide environmental managers with more
    choice and assistance in meeting their environmental responsibilities.
    These activities 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 developing electronic tools such
    as the Toxic Release Inventory-Made Easy (TRI-ME) that help make our
    regulations and guidance more understandable and easier for the public
    to deal with. GAO's report states that these efforts were outside the
    scope of their review of the agency's information collection
    requirements.
        We agreed with the recommendation that the Agency should correct
    the burden hour estimate for the national pretreatment program. The
    reduction of nearly 600,000 burden hours was a result of Office of
    Management and Budget (OMB) approval of an Information Collection
    Request (ICR) renewal submitted by EPA converting burden hours for
    contracted lab analyses into burden dollars. This ICR was adjusted to
    convert the burden dollars back to burden hours in the renewal approved
    by OMB on September 28, 2000. Subsequently, OMB has modified its
    approach regarding the proper categorization of such contracted
    services, specifying that burden should be expressed in hours to the
    extent possible.
        Question. What steps did EPA take to ensure that it does not
    continue to use improper burden reduction reporting techniques as
    exposed by GAO?
        Answer. EPA will properly identify burden reductions as adjustments
    and/or program changes as defined by OMB. Also, EPA will characterize
    lab analysis burden where possible as consistent with OMB's latest
    guidance.
        Question. How many hours of paperwork burden did EPA impose on
    businesses in the last reporting year and each of the previous four
    years?
        Answer. The total EPA burden hours (includes business, state and
    local governments other non-federal reporting enitities) for each of
    the last five fiscal years is as follows:

                            [In millions of dollars]

            Year                                                Burden hours
    Fiscal year 2000..................................................   129
    Fiscal Year 1999..................................................   119
    Fiscal Year 1998..................................................   115
    Fiscal Year 1997..................................................   116
    Fiscal Year 1996..................................................   108

        Some of the key increases in burden hours from fiscal year 1999 to
    2000 are:
      --3.6 million hours: Total Maximum Daily Load final rule (3.3 million
            hours due to an adjustment of previous burden to account for
            burden on states
      --1.1 million hours: Radon in Drinking Water final rule
      --1.2 million hours: NPDES--animal feeding operations permits
      --1.6 million hours: RCRA lead-based paint debris final rule
      --1.5 million hours: Toxic Release Inventory persistent
            bioaccumulative toxic (PBT) final rule
        Question. How is EPA reducing the paperwork burden it imposes on
    businesses?
        Answer. EPA continues to review existing paperwork requirements for
    streamlining opportunities on a case by case basis. In addition, we are
    promoting burden reduction across entire programs, as in the Office of
    Solid Waste's burden reduction effort for the RCRA program. EPA also
    has initiated cross Agency efforts like the National Environmental
    Information Exchange Network and the More Effective and Efficient
    Reporting initiative that will provide burden reduction opportunities.
        Question. How is the Office of Environmental Information working
    with program offices to tailor new rules to impose less paperwork
    burden?
        Answer. OEI has initiated a new initiative called More Effective
    and Efficient Reporting (MEER). An Agency-wide burden reduction
    strategy is one component of this initiative. OEI is working closely
    with other EPA offices to identify appropriate activities which can be
    part of an on-going, long-term effort to streamline collections while
    maintaining the Agency's commitment to our mission. OEI's goal is to
    develop a strategy with several incremental steps which can help the
    Agency make information collection more efficient and less burdensome.
    As part of this effort, OEI has been working with its partners and
    stakeholders to streamline and consolidate reporting, facilitating, and
    examining impediments to consolidation. Over the next year, OEI intends
    to establish a MEER Steering committee and workgroup, develop a
    background report on burden reduction and consolidation efforts to
    date, and convene a program office workshop on burden reduction
    efforts.
        Question. How are the program offices, either with or without the
    help of OEI, reviewing current paperwork requirements to reduce their
    burden on businesses?
        Answer. The Office of Solid Waste (OSW) is developing the Burden
    Reduction Proposed Rule to reduce the record-keeping and reporting
    burden RCRA imposes on the States, the public, and the regulated
    community. This streamlining is important not only to meet the goals of
    the Paperwork Reduction Act, but also to allow EPA and the states to
    focus their implementation efforts on the most important regulatory
    requirements. OSW is assessing which RCRA requirements can be cut back,
    streamlined, or eliminated; they estimate that they should be able to
    reduce burden by about 40 percent.
        Several EPA initiatives have been launched that have potential for
    significant burden reduction. These projects have generally helped to
    steer the Agency toward ways of collecting and managing information
    from the public and States which will be more efficient over the long-
    term. Most notable among these is the National Environmental
    Information Exchange Network (NEIEN). The NEIEN is a partnership
    program with the States aimed at developing an integrated environmental
    data exchange. It includes efforts to move toward electronic reporting,
    use of specific data standards, and a centralized data exchange
    network. Six data standards were finalized on November 21, 2000. EPA
    and the States are currently developing three additional data
    standards. EPA plans to propose a rule, the Cross-Media Electronic
    Reporting and Record-keeping Rule (CROMERRR), to simplify the transfer
    of data to the Agency as well as remove obstacles to e-reporting.
        Another cross-Agency initiative with burden reduction potential.
    Performance Track will reduce reporting burdens for companies which
    have been recognized for performing beyond compliance with regulatory
    requirements to attain levels of environmental performance and
    management which benefit people, communities, and the environment.
        In addition to Agency and programmatic streamlining efforts, EPA
    has encouraged a number of innovative activities which are typically
    not counted in burden reduction estimates. These include Web-based
    Compliance Assistance Centers, the promotion of internal facility audit
    policies to detect violations, and options for regulatory compliance
    such as emissions trading. EPA has also worked hard to implement easier
    to understand regulatory language. Among the Agency's oldest innovative
    efforts, EPA has been providing assistance to small businesses through
    the Office of the Small Business Ombudsman.
                               performance goals
        Question. Provide the number of annual planning goals in the fiscal
    year 2001 and fiscal year 2002 annual performance plans, and the
    breakout of output and outcome goals.
        Answer. The Agency's fiscal year 2001 and fiscal year 2002 Annual
    Plans contain 75 and 77 annual performance goals (APGs), respectively.
        EPA periodically evaluates for outcome orientation its entire set
    of externally reported APGs which are listed in the Agency's Annual
    Plan/Congressional Justification document. For fiscal year 2001, there
    are 179 APGs, with 33 characterized as end outcomes, nine as
    intermediate outcomes, and 137 as outputs. For fiscal year 2002, after
    an initial review, there are 181 APGs, with 42 characterized as end
    outcomes, 11 as intermediate outcomes, and 128 as outputs. The
    hierarchy used in these evaluations is generally consistent with one
    that has been used by the General Accounting Office.
                              performance measures
        Question. Provide the number of performance measures in the fiscal
    year 2001 and fiscal year 2002 annual performance plans, and the
    breakout of output and outcome goals.
        Answer. The Agency's fiscal year 2001 and fiscal year 2002 Annual
    Plans contain 163 and 135 annual performance measures (APMs),
    respectively.
        EPA periodically evaluates for outcome orientation its entire set
    of externally reported APMs which are listed in the Agency's Annual
    Plan/Congressional Justification document. For fiscal year 2001, there
    are 358 APMs, with 65 characterized as end outcomes, 32 as intermediate
    outcomes, and 261 as outputs. For fiscal year 2002, after an initial
    review, there are 360 APMs, with 77 characterized as end outcomes, 26
    as intermediate outcomes, and 257 as outputs. The hierarchy used in
    these evaluations is generally consistent with one that has been used
    by the General Accounting Office.
        Question. How is EPA increasing the number of outcome goals and
    performance measures?
        Answer. The Agency recognizes the need to make greater use of
    outcome goals and measures, and we have initiated a variety of projects
    to improve performance measurement. We use improvement work teams,
    conduct workshops, and prepare special analyses to support development
    of more outcome-oriented goals and measures. Some examples of our
    ongoing work include: establishment of a work group and cooperative
    agreement with Florida State University to develop more outcome-focused
    goals and measures related to chemicals and pesticides (Office of
    Prevention, Pesticides, and Toxic Substances); the establishment of a
    National Performance Measurement Strategy with includes a plan to
    develop more outcome-based performance goals and measures (Office of
    Enforcement and Compliance Assurance); and benchmarking of performance
    measures used by other agencies with functions similar to those of
    EPA's varied programs (Office of Chief Financial Officer). In addition,
    in order to help maintain a focus on outcomes, the Agency has
    established an annual performance goal in its Annual Plan dedicated to
    increasing the proportion of our goals and measures that are
    characterized as outcomes.
        Question. How can EPA examine and revise its GPRA strategic
    planning more quickly than otherwise required under GPRA?
        Answer. The Agency's strategic planning is an ongoing activity that
    occurs throughout the development of each annual budget and undergirds
    all major programmatic decisions of the Agency. This activity is not
    governed by GPRA deadlines. GPRA does, however, establish a minimum
    triennial floor for the development of revised Agency strategic plans.
    Although the GPRA allows plans to be revised earlier than the triennial
    deadline, the law--as well as good governmental practice--requires
    federal agencies to consult with Congress and consider the views and
    suggestions of other entities potentially affected by or interested in
    their strategic plans. As a result, the revision of the Agency's Plan
    is an extensive process that neither could--nor should--be completed
    hastily. The Agency's most recent Strategic Plan was completed in
    September of 2000, with the next mandated revision due in September of
    2003. While a well-considered revision could be accomplished earlier
    than this date, the Agency would need to carefully evaluate the time
    required to meaningfully consider the strategic direction of all of its
    programs, consult closely with Congress and State and Tribal partners,
    and engage the views of the regulated community, citizen and public
    policy groups, as well as the public as a whole. Our experience with
    prior Strategic Plans demonstrates that an extensive revision
    undertaken with significant consultation could require two years from
    the beginning of the initial project planning to the production of the
    document itself.
        Question. Will EPA develop different measures for program
    management and program effectiveness?
        Answer. Over the last few years, EPA has worked to establish sound
    measures for program management. The Agency's Strategic Plan includes a
    separate strategic goal for effective management as a way to capture
    activities and results that are fundamental for effective and efficient
    operation of all Agency programs. The Agency is committed to its on-
    going effort to improving the quality of all its performance goals and
    measures including those pertaining mainly to program management
    activities.
        EPA has established a framework for results-based management that
    the Agency continues to improve upon. By improving its ability to track
    progress, EPA positively affects improvements in demonstrating overall
    program effectiveness.
        Furthermore, a number of ongoing activities, within EPA's existing
    programs, should positively impact EPA's ability to increase both the
    quantity and quality of environmental outcome measures in Agency
    management systems. This improvement strategy includes an analytic
    approach to assist programs in the development of measures that better
    reflect program effectiveness and directly communicate environmental
    results. This approach involves using a framework known as the
    Hierarchy of Indicators. The framework consists of six categories that
    range from administrative measures, or outputs, to changes in
    environmental quality or outcomes.
        This approach can be very useful in developing measures that
    reflect programmatic goals and ensure that the activities of the
    offices are properly linked to environmental results (to the extent
    possible). The hierarchy can be used to assist program offices in
    developing measures that are farther along the continuum. Not all
    Agency activities are conducive to such changes. However, offices
    responsible for necessary administrative activities are encouraged to
    develop intermediate outcomes that better link activities to
    environmental outcomes.
                   efforts to reduce the npdes permit backlog
        Question. What is the Status of EPA's efforts to reduce the backlog
    of federal and state NPDES permits? Provide a breakdown by region and
    state.
        Answer. EPA has made strong progress in reducing the NPDES permit
    backlog towards meeting our target of a 10 percent backlog for major
    permits by the end of 2001 and 10 percent backlog for all permits
    (majors and minors) by the end of 2004. EPA-issued permits for major
    facilities are slightly off the target trend line to meet the 2001
    goal, however, a large boost is expected through the issuance of a
    general permit covering major facilities in Alaska. EPA continues to
    improve permit backlog of minors through permit issuance and data
    clean-up.
        The authorized states, as a whole, have made some improvements
    toward meeting the 2001 goal of 10 percent backlog of majors, however,
    achievement of the target for authorized states is in doubt. Authorized
    states' efforts to meet the 2004 backlog reduction goal of 10 percent
    backlog for all permits are on target, with states making strides
    through both permit issuance and data clean-up.
        The attached charts provide data on State and Regional progress
    towards meeting backlog reduction goals.

                       resources to reduce npdes backlog
        Question. Provide the level of resources EPA is devoting to reduce
    the NPDES backlog from fiscal year 2001 and in the fiscal year 2002
    request.
        Answer. Both EPA and state permitting agencies have developed
    strategies that affirm permit issuance as a high priority task and in
    many cases, reorganize staff to reduce permit backlog.
        NPDES permit issuance is a substantial undertaking in EPA Regional
    Water Divisions and in State water pollution control agencies. To help
    reverse the trend in rising backlogged permits, EPA has spent about
    $200,000 on assistance for EPA permit issuance in 2001 and we
    anticipate making the same level of assistance available in 2002.
    Additionally, in fiscal year 2001 EPA spent approximately $70,000
    tracking the NPDES permit backlog and providing data to states and
    state organizations. A similar level of spending for these activities
    is anticipated for 2002.
        In fiscal year 2001, EPA also made some if its contracts available
    to states to use in assisting them with permit issuance and data clean
    up. We anticipate continuing this practice which enables the states to
    use their Section 106 grant funds to secure contractor support for
    permit issuance by using EPA national contracts.
                             enforcement targeting
        Question. Describe EPA's efforts to strategically target its
    enforcement and compliance activities to address the most significant
    risks to human health and the environment.
        Answer. There are several methods employed by EPA to target
    enforcement and compliance activities to address the most significant
    risks to human health and the environment. Below is a summary of some
    of these key activities.
        Evaluation of risk impacts on a multimedia basis.--EPA uses several
    analytic techniques to evaluate risk--particularly at the sector-level.
    For example, EPA develops comprehensive sector rankings every two
    years, and factors this information into the enforcement/compliance
    planning process. EPA examines all major industrial sectors to assess
    noncompliance patterns, emissions by media, and relative risk posed by
    each industry to nearby populations. The risk model used to assist in
    this evaluation has been peer reviewed and approved by the EPA Science
    Advisory Board.
        Stakeholder input to identify risks.--Through the Memorandum of
    Agreement (MOA) process, EPA solicits comment from a broad range of
    stakeholders on possible environmental problems. This information
    gathering process assists EPA in evaluating potential risks that may be
    missed by data analysis (because some problems are outside the scope of
    EPA data collection). In addition, OECA recently instituted a process
    for EPA personnel to nominate environmental problems for OECA's
    consideration.
        Empowering staff to apply risk-based criteria. EPA has developed
    the Online Tracking Information System (OTIS) that assists EPA and
    state staff in applying risk criteria in their daily decisions. The web
    site provides a user friendly tool to examine regulated facilities in
    the context of compliance history, pollutant release, and demographics.
    In addition, OECA is now adding the capability to query data based upon
    watershed health--again allowing Regions and States to better target
    resources. Users can also look for facility clusters based upon the
    mapping application supported by OTIS. Because the site bridges
    pollutant releases, environmental conditions, and compliance data,
    Regions and States now have the capability to easily assess relative
    impacts when making compliance monitoring decisions.
        Media priorities.--OECA implements many of its strategic priorities
    based upon studies and analysis that examine significant risks. For
    example, the EPA Clean Water Action Plan provides a set of specific
    steps for improving water quality. Many of the key priorities explained
    in this Plan are key components of OECA's MOA process. Additionally,
    evaluation of facility types (e.g., major permittees versus minor
    permittees) under the CWA, CAA, and RCRA program in relation to
    supporting compliance monitoring and enforcement policies focus
    Regional and state attention on facilities that pose a higher risk to
    human health and the environment.
        Enhanced targeting.--Looking to the future, EPA is in the process
    of bringing together more extensive data that may assist in correlating
    health data (e.g., cancer rates) with enforcement data. This type of
    analysis, along with technical advances in risk modeling, will enable
    EPA to continue aligning the compliance and enforcement program with
    health and environmental risks.
                number of tmdls required by section 303(d) list
        Question. What is the latest estimate of the number of TMDLs
    required under current state section 303(d) list? Please break this
    down by state.
        Answer. The list below contains the number of impaired waters on
    each State's 1998 list and an estimate of the number of TMDLs that are
    required. This information is based on State information and, in some
    cases, EPA's estimate of the total number of TMDLs required. The number
    of TMDLs actually necessary may differ, depending upon how individual
    States submit the TMDLs to EPA (i.e., as a single TMDL per pollutant
    per waterbody or ``bundling'' a group of TMDLs within a waterbody or
    watershed).

    ------------------------------------------------------------------------
                                                                      Number
                            State                         Number of     of
                                                            Waters    TMDLs
    ------------------------------------------------------------------------
    Alabama.............................................        154      310
    Alaska..............................................         58       79
    Arizona.............................................        103      225
    Arkansas............................................         51       70
    California..........................................        509    1,471
    Colorado............................................         79      197
    Connecticut.........................................        223      312
    Delaware............................................        377      669
    District of Columbia................................         36       86
    Florida.............................................        712    1,973
    Georgia.............................................        584      920
    Hawaii..............................................          3        6
    Idaho...............................................        710    1,619
    Illinois............................................        738    2,863
    Indiana.............................................        208      373
    Iowa................................................        157      220
    Kansas..............................................      1,107    1,692
    Kentucky............................................        231      367
    Louisiana...........................................        196      607
    Maine...............................................        226      267
    Maryland............................................        196      371
    Massachusetts.......................................        906    1,450
    Michigan............................................        267      410
    Minnesota...........................................        143      172
    Mississippi.........................................        721    2,241
    Missouri............................................        180      216
    Montana.............................................        869    2,350
    Nebraska............................................        114      216
    Nevada..............................................         37       90
    New Hampshire.......................................        226      263
    New Jersey..........................................      1,059    1,648
    New Mexico..........................................        186      330
    New York............................................        627      632
    North Carolina......................................        477      378
    North Dakota........................................        133      329
    Ohio................................................        881    2,281
    Oklahoma............................................        531    1,430
    Oregon..............................................      1,183    1,769
    Pennsylvania........................................      1,039    1,711
    Rhode Island........................................        127      245
    South Carolina......................................        658      739
    South Dakota........................................        161      296
    Tennessee...........................................        352      795
    Texas...............................................        146      247
    Utah................................................        203      585
    Vermont.............................................        196      248
    Virginia............................................        883    1,002
    Washington..........................................      1,317    2,188
    West Virginia.......................................        722    1,022
    Wisconsin...........................................        551      942
    Wyoming.............................................         63      122
    American Samoa......................................          1        1
    CNMI................................................          2        2
    Guam................................................          3        6
    Puerto Rico.........................................        199      207
    Virgin Islands......................................          9       15
                                                         -------------------
          Total.........................................     21,845  41,318
    ------------------------------------------------------------------------
    (Seven states, Georgia, South Carolina, Montana, Michigan, New Mexico,
      Utah, and Wyoming have approved 2000 303(d) lists which are not yet
      have not been updated into the table).

                  state non-point source data to prepare tmdls
        Question. How many states have the nonpoint source data necessary
    to prepare all required TMDLs?
        Answer. EPA recognizes that not all states have comprehensive data
    for nonpoint source loadings of TMDL listed waters. EPA expects that,
    where additional data is needed, it will be developed as part of the
    TMDL process.
                total estimate of cost to prepare tmdls by state
        Question. What is the latest estimate of costs to prepare all
    required TMDLs? Please break this down by state.
        Answer. Congress directed EPA to provide a ``comprehensive
    assessment'' of both development and implementation costs of the
    ``Total Maximum Daily Loads'' (TMDL) program in the Conference Report
    106-988 describing the VA/HUD and Independent Agencies Appropriations
    Act for Fiscal Year 2001. A draft of this report, ``The National Costs
    of the Total Maximum Daily Load Program,'' was released for public
    comment in early August, 2001. Comments are due on December 7, 2001.
        The draft report estimates that the total average annual costs to
    states and EPA of developing TMDLs, over the next 15 years, are
    estimated to be between $63-69 million per year. It will cost a total
    of approximately $1 billion over 10 to 15 years to develop 36,000 TMDLs
    in the over 20,000 waterbodies known to be impaired. EPA expects that
    states will increase the number of TMDLs developed each year, spending
    about $30 million in the year 2000, $43-48 million in 2002, and about
    $68-75 million starting in 2005 and each year thereafter until 2015.
        The costs of TMDL development cited in the draft report are based
    on requirements of the existing TMDL program and the new provisions
    added, but not implemented, in the July 2000 rule. The costs of the
    additional requirements associated with the July 2000 regulations
    represent less than 10 percent of the total cost estimated in this
    report. The draft report does not contain estimates of the costs for
    preparing the required TMDLs broken down by state.
                        state resources to prepare tmdls
        Question. What is EPA's estimate of whether the states have the
    resources necessary to prepare all required TMDLs? Which States does
    EPA believe do not currently have the resources necessary?
        Answer. EPA does not have a state-by-state analysis of potential
    state costs. State funding for TMDLs has grown substantially over the
    past few years. For example, resources available under Section 106
    Water Program Grants increased from $115 million in fiscal year 2000 to
    $170 million in fiscal year 2001. In addition, under section 604(b)(3)
    of the Clean Water Act, states may use up to one percent of State
    Revolving Loan Funds Grants funds (or $100,000, whichever is greater)
    for planning and related purposes, including development of TMDLs. In
    fiscal year 2001, the total funding available under this authority was
    $14 million. EPA has also revised the eligibilities for the section 319
    funding to provide that up to 20 percent of each state's allotment (up
    to $47.5 million nationally) may be used to complete assessments of
    nonpoint sources contributing to impaired waters and to help establish
    TMDLs for those waters. Finally, EPA has budgeted $10 million in
    contract funds to support state efforts to develop TMDLs.
                  length of time required to approve all tmdls
        Question. If TMDLS are approved at historic rates, how long will it
    take EPA to approve all required TMDLs?
        Answer. EPA's current policy is that all TMDLs should be
    established within 8-13 years from the time a water is initially listed
    as impaired. EPA believes that the pace at which states develop TMDLs
    and EPA approves them will continue to increase over the next few
    years. In 22 states, there are consent decrees or court orders which
    require that TMDLs be established within 4 to 13 years.
                             cost to approve tmdls
        Question. How much will it cost EPA in resources and FTEs to
    approve these TMDLs? Please break down by region.
        Answer. While we have not delineated resources specifically for
    approvals, we can provide our estimates of total Regional TMDL
    resources, which includes support for TMDL approvals as well as for
    review and approval of CWA Sec. 303(d) lists and support for
    development of TMDLs at the request of a state or where a state does
    not develop a TMDL called for in a consent decree. Specifically, in
    fiscal year 2001:

    ------------------------------------------------------------------------
                                                      FTE
                                                  EXTRAMURAL      Amount
    ------------------------------------------------------------------------
    Region 1....................................         4          $600,000
    Region 2....................................         6           640,000
    Region 3....................................         5         1,100,000
    Region 4....................................        16         1,420,000
    Region 5....................................         6         1,170,000
    Region 6....................................         7         1,150,000
    Region 7....................................         4           740,000
    Region 8....................................         3           940,000
    Region 9....................................         9           870,000
    Region 10...................................        14           870,000
    Undistributed...............................  ..........         500,000
                                                 ---------------------------
          Total.................................        75        10,000,000
    ------------------------------------------------------------------------

                        adequate agency funds for tmdls
        Question. Is EPA budgeting the funds necessary to approve all
    required TMDLs?
        Answer. EPA believes that there are adequate funds requested in the
    fiscal year 2002 budget to approve the required TMDLs.
             estimated number and cost savings from bundling tmdls
        Question. What number or percentage of TMDLs does EPA estimate
    states will be able to bundle and how much time and money will this
    save?
        Answer. The draft cost study examined a large sample of 1,096 TMDLs
    for 668 water bodies submitted to EPA. This sample indicates the extent
    to which states are already beginning to adopt approaches for
    efficiently developing TMDLs. More than half the TMDLs benefitted from
    the cost efficiencies that can be realized by coordinating the
    development of multiple TMDLs for a single waterbody and by
    coordinating the development of TMDLs for multiple water bodies within
    watersheds. Based on these findings, a national level analysis of
    interconnected waterbodies within watersheds was conducted and
    concluded that more than 80 percent of all waterbodies, accounting for
    90 percent of all TMDLs, could potentially realize varying degrees of
    cost efficiencies; we expect that states will likely bundle 60-70
    percent.
        The cost of developing a TMDL for one pollutant is estimated to be
    $28,000 on average nationally, but may range from about $6,000 to
    $154,000. The lower end reflects the cost of a TMDL that is easiest to
    develop and has the benefit of maximum efficiencies (e.g., the TMDL for
    the second nutrient pollutant for a water body). The higher end
    represents the costs of TMDLs that are the most difficult to develop
    and for which there is no benefit of related work done on other TMDLs
    in the water body.
        For a more detailed discussion of efficiencies, see the draft
    report, pp. 16-20, and the support document # 1, pp. II-5 to II-9.
            attainability analysis to determine cause of impairments
        Question. Does EPA agree that the states should review their use
    attainability analysis (UAAs) to determine whether individual
    impairments are caused by natural contamination or introduced
    pollution?
        Answer. EPA agrees that states should periodically review their
    water quality standards to determine whether the existing designated
    uses and associated criteria for a specific waterbody are properly
    identified and attainable. Completing UAAs is one way that states (and
    EPA) can determine whether impairments result from natural sources or
    introduced pollutants.
                     two-tiered list to set tmdl priorities
        Question. Does EPA believe states should create two-tiers of TMDL
    with an action list for which data reveals an impairment and for which
    a TMDL should be developed and a second ``preliminary'' list for those
    water with less data available and the impairment is less certain? If
    not, why?
        Answer. EPA agrees that it is important that the list of waters
    needing TMDLs be as accurate and scientifically valid as feasible. EPA
    is aware that in some instances existing states' lists of impaired
    waterbodies include waterbodies for which little or no data supports
    the listing. EPA supports efforts by states to develop clear,
    scientifically based methodologies which describe how waters are
    determined to be impaired. In some cases, states may use action lists
    and preliminary lists to aid in that decision. EPA realizes that there
    will be waters for which the states lack sufficient data on the nature,
    extent and source of the impairment to determine if a TMDL is the
    appropriate response to the water quality problem. EPA is preparing, in
    cooperation with states the Consolidated Assessment and Listing
    Methodology (CALM)) that will provide information on good monitoring
    practices and methods. EPA has also drafted an ``Integrated Listing and
    Reporting Guidance'' that provides an option for states to submit one
    characterization of all their waters, including those impaired as
    required by section 303(d). This integrated guidance allows states an
    opportunity to describe those waters needing additional monitoring to
    support a decision that a waterbody is impaired.
              distribution of impaired waters in two-tiered system
        Question. If states were to employ a two-tiered system, what
    percentage of waters does EPA believe the action list and preliminary
    list would occupy among the total waters?
        Answer. EPA cannot estimate how currently-listed waters would be
    distributed if states were to establish a two-tiered list. This would
    depend on the methodologies used by the individual states to decide
    which waterbodies are impaired. EPA is developing guidance
    (Consolidated Assessment and Listing Methodology (CALM)) in cooperation
    with states, to help states develop and improve on these methodologies
    for the 2002 listing cycle.
                  impact of placing waters on preliminary list
        Question. Does EPA believe that placing waters with little data on
    a preliminary list would mean putting off action on these waters?
        Answer. Placement of waterbodies on a preliminary list would defer
    TMDL development for these waters, however, supplemental monitoring
    would be scheduled and undertaken. If an impairment requiring a TMDL
    was confirmed, a TMDL would be scheduled and completed.
                         voluntary monitoring programs
        Question. What volunteer initiatives could states implement to
    address water quality in waters for which impairment data is lacking?
        Answer. A number of states manage and support statewide networks of
    volunteers who collect water quality data. When properly trained, these
    volunteer monitors can collect chemical, biological and physical data
    that can supplement professionally collected data. Some states utilize
    this quality-controlled volunteer data in developing Section 305(b)
    reports and Section 303(d) lists. Even where states do not support a
    statewide program through their water quality or natural resource
    agency, they often can use data collected by volunteer organizations
    associated with universities, schools, and watershed groups. While
    volunteers must be organized, trained, and supported, and the data they
    produce must be stored, managed, and evaluated, their efforts are cost-
    effective and have proven valuable in screening for problems and
    providing data for waters the states cannot otherwise monitor. EPA
    provides guidance and technical support to volunteer monitoring groups
    for streams and rivers and lakes and believes that this data is a
    valuable compliment to the data collected by state and federal
    agencies.
                                  reinvention:
        Question. What is the status of EPA's review of its reinvention
    programs?
        Answer. On April 10, Administrator Whitman issued a memorandum
    charging EPA's Innovation Action Council (IAC) with formulating
    ``recommendations for updating [EPA's] innovation strategy.'' In
    considering appropriate next steps, the IAC is looking at both the
    challenges (environmental, regulatory or programmatic) facing the
    Agency, and the innovative approaches and tools needed to meet those
    challenges. The IAC is receiving recommendations from a number of
    recent reports by outside groups and has had preliminary discussions
    with several state environmental commissioners as it develops its
    recommendations. Preliminary recommendations will be forwarded to the
    Administrator for her consideration and additional stakeholders will be
    consulted before the strategy is finalized.
        Question. How will EPA improve its reinvention programs to reduce
    barriers or transaction costs for participants?
        Answer. EPA is currently working on updating its Regulatory
    Innovations Strategy. As part of this effort, the Agency will work to
    streamline and simplify the processes of these activities. Project XL
    is one high profile program where this is happening. In a mid-course
    re-engineering, the XL program cut approval and negotiation times
    significantly. We were able to do so by clarifying program elements,
    helping sponsors develop better projects and proposals, improving
    stakeholder involvement processes and by streamlining internal review
    and decision-making. EPA will continue to place a high priority on
    reducing transaction costs for participants, co-regulators,
    stakeholders and Agency staff.
        While reducing transaction costs is always an important goal, the
    appropriate evaluation of any activity considers both the costs and the
    benefits. Early analyses of XL projects, for example, demonstrate that
    participants are attaining benefits that far outweigh the costs of
    negotiating the agreement.
        Question. How will EPA direct the program offices and Office of
    Enforcement and Compliance Assurance (OECA) to reduce barriers,
    transaction costs and approval time for reinvention projects?
        Answer. Many of the innovation programs, particularly those
    providing regulatory flexibility, represent new ways of doing business
    for EPA. They have required EPA organizations and staff to establish
    new types of relationships with project sponsors, stakeholders, co-
    regulators and each other. These projects pose challenging issues that
    cut across EPA's organizational lines, thus requiring a new type of
    cross-Agency coordination and decision-making.
        EPA has worked to establish procedures to ensure the timely
    development, review and approval of projects under innovation programs,
    and has made significant progress in improving the efficiency of these
    processes while retaining the necessary consideration of key legal and
    technical questions. For example, in Project XL EPA has now signed over
    50 final project agreements--each one reflecting the input of relevant
    program offices, OECA and General Counsel (OGC). This involvement
    provides valuable technical and other expertise that benefit all
    parties in the projects.
        EPA is committed to the continuous improvement of its processes for
    dealing with the complexity of innovation projects. The innovation
    update currently under development by the IAC is expected to explore
    ways to continue to reduce transaction costs and approval time while
    ensuring that all consideration have been factored in.
        Question. Will EPA approve reinvention proposals to change current
    regulatory requirements if they provide improvements in the
    environment?
        Answer. Project XL currently accepts and implements proposals to
    change the regulatory requirements for the project participants. If
    evaluation of the project demonstrates that the regulatory change
    results in benefits--environmental or economic--that outweigh the cost
    or risks, EPA will consider making those changes available to broader
    segments of the regulated community. To date, XL projects have resulted
    in, or have contributed to, new hazardous air pollutant regulations
    (MACT), new approaches to air permitting (New Source Review), and a
    national policy regarding the disposal of lead-containing construction
    debris.
        Question. How will EPA ensure innovative approaches to improve
    environmental protection are incorporated into the daily operations of
    the agency rather than limited to experiments outside the mainstream of
    the Agency's programs?
        Answer. All of EPA's innovation pilots are intended to provide
    innovative approaches that can be used to develop standard EPA
    regulatory practices that are cheaper and more flexible. Innovative
    approaches are being adopted already in regulatory programs (i.e., to
    date, XL projects have resulted in or have contributed to new hazardous
    air pollutant regulations (MACT), new approaches to air permitting (New
    Source Review), and a national policy regarding the disposal of lead-
    containing construction debris). In developing recommendations for the
    Administrator to update EPA's innovations strategy, the Innovation
    Action Council plans to address how to make the process of moving good
    ideas from ``pilots to practice'' more routine and systematic. Also,
    recently announced plans to improve the rule-making process include an
    increased emphasis on considering a wide array of options at the
    outset, and involving EPA senior management in the early regulatory
    planning process. EPA is also exploring ways of making information on
    innovations more widely available throughout the Agency and to states
    (e.g., a catalogue or electronic clearinghouse).
        Question. How will EPA reflect the efforts to institutionalize
    reinvention activities into day-to-day activities in its resource
    allocation for fiscal year 2002 and fiscal year 2003?
        Answer. As part of the effort to update EPA's innovations agenda,
    the Agency's senior leadership is reviewing options for incorporating
    innovation into budgeting and planning processes and is committed to
    strong management of its innovations program. The fiscal year 2002
    President's request for EPA reinvention programs is focused on
    developing and coordinating sector-based approaches, facility-based
    pilots, small business assistance and performance incentives. The
    Agency is continuously building upon its innovation programs by
    institutionalizing reinvention activities into its day-to-day
    activities. The Agency will consider the forthcoming recommendations
    for updating EPA's Innovations Strategy while developing its fiscal
    year 2003 request.
                                   pbt list:
        Question. Has EPA made a final decision on whether it is
    scientifically appropriate to apply its PBT methodology to metals and,
    if it is, how that should be done? If EPA has made such a decision,
    when was it made, where is it explained, and why did the Agency
    conclude there was no need for independent peer review of the issue by
    the SAB?
        Answer. The Agency's PBT methodology was developed by the Agency to
    identify whether a substance is persistent, bioaccumulative and toxic
    (i.e., a PBT). The PBT methodology, the basis for its development, and
    its application are explained in the proposed (64 FR, 687-729, January
    5,1999) and final (64 FR, 58665-58753, October 29, 1999) PBT chemical
    rules.
        In addition, EPA uses a methodology called the EPA's Waste
    Minimization Prioritization Tool (WMPT), which is being used to
    identify PBT chemicals for a number of EPA projects. WMPT is a peer-
    reviewed chemical hazard screening tool that uses persistent,
    bioaccumulative, and toxic properties of a chemical, to evaluate its
    potential hazard. The WMPT has been peer-reviewed by outside experts,
    and focus group meetings were held with industry, government, and
    public interest groups among other review activities.
        Recognizing there are continuing issues on the application of the
    PBT methodology to lead and other metals, the Agency has committed to
    seek peer review from its SAB. As stated in the Final TRI Lead Rule,
    ``The external peer review would address the question of whether lead
    and lead compounds should be classified as highly bioaccumulative. The
    external peer review would address the issue of how lead and other, as
    yet unclassified, metals, such as cadmium, should be evaluated using
    the PBT chemical framework, including which types of data (and which
    species) are most suitable for these determinations.''
        Question. If EPA has made a final decision that it is
    scientifically appropriate to apply its PBT methodology to metals, is
    there a difference in the way EPA applies its PBT methodology to metals
    versus organic compounds? If so, what is the difference and where is it
    explained?
        Answer. The Agency's PBT methodology was developed by the Agency to
    identify whether a substance is persistent, bioaccumulative and toxic
    (i.e., a PBT). The PBT methodology, the basis for its development, and
    its application are explained in the proposed (64 FR, 687-729, January
    5, 1999) and final (64 FR, 58665-58753, October 29, 1999) PBT chemical
    rules.
        Recognizing there are continuing issues on the application of the
    PBT methodology to lead and other metals, the Agency has committed to
    seek peer review from its SAB. As stated in the Final TRI Lead Rule,
    ``The external peer review would address the question of whether lead
    and lead compounds should be classified as highly bioaccumulative. The
    external peer review would address the issue of how lead and other, as
    yet unclassified, metals, such as cadmium, should be evaluated using
    the PBT chemical framework, including which types of data (and which
    species) are most suitable for these determinations.''
        Question. If EPA has not made a final decision whether it is
    appropriate to apply PBT criteria to metals, do you intend to take any
    steps to discourage states and localities from using the Agency's draft
    PBT list for regulatory purposes, particularly insofar as the draft
    list includes several metals?
        Answer. As stated in the Federal Register Notice, EPA developed the
    draft RCRA Persistent, Bioaccumulative and Toxic (PBT) List for use in
    the voluntary hazardous waste minimization programs, not for regulatory
    purposes. EPA headquarters provided regional and state partners draft
    waste minimization chemical priorities at its RCRA National Meeting in
    August 2000, stressing that regions and states should focus on these
    draft waste minimization chemical priorities rather than the draft RCRA
    PBT List. Emphasis on using the draft waste minimization chemical
    priorities in regional and state waste minimization activities is
    further enhanced through monthly conference calls and meetings between
    EPA headquarters and regional representatives and state partners.
        Question. Why did EPA disregard the fiscal year 2001 VA/HUD
    Conference Report language and the bipartisan recommendation of the
    House Science Committee and proceed with applying the PBT methodology
    to metals, in the form of increased reporting of lead, before seeking
    independent SAB peer review of the appropriateness of applying its PBT
    methodology to metals?
        Answer. EPA carefully considered the fiscal year 2001 VA/HUD
    Conference Report language and the bipartisan recommendation of the
    House Science Committee when it proceeded with finalizing the TRI lead
    rule. EPA has committed to seek peer review from its SAB as discussed
    in the preamble to the that rule.
        Question. What is the scope of the review that EPA plans to ask the
    SAB to conduct? Will the review be consistent with the request in last
    year's VA-HUD Conference Report that asked for a broad review of the
    ``scientific appropriateness of applying PBT criteria and methodology
    to metals?'' If not, why not?
        Answer. As stated in the final TRI Lead Rule, the Agency has
    committed to seeking SAB peer review as follows: ``. . . The external
    peer review would address the question of whether lead and lead
    compounds should be classified as highly bioaccumulative. The external
    peer review would address the issue of how lead and other, as yet
    unclassified metals, such as cadmium, should be evaluated using the PBT
    chemical framework, including which types of data and which species are
    most suitable for these decisions.''
        Question. What procedures are in place to ensure that the charge
    sent to the SAB fully covers all relevant issues concerning the
    application of EPA's PBT methodology and criteria to lead and other
    metals?
        Answer. To ensure that the charges sent to the SAB are consistent
    with the statements in the final TRI lead rule regarding SAB review,
    the Agency has placed the development of the SAB charges under the
    purview of EPA's Risk Assessment Forum, which has established both an
    intra-Agency steering committee composed of senior EPA managers and an
    ad-hoc intra-Agency technical panel composed of senior EPA scientists
    to develop the charges and background document. Several of the EPA
    staff who were involved with the development of the lead rule and other
    EPA activities that are using the PBT framework are involved with the
    development of the SAB charges. These individuals are very familiar
    with the relevant issues raised during the public comment periods on
    those activities and the interagency review period with respect to the
    commitment the Agency made in the final TRI lead rule regarding SAB
    peer review.
        Question. When does the Agency expect to transmit a charge to the
    SAB on these issues?
        Answer. EPA is actively preparing for peer review from its SAB. EPA
    expects to have the specific SAB charges delivered to the SAB by Fall
    of 2001. EPA's preparation for the SAB peer review includes preparing a
    background document, developing the charges to the SAB, assembling the
    materials necessary for the SAB review, and involving all the affected
    offices within the Agency.
        Question. Will the SAB review comply with the Agency's criteria for
    independent peer review as set forth in its Peer Review Handbook?
        Answer. The SAB review will satisfy the requirements of the
    Agency's peer review policies.
        Question. What is the expected completion date of the SAB review?
    Does EPA expect to reconsider any decisions based on application of its
    PBT criteria and methodology to metals if the SAB concludes that
    applying the Agency's PBT criteria to metals is scientifically
    inappropriate?
        Answer. Generally, the SAB tries to complete its assessment and
    provide EPA with a written reply within four months of receipt of the
    charges. EPA will carefully review and consider the advice provided by
    the SAB to the charges put forth by EPA. EPA will then make a
    determination on how to proceed based on that review.
        Question. What plans, if any, does EPA have in place to evaluate
    criticisms of its analysis of economic impacts on small business in the
    TRI lead rule during the time the SAB review is underway?
        Answer. The General Accounting Office (GAO) evaluated the analytic
    methods that EPA used. They concluded that the methods used and the
    conclusions drawn ``were within the discretion provided by both the RFA
    and EPA's guidance.'' EPA has no plans at this time, to do an
    additional analysis of the impact of the TRI lead rule on small
    businesses.
                                 small business
        Question. How did EPA include small business concerns into its
    current review of EPA rulemaking processes?
        Answer. The recently completed review of the Agency's rulemaking
    process was an internal review led by a Task Force consisting of the
    Agency's Assistant Administrators. Four subgroups were set up to
    address particular elements of the process: science; economics; policy
    (e.g., RFA/SBREFA); and process. The Small Business Ombudsman/Small
    Business Division in the Office of Policy, Economics and Innovation and
    the Small Business Advocacy Chair contributed to the recommendations of
    the policy subgroup. Representatives from the Agency's Compliance
    Assistance program also participated and represented small business
    concerns during the review.
        Question. How is EPA using that process to ensure that small
    business issues are addressed from the beginning of the rulemaking
    process?
        Answer. The Agency's process contains several elements that help
    ensure small business issues are addressed from the beginning of the
    EPA rulemaking process. First, the Agency offers training and guidance
    to rule writers that includes material on the Regulatory Flexibility
    Act (RFA) and the Small Business Regulatory Enforcement Fairness Act
    (SBREFA) requirements, as well as the Agency's policy to conduct
    outreach and provide accommodations in ANY rule that imposes ANY impact
    on small entities. Second, the Agency uses a tiering process for rule
    development. To initiate a rulemaking, a program office completes a
    tiering form that provides an overview of the action, including whether
    or not the action is expected to have an impact on small businesses.
    The Agency has developed comprehensive guidance on determining the
    impact on small businesses (``Revised Interim Guidance for EPA
    Rulewriters: Regulatory Flexibility Act as amended by the Small
    Business Regulatory Enforcement Fairness Act'' (March 29, 1999)).
    Third, one of the first tasks in developing significant rules is
    preparation of an ``analytic blueprint.'' The Agency uses the analytic
    blueprint to help guide early development of appropriate information
    and early consultation with small businesses and other stakeholders.
    The blueprint helps the Agency ensure that relevant information (e.g.,
    potential small business impacts) is developed and brought into the
    decision-making process. Finally, the Agency provides checklists to
    rulewriters, including references to the requirements of RFA/SBREFA.
        Question. How is EPA increasing its knowledge of the impacts of its
    regulatory requirements on small business?
        Answer. EPA is continually learning from its past and current work
    experiences, as well as seeking new ways to increase its knowledge of
    the impacts of its regulatory requirements on small businesses. The
    Administrator or Deputy Administrator meet periodically with
    representatives of small business trade groups to discuss issues of
    particular concern to small businesses. The meetings have now become a
    tradition at EPA and serve to improve understanding on both sides of
    issues and, at times, lead us to change practices that are unduly
    burdensome to small businesses. The Agency has also reviewed some of
    its past assessments, as well as the methods used at other federal
    agencies/departments.
        Question. How is EPA increasing its knowledge of the impacts on
    small business of rulemakings under consideration?
        Answer. EPA has developed a comprehensive guidance manual for
    rulewriters to facilitate the evaluation of potential small business
    impacts (``Revised Interim Guidance for EPA Rulewriters: Regulatory
    Flexibility Act as amended by the Small Business Regulatory Enforcement
    Fairness Act'' [March 29, 1999]). Specific tools used by EPA to
    increase its knowledge of impacts of rulemakings under development
    include: SBREFA panels; meetings with industry trade groups; small
    business trade groups and consultations with small businesses.
        Question. How is EPA increasing delivery of information about its
    regulatory requirements to small businesses?
        Answer. EPA has a long history of developing materials to aid the
    regulated community in its compliance efforts. These documents include
    such items as Sector Notebooks, Plain English Guides, and Fact Sheets.
    EPA makes these and numerous other resources easily accessible through
    the main EPA Internet home page (www.epa.gov). Moreover, beyond the
    confines and oversight of the Agency, EPA provides support and
    maintains meaningful affiliations with many other programs and
    personnel advising small entities by working through industry
    partnerships, grants, cooperative agreements, as well as the Small
    Business Assistance Programs run by the states under section 507 of the
    Clean Air Act. Finally, the Agency, with its stakeholders, has
    developed a host of internet-based Compliance Assistance Centers to
    provide technical information specific to particular industries. These
    centers are funded by EPA, but are managed by university and industry
    partnerships.
        Specific programs include:
      --(1) the Asbestos and Small Business Ombudsman located at EPA
            Headquarters;
      --(2) Regional small business liaisons, who serve as local resources
            to assist small entities who contact the EPA regional offices;
      --(3) various hotlines and clearinghouses that serve entities of any
            size, including large percentages of small entities; and
      --(4) technical and program staff located throughout Headquarters and
            the regions who are available to answer questions in their
            subject area or refer small entities to the appropriate state
            and local resources.
        Question. How is EPA ensuring that program offices considering
    rulemakings determine potential small business impacts in areas which
    they may not already be aware?
        Answer. The Agency focuses on consideration of potential small
    business impacts early in the process. The Analytic Blueprint is a tool
    the Agency uses to map out the information that will be available to
    decision makers to inform development of, and selection among, policy
    options. The Agency's RFA/SBREFA guidance informs development of the
    blueprint and analytic planning. A screening analysis under RFA/SBREFA
    requires analysts to examine the following questions to make an initial
    assessment of the potential of a rule to have a significant economic
    impact on a substantial number of small entities (SISNOSE):
      --What types of entities are subject to the rule (regardless of
            size)?
      --Are any small entities included?
      --Are any small entities adversely affected?
      --Is the rule likely to have a significant economic impact on a
            substantial number of small entities, considering both
            qualitative and quantitative information?
        EPA establishes a SBREFA Panel to learn from small entity
    representatives of any small business impacts if the screening analysis
    indicates there may be SISNOSE. Further, the Agency's policy to conduct
    outreach and provide accommodations in ANY rule that imposes ANY impact
    on small entities encourages the consideration of potential small
    business impacts early in the regulatory development process. Finally,
    EPA continues to develop its relationship with the Small Business
    Administration's Office of Advocacy as a means to identify the concerns
    of small businesses.
        Question. How is EPA ensuring that program office economic analysis
    of small business impacts do not omit small businesses or industry
    sectors it believes may be impacted by the rulemaking but on which the
    agency does not currently possess impact information?
        Answer. The Agency's screening analysis under RFA/SBREFA requires
    analysts to examine the following questions to make an initial
    assessment of the potential of a rule to have a significant economic
    impact on a substantial number of small entities (SISNOSE):
      --What types of entities are subject to the rule (regardless of
            size)?
      --Are any small entities included?
      --Are any small entities adversely affected?
      --Is the rule likely to have a significant economic impact on a
            substantial number of small entities, considering both
            qualitative and quantitative information?
        If the answer to the last three questions is ``no,'' then the
    Agency will certify the rule as having no SISNOSE. If the answer to the
    final question is ``yes'', then the Agency will proceed to prepare a
    Regulatory Flexibility Analysis (RFA) and convene a Small Business
    Advocacy Review Panel.
        If the Agency does not have enough information to determine with
    confidence that it can certify that there is no SISNOSE, then the
    Agency assumes the answer to the above final questions is ``yes'' and
    will prepare an RFA and convene a Small Business Advocacy Review Panel.
    This ensures that small business or industry sectors that may be
    impacted by a rulemaking, but for which the Agency does not currently
    possess impact information, are not omitted from the analysis. If, in
    the course of initiating the formal analysis of potential economic
    impacts on small entities, the Agency determines that impacts are not
    significant, then the Agency can decide to certify no SISNOSE at any
    time before proposal.
        EPA's policy is to make an assessment of the rule's impact on any
    small entities, to engage the potentially regulated entities in a
    dialog regarding the rule, and minimize the impact to the extent
    feasible--even where the Agency certifies that a rule will not have a
    significant economic impact on a substantial number of small entities.
    This policy also ensures that impacts on small business or industry
    sectors are not omitted.
        Question. How is EPA ensuring that self-imposed deadlines for
    rulemakings are not used to skip collection of information on small
    business impacts?
        Answer. EPA is committed to collecting and analyzing appropriate
    information to support its actions, including information related to
    small business impacts. Data collection and information needs are
    explicit elements of the analytic blueprint EPA develops for
    significant rules. EPA is renewing its emphasis of the Analytic
    Blueprint and up-front identification of information needs and
    scheduling constraints. EPA is also reviewing its Action Tracking
    System to identify areas of improvement, including how to manage
    interim deadlines and milestones.
                             acrylamide rulemaking
        Question. What is the status of EPA's consideration of whether to
    regulate acrylamide grouts?
        Answer. EPA is currently gathering and reviewing new data to
    determine whether the underlying data and assumptions it used in
    support of prior regulatory analyses are still reasonable.
        EPA is reviewing data on key factors including chemistry,
    economics, and exposure control options. It is reconsidering both
    regulatory and nonregulatory options for protecting grouting workers.
    Much of the current data was collected by consulting technical
    literature. EPA also contacted some businesses and local governments to
    gather information. The economic data update is focusing on the
    chemical grout marketplace. It addresses the relative costs, market
    share, and desirability to users of acrylamide and its substitutes. The
    information EPA has collected is also relevant to the question of how
    many people are exposed and therefore how extensive is the risk from
    the use of acrylamide grouts. EPA is also collecting and reviewing data
    on currently available personal protective equipment to determine
    whether there is an adequate and affordable means of providing exposure
    protection to grouting workers.
        Once EPA has completed the data gathering and analysis phase, it
    will revisit the question of whether to protect workers who use
    acrylamide grout and how to do so. EPA expects to have decided upon a
    course of action by the end of September 2001.
        Question. Has EPA determined that a nonregulatory approach may be
    sufficient to adequately protect human health?
        Answer. No, EPA has not yet made a decision. EPA is collecting and
    reviewing data on currently available equipment for providing worker
    protection. The effectiveness and cost of such equipment are key
    factors in the decision. Other important factors are whether the
    equipment is compatible in terms of durability, comfort, and function
    with grouting conditions in the field. EPA will consult with the
    Occupational Safety and Health Administration (OSHA) and other affected
    stakeholders before making a final decision.
                                wiper rulemaking
        Question. What is the status of EPA's rulemaking on the handling
    and disposal of solvent-contaminated wipers?
        Answer. EPA is currently evaluating an option that would exempt
    solvent-contaminated reusable and disposable wipes from RCRA hazardous
    waste regulations provided that specified conditions are met, such as
    the absence of free liquids, and proper labeling and storage. This
    option includes conditions identified in some state policies, and
    addresses disposable wipes containing hazardous solvents.
        Question. Does the wiper rule provide EPA with the opportunity to
    level the economic playing field for small businesses who want to use
    nonwoven wipers and rags, in a way that benefits small businesses and
    the environment?
        Answer. Yes. EPA is evaluating an option that would provide
    regulatory relief for small businesses using disposable or nonwoven
    wipes and rags, provided specified conditions are met, such as the
    absence of free liquids, and proper labeling and storage.
        Question. Does the wiper rule provide EPA with the opportunity to
    create uniform standards for the disposal of laundered shop towels,
    nonwoven wipers and rags and thereby eliminate contradictory state
    rules and minimize confusion and excessive costs on the use of these
    products?
        Answer. Yes. The option that EPA is evaluating would create uniform
    standards for industrial wipes, rags and shop towels, reduce the costs
    of compliance with RCRA regulations for many generators, and address
    inconsistencies that exist in current state policies with respect to
    these materials.
        Question. How many small business industrial launderers oppose this
    rule versus the number of small businesses which would benefit from the
    rule either through supplying nonwoven wipers and rags or using such
    products?
        Answer. EPA does not know the number of industrial laundries
    opposing this rule. However, we do know that the two trade associations
    representing many industrial laundries oppose this rule. Conversely, we
    are aware of other industrial laundries who favor this rule.
        Question. Is the wiper rule an example of a rule which impacts
    small businesses, but not substantially, therefore not requiring a
    small business advocacy panel?
        Answer. EPA is completing an economic impact analysis on small
    businesses. At this time, we are unable to provide information as to
    whether this rule will require a small business advocacy panel.
                               new source review
        Question. What is the status of EPA's new source review litigation
    effort? Provide a brief summary of EPA action, litigants, factual
    background including degree of actual environmental impact, legal
    issues, current status, expected next step, and settlement if obtained?
        Answer. As you are aware, the Department of Justice (DoJ) is
    currently reviewing the existing enforcement actions against certain
    utilities and other defendants for violations of New Source Review
    requirements under the Clean Air Act. In the meantime, both the
    Environmental Protection Agency and DoJ are proceeding with settlement
    discussions with some companies, and in litigation with others. The
    Eleventh Circuit Court of Appeals has informed us that it will hear
    argument in September on the Tennessee Valley Authority's appeal of the
    EPA's Environmental Appeal Board decision last fall finding TVA liable
    for substantial violations of NSR.
        In the meantime, EPA has concluded global consent decrees with four
    petroleum refining companies covering 27 facilities representing about
    28 percent of total domestic refining capacity. These agreements, which
    resolve alleged violations of NSR and other important provisions of the
    Clean Air Act, are expected to reduce emissions of sulfur dioxide,
    nitrogen oxide, and other criteria pollutants by at least 130,000 tons
    per year. All four of these consent decrees have been lodged with
    federal courts; we expect all four will be entered by the end of the
    fiscal year. This month, EPA announced another settlement of alleged
    NSR violations at a refinery owned by Clark Oil Company in Illinois; we
    expect the agreement to reduce sulfur oxide emissions by nearly 5,000
    tons annually. Last October, EPA entered into a consent decree with
    Tampa Electric Company to resolve alleged NSR violations, and in
    November announced agreements in principle with Dominion Resources
    (VEPCO) and Cinergy. Assuming the VEPCO and Cinergy agreements lead to
    consent decrees, the three settlements together are expected to reduce
    sulfur dioxides and nitrogen oxides by a combined total of 750,000 tons
    per year.
        Attached is a summary of the most significant recent settlements or
    active cases involving alleged violations of NSR, which includes some
    information about projected environmental benefits from these actions.

                     Attachment: New Source Review Snapshot

                                  power plants
        Companies settling, in active discussion or in litigation--49
    percent of Total Coal-fired Capacity
        Global Settlements.--Tampa Electric Company--Injunctive Relief:
    Approximately $1 billion; SOX/NOX Tons Reduced:
    190,000 per year when fully implemented.
        Global Agreements in Principle.--Vepco and Cinergy (Announced);
    Combined Injunctive Relief: Approximately $3 billion; Anticipated
    SOX/NOX Tons Reduced: 750,000 per year when fully
    implemented.
        Current Negotiations.--Global settlement discussions with three
    additional companies.
        Complaints Filed.--8 companies (AEP, Dayton Power & Light, Duke,
    First Energy, Illinova, SIGCORP, Southern Co., TVA); AEP, Southern, TVA
    together emit 5.5 million tons of SOX/NOX, or
    about 20 percent of emissions from all coal-fired capacity nationwide
    (1996 data).
        Litigation Update.--EPA claims against TVA largely upheld by
    Environmental Appeals Board (EAB) in the fall of 2000; 11th Circuit
    scheduled to hear TVA's appeal of the EAB decision in September of
    2001; Summary Judgment pending for AEP.
                                   refineries
        Total cases settled, in negotiation, or under investigation:
        Global Settlements.--Koch, BP, Motiva, Marathon-Ashland; 28 percent
    of U.S. Refining Capacity; Combined Injunctive Relief: Approximately
    $1.3 Billion; Anticipated SOX/NOX Tons Reduced:
    130,000 tons per year when fully implemented; Additional reductions in
    VOCs, benzene and other pollutants.
        Single Facility Settlements.--Cenco, CA; Clark, Illinois (4,700
    tons per year of SOX, reduced).
        Current Negotiations.--Negotiating global settlement with three
    companies representing up to 25 percent of additional refining
    capacity.
        Under Investigation (114's and NOV's).--Notices of Violation issued
    to Exxon-Mobil and Citgo facilities.
        Active Litigation.--Murphy Oil trial appellate decision expected in
    July 2001.
                                 wood products
        Global Settlement.--3 companies (Georgia Pacific, Louisiana Pacific
    and Willamette); Willamette settlement reduced VOCs and other
    pollutants by 27,000 tons per year.
        State Settlements.--Weyerhaeuser.
        Current Negotiation.--Boise Cascade: 2 NOVs issued, 8 facilities
    addressed.
                              pulp and paper mills
        Complaints Filed.--Two single-facility judicial complaints
    (Westvaco, Gladfelter).
        Current Negotiation.--One company.
        Under Investigation.--At least 5 additional facilities.
                            iron & steel (mini-mill)
        Global Settlement.--Nucor Steel; Injunctive Relief: $85 Million;
    VOC/NOX Tons Reduced: 9,400 per year when fully implemented.
        Ongoing Disclosure Initiative.--Invitation to Audit 42 mini-mills.
                            other significant cases
        Buckeye Egg Farms; NOV issued for PSD/PM violation at large egg-
    laying facility.
        Question. Provide examples of how EPA may have used litigation to
    obtain clarification of New Source Review (NSR) requirements instead of
    through legislative or rulemaking processes.
        Answer. EPA believes its enforcement actions have proceeded from a
    consistent understanding and interpretation of New Source Review
    requirements by the Agency, and were based on noncompliance uncovered
    in investigations. EPA has not used litigation to obtain clarification
    of NSR requirements.
        An Enforcement Alert, published in January of 1999 (before filing
    of EPA's complaints against power companies), represents one of our
    efforts to publicize concerns about noncompliance with NSR
    requirements. A copy of the Enforcement Alert (January, 1999, Volume 2,
    Number 1) is available on the Internet at http://es.epa.gov/oeca/ore/
    enfalert/psd.pdf.
        Question. How can EPA improve the New Source Review program to
    protect air quality but ensure utilities and refiners do not face
    disincentives to install more efficient production technology?
        Answer. In May 2001, the National Energy Policy Development Group,
    in its National Energy Policy Report, recommended that the
    Administrator of the EPA, in consultation with the Secretary of Energy
    and other Federal agencies, examine the New Source Review (NSR)
    regulations and report to the President on the impact of NSR on
    investment in new utility and refinery generation capacity, energy
    efficiency, and environmental protection. During July, as part of the
    NSR review and report to the President, EPA met with interested
    stakeholders and held a series of public meetings to solicit
    information about the impact NSR might have on refiners or utilities.
    These meetings will help us to formulate the recommendations that will
    be included in the report to the President. Thus, EPA believes that it
    is premature to make recommendations prior to completing the review.
        Question. How can EPA improve the New Source Review (NSR) program
    to protect air quality but ensure actual emissions are the focus and
    not potential or theoretical emissions?
        Answer. EPA took comments on its method for calculating emission
    increases under the NSR program in 1996 and again in 1998. We are still
    in the process of deliberating over whether changes are needed and, if
    so, what changes are most appropriate.
        Question. How can EPA improve the New Source Review program to
    protect air quality but reduce the time and burden needed to obtain NSR
    permits?
        Answer. The New Source Review (NSR) program is typically
    administered by State and local air pollution permitting authorities.
    EPA provides guidance to these authorities for implementing the
    program. EPA proposed several process improvements as part of the 1996
    NSR proposal. Because disputes arise over what control technologies are
    considered available, the permit review process can become lengthy. EPA
    proposed several measures designed to streamline and provide more
    certainty concerning the control technology review requirements for
    NSR. Additionally, EPA proposed measures to clarify the roles,
    responsibilities and time frames for review by Federal Land Managers of
    sources potentially affecting air quality near national wilderness
    areas and parks. We are still in the process of deliberating over these
    changes.
      clarify and define concentrated animal feedlot operation regulation
        Question. How can EPA better clarify and define its proposed
    concentrated animal feedlot operation (CAFO) regulation?
        Answer. EPA has held nine public information sessions around the
    country to help the public better understand the proposed regulations
    (Baltimore, MD; Ames, IA; Riverside, CA; Ft. Wayne, IN; Dallas, TX;
    Chattanooga, TN; Denver, CO; Boise, ID; and Casper, WY). We are engaged
    in an ongoing dialogue with major associations and their membership to
    discuss the proposal and EPA's goals. We are also working closely with
    USDA in order to further understand the potential impacts of the
    proposal on the agricultural community, to analyze underlying data that
    can help us refine the regulatory approach, and to examine options for
    meeting EPA's goal to protect water quality.
        The comment period was extended to July 30 to give the public more
    time to prepare written comments on the proposal. New information
    received during the public comment period that EPA may use in the final
    rule will be published in a ``notice of data availability'' in late
    fall of this year. The public will then have an additional 30 to 45
    days to comment.
        EPA understands the concerns some have raised with respect to the
    regulation, and we continue to examine the issues as we work towards
    preparing options for the final rule scheduled for December 2002.
        impact of concentrated animal feeding operations rule on use of
                              chemical pesticides
        Question. How will the CAFO rule increase the use of chemical
    pesticides [fertilizer] on crops by discouraging the use of manure?
        Answer. It is not the intent of the proposed revised regulation to
    increase the use of commercial fertilizers nor discourage the use of
    manure. We understand that the proposed 100 foot setback provision for
    land application and the co-proposals concerning the off-site transfer
    of manure may inadvertently have such a result.
        EPA is aware that 65 percent of manure produced by CAFOs is in
    excess of their on-site crop needs, and that as many as 350 counties
    generate more phosphorus from AFOs than is needed for crops. EPA is
    carefully studying this issue and is working to craft a solution to
    avoid disrupting manure markets.
     weather impact on concentrated animal feeding operations requirements
        Question. How does EPA ensure that CAFO requirements needed for wet
    climates are not overly burdensome in dry areas?
        Answer. EPA believes that our proposal accounts for differences in
    climate. For example, we proposed that production areas be designed to
    contain manure, wastewater, and contaminated runoff for certain
    periods, i.e., beef and dairy feedlots must be designed for a 25-year,
    24-hour storm (as defined by the National Oceanic and Atmospheric
    Administration), and that swine, poultry and veal areas be designed for
    zero discharge except in catastrophic events. In wet climates, the
    resulting design would be more rigorous than would be required in a dry
    climate. For land application areas, permits would incorporate the
    state-adopted NRCS 590 standard which includes methods for determining
    rate of manure application. These methods take into account rainfall,
    slope, soil conditions, and other factors that accommodate climactic
    differences in determining optimal conservation practices.
        EPA has also proposed that both the co-permitting and the off-site
    transfer certification requirements could be waived if the State has an
    effective program for managing and redistributing excess manure
    nutrients. It may be the case that a State with dry climates could more
    realistically tailor its program to achieve such waivers, than a State
    with wet climates, because of the greater challenge to prevent
    nutrients from entering waters of the U.S. resulting from wet weather
    events.
                     cost of determining hydrologic issues
        Question. How did EPA consider the costs associated with
    determining hydrologic issues, such as whether ground water at a
    facility is linked to federal waters?
        Answer. Under one technology option, EPA and USDA developed a
    methodology to assess geological features that would most likely
    constitute a direct hydrological connection to surface water. The
    method results in an estimated 24 percent of facilities nationally that
    would incur costs to prevent discharges to groundwater. In the proposed
    rule, EPA has provided an opportunity for facilities to obtain a
    hydrologist's report that no hydrological connection exists, and
    therefore no further action would be necessary. EPA also included the
    cost of installing monitoring wells, lagoon liners, and solid storage
    pads at these facilities in its Regulatory Impact Analysis of the
    proposed rule.
        preventing duplicative reporting and record keeping requirements
        Question. How does EPA ensure that its federal reporting and record
    keeping requirements are not duplicative of existing state requirements
    in given states?
        Answer. Forty-three States are authorized to administer the NPDES
    program for CAFOs. In these cases, States could coordinate the
    reporting and record-keeping requirements of any programs under their
    control, including their non-NPDES programs for AFOs and CAFOs.
                     concentrated animal feeding operation
        Question. How is EPA addressing concerns over co-permitting,
    nutrient management plans, and the financial resources necessary to
    establish the regulatory infrastructure needed to implement and enforce
    the proposal?
        Answer. EPA is working with USDA, representatives of the regulated
    community, and our State co-regulators to refine our proposals in light
    of our goal to protect water quality, and to identify solutions that
    are effective, affordable, and flexible. We understand that whether we
    rely on voluntary programs, regulatory programs, or both, the animal
    production industry and States need the financial resources to
    implement the management practices needed at both the production areas
    and the land application areas, or for developing other uses for excess
    manure. We are seeking to participate in the dialogue over the Farm
    Bill to help address these concerns.
                       clean air violations from bakeries
        Question. What is the status of EPA's information request from
    bakers regarding their handling of refrigerant in their appliances?
        Answer. EPA has sent Section 114 information requests to large
    baking companies regarding their compliance with ozone layer protection
    requirements governing ozone depleting refrigerants used in industrial
    process refrigeration and other equipment. EPA has requested additional
    information where initial responses were unclear, and has received
    several follow-up responses from the baking companies. EPA continues to
    analyze these responses. Responses received to date indicate serious
    compliance difficulties at many of the baking facilities, involving
    excessive emissions of ozone depleting compounds as well as record-
    keeping-related violations.
        Question. How could EPA reach a comprehensive settlement with this
    industry which would allow participating bakers to devote the maximum
    amount of resources to coming into compliance and protecting the
    environment?
        Answer. EPA representatives have initially met with the main trade
    association for the baking industry, the American Bakers Association,
    to discuss a comprehensive settlement of all violations discovered by
    self-audits. EPA has pledged to continue these discussions and explore
    ways of resolving any such violations while achieving the greatest
    environmental benefit consistent with EPA's self-auditing policy.
        Question. How is EPA addressing municipality concerns that a zero
    discharge standard for overflows from collection systems would impose a
    technologically impossible and scientifically unsupportable burden on
    municipalities?
        Answer. Section 301(a) of the Clean Water Act (CWA) establishes a
    zero discharge standard for unpermitted discharges. This strict
    liability standard requires that dischargers obtain an NPDES permit for
    their discharge according to the standards in section 301(b). EPA
    recognizes that some overflows from sanitary sewer collection systems
    are unavoidable, even at the best run systems. EPA is currently
    considering how best to address this reality in its regulations. One
    approach is through the existing ``upset'' and ``bypass'' provisions,
    that recognize exceptional incidents. The ``bypass'' provision
    prohibits the intentional diversion of waste streams from any portion
    of a treatment facility, but provides a framework for identifying the
    limited circumstances when EPA will not bring enforcement action. The
    ``upset'' provision provides a framework for identifying the limited
    circumstances when the permittee may establish an affirmative defense.
    These provisions could be tailored to specifically address SSOs.
    Another approach would be to authorize by permit a limited number of
    partially treated discharges in circumstances where the discharge is
    beyond the reasonable control of the operator. EPA is currently
    considering these and other approaches.
      impact of zero discharge standard on cwa technology-based standards
        Question. How would EPA avoid circumventing the required process
    for developing CWA technology-based standards if it imposed a zero
    discharge standard?
        Answer. Section 301(a) of the Clean Water Act (CWA) establishes a
    zero discharge standard for unpermitted discharges. This strict
    liability standard requires that dischargers obtain an NPDES permit for
    their discharge according to the standards in section 301(b). EPA
    recognizes that some overflows from sanitary sewer collection systems
    are unavoidable, even at the best run systems. EPA is currently
    considering how best to address this reality in its regulations. One
    approach is through the existing ``upset'' and ``bypass'' provisions,
    that recognize exceptional incidents. The ``bypass'' provision
    prohibits the intentional diversion of waste streams from any portion
    of a treatment facility, but provides a framework for identifying the
    limited circumstances when EPA will not bring enforcement action. The
    ``upset'' provision provides a framework for identifying the limited
    circumstances when the permittee may establish an affirmative defense.
    These provisions could be tailored to specifically address SSOs.
    Another approach would be to authorize by permit a limited number of
    partially treated discharges in circumstances where the discharge is
    beyond the reasonable control of the operator. EPA is currently
    considering these and other approaches.
       best management practices for secondary standards for collection
                                    systems
        Question. How can EPA work within existing regulations which
    recognize that some discharges are better addressed through best
    management practices, to develop a secondary standard for collection
    systems?
        Answer. EPA is considering whether to publish a rule that would
    require NPDES permits for municipal sanitary sewer collection systems
    to contain a standard provision for better operation and management of
    systems to avoid SSOs, increased attention to system planning, and
    better notification to the public in the event of an overflow. As an
    alternative to modifying the existing regulations, EPA could issue
    guidance or a policy on applying existing NPDES regulations, including
    the bypass and upset provisions at 40 CFR 122.41(m) and (n) and the
    secondary treatment regulations at 40 CFR 133, to municipal sanitary
    sewer collection systems and SSOs.
              public comment on alternative regulatory principles
        Question. How can EPA provide an opportunity for comment on
    alternative regulatory principles?
        Answer. EPA is reviewing the proposed rule. One option would be to
    propose a framework for: evaluating the specific circumstances of a
    discharge from a municipal sanitary sewer collection system; and
    determining whether to potentially excuse those discharges, either
    though the exercise of enforcement discretion or through establishment
    of an affirmative defense. Another option would be to propose a
    framework in which a limited number of partially treated discharges
    could be authorized by permit in circumstances, such as extreme wet
    weather, where the discharges were beyond the reasonable control of the
    operator. The proposed rule will provide an opportunity for interested
    stakeholders to comment on whatever framework is proposed, as well as,
    alternative approaches to deal with these discharges.
                             information management
        Question. Provide the status of each Reinventing Environmental
    Information initiative and milestone, either still standing alone or as
    incorporated into more recent efforts.
        Answer. The original elements of the Reinventing Environmental
    Information initiative (REI)--Data Standards, Electronic Reporting,
    State Participation (The One Stop Program), Systems Reengineering (the
    13 REI systems), Locational Data Improvement (Geospatial efforts), and
    Facility Identification (the precursor to the Facility Registry
    System)--have been incorporated into the Agency's information
    integration efforts and are the core components of the infrastructure
    needed by EPA to participate, as a partner, in the National
    Environmental Information Exchange Network (NEIEN). The following is an
    update on the status of each of these projects:
        Data Standards.--The REI Action Plan committed EPA to create a data
    standards program for the Agency. Specifically, this plan directed EPA
    to: (1) Promulgate interim standards for Date, Facility Identification,
    SIC/NAICS, Latitude/Longitude, Biological Taxonomy, and Chemical
    Identification; (2) Develop Business rules and promulgate final
    standards; (3) Establish a central Agency support program; and (4)
    Implement standards in national systems. In addition, the REI Action
    Plan called for the Agency to institutionalize the data standardization
    process and develop standards and protocols for electronic reporting.
    EPA has either met or has made significant strides in achieving these
    goals. As of November 2000, data standards and business rules for all
    six of the areas originally identified in the REI initiative have been
    completed and implementation dates for the 13 national systems have
    been set. These dates are:

    ------------------------------------------------------------------------
                                                              IMPLEMENTATION
                  DATA STANDARD               DATE COMPLETED   DATE FOR REI
                                                  BY EPA          SYSTEMS
    ------------------------------------------------------------------------
    Calendar Date...........................         1/20/99         9/30/99
    SAIC/NAICS..............................         1/20/99         9/30/02
    Facility ID.............................        11/21/00         9/30/03
    Lat/Long................................        11/21/00         2/28/02
    Chemical ID.............................        11/21/00         3/31/03
    Biological ID...........................        11/21/00         3/31/03
    ------------------------------------------------------------------------

        In addition to finishing these standards, the Agency has
    established a central support program for implementing them in major
    EPA systems. This support program involves conducting periodic surveys
    of implementation status; general communication and outreach to program
    offices; and convening meetings with program information management
    officials and system managers. As a result, EPA system managers have
    begun implementing these standards in 12 of the 13 national systems
    identified in the REI Action Plan (we are working with the last system
    to address technical obstacles to conformance). The Calendar Date
    standard, the only standard for which the implementation date has
    passed, has been implemented by most of EPA's 13 national systems. Most
    of the national systems are on track for the Latitude/Longitude and
    SIC/NAICS data standards which have implementation dates next year.
    Progress has also begun on the remaining data standards which have
    implementation dates into 2003.
        Significant progress has also been made in institutionalizing the
    data standardization process. Specifically, the Environmental Data
    Standards Council was created and has forged a firm partnership with
    EPA, State, and Tribal organizations; it is about to circulate two new
    jointly developed draft data standards (Permitting, and Enforcement and
    Compliance) for broad public review and comment. The Council is
    deliberating on a new round of standards based on State, EPA, and
    Tribal needs with priority consideration of electronic format data
    exchanges slated for the National Environmental Information Exchange
    Network.
        Electronic Reporting.--EPA has drafted a rule to address an
    electronic reporting process and remove existing regulatory barriers to
    electronic reporting. At this time, the rule is in Administration
    review. EPA has also initiated several electronic reporting activities
    with States and the regulated community, and has begun to receive
    official submissions of air emission and Toxics Release Inventory (TRI)
    data electronically.
        Locational Data Improvement Project.--The Agency is continually
    improving the quality of locational data (latitude and longitude
    coordinates) of regulated entities stored in the Agency's Locational
    Reference Table (LRT). During 2000, approximately 100,000 new or
    improved locational data points were submitted to the LRT.
        Facility Registry System (FRS).--FRS development was completed in
    fiscal year 2000. As of July 2001, FRS contains over 500,000
    authoritative facility identification records. FRS is available by
    clicking on ``facility information'' under the ``Queries, Maps and
    Reports'' option located at www.epa.gov/enviro TRI.
        Question. In fiscal year 2002, which 15 States will use the Central
    Data Exchange (CDX) infrastructure to provide data to EPA?
        Answer. The original projection of 15 States has been exceeded in
    fiscal year 2001. Specifically, in fiscal year 2001, a total of 34
    States are using CDX to report data to EPA, across the following
    program areas:
      --Annual Air Emissions Inventory submissions under the Clean Air Act
            were received through CDX from 34 States, including: AL, AZ,
            CA, CO, CT, FL, IL, IN, KS, KY, LA, MA, MD, ME, MN, MO, MS, NC,
            ND, NE, NH, NJ, NY, OH, OK, PA, RI, SC, TN, UT, VA, VT, WA, WY.
            We also received submissions from county air boards in states
            including: KY, NC, NE, NV, PA, TN, WA. Several other states,
            such as Hawaii have indicated they plan to use CDX before the
            end of this fiscal year.
      --TRI Form R submissions under the Emergency Planning and Community
            Right to Know Act (EPCRA) were received from over 600
            facilities in seven states: OH, IL, MI, TX, LA, CO, WA.
      --For exchanging data with States under the National Pollution
            Discharge Elimination System (NPDES), established by the Clean
            Water Act, we are currently working with VA and plan to expand
            testing to NJ.
        In fiscal year 2002, we plan to further expand CDX implementation
    as follows:
      --to all states and counties submitting air emissions data to EPA;
      --to all state and local drinking water authorities involved in
            reviewing data provided by laboratories under the Safe Drinking
            Water Act's Unregulated Contaminant Monitoring Rule (UCMR);
      --to all facilities nation-wide required under EPCRA to report TRI
            data to the TRI program;
      --complete testing with VA and NJ, expand to offer CDX to 5-10 states
            that submit to EPA's Permit Compliance System in support of the
            NPDES program; and
      --CDX will also conduct testing with State programs involved in the
            exchange of data under the Resource Conservation and Recover
            Act (RCRA), and Water Quality Monitoring Data provided to EPA's
            STOrage and RETrieval System (STORET).
        Question. How much of the $25 million for the National
    Environmental Information Exchange Network (NEIEN) will go to getting
    these 15 States on-line?
        Answer. The original fiscal year 2001 projection of 15 States being
    on-line with the Central Data Exchange (CDX) has been increased to 34
    States using CDX to report data to EPA across various program areas.
    The $25 million for the NEIEN Grant Program is proposed to have three
    broad components for which any of the 34 States would apply and
    potentially receive a portion of the funding. It is anticipated that
    the majority of the States will apply for Core Capacity Building Grants
    of which 45 percent to 50 percent of the total funding received will be
    dedicated to a competitive process.
        Question. How much will it cost to get the remaining States to use
    the CDX/NEIEN system?
        Answer. Although the Agency does not currently have estimates of
    the overall costs for States to participate in the Network, EPA and the
    States have several efforts underway that will provide information
    related to State costs. These efforts include: (1) a State Readiness
    Assessment, which is examining States' readiness to participate in the
    Network; (2) a State node pilot project, which is assessing what is
    involved in developing a State ``node'' or portal on the Network; and
    (3) a preliminary study of the costs and benefits of selected data
    flows through the Network. These efforts, taken together, will provide
    key information related to State costs.
        Question. How much will the continued operation of the CDX/NEIEN
    annually cost EPA and the States?
        Answer. Over the next several years, CDX will process an increasing
    volume of electronic reporting as well as assuming other data receipt
    processes (including paper, diskette, magnetic media and other forms of
    data submission). EPA's costs are expected to rise accordingly: $10
    million in fiscal year 2002, $13 million in fiscal year 2003, and up to
    $21 million in fiscal year 2004.
        We do not have projections regarding the costs states will incur to
    participate in the Network, but currently have several efforts underway
    that will assist in estimating State costs. State costs should decline
    compared to their present costs because the Network will feature
    electronic reporting to a single EPA portal.
        Question. How will EPA collect information from non-CDX states?
        Answer. EPA's long-term intention is to obtain all of its
    regulatory compliance data through CDX. CDX is being implemented on a
    program by program basis, with States joining when their systems allow.
    States which are not able to send data through CDX are using the same
    procedures in place prior to CDX implementation--they are submitting
    data to EPA's program legacy systems.
        Question. How will the CDX system address data quality issues from
    the standpoint of data entry and the quality of the data put into
    whatever system is currently used?
        Answer. The CDX process allows the Agency to address data quality
    in two ways:
        (a.) Avoiding Data Entry Errors by:
      --Establishing ``intelligent'' edit checks in our electronic forms at
            the point data is entered by users.
      --Leveraging data already provided by the user to pre-populate forms,
            thereby reducing amount of re-keying.
      --Introducing ``error detection' measures into our data receipt and
            processing functions that automatically detect and send
            detected errors back to the submitter.
        (b.) Enhancing Error Detection and Correction by:
      --Providing viewing features' for States/industry to review and
            correct data in information systems before it is made available
            to the public. It is this last feature of CDX that helps
            address the inherent quality of the data being entered into
            State and EPA information systems.
        Question. How is EPA integrating standardization and other
    information management improvements into the new CDX/NEIEN systems?
        Answer. CDX uses data standards as one of the data receipt error
    checks when possible. In addition to flagging errors and returning them
    to the submitter for correction, CDX is providing the capability for
    submitters to review the data they have submitted to CDX before it is
    transferred to its legacy system and made available to the public. This
    allows the data submitter to verify the accuracy of data which passes
    automated edit checks. CDX also incorporates Agency data standards into
    all file submission specifications it releases to its user community.
        Question. How is EPA moving from better collecting, processing and
    using currently required data to requiring and using only a smaller
    core of essential environmental information?
        Answer. Although the Network does not directly address this issue,
    the use of standardized electronic formats should make it easier to
    identify duplicate submissions and other opportunities for
    streamlining. Through the More Efficient and Effective Reporting (MEER)
    Initiative, the Agency is exploring opportunities to streamline and
    consolidate environmental reporting requirements by both reducing the
    submission of similar data multiple times and consolidating related
    reports.
        Question. Who is responsible for correcting errors identified in
    information contained in the CDX/NEIEN system?
        Answer. Data errors in the content of the submitted data must be
    corrected by the submitter. Obvious errors (e.g., missing values) will
    be identified upon receipt in CDX and the submitter will be immediately
    notified. EPA believes that the CDX process will not introduce any
    additional errors. EPA will continue to facilitate the identification
    and correction of data errors through the error correction process that
    is a feature of our national data systems and many websites.
        Question. How will the Agency integrate information collected
    through the CDX/NEIEN into programmatic or enforcement information
    systems or otherwise meet the requirements for which those systems were
    designed?
        Answer. CDX receives data from its source submitter (State or
    regulated facility) and transmits these data to their programmatic or
    enforcement system in a format acceptable to the system.
        Question. What is the status of the Agency's efforts to modernize
    its programmatic information systems?
        The Agency is continuing its ongoing, significant efforts to
    develop, maintain, and enhance its programmatic information systems. As
    the systems' requirements evolve to reflect changing customer
    expectations and changes in programmatic emphases, the system managers
    plan incremental or more major modernization projects. For the first
    time ever at EPA, the system managers are now able to plan such
    projects in the context of an overall Agency Enterprise Architecture.
    Several of EPA's Program Offices (e.g., OW, OSWER, OECA) are
    undertaking architectural and information strategic planning exercises
    within their programmatic domains, in coordination with EPA's
    Enterprise Architecture program. These programmatic planning exercises
    will help establish the additional detail needed for efficient and
    effective modernization of programmatic information systems.
        EPA annually oversees, and periodically evaluates, its major IT
    investments to determine whether the systems are delivering what was
    expected. This year's information technology Capital Planning and
    Investment Control (CPIC) process tracked 26 programmatic systems, in
    great detail. Each programmatic system investment proposal described
    the system's: (1) required management approvals; (2) conformance with
    data standards; (3) plans for ensuring data quality; (4) approach to
    data integration; (5) extent of architectural alignment; (6) commitment
    to security planning and controls; and, (7) consideration of deployment
    costs. The modernization work documented in each proposal clearly
    reflects the Agency's major information management priorities, and the
    investment proposals present a comprehensive annual status snapshot for
    the Agency's major systems.
        Question. How is the modernization of the Agency's programmatic
    systems integrated with the NEIEN efforts?
        Answer. An important element of the Agency's Reinventing
    Environmental Information effort was modernizing 13 major program
    systems. Beginning in fiscal year 2000, the modernization efforts were
    linked to the Agency's information integration efforts and, in turn,
    the NEIEN. EPA's Information Technology Management Reform Act (ITMRA)
    review process explicitly includes program consistency with the
    Agency's integration effort as important criteria for funding.
        As a result of these efforts, EPA program offices are focusing on
    the Agency-wide integration efforts--for example, several program
    offices have redirected major data flows through the CDX, and a
    schedule for a series of these redirected data flows affecting all
    Agency program offices is being developed, collaboratively with OEI,
    the States, and the Program Offices. EPA Program and Regional Offices
    also are actively working on other integration efforts including
    implementing the approved data standards, using the Facility Registry
    System, and developing the NEIEN.
        Question. Describe the role OEI is playing in agency information
    management resource decisions, including implementing cuts to program
    offices needed to develop the operating plan?
        Answer. Under ITMRA of 1996 (``Clinger-Cohen Act''), EPA and other
    Federal agencies are given responsibility for overseeing the
    acquisition, use, and disposal of information technology (IT) in order
    to improve the productivity, efficiency, and effectiveness of Federal
    programs. These Congressional requirements have provided a valuable
    tool for OEI to ensure that EPA's IT investments are cost effective.
    OEI has been aggressively undertaking its Clinger-Cohen
    responsibilities, including those relating to the review of IT
    investments, and intends to continue to improve its IT investment
    management process and results.
        With regard to implementing cuts to program offices needed to
    develop the Agency's operating plan, OEI performs an important role by
    issuing the Chief Information Officer's independent advice to the EPA
    Administrator. This letter, which is required by the Clinger-Cohen Act,
    provides the Administrator with information on what major investments/
    systems should be funded in the Agency's budget.
        Question. What is the status of OEI strategic planning for EPA
    information management? Please provide the most recent materials in
    this area.
        Answer. EPA has initiated a process to develop a strategic plan to
    manage the Agency's information resources (e.g., data, technology,
    people, policies, funding). As a preliminary first step, OEI is
    currently holding internal discussions with senior officials in its
    Regional and Program Offices to develop a vision and goals to guide
    EPA's management of information. Following an internal review of the
    vision and goals document (during the First Quarter fiscal year 2002),
    the Agency will meet with its State and tribal partners and
    stakeholders to solicit their input (Second Quarter fiscal year 2002).
    EPA then will develop an action plan to implement the vision and goals
    (Third Quarter fiscal year 2002). At this point, a strategic
    information plan has not yet been developed. When the Agency produces
    such materials, we would be happy to share them with you.
                                      tri
        Question. To what degree has EPA increased the number of TRI
    chemical forms submitted in digital format?
        Answer. The proportion of chemical submissions received
    electronically (diskette or web-based electronic reporting) has risen
    from about 60 percent of Reporting Year 1994 submissions (received in
    1995) to 83 percent of Reporting Year 1999 submissions (received in
    2000). (Each Form R is used to report one chemical. Since 1998, a Form
    A--used to certify that a facility is not subject to Form R reporting
    for a specific toxic chemical--may be used to report multiple
    chemicals. Thus, each chemical listed on a Form A counts as an
    individual chemical submission.
        Since 1987, EPA has offered an electronic means of reporting TRI
    submissions. The Automated TRI Reporting Software (ATRS) provides a
    means of completing a Form R and/or Form A electronically, with field
    and batch level validation checks. A reporting facility can submit via
    a diskette to both EPA and more than 40 states. Beginning last
    reporting year (Reporting Year 1999), the TRI program co-sponsored a
    web-based electronic reporting pilot with EPA's Office of Information
    Collection. The pilot provided the TRI reporting community with the
    option to complete their Form R and/or Form A submission(s) with the
    ATRS software, and then transmit their submission(s) via the internet.
    About 90 facilities participated, reporting more than 600 chemicals.
        For Reporting Year 2000, EPA continues to encourage electronic
    reporting with two new options. The first is the Toxics Release
    Inventory-Made Easy Software (TRI-ME). TRI-ME is an interactive,
    intelligent, user-friendly software tool that guides facilities through
    the TRI reporting experience. Like ATRS, TRI-ME submissions can be sent
    to EPA on diskettes. The second is an expanded version of the web-based
    reporting pilot from last year; several thousand facilities have been
    invited to participate in web-based reporting this year, using either
    ATRS or TRI-ME. Additionally, some facilities that participated in last
    year's web-based electronic reporting pilot were given the option to
    digitally sign their submission(s) to EPA. This eliminates the need to
    separately mail a diskette and a signed certification statement to EPA.
        The TRI Program plans to continue to expand and enhance electronic
    reporting to reduce facility's reporting burden, improve data quality,
    and speed publication of the TRI data.
        Question. How does the technical information contained in the TRI
    database provide local families and communities with the actual risk
    they may face to their health?
        Answer. TRI data, together with other data, can provide a valuable
    starting point in evaluating risk. However, the information contained
    in the TRI database alone is not sufficient to determine potential
    adverse effects on human health and the environment. The determination
    of potential risk depends upon many factors, including the toxicity of
    the chemical, the fate of the chemical after it is released, the
    locality of the release, and the populations that are exposed to the
    chemical after its release. Information on releases and other waste
    management activities of toxic chemicals from the TRI database is an
    important resource for determining the potential chemical exposure; as
    it provides local communities with information on the quantities
    released to the various environmental media in their communities.
        Question. Does the TRI database provide local communities with a
    determination of whether it is safe to live in their communities?
        Answer. The TRI database alone does not provide local communities
    with a determination of whether it is safe to live in their
    communities. TRI data, in conjunction with other information, can be
    used as a starting point in evaluating exposures that may result from
    releases and other waste management activities of toxic chemicals. The
    determination of potential risk depends upon many factors, including
    the toxicity of the chemical, the fate of the chemical after it is
    released, the locality of the release, and the populations that are
    exposed to the chemical after its release. As you may be aware, EPCRA
    section 313(h) states that the purpose of the information collected is
    to ``. . . provide information to the Federal, State, and local
    governments and the public, including citizens of communities
    surrounding covered facilities'' and ``. . . to inform persons about
    releases of toxic chemicals to the environment; to assist government
    agencies, researchers, and other persons in the conduct of research and
    data gathering, to aid in the development of appropriate regulations,
    guidelines, and standards; and for other similar purposes.''
        Question. Does the TRI database provide local communities with a
    description of the degree to which their health is hurt by living in
    their communities?
        Answer. TRI reports reflect releases and other waste management
    activities of chemicals, not exposures of the public to those
    chemicals. TRI data, in conjunction with other information, can be used
    as a starting point in evaluating health impacts associated with local
    conditions.
        Question. Does the TRI database provide local communities with a
    description of the degree to which their health is affected by local
    industry use of chemicals which are not released into the surrounding
    community ?
        Answer. TRI reports reflect releases and other waste management
    activities of chemicals, not exposures of the public to those
    chemicals. The use of chemicals by a facility determines whether the
    facility must report. Facilities in the specified industries that have
    the equivalent of 10 or more full-time employees and meet established
    thresholds for manufacturing, processing, or otherwise use of listed
    chemicals must report their releases and other waste management
    quantities (including quantities transferred off-site for further waste
    management).
        Question. How is EPA determining whether noncompliance with TRI
    provisions may be a widespread unawareness or misunderstanding of the
    requirements before taking enforcement action?
        Answer. EPA looks at several factors when examining noncompliance
    with TRI provisions before taking an enforcement action:
        1. Fair notice given to the regulated community: the amount and
    types of EPA outreach and compliance assistance including printed
    material distributed to regulated entities, free workshops provided by
    EPA Regional Offices, guidance documents on the EPA website, including
    questions and answers on specific chemicals required to be reported.
        2. The clarity of the instructions in the TRI reporting forms: EPA
    guidance as to what is required to be reported and how to calculate
    emissions for the TRI reporting.
        3. The commencement date of the reporting requirements: chemicals
    which were required to be reported for many years are more likely to
    trigger an enforcement response than chemicals that have recently been
    added to the TRI.
        4. The magnitude of the violations: EPA considers the amount and
    types of toxic chemicals that have not been reported to the TRI when
    considering an enforcement response.
        5. The possible reasons for noncompliance: EPA examines the
    noncompliance rates for various chemicals and tries to determine the
    underlying reasons for high non-compliance rates.
        6. The use of EPA compliance incentive policies to encourage
    companies to examine their compliance. Two such policies, ``Incentives
    for Self-Policing: Discovery, Disclosure, Correction and Prevention of
    Violations'' (Audit Policy), and ``Policy on Compliance Incentives for
    Small Businesses'' (Small Business Policy), provide incentives to
    conduct environmental audits by substantially reducing or eliminating
    penalties for entities that voluntarily discover, disclose,
    expeditiously correct and prevent violations of federal law.
        Question. What is the status of EPA's incorporation of the recent
    National Mining Association (NMA) v. EPA decision into its reporting
    obligations for the mining industry?
        Answer. EPA posted on its website a summary of the decision and a
    copy of the response letter sent to counsel for NMA, explaining the
    Agency's position on the extent and effect of the Court's Order. In a
    June 14, 2001 letter, and a June 28, 2001 letter to counsel for NMA,
    EPA explained that mining facilities currently have a statutory
    obligation to determine whether they exceed reporting thresholds, in
    compliance with the requirements of EPCRA section 313 and consistent
    with the court's decision.
        As a consequence of the NMA decision, the Agency is considering a
    rulemaking to clarify the status of mining extraction and beneficiation
    activities.
        Question. How will the reporting requirements for 2000 include the
    court's ruling that mining extraction and benefication are not
    ``processed'' under EPCRA?
        Answer. The Court in NMA ruled only on a very narrow issue-
    specifically, the Court overturned the interpretation adopted in the
    1997 rule, that the extraction and beneficiation of naturally-
    occurring, undisturbed ores is ``processing,'' on the grounds that
    these ores had not been ``manufactured'' within the meaning of EPCRA
    section 313. As a result of this decision, EPA is not requiring mining
    facilities to report based on the interpretation adopted in the 1997
    rule.
        Mining facilities currently have a statutory obligation to
    determine whether they exceed reporting thresholds, in compliance with
    the requirements of EPCRA section 313 and consistent with the court's
    decision.
        Question. Will EPA require industry to include, in their
    calculations of the amount of toxic chemical that are processed or
    manufactured at mining facilities, toxic chemicals that are present in
    ores during extraction and beneficiation?
        Answer. Mining facilities currently have a statutory obligation to
    determine whether they exceed reporting thresholds, in compliance with
    the requirements of EPCRA section 313 and consistent with the court's
    decision. In addition, under current requirements, if a facility
    exceeds a threshold for a chemical at that facility, it must report on
    all non-exempt releases of the chemical that occur at the facility.
    This requirement was not addressed by the Court's decision in NMA.
    Further, the Court explicitly declined to reach the question of whether
    manufacturing that occurs during the course of extraction and
    beneficiation is an EPCRA section 313 threshold activity. As a
    consequence of the NMA decision, the Agency is considering a rulemaking
    to clarify the status of mining extraction and beneficiation
    activities.
                                hwir rulemaking
        Question. What is the status of EPA efforts to identify additional
    targeted exemptions to the Hazardous Waste Identification Rule (HWIR)?
        Answer. EPA is currently developing two proposed rules that are
    related to targeted exemptions to the definition of hazardous waste.
    Both proposals are expected to be signed within the next year.
        The first proposal is an expansion of the current ``headworks''
    exemption for solvents destined for wastewater treatment. It will
    address: (1) possibly exempting the four solvents (benzene, 2-
    ethoxyethanol, 2-nitropropane, and 1,1,2-trichloroethane) that were
    added to the solvents listing in 1986, but not added to the exemption,
    and (2) possibly allowing the alternative of direct monitoring to
    demonstrate compliance with the exemption (as opposed to requiring a
    mass balance be performed).
        The second proposal is a new conditional exemption for certain
    slagged combustion wastes. Wastes that have been slagged to
    liquefaction (typically at temperatures above 2100 deg. F) are presumed
    to have all hazardous organic chemicals eliminated. The proposal will
    address the presence of metals in such wastes.
        In addition, we have also started work on scoping analyses for four
    possible additional exemptions, using readily available data: (1)
    biological treatment residues exemption, (2) scrubber water combustion
    residue exemption, (3) exemption for leachate managed in a wastewater
    treatment unit, and (4) expanding the current de minimis exemption.
    Depending on what our preliminary analyses reveal, and on available
    resources, we may develop additional proposals in the 2002/2003 time
    frame.
        Question. How will the Agency proceed, including working with
    stakeholders, in the exploration and development of additional
    Hazardous Waste Identification Rule (HWIR) exemptions?
        Answer. EPA has met several times with industry representatives to
    better understand their perspective on the burdens imposed by hazardous
    waste identification and how best to address that burden, and we will
    continue this dialogue. We have invited states to participate in our
    rulemaking workgroup discussions, and plan to continue working closely
    with states to address implementation issues. We have also notified
    waste management industry and environmental groups about our
    rulemakings, and will encourage broader participation by these groups
    as the proposals progress.
                                   snap rule
        Question. What is the status of EPA's proposed rule to further
    restrict the use of hydrofluorocarbons in the manufacture of foam
    products? When will EPA finalize this rule?
        Answer. The July 2000 proposed rule generated a broad range of
    comments and viewpoints on the feasibility of EPA's proposed
    restrictions and on the availability of non-ozone depleting
    alternatives for the various end-uses within the foam industry. To
    reliably assess the factual basis of these comments, the Agency
    commissioned an extensive analysis of the foams industry and the
    technical and economic constraints faced by the various components of
    the industry, including chemical and equipment manufacturers, chemical
    formulators, and foam manufacturers and applicators. EPA also met with
    various industry representatives and received additional technical
    information to fill other information gaps identified in the original
    comments.
        In May 2001, EPA published a Notice of Data Availability in the
    Federal Register (66 FR 28408) to provide the public with an
    opportunity to review all of the additional information collected by
    the Agency since the end of the comment period. Comments on this
    additional information are now being reviewed and the Agency hopes to
    issue a final rulemaking by the end of this year that will take account
    of all comments and information received since the proposal.
        Question. How could EPA split the rule to move forward with the
    original purpose of the rule to regulate HCFCs without accelerating the
    existing phase-out schedule of current substitutes?
        Answer. The purpose of the proposed rule is to implement Section
    612 of the Clean Air Act and facilitate the transition away from ozone-
    depleting chemicals in instances where safe and effective alternatives
    are available.
        In developing the final rule, the Agency will consider, based on
    comments received and available information, whether the proposed
    restrictions on HCFC use in the various foam end-uses are appropriate.
    The final rulemaking may be divided into two or more components in the
    event that some portions of the rule requires additional data
    generation.
        EPA is reviewing the data collected to determine if there is
    sufficient information to issue a final rulemaking that will adequately
    address the range of issues confronting the industry. EPA has, and will
    continue to, investigate the best way to implement its statutory
    authority while providing clear and equitable direction to the affected
    industry.
                             workforce development
        Question. How will EPA ensure that it has the right mix of skills,
    experience, talent and motivation in its workforce that it will need as
    it moves away from its traditional federal command, control, and
    enforcement approach to a more cooperative relationship with states and
    others?
        Answer. EPA's efforts to meet what has been called the ``Federal
    human resources crisis'' has led to the development of Investing in Our
    People, EPA's Strategy for Human Capital 2001 through 2003. This
    strategy represents a comprehensive approach to the effective
    management of the Agency's human resources, with programs in areas
    ranging from family-friendly initiatives, developmental activities, and
    empowering human resources information systems. Part of the strategy is
    EPA's Workforce Assessment Project (WAP) which serves as a foundation
    for the Agency's workforce planning efforts. The WAP identifies the
    critical cross-cutting competencies that all employees need today and
    out to the year 2020 and serves as the first step for improving the
    effectiveness of its workforce and finding the best way to achieve the
    President's desire to ``make Government more responsive to the needs of
    citizens, more efficient, and more accountable.''
        EPA offices already employ a number of methods to develop the
    skills its workforce needs. These include: mentoring programs;
    rotational assignments or ``job swap'' programs that often include
    cross-media training and experience; Individual Development Plans; and
    hiring through the Student Career Experience Program, and the EPA
    Intern Program. Finally, many offices use Intergovernmental Personnel
    Act (IPA) assignments that enable EPA employees to gain skills by
    serving in state or local governments or universities, as well as
    enable the Agency to acquire critical skills by bringing in external
    expertise for a specified period.
        Workforce planning is a fundamental strategy to improve EPA's human
    capital. We are currently working with the Administration, particularly
    the Office of Management and Budget, to assess EPA's workforce, and
    restructure as appropriate. We will give full attention to these issues
    in the fiscal year 2003 President's Budget.
        Question. How will EPA address the potential impending retirement
    of a significant percentage of its SES workforce?
        Answer. EPA is concerned about the large number of senior leaders
    who are eligible to retire over the next several years. To prepare for
    this potential turnover, EPA has designed and is about to implement, a
    Senior Executive Service Candidate Development Program (SES CDP). This
    program will provide the process and structure for EPA to select a
    number of high potential GS-14 & 15 employees and provide them a series
    of developmental experiences that will help them build their skills and
    competencies in the core executive qualifications required of senior
    leaders.
        This program has been approved by the Office of Personnel
    Management (OPM) and EPA anticipates selecting approximately 50
    candidates in January 2002. Candidates will go through a developmental
    process that will last up to 18 months. Those who successfully complete
    their development will be recommended by EPA's Executive Review Board
    to the OPM's Qualifications Review Board for certification for non-
    competitive appointment into SES positions. This program will provide a
    well-qualified and motivated pool of senior leaders who can replace
    those who will be retiring over the next several years.
        Question. How will EPA establish a sound credible employee
    development program for all sectors of the Agency's workforce? How will
    you measure improved productivity or other results from these programs?
        Answer. In 1997, EPA initiated the Workforce Development Strategy
    (WDS). This strategy provides a comprehensive approach to help all
    Agency employees develop the skills and competencies required to
    achieve EPA's mission. The WDS has several components: (1) Workforce
    Assessment (completed in 1999) to identify the critical cross-cutting
    competencies that all employees need today and out to the year 2020;
    (2) Workforce Planning Initiative (just beginning) to develop a
    standardized methodology that will provide a basis for strategic
    recruitment, retention and development; (3) EPA Intern Program
    (operational) is a comprehensive, entry level, permanent employment and
    career development program designed to recruit and nurture the next
    generation of EPA leaders; (4) New Skills/New Options (being
    implemented this fall) is designed to help employees in administrative
    job series learn the skills and develop the competencies necessary to
    improve their performance and link them to the mission of their
    organizations; (5) Mid-Level Development Program (in implementation
    stage now) provides a curriculum addressing the cross-cutting skill
    sets that virtually all employees need to be effective; (6) Management
    Development Program (some components are implemented, others coming on-
    line over the next several months) focuses on creating leadership
    excellence at all levels of management through tailored training
    programs, support tools and 360 degree feedback; (7) SES Candidate
    Development Program (described in response to preceding question); and
    (8) Organizational Leadership Enterprise (being implemented in several
    organizations) provides an integrated leadership approach that improves
    overall organizational performance.
        Some metrics for determining the success of the WDS include
    employee turnover rates, job satisfaction, promotions/job progression,
    number of employee complaints regarding managerial performance,
    customer satisfaction rates, length of time it takes to fill positions
    (particularly in the SES), popularity of training programs/
    developmental tools, ability to attract high-performing employees, and
    employee performance measures. All of these indicators tend to measure
    the relative ``health'' of the organization as an employer. We are also
    embarking on a project to determine success measures that relate more
    directly to mission outcomes and results. The results of this effort
    are some months away.
        Workforce planning is a fundamental strategy to improve EPA's human
    capital. We are currently working with the Administration, particularly
    the Office of Management and Budget, to assess EPA's workforce, and
    restructure as appropriate. We will give full attention to these issues
    in the fiscal year 2003 President's Budget.

                              subcommittee recess

        Senator Mikulski. And having said that, this subcommittee
    is recessed until tomorrow at 2 p.m. when we will take
    testimony from the Secretary of HUD.
        [Whereupon, at 12:23 p.m., Wednesday, June 13, the
    subcommittee was recessed, to reconvene at 2 p.m., Thursday,
    June 14.]

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2002

                                  ----------

                            THURSDAY, JUNE 14, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 2:49 p.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Barbara A. Mikulski (chairman)
    presiding.
        Present: Senators Mikulski, Kohl, Bond, and Shelby.

                  DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

    STATEMENT OF MEL MARTINEZ, SECRETARY
    ACCOMPANIED BY:
            DANIEL MURPHY, CHIEF OF STAFF
            ROBERT WOODSON, DEPUTY TO THE CHIEF OF STAFF FOR POLICY AND
                PROGRAMS
            RICHARD HAUSER, GENERAL COUNSEL
            DAVE GIBBONS, DEPUTY CHIEF FINANCIAL OFFICER FOR BUDGET
            PEGGY YOUNG, SENIOR ADVISOR TO THE CHIEF FINANCIAL OFFICER
            OSCAR ANDERSON, SPECIAL ASSISTANT TO THE SECRETARY FOR
                LEGISLATION
            CHRISTOPHER BOESEN, SPECIAL ASSISTANT, OFFICE OF LEGISLATION
            NANCY SEGERDAHL, PRESS SECRETARY/SENIOR COMMUNICATIONS ADVISORS
                TO THE SECRETARY
            JOHN WEICHER, ASSISTANT SECRETARY FOR HOUSING FEDERAL HOUSING
                COMMISSIONER
            SEAN CASSIDY, GENERAL DEPUTY ASSISTANT SECRETARY, OFFICE OF
                HOUSING
            MICHAEL MORAN, ASSISTANT GENERAL COUNSEL
            JEFFREY LUBELL, DIRECTOR, POLICY DEVELOPMENT DIVISION, OFFICE
                OF POLICY DEVELOPMENT AND RESEARCH

                OPENING STATEMENT OF SENATOR BARBARA A. MIKULSKI

        Senator Mikulski. The VA/HUD subcommittee of appropriations
    will come to order. This afternoon we will be taking the
    testimony of our new cabinet officer, Secretary Mel Martinez of
    Housing and Urban Development.
        First of all, this committee would like to apologize to the
    Secretary. We know that our hearing was supposed to start at
    2:00 p.m., but because of a parliamentary thicket that has
    developed on the Senate floor, we are much delayed. The
    committee apologizes to you. It is not our usual and customary
    practice certainly to keep a cabinet-level officer waiting. And
    should there be votes and someone, and we have to temporarily
    recess. We invite you to use the facilities of our offices and
    phone calls or any other conveniences you might do.
        Mr. Martinez. Thank you.
        Senator Mikulski. So Mr. Secretary, we feel embarrassed
    about this situation, but we welcome you most warmly. You have
    one of the most difficult jobs in government, providing housing
    assistance, trying to rebuild the neighborhoods, helping the
    elderly, the disabled, the homeless and all at the same time
    being fiscally responsible. We would like to--I would like to
    personally thank you for the way that we have begun with
    various issues that have come to our attention. We have found
    you most responsive and indeed quite collegial and we look
    forward to such a cordial relationship.
        Since our first conversation the gavel has changed. But I
    want you to know that Senator Bond and I share many of the same
    values and goals when it comes to housing. And in fact probably
    in this committee it has been characterized by bi-partisanship.
    But certainly, particularly those areas on housing, we are very
    much in alignment. His goals--Senator Bond's goals--on
    affordable housing, helping neighborhoods and proper fiscal
    management are my own.
        But as we begin our hearing I think with the new cabinet
    officer, I think this is the time to take stock, to look at
    HUD's core programs, and to make HUD a true partner with local
    government. I know you share my vision and I look forward to
    working with you.
        As I look at the President's budget I see areas of common
    ground and areas of concern. In the area of faith-based
    initiatives, know that I have always been consistently
    supportive of faith-based initiatives. In our very first
    meeting you shared with me your own personal story about the
    role that Catholic Charities played in your life. I noted that
    I had been a Catholic Charities social worker. I guess in some
    ways I still am on this committee.
        We want to be able to listen to the President's initiative;
    to really be able to flesh it out because in housing and urban
    development we have already had faith-based initiatives. Much
    of the housing for the elderly--my hometown of Baltimore is
    organized by the associated Jewish and Catholic charities, etc.
    The work of the homeless in particular has, I think, been a
    signature issue for faith-based activity. So we look forward to
    that.
        So we want to hear more about it and we want to know how we
    can work with the administration. We will be insistent, though,
    that any new program be constitutionally compliant. And I know
    you as both a lawyer and a citizen would want the same.
        Looking at Section 8--boy, is this a big issue for us to
    work on. Renewing Section 8 contracts continues to be our
    number one priority. Working families depend on this in the way
    of absolutely moving people from welfare to work, and to make
    sure that housing subsidies are not meant to be a way of life
    but to be a way to a better life.
        So we want to hear several things: One, how you want to use
    Section 8. The issue of returned Section 8 vouchers. And number
    three how also that the Section 8 database is more reliable and
    consistent.
        Another area, which we have already worked on, is predatory
    lending. We continue to be plagued by something called flipping
    or predatory lending. This is where through unscrupulous
    investors the poor are gouged, the taxpayer and FHA is
    defrauded, dreams are broken and opportunities are lost. I
    mean, really, we are dealing with scum; white collar crooks at
    the worst. And we want to continue our course on predatory
    lending. We want to thank you for the--Ms. Maggiano who you
    have assigned to work with predatory lending. We think in
    Baltimore we can be the laboratory for coming to a national
    solution.
        But often what happens is that there are defaults when FHA
    housing, either through predatory lending or because of poor
    counseling for first-time homeowners. And then neighborhoods
    are left with something called HUD houses. And instead of being
    a great name, instead of it being something that everybody
    would want to buy, it becomes a vacant house that is often the
    very reason that neighborhoods deteriorate and destabilize. So
    we want to stop not only the predators. Also make sure that
    when people come into homeownership, they are ready for it. But
    also what are we going to do with those FHA houses?
        We also want to talk about public housing. We are
    disappointed at the administration's decision to cut $700
    million from the Public Housing Capital Fund. We want to talk
    about repair and maintenance and also about new construction.
    In the area of construction we are concerned that there has not
    been a lot of production. And Senator Bond feels very
    passionately about it, so do I and so does Senator Sarbanes.
        I am going to leave in the interest of time him to
    elaborate on his own views on the topic, but know that they are
    really parallel views. And I hope we can work with Senator
    Bond, Senator Sarbanes, Senator Gramm, of course, but we three
    are the ones that really have a great passion on this area.
        In the area of elderly housing, we know that we have to
    look at new ways to meet the aging population. We note that it
    is only a $6 million increase in elderly housing and we would
    like to know how you are going to meet the increased demand on
    this.
        In the area of the digital divide, we note with enthusiasm
    your desire to create seven hundred computer learning centers.
    We really believe that these could be tools. E-villages in
    communities now riddled with despair could really be workforce
    readiness for adults in getting their kids ready for the
    future.
        Also, one of the other areas that I want to discuss is the
    FHA multi-family loan limits. One possible way to create more
    housing is to raise the loan limits for FHA multi-family loans.
    I noted it in your testimony. People from the home builders and
    the mortgage bankers have already discussed this with me. So we
    are interested in what you think would be a prudent way to do
    this. But I recall that in 1986 when we passed yet another tax
    bill, they cautioned us that the change in the tax rules, and
    now the FHA limits that have not been raised in a number of
    years really has had a chilling effect in the creation of new
    multi-family private sector dwellings. And we would like to
    know your views on this.
        So we have a lot to talk about, which is essentially
    though, how we can empower poor people that the subsidies we
    provide today are a way to a better life; a way to a life of
    self-sufficiency and economic empowerment. And with that I am
    going to conclude my statement and turn to Senator Bond.

                    STATEMENT OF SENATOR CHRISTOPHER S. BOND

        Senator Bond. Thank you very much Madame Chair. With the
    usual timing, the Senate apparently is going into a vote now,
    which goes----
        Senator Mikulski. Let's see. Let's just see.
        Senator Bond [continuing]. Which goes to prove my basic
    belief that Murphy's Law was unduly optimistic when it comes to
    scheduling the Senate. But I thank you Madame Chair and I join
    you in welcoming and apologizing to HUD Secretary Martinez to
    testify on HUD's budget for fiscal year 2002.
        Senator Mikulski. Senator Bond, I am going to excuse myself
    and ask you to come in to captain the ship. That way I can run
    and vote and come back. Other members that are here will kind
    of be able to get this train rolling.
        Senator Bond. I would be honored to do so. I like to keep
    in practice.
        Senator Mikulski. He can have the microphone, but hide
    this.
        Senator Bond. I am not going to touch it. I am not going to
    touch it. Thank you Madame Chair. As I started to say, I know
    this will be a very difficult year for the Department, but we
    really are gratified by your presence, Mel, as Secretary and
    what Chairman Mikulski has said. And I certainly echo that we
    are most impressed and gratified by your commitment to
    reforming and rebuilding HUD. Nevertheless--and this is where
    the `however' comment comes in--we are deeply concerned. I am
    concerned that HUD's budget request of $30.4 billion may
    actually be a reduction from the fiscal year 2001 funding, and
    this budget reverses the progress made in the last several
    years by Congress on a strongly bi-partisan basis and ignores a
    number of priorities related to pressing housing and community
    development needs.
        I do not place the administration's budget decisions on
    your doorstep--the ones to which I most strongly object. I know
    the delay and the transition and the fact that you did not have
    your people in place nor did you have, what I would think would
    be a reasonable time to review it. But clearly this is an OMB
    budget. Much of the work product was done by the professional
    staff who, from my perspective, may have overstayed their
    welcome. I urge you to take charge of the HUD budget process
    away from those who seem to have dismissed many of the
    congressional initiatives on which we had agreed. I will submit
    a more complete statement of my concerns for the record and we
    will go into them in questions.
        Senator Bond. First I am concerned over a number of
    proposed budget cuts in public housing which include reductions
    of some $700 million from the Public Housing Capital Fund, as
    well as a complete elimination of the Public Housing Drug
    Elimination Program, which is funded at $309 million in fiscal
    year 2001. We made considerable progress over the last several
    years in meeting the long-term capital needs of public housing,
    and I have heard from the public housing community that a
    drastic cut of this nature may interfere with financing and
    other plans--long-standing plans, which they had. I am also
    pleased that we have been able to make progress in addressing
    crime and drug abuse in public housing and I hate to see us
    give up that effort.
        Further I am concerned over the elimination of the Rural
    Housing and Economic Development Program--a very modest program
    that made a big difference in leveraging new funds for many
    distressed rural areas; something that Senator Harkin and I
    have worked on and we see a great need in rural America.
        In addition, the HUD budget for fiscal year 2002 proposes
    to set aside a $200 million, taking it out of the HOME program
    for down payment assistance. This takes away from the
    flexibility of local governments to make the determination of
    about how to assure an adequate supply of housing stock.
    Homeownership is an important goal, but limiting State and
    local decision making in the HOME program makes no sense,
    especially since downpayment assistance is already an eligible
    activity.
        Finally, program accountability and oversight are critical
    to the successful rebirth of the Department and there needs to
    be a re-emphasis on these requirements. As one example, the
    funding of empowerment zones in the HUD budget causes me real
    concern in view of recent HUD IG Reports suggesting the misuse
    of funds as well as, a lack of HUD oversight. However, the
    issue that needs to be addressed most urgently in this hearing,
    one that the Chair has already pointed out, is the Section 8
    program.
        I am a strong supporter of Section 8 project-based housing
    because it guarantees housing for low-income families in many
    tight housing market places where vouchers simply do not work.
    For example you can give somebody on a walker or maybe a
    wheelchair or crutches a voucher and tell them to go out and
    look. But if there are no places to go, that elderly person,
    that disabled person, is not going to be able to walk that far.
    And this is not only a problem for elderly and disabled
    persons, if there is no available affordable, low-income
    housing, then low-income families will be left homeless or in
    substandard housing. I remain very concerned that HUD still
    does not do enough to preserve Section 8 project-based housing
    as low-income housing when the Section 8 contracts expire. It
    is particularly troubling when we continue to lose housing for
    elderly and disabled Americans despite requirements in the
    fiscal year 2001 Act that HUD make every attempt to preserve
    this housing as low-income housing.
        I also understand that the House is seeking to rescind some
    114-plus million dollars in Section 8 assistance for fiscal
    year 2001 despite the fact that HUD must still meet rescission
    requirements of 1.8 billion from the enactment last year of the
    2001 appropriations. While HUD has been the bank over the last
    few years for upwards of some $10 billion as offsets to fund
    any number of other administration and congressional
    priorities, the simple fact of the matter is that well may have
    run dry.
        We need to ensure that families with Section 8 vouchers
    will be able to use these vouchers to obtain housing and that
    expiring Section 8 project-based contracts will be renewed. In
    other words, we should not be playing fast and loose through
    some shell game where HUD or OMB hold back critically needed
    housing funds to allow rescissions to pay for other activities
    at the expense of a poor family without housing. That is not
    acceptable. This contravenes the clear intent of Congress and
    is poor policy under any circumstances.
        Finally, as you may know, and as I think actually we may
    have discussed, and certainly the Chair mentioned it, last year
    we introduced the Housing Needs Act of 2000 to provide block
    grant funding to develop assisted housing for extremely low-
    income families as a part of mixed-income housing. We are going
    to be working on introducing similar legislation because the
    housing needs of extremely low-income families remain a
    critical need. I believe I shared with you that fact that in
    St. Louis County, Missouri when the public housing authorities
    issues housing vouchers, for every hundred they issue they know
    they are going to get fifty back because there no available
    low-income housing. The housing voucher does not do much to
    keep off the rain if there is no wood or bricks or mortar for
    families to apply it to. This is going to be an important
    debate. We look forward to working with you, discussing this
    problem and having your guidance and leadership in crafting
    responsive legislation.
        My concerns today are really about the failure of this OMB
    budget proposal to meet the housing needs of this Nation as
    well as an indictment of the last Secretary and his failure to
    put HUD on a firm footing to meet the housing needs of low and
    moderate-income families as well as the redevelopment and
    development needs of States and localities. HUD must seize the
    mantle of leadership in providing housing for American families
    and for developing and redeveloping our communities. Mr.
    Secretary I look forward to working with you on rebuilding and
    reforming HUD. It is a huge challenge but an important
    challenge. And speaking of leadership, I see now that the
    mantel of leadership is about to pass to the distinguished
    Senator from Wisconsin. It is my pleasure to turn the hearing
    over to you, Senator.

                         STATEMENT OF SENATOR HERB KOHL

        Senator Kohl. Thank you, I will have a brief statement.
    Senator Bond, I want to thank you and Senator Mikulski for
    convening this hearing. I want to welcome Secretary Martinez. I
    very much look forward to working with you. As a new member of
    this subcommittee, this is the first time I have had the
    opportunity to review the HUD budget in great detail. I have
    been fortunate to have much input from the people of Wisconsin.
    So let me say there was much disappointment in two areas and
    others which I will address later, the reduction in capital
    funds and decision to terminate the Drug Elimination Grant
    Program.
        I have heard from public housing authorities in Wisconsin
    who are deeply concerned about the proposal to cut $700 million
    in the Public Housing Capital Fund. In Milwaukee alone, there
    is a backlog of $100 million of capital needs. Although the
    administration has said there is unspent money in the Capital
    Funds pipelines, these funds have been obligated and public
    housing authorities expect to spend them as planned. The vast
    majority of Wisconsin housing authorities have spent their
    funds now in a timely fashion.
        Capital funds address critical needs such as fire
    protection systems in high-rises, replacements of roofs and new
    heating systems. We cannot allow these basic improvements to
    our public housing stock to be delayed because of a
    misunderstanding about how much capital is truly available. I
    hope the subcommittee will investigate this issue thoroughly
    and ensure there are sufficient funds to meet the basic needs
    of public housing residents.
        The Administration's proposal to terminate the Drug
    Elimination Grant Program is surprising. This program has been
    hailed for its successes and has been credited with helping to
    reduce crime in public housing developments across the Nation.
    In Wisconsin the Milwaukee Housing Authority has used its grant
    to fund public safety programs and activities for children and
    youth, including education programs. The results speak for
    themselves. In the year 2000, violent crimes in that area
    dropped by 43 percent and non-violent crimes dropped by 36
    percent. Madison has had similar successes. East Madison's
    communities centers' Positive Options Program, which is funded
    by a Drug Elimination Grant, won an award from the State of
    Wisconsin for being an outstanding and effective service. Just
    as the program is being hailed, its funding is now threatened.
        Frankly the argument that HUD should not be in the law
    enforcement business does not carry much water with me. If this
    program ensures that our public housing is safer and more
    secure then it is a program which is helping us meet the
    program needs in our community, which is after all a core
    mission of HUD.
        I thank you very much.
        Senator Bond. Senator Shelby.

                     STATEMENT OF SENATOR RICHARD C. SHELBY

        Senator Shelby. Thank you. Secretary, as you well know we
    are voting and we will probably continue to vote. If Senator
    Kohl has not voted he will vote on this.
        Secretary, the FHA multi-family credit subsidy, which you
    are very familiar with, is an important program that helps
    address some needs, the housing needs of thousands and
    thousands of American families. It seems that this program
    consistently encounters funding shortfalls. I believe that the
    Administration's decision to include 40 million in the
    supplemental appropriations bill is a sound one that will
    provide clear benefits. I guess what I am getting at is, in the
    short term, how far do you believe these funds will go to help
    to deal with the shortage of affordable housing in America? Do
    you believe additional funds will be needed to get us through
    this fiscal year 2001?
        Mr. Martinez. Senator, let me just say that I had a
    prepared statement which will be offered for the record, and I
    will spare you going through anymore prepared remarks and just
    try to deal with your questions and the obvious issues that
    have arisen in the statements from the Senators.
        The credit subsidy program is that recurrently seems to
    have shortfalls in funding. HUD began the fiscal year prior to
    my Administration with a $12.5 million deficit in that program.
    So with the appropriated funds for this current year, there was
    already a $12.5 million catch-up. So it is no surprise that
    along with that and basically a demand-driven program that it
    has run out of money again. Three or four times in the last 6
    years this occurred.
        The $40 million is an amount equal to the sum, which was
    put into the budget as an emergency appropriation, or to be
    available as an emergency. We did not think it was appropriate
    to declare an emergency when if fact what we have is a need
    program, but not an actual housing emergency as such. I would
    liken that to events like we might have had in Oakland and San
    Francisco after the earthquake a few years ago, or maybe a
    hurricane or some other natural disaster, which would trigger
    an emergency. But the fact is the grant subsidy program does
    serve a portion of the market of 80-100 percent of median
    income, which is, you know, in many respects affordable
    housing.
        Senator Shelby. In a way it creates a dynamic for others,
    doesn't it?
        Mr. Martinez. Correct. So it is a good thing. What we are
    proposing is that in addition to the $40 million subsidy, which
    we know is not enough to cover the demand, is that we do
    something that is going to put this program on a stable footing
    for years to come----
        Senator Shelby. The future.
        Mr. Martinez.--which is raise the premium of the FHA
    premium to 80 basis points which will give us an opportunity to
    fund all that is in the pipeline--certainly in the pipeline the
    40 million will do. But all that is going to be in the demand
    driven pipeline for this year and then it also allows to put it
    on a solid footing for years to come. So that, I think there is
    some benefit in the predictability that the marketplace will
    have.
        Senator Shelby. Don't builders need predictability?
        Mr. Martinez. I think they do. And I think it is something
    that is helpful----
        Senator Shelby. You cross that fine line.
        Mr. Martinez.---that you also need to be able to make the
    deal when they put the deal together. And when the program all
    of a sudden runs out of money, well, that creates tremendous
    disruption. So I believe that it is a healthy thing to put it
    on a pay-as-you-go basis. The 80 basis points that it will
    have, you know, an increase----
        Senator Shelby. How much money will that bring in? Do you
    have some numbers on that? Are you scoring that?
        Mr. Martinez. I do not have that.
        Senator Shelby. Could you do it for the record?
        Mr. Martinez. I am told it would be the equivalent of
    another $40 million, so that would be probably an $80 million
    infusion into the program which----
        Senator Shelby. Which will probably be good.
        Mr. Martinez. It would be very good. It is almost as much
    as----
        Senator Shelby. You are the Secretary. You have got a
    background on all this. You know how this works.
        Mr. Martinez. Yes, sir. It would be almost as much as was
    initially appropriated for the whole year. So we are talking
    about $80 million just to complete this year.
        Senator Shelby. Correct me if I am wrong on this. Was last
    year's $40 million set-aside in last year's appropriation, has
    that money been spent? Has it been released?
        Mr. Martinez. No.
        Senator Shelby. You are saying no.
        Mr. Martinez. No.
        Senator Shelby. What about that money? Couldn't you use
    that money in some way?
        Mr. Martinez. It would call upon me to ask the President
    that we had a housing emergency which I, in good conscience, do
    not know that we have.
        Senator Shelby. So I had to show you had one.
        Mr. Martinez. Right.
        Senator Shelby. Could you have one in this area of low-
    income and maybe not over the whole housing market?
        Mr. Martinez. I think we have housing needs. We have
    housing demand. We have housing goals and hopes. But I think
    that what happened to the people of El Salvador, who lost 20
    percent of their housing in the country because of an
    earthquake is an emergency.
        Senator Shelby. Real or immediate?
        Mr. Martinez. An immediate, urgent emergency is not what I
    see. But the raising of a premium in addition to the $40
    million I think gets us where we want to go. It is something
    that some of the industry finds onerous because it is an
    increase in their cost. But the fact of the matter is that is
    going to be predictable and is going to be stable. And for
    years to come, I think, it is going to provide a program that
    the builders out there can count on.
        Senator Shelby. The builders need predictability for the
    future.
        Mr. Martinez. And to get financing, to put deals together.
    Now one other thing we will do is--if upon review of the
    premium's charge, we find that what we are charging is more
    than should be charged--we would be inclined to reduce that
    premium based on the experience. This would be a business
    proposition. It would be a pay-as-you-go. We look at the
    premium charge and if it was too much, we would reduce it.
        Senator Shelby. Thank you. Madam Chairman, thank you.
        Senator Mikulski. You are more than welcome and I
    understand you have also had a chance to speak and ask
    questions. Senator Kohl, you as well?
        Senator Shelby. Madam Chairman, excuse me if you would. I
    have asked that my opening statement be made part of the
    record.
        Senator Mikulski. Absolutely. Without objection, so
    ordered, yes.
        Senator Kohl, have you spoken?
        Senator Kohl. I have made an opening statement and asked
    some questions.
        Senator Mikulski. Good and we are going to move on now. We
    have really kept our Secretary waiting. Why don't you go ahead
    and start on your opening statement and Senator Bond will join
    us and we all have had a chance to read your statement but we--
    --
        Mr. Martinez. I will try to summarize.
        Senator Mikulski. But we want you to have the--but you take
    whatever time. You do it whatever way you want. We really are
    apologetic for this afternoon.
        Mr. Martinez. Madam Chair, you are very kind and I am
    delighted to be before you. I noticed that swing of the gavel
    since I began my tenure as Secretary. But let me tell you that
    I value bi-partisanship that seems to reign in this Committee.
    I believe as it relates to housing and urban development and
    the needs of the people of America who are served by HUD, we do
    need to approach it on a bi-partisan basis. So in that same
    spirit, I look forward to working with you as Chair of the
    Committee try to do some things that I know we share as goals
    for the people of our country.
        We at the Department of HUD face great challenges as we
    work to improve the Nation's housing and expand opportunities
    for America's families. President Bush and I are committed to
    restoring the confidence of the Congress and the American
    people in the operation of this agency. Our fiscal year 2002
    budget is a first step for restoring that confidence.
        Let me say at the start that even though we are focused
    today on the budget, our ultimate success will not be measured
    by how much money we spend. I want this Department to be judged
    on the numbers that are far more important which is how many
    families get a chance to buy their first home and how many
    children grow up in the kinds of neighborhoods we would all
    want our children growing up in.
        The Administration has set that the overall growth of
    Federal discretionary spending at 4 percent, a level that is
    responsible and appropriate. But the President recognizes this
    Department's mission of improving housing and community
    development opportunities brings with it a special set of
    obligations. That is why the Department of Housing and Urban
    Development's proposed budget increases by nearly 7 percent for
    fiscal year 2002.
        I am very pleased that the President has made increasing
    home ownership and the freedom that comes with it, a top
    priority of his Administration. Home ownership plays a vital
    role in creating strong communities by giving families a stake
    in their neighborhoods while helping them to build wealth. And
    yet even though almost 70 percent of all families in America
    have realized the dream of home ownership, minorities and low-
    income families lag far behind. That must change and this
    Department is firmly committed to reducing that gap in home
    ownership.
        The cost of down payments remains the single, biggest
    barrier to home ownership. The American Dream Down Payment Fund
    provides $200 million in matching assistance to help more than
    130,000 low-income families purchase a home. I am also happy to
    announce that Section 8 voucher holders will now be able to use
    up to 1 year's worth of assistance towards a down payment on a
    home because of the good work of Congress in passing the
    American Homeownership and Economic Opportunity Act. We now at
    HUD are implementing the function of that Act, and we will see
    families being able to accumulate those Section 8 vouchers
    towards homeownership.
        Another of our proposals is the $1.7 billion Renewing the
    Dream tax credit that will support the rehabilitation or new
    construction of some 100,000 homes for purchase in low-income
    neighborhoods. A fourth initiative will expand access to home
    ownership by reducing payments in a first years of a mortgage.
    Each of these efforts will compliment HUD's existing home
    ownership programs.
        Of course we recognize that homeownership is not an option
    for everyone. Today more than four million households rely on a
    variety of HUD programs to help them with their high cost of
    rental housing. This budget preserves and expands our
    commitment to every American seeking the freedom to live in
    decent and affordable housing.
        I want to specifically note the President's proposal to
    increase the limits for FHA multifamily insurance by 25
    percent. We need to spur to the construction and rehabilitation
    of affordable rental housing in high-cost areas and increasing
    the limits is a critical step in that direction. Building
    stronger communities means helping low-income families increase
    their skills and earnings. Helping families become self-
    sufficient is also part of it.
        The Community Technology Centers, which the Chair spoke of,
    delivers on both counts. For fiscal year 2002, HUD will provide
    $80 million in competitive grants to help communities create or
    expand Computer Technology Centers in low-income areas.
        Unfortunately, too many Americans looking for a home
    instead find themselves victimized by housing discrimination
    and outright fraud. The people of HUD are committed to
    vigorously enforcing our fair housing laws to help ensure that
    all Americans have equal access to rental housing and home
    ownership opportunities. For the fiscal year, the Department
    plans to increase by 16 percent over current levels the amount
    of funding available for fair housing enforcement and
    educational activities.
        We are also taking additional steps to crack down on
    predatory lending. For example the abusive practice of property
    flipping that destroys neighborhoods and the dreams of American
    families. We intend to eliminate this practice as far as HUD is
    concerned by denying FHA insurance to properties resold within
    a certain period of time.
        I know this is of great concern to the Chairwoman in her
    hometown of Baltimore. HUD has taken a number of positive steps
    to combat flipping and predatory lending. We have helped
    assemble a local predatory lending task force with local and
    State organizations to address flipping in the FHA single
    family program. I assigned several senior HUD staff to this
    particular task force. We were pleased to provide an update of
    the recent activities of the task force at last month's field
    hearing in Baltimore. Our efforts in Baltimore should act as a
    testing ground for nationwide reform.
        I have not touched on many of our other notable efforts.
    Among them are work to improve the quality of life with the
    elderly, assist those with disabilities, reduce lead based
    paint hazards and aid the homeless. Perhaps we will have a
    chance to discuss some of those as your questions direct.
        As you know last year's HUD budget increased by 16 percent.
    I do not believe we can continue that rate of growth. If we
    did, our budget would be over $180 billion by the year 2010.
    While most of our programs are being funded at last year's
    record-high level or even slightly higher levels, I will
    mention two important reductions, and these have already been
    mentioned. The budget provides nearly $2.3 billion for the
    Public Housing Capital Fund. Let me make this clear. The
    Capital Fund will still have over half a year's funding in
    reserve to address any backlog needs. This budget funds 100
    percent of the money necessary to cover the modernization and
    maintenance needs for fiscal year 2002. The PHAs have over $8
    billion in backlog funding if you include those funds already
    released for the year 2001.
        So what I am saying basically--and Senator Kohl very
    specifically to your concerns--is that there will not be any of
    these encumbered expenses for maintenance and modernization
    that any housing authority would have in the pipeline or would
    even conceive in doing in this coming year that will be
    hampered by this reduction in the funding, given the $8 billion
    backlog that currently exists, much of which is an unencumbered
    or unasked for funds at this time.
        HUD has also proposed terminating the Public Housing Drug
    Elimination Program. While a well-intentioned effort, it
    suffers from a large number of abuses. This effort also
    duplicated the efforts of many other cabinet departments and
    required the Department of Housing and Urban Development to
    take on a law enforcement role that I believe to be clearly
    outside our core mission.
        I have met with Attorney General Ashcroft to determine how
    Federal law enforcement resources can be best utilized to fight
    crime in public housing authorities. I also believe, and if I
    can expand on this a moment, that I am greatly concerned about
    the abdication of responsibility for law enforcement and
    housing authorities by local law enforcement. I believe that
    the Drug Elimination Program, while it has had successes in
    some instances, in many instances, it has not. It has been
    devoted to additional cops on the beat in public housing
    authorities or lighting or issues like this. It has very often
    been used for things far afield from fighting drugs.
         The fact is that these people that live in housing
    authorities are not outside the scope and the responsibility of
    local law enforcement. They are also not beyond the scope and
    responsibilities that the Federal Government has in all its
    other grant programs and other programs that are available.
        So my hope is that we can bring the housing authorities
    into the mainstream of opportunities that exist with $19
    billion of drug monies that are available from this year's
    budget alone and that we can have a more sensible program that
    is geared toward law enforcement administered by those who are
    accustomed to administering law enforcement grants through the
    Justice Department, which I think in the end will have a
    beneficiary effect and get us to a better place in terms of our
    drug elimination issues.
        A $150 million of what was budgeted last year for this
    program will continue to go to the housing authorities as part
    of the at-large grants or general grants they could utilize for
    these programs if they so chose. My hope is that they would be
    focused on good programs, on sincere honest efforts to
    eliminate drugs, but not on some of the other things we have
    seen utilized in the past, and which we think go really far
    afield from the goal of drug fighting.

                               prepared statement

        I have often spoken candidly about the need to resolve
    HUD's serious management challenges. Throughout the years,
    Congress has repeatedly told the Department to improve its
    management and restore its focus--in other words, get its own
    house in order. This Administration is listening and we have
    dedicated ourselves during this first year to riding the ship
    of state. As we seek to fulfill our mission this Department is
    committed to continuing a strong relationship with the Congress
    so that together we can make the Department of Housing and
    Urban Development an efficient and effective fighter on behalf
    of America's housing and community development needs.
        Thank you very much.
        Senator Mikulski. Thank you, Mr. Secretary. And it's quite
    an agenda we have to work on.
        [The statement follows:]

                       Prepared Statement of Mel Martinez

        Chairwoman Mikulski, Ranking Member Bond and distinguished Members
    of the Committee, thank you for this opportunity to discuss the
    Department of Housing and Urban Development's budget for fiscal year
    2002.
        The Department of Housing and Urban Development faces a big
    challenge in the coming years as we find ways to improve housing and
    expand opportunities for families seeking to improve their quality of
    life. President Bush and I are committed to restoring the confidence of
    the Congress and the American people in the operation of this Agency.
        Our fiscal year 2002 budget is the first step toward restoring that
    confidence. This is a compassionate and responsible budget that will
    allow us to serve people more effectively and empower individuals and
    communities across the Nation.
        This Department's success will not be measured by how much money we
    spend, but by how many families get the chance to buy their first house
    and by how many children get the chance to grow up in the kind of
    neighborhood we all want to live in.
        The Administration has set the overall growth for Federal spending
    at 4 percent. This is a responsible and appropriate level. But the
    President also recognizes that this Department has a special obligation
    to help fulfill this Nation's housing and community development needs.
        That is why the Department of Housing and Urban Development's
    proposed budget increases nearly 7 percent for fiscal year 2002. This
    will allow the Department to meet its priorities in improving housing
    and community development opportunities for American families. This
    budget will help low-income families become home owners, increase the
    amount of affordable rental housing, help low-income individuals build
    the skills they need to compete in the modern workplace, support
    community development, meet the needs of special populations, strongly
    enforce our fair-housing laws, and provide the adequate resources to
    improve the management of the Department.
               helping low-income families achieve homeownership
        Housing--particularly homeownership--is at the heart of that
    mission. President Bush has made increasing homeownership--especially
    for low-income families and minorities--a top priority of his
    Administration.
        Homeownership plays a vital role in creating strong communities by
    giving families a stake in their neighborhoods and helping them to
    build wealth. Although a period of sustained economic growth has helped
    to raise the overall homeownership rate to a record level, the
    homeownership rates of minorities and low-income families lag far
    behind those of other families.
        The most recent data show that the homeownership rate for Hispanic
    and African American households is under 50 percent. By contrast, the
    homeownership rate for the Nation as a whole is 67 percent. This
    Department is firmly committed to reducing this gap by increasing the
    homeownership rates of minority households.
        The data indicate that homeownership rates are also lagging in
    central cities (51.4 percent) and among households with incomes below
    the area median (51.5 percent). Since minority households are more
    likely to fall into these categories, it is clear that their
    homeownership rates can be raised by improving access to homeownership
    in central cities and among low-income families.
        For fiscal year 2002, the Bush Administration has proposed a number
    of new or expanded initiatives to improve homeownership rates among
    low-income and minority families. Since the biggest single obstacle to
    homeownership is the inability to afford a downpayment on a home, two
    of the initiatives--the American Dream Downpayment Fund and the Section
    8 Homeownership program--focus directly on overcoming this obstacle. A
    third initiative--the Single-Family Housing Tax Credit--will subsidize
    the costs of homes that are rehabilitated or newly constructed for
    purchase by low-income households, while a fourth initiative--FHA's
    Hybrid Adjustable Rate Mortgage--will expand access to homeownership by
    reducing mortgage payments in the initial years of a mortgage.
        The American Dream Downpayment Fund will provide $200 million
    within the HOME program to match downpayment assistance provided by
    third parties. This proposal will help 130,000 low-income families
    overcome the biggest obstacle to homeownership--putting together a
    downpayment.
        Another proposal that will help families own their own homes is the
    expansion of the use of Section 8 vouchers for homeownership. Under
    soon-to-be-published regulations, voucher-holders will be able to use
    up to one year's worth of Section 8 assistance for the downpayment on a
    home. HUD expects this program to be of use to existing voucher holders
    who can afford the ongoing costs of a mortgage, but who do not have
    enough savings to cover a downpayment.
        Based on legislation enacted in the last Congress, HUD is also
    implementing an alternative approach to Section 8 homeownership under
    which the voucher can subsidize ongoing homeownership costs. As part of
    a pilot program to accommodate the needs of disabled households, HUD
    will apply higher income eligibility limits to these households.
        A third proposal--the Single-Family Housing Tax Credit--is a $1.7
    billion tax credit that will support the rehabilitation or new
    construction of an estimated 100,000 homes for purchase in low-income
    neighborhoods over a 5-year period. The program will subsidize up to 50
    percent of project costs and benefit low-income families.
        In addition to working closely with the Department of Treasury in
    designing this tax credit, HUD will conduct a thorough review of
    policies and regulations that may constitute a barrier to the
    development of affordable single-family homes and consider ways to
    streamline the development process.
        For fiscal year 2002, HUD seeks authority to allow the Federal
    Housing Administration (FHA) to offer families a hybrid adjustable-rate
    mortgage. These mortgages reduce the initial homeownership costs by
    combining a low fixed rate in the early years of the mortgage with a
    rate that adjusts with the market thereafter. HUD estimates that the
    introduction of hybrid adjustable rate mortgages will allow FHA to
    provide mortgages to an additional 40,000 families in fiscal year 2002.
    It also will yield additional income of $99 million for the FHA and $13
    million for the Government National Mortgage Association (Ginnie Mae).
        These initiatives will complement HUD's existing homeownership
    programs. The main HUD programs that help families achieve
    homeownership are the HOME Investment Partnerships Program (HOME), the
    FHA Mortgage Insurance and the Community Development Block Grant (CDBG)
    program. HUD also works to expand homeownership opportunities through
    the efforts of Ginnie Mae, programs for Native American Communities,
    the Self-Help Opportunities Program (SHOP), Housing Counseling and
    oversight of the Government Sponsored Enterprises (GSEs)--Fannie Mae
    and Freddie Mac.
        In fiscal year 2002, HUD will provide $1.796 billion in total HOME
    funding, the same as in fiscal year 2001. HOME is a flexible block
    grant that provides support for local affordable housing efforts. Funds
    are allocated directly to large cities, counties, or consortia of
    smaller areas (known as ``participating jurisdictions'') and to states
    for distribution to other cities and towns. There are currently 594
    participating jurisdictions, although that figure is expected to rise
    in fiscal year 2002.
        Recipients of HOME funds have substantial discretion to determine
    how the funds are spent. To date, approximately 45 percent of HOME
    funds have been spent on assistance to homeowners and new homebuyers,
    with the balance going to activities that help make rental housing
    affordable. HOME funds can be used to expand access to homeownership by
    subsidizing downpayment and closing costs, as well as the costs of
    acquisition, rehabilitation, and new construction. To date, HOME
    grantees have committed funds to provide homeownership assistance to
    more than 320,000 low-income households.
        In fiscal year 2001, the HOME program received a substantial
    increase of nearly $200 million (12 percent) over the prior year's
    level. For fiscal year 2002, HUD will dedicate this money to the
    American Dream Downpayment Fund, described above, which is funded as a
    set-aside within HOME.
        FHA insurance continues to be one of the Nation's principal tools
    for increasing homeownership for moderate-income and first-time
    homebuyers. FHA insurance helps make homeownership affordable for
    families who may not qualify for conventional mortgages.
        FHA offers a range of different insurance products. In fiscal year
    2002, an estimated 1.15 million families will finance their homes
    through FHA's Mutual Mortgage Insurance Fund. Other FHA homeownership
    products include insurance for rehabilitation loans, condominiums,
    energy-efficiency loans, and reverse mortgages for elderly homeowners.
    In addition, FHA provides mortgage insurance for multi-family
    developments and health-care facilities.
        Many of FHA's single-family programs operate at a surplus, which
    means that income from premiums is more than enough to cover expected
    losses from defaults. For example, new mortgages insured by the Mutual
    Mortgage Insurance Fund in 2002 are expected to generate $2.5 billion
    over the life of the loan.
        In fiscal year 2002, FHA plans to make a number of programmatic
    reforms to strengthen its financial position. For example, to address
    losses in the General Insurance and Special Risk portfolios, FHA will
    raise premiums and review its underwriting criteria in a number of the
    programs in these portfolios. This will reduce the amount of credit
    subsidy required to support these programs from $101 million in fiscal
    year 2001 to $15 million in fiscal year 2002.
        Ginnie Mae helps to ensure the availability of mortgage funds for
    low- and moderate-income families served by FHA and other Federal
    government programs. Ginnie Mae guarantees securities backed by pools
    of mortgages insured by FHA or guaranteed by the Rural Housing Service
    (RHS) or the Department of Veterans Affairs. Through this guarantee,
    Ginnie Mae has helped to finance homeownership opportunities for more
    than 24 million families.
        Ginnie Mae operates a Targeted Lending Initiative in which the
    guarantee fees it charges lenders are reduced for mortgages in any of
    the Nation's 72 Empowerment Zones, Enterprise Communities, and adjacent
    eligible central city areas. Since its inception in 1996, this
    incentive has led to over $11 billion to finance more than 121,000
    loans in central cities.
        The Department's fiscal year 2002 budget also has three programs
    that are specifically designed to help promote homeownership among
    Native American communities.
        First, the Indian Housing Block Grant provides tribes or tribally
    designated housing entities with a flexible source of funding for
    affordable housing and related activities. As provided in the Native
    American Housing Assistance and Self Determination Act (NAHASDA), block
    grant funds may be used for a wide range of homeownership and rental
    activities. The fiscal year 2002 budget provides $649 million, the same
    level as enacted in fiscal year 2001.
        Second, the Title VI Federal Guarantees for Tribal Housing
    Activities provides loan guarantees for Indian Housing Block Grant
    recipients who need additional funds to engage in affordable housing
    activities, but who are unable to borrow from other sources without the
    guarantee of payment by the Federal Government. The fiscal year 2002
    budget provides $6 million in funds set aside within the Indian Housing
    Block Grant Program as a credit subsidy to guarantee $53 million in
    private sector loans.
        Third, the Indian Home Loan Guarantee Program (Section 184) helps
    Native Americans to access private mortgage financing for the purchase,
    construction, or rehabilitation of single-family homes by providing
    loan guarantees to lenders. The fiscal year 2002 budget provides
    continued funding of $6 million in credit subsidies to guarantee a
    total of $234 million of such loans.
        To support its homeownership programs for Native American
    communities, HUD will again provide $2 million to the Native American
    Indian Housing Council which delivers technical assistance and training
    to tribally designated entities, conducts research, and provides
    information on Indian housing and economic development issues.
        In addition to the programs discussed above, the fiscal year 2002
    budget includes funding for a number of other programs that help
    families achieve homeownership.
        One such program is Housing Counseling, which provides
    comprehensive housing counseling services, including pre-purchase,
    default, and renter counseling to eligible homeowners and tenants. By
    educating families on the homeownership process and the
    responsibilities and benefits of homeownership, Housing Counseling
    helps to expand homeownership opportunities. For fiscal year 2002, HUD
    plans to continue funding this program at $20 million as a set-aside
    within HOME.
        Another such program is the Self-Help Homeownership Opportunities
    Program (SHOP). SHOP provides grants to national and regional nonprofit
    self-help organizations to subsidize the costs of land acquisition and
    infrastructure improvements. Homebuyers must contribute a significant
    amount of sweat equity or volunteer labor to the construction or
    rehabilitation of the dwellings. For fiscal year 2002, HUD is
    requesting $22 million for SHOP as a set-aside within the Community
    Development Block Grant account, an increase of $2 million over fiscal
    year 2001. The increase reflects the early successes of this program.
    Fiscal year 2002 grants will help to produce more than 1,400 new homes.
        HUD also sets affordable housing goals for two key housing
    financial institutions over which it has oversight responsibilities:
    Fannie Mae and Freddie Mac. These Government Sponsored Enterprises
    (GSEs), play a vital role in financing affordable owner-occupied
    housing in the Nation through their participation in the secondary
    mortgage market. Last year, HUD announced new affordable housing goals
    for the GSEs that will substantially increase the availability of
    financing for affordable housing. In fiscal year 2002, HUD will
    continue to monitor the compliance of the GSEs with these goals and
    work in cooperation with them to find new ways to expand homeownership
    for all Americans.
        In fiscal year 2002, HUD plans to continue to fund a $3 million
    cooperative agreement with the Housing Assistance Council (HAC). HAC is
    a nonprofit corporation that works to increase the availability of
    decent and affordable housing for low-income people in rural areas
    throughout the United States. In fiscal year 2002, HAC will focus on
    the affordable housing needs of people living in the ``Colonias.''
    These are poor rural communities and neighborhoods along the U.S.-
    Mexican border that lack basic infrastructure and services, as well as
    decent and affordable housing.
                           affordable rental housing
        While seeking to expand homeownership opportunities, HUD recognizes
    that homeownership may not be a practical option for all families,
    especially those at the bottom of the income scale. To help low-income
    families afford the high costs of rental housing, HUD provides rental
    subsidies to more than four million households nationwide through a
    variety of programs.
        To spur the construction of more affordable rental housing, HUD has
    proposed that the limits for FHA multi-family insurance be increased by
    25 percent. Increasing the limits will help to spur the availability of
    private financing for new production and substantial rehabilitation of
    residential rental housing in high-cost areas.
        The fiscal year 2002 budget seeks to strengthen HUD's current
    rental assistance programs rather than proposing any new ones. During
    fiscal year 2002, HUD will focus in particular on improving the
    utilization of Section 8 vouchers and public-housing capital funds by
    housing agencies.
        This budget funds the project-based and tenant-based Section 8
    programs under a single account, known as the Housing Certificate Fund.
    In the Section 8 voucher program, families live in modestly priced
    rental housing that they find in the private market. In the project-
    based Section 8 program, by contrast, families live in specific
    developments that have a pre-existing contractual relationship with
    HUD. In both programs, families are expected to contribute 30 percent
    of their adjusted income for housing costs (rent plus utilities). HUD
    provides subsidies to cover those rental costs not paid by the tenant.
        In fiscal year 2002, HUD will obligate $15.1 billion in new budget
    authority to renew all expiring Section 8 contracts for one year, an
    increase of $2.2 billion over fiscal year 2001. The increase is
    explained largely by the fact that Section 8 contracts were previously
    funded on a long-term multi-year basis. As long-term Section 8
    contracts expire, the number of contracts that need to be renewed each
    year (and the funding required to do so) increases. Fiscal year 2002
    funds will be used to renew expiring contracts for 2.7 million units.
        For fiscal year 2002, the Department has requested $197 million for
    approximately 34,000 additional ``incremental'' Section 8 vouchers.
    These vouchers will enable HUD to make progress in reducing the number
    of low-income renter households with worst-case needs, which stood at
    4.9 million in 1999. Rather than targeting the vouchers to any specific
    purpose, HUD will distribute them through the Fair Share allocation
    system to public housing agencies (PHAs) that have demonstrated an
    ability to use effectively their existing vouchers, as measured by high
    voucher-utilization rates. This process will maximize the ability of
    housing agencies to meet locally defined needs.
        HUD recognizes that in the past, it has not moved as quickly as it
    should have in issuing incremental vouchers to PHAs. If Congress funds
    its request for incremental vouchers, HUD will act expeditiously to
    distribute the vouchers to PHAs.
        To further speed assistance to low-income families, HUD has
    targeted for improvement in 2002 the utilization of existing Section 8
    vouchers by PHAs. The most recent available data indicate that housing
    agencies are utilizing approximately 92 percent of the vouchers under
    contract for one year or more. By working to improve PHAs' utilization
    of vouchers, HUD will be able to serve tens of thousands of additional
    families within existing funding levels.
        In addition to funding contract renewals, the Housing Certificate
    Fund provides funds for a number of additional activities. One of those
    is the Tenant Protection Program. This program protects families who
    live in a project-based subsidized development whose owner either
    chooses to opt-out of the program or is terminated for cause. Such
    families receive ``enhanced'' vouchers to help them remain in their
    developments or tenant-based assistance to move to a new apartment.
    Housing vouchers are also provided to public-housing tenants displaced
    by the demolition of distressed public housing. In fiscal year 2002,
    funds are requested for an estimated 30,000 tenant protection vouchers.
        HUD is also requesting funds to continue its performance-based
    Contract Administrator Program, which funds contracts with designated
    State or local housing agencies, sometimes in partnership with other
    public or private entities. Acting as HUD's agent, contractors oversee
    some 20,000 direct contracts between HUD and project owners for
    project-based Section 8 assistance. In fiscal year 2002, approximately
    $196 million will be required to continue these contracts, which run
    for three years.
        HUD will shortly be submitting legislation to continue authority to
    restructure FHA-insured mortgages in conjunction with ``marking'' down
    of excessive rents for certain Section 8 project-based developments to
    the rents charged in the surrounding market. Authority for the Mark-to-
    Market restructuring program expires at the end of fiscal year 2001.
                                 public housing
        The public housing program is funded through the Public Housing
    Operating Fund, the Public Housing Capital Fund, and the HOPE VI
    program.
        While no longer supporting the development of new public housing on
    a major scale, HUD remains committed to sustaining and improving the
    Nation's public housing by funding public housing operating and capital
    expenses. Through the HOPE VI program, HUD also funds the demolition of
    obsolete public housing stock and its replacement with vouchers or new
    public housing that blends into the community.
        The fiscal year 2002 budget provides $3.385 billion for the Public
    Housing Operating Fund, an increase of $150 million over the fiscal
    year 2001 enacted levels.
        In light of higher-than-expected energy costs, some PHAs are facing
    a shortage of funds in fiscal year 2001. To address this problem, the
    Department has moved quickly to provide $105 million of fiscal year
    2001 funds to affected agencies. If this increase is not sufficient to
    cover costs associated with the sharp and unexpected rise in energy
    rates , PHAs will be reimbursed for excess utility costs due to rate
    increases as outlined in regulation.
        The Public Housing Capital Fund provides formula grants to PHAs to
    meet the accrual of new modernization requirements and to reduce the
    backlog of rehabilitation and modernization requirements.
        The fiscal year 2002 budget provides $2.293 billion for the Public
    Housing Capital Fund, a decrease of $700 million relative to fiscal
    year 2001. This amount will be sufficient to meet all new modernization
    requirements. Because PHAs have a large amount of unspent capital funds
    from prior years, the budget does not provide any new funds to address
    the backlog of modernization needs. Two other reasons to cut this
    program include the facts that: QHWRA (Public Housing Reform) gives
    PHAs the ability to leverage federal funds with private investment to
    finance capital improvements; and HOPE VI removes the most severely
    distressed units which represent a disproportionate share of backlog
    need.
        The purpose of the reduction in capital funds is to draw down
    capital funds that have been appropriated, but not expended, by PHAs.
    Recognizing that the funds are primarily for capital improvement
    projects, HUD expects PHAs to obligate these funds within 18 months and
    expend them in 36 months. Although not all PHAs are falling behind in
    scheduled modernization, the buildup of unobligated and unexpended
    funds by some PHAs indicates that modernization funds may not be
    reaching the PHAs with the greatest needs or capacity. For example, as
    of March 1, 2001, $700 million in fiscal year 1998 funds remained
    unspent by PHAs. HUD plans to review the Capital Fund program and put
    procedures in place to ensure a more timely and effective reduction of
    the nearly $18 billion backlog of modernization and rehabilitation
    needs.
        While we provide increased funding for the Public Housing Operating
    Fund, this Department also provides funds for the demolition and
    revitalization of severely distressed public housing under the HOPE VI
    program. The budget requests $574 million for HOPE VI grants in fiscal
    year 2002, the same as the fiscal year 2001 enacted level.
        HOPE VI was launched as part of an effort to demolish 100,000 of
    the most distressed public housing units. As of the end of fiscal year
    2000, HUD had approved applications to demolish nearly 113,000 units
    and PHAs had actually demolished approximately 60,000. Almost 35,000 of
    the completed demolitions were carried out in connection with HOPE VI
    revitalization grants.
        The HOPE VI program will expire in fiscal year 2002 and must be
    reauthorized to continue. The Department is evaluating the HOPE VI
    program and will submit authorizing language during the coming year to
    extend and amend the program to target funds to the highest priority
    needs.
        For fiscal year 2002, HUD has proposed the termination of Public
    Housing Drug Elimination Grant Program (PHDEP), which was funded at
    $309 million in fiscal year 2001. There are three main reasons for this
    termination. First, the program is duplicative of the Operating and
    Capital Funds in that all expenditures that are eligible under PHDEP
    are also eligible expenditures of one or both of these funds. Second,
    many other Cabinet Departments have anti-drug programs that can be
    brought to bear on the problems of drug use and violent crime in public
    housing. Governmentwide, over $18 billion in Federal funding is
    projected for fiscal year 2002 on anti-drug programs and illegal drug
    enforcement efforts. Finally, the Inspector General has severely
    criticized PHDEP for being the source of funds for such inappropriate
    activities as staff retreats, bank loans, and Christmas parties.
    Indeed, the Department itself diverted PHDEP technical assistance funds
    to implement a gun buy-back program, which the Comptroller General
    ruled was not a legal use of funds.
        Although HUD is not requesting funds for PHDEP, it will fund
    Operation Safe Home and the Witness Relocation Program. The Inspector
    General operates a special task force--Operation Safe Home--which
    combines the expertise of Federal and local crime-fighting forces to
    combat violent crime such as illegal drug trafficking and gang-related
    activity in public and assisted housing developments. In fiscal year
    2002, $10 million will be set aside within the Public Housing Operating
    Fund and transferred to the Inspector General for additional law-
    enforcement staff.
        The Witness Relocation Program assists families that have
    cooperated in efforts to combat crime in communities. It is a crucial
    part of Operation Safe Home. Since the initiation of Operation Safe
    Home, the Inspector General has relocated 650 witnesses whose testimony
    was essential to the prosecution of perpetrators of violent crimes.
              building assets and skills among low-income families
        Central to HUD's mission of promoting stronger communities are
    programs to help low-income working families acquire skills that will
    increase their earnings and to help families on welfare make progress
    towards self-sufficiency. HUD also seeks to help low-income families
    accumulate assets so that they can achieve homeownership, pursue
    educational opportunities, start a new business, and attain other
    important goals.
        HUD's basic programs contribute to this objective by providing low-
    income families with the housing stability they may need to focus on
    obtaining work or increasing their earnings. HUD's homeownership
    assistance programs also help families accumulate assets. In addition,
    HUD has a number of programs that focus directly on building assets and
    skills among low-income families.
        The Community Technology Centers program is one such initiative.
    For fiscal year 2002, HUD will provide $80 million in competitive
    grants to help communities create or expand computer technology centers
    in low-income areas. The centers will provide free Internet access and
    help families acquire computer skills, access educational information,
    and search for work.
        Through the Neighborhood Networks program, HUD has helped to create
    more than 700 computer technology centers in multi-family assisted
    housing developments and HOPE VI sites throughout the country. Hundreds
    of additional computer centers operate in public housing and Native
    American housing. HUD supports the development of these centers by
    providing guidebooks and other technical assistance, sharing
    information on best practices, and allowing the centers to occupy space
    in affordable housing developments.
        Another such program is the Family Self-Sufficiency (FSS) Program.
    Currently serving some 55,000 families in the tenant-based Section 8
    and public-housing programs, FSS promotes the development of local
    strategies to help families obtain or increase employment so that they
    can build assets and achieve economic independence and self-
    sufficiency. FSS helps to link participating families with local
    opportunities for educational services, job training, counseling, and
    other services while they are receiving housing assistance. As
    participating families increase their work effort, the amount of
    increased rent attributable to increased income from employment is
    deposited in an escrow account. Families that comply with program rules
    and become independent of welfare assistance by the end of the 5-year
    program term can use the funds in the escrow account to purchase a
    home, pay for higher education, start a business, or other agreed-upon
    goals.
        In fiscal year 2002, HUD will work to increase participation in FSS
    by providing funding for FSS service coordinators at local housing
    agencies, helping to spread awareness of successful practices, and
    promoting partnerships between local housing and welfare agencies. The
    fiscal year 2002 budget provides $46.4 million for FSS coordinators
    within the Housing Certificate Fund.
        The Administration plans to offer additional incentives to
    encourage savings and asset accumulation by low-income households
    through the Individual Development Accounts (IDA) initiative. This new
    program will improve access to savings institutions by creating a
    mechanism to subsidize the savings of eligible participants. Financial
    institutions would be allowed a tax credit in exchange for matching
    contributions to participants' deposits. Individuals would then be able
    to withdraw their contributions and matching funds, along with
    earnings, for qualified purposes, such as education expenses, first-
    time home purchases, and business start-up expenses, that help
    facilitate entrance into the country's economic mainstream.
        The Resident Opportunity and Self-Sufficiency Program (ROSS )
    provides a range of supportive services to families in public housing
    through competitive grants to PHAs, resident groups, Indian tribes and
    other qualified organizations. The services funded through ROSS are
    designed to help families make progress towards self-sufficiency;
    enable the elderly and persons with disabilities to live independently
    through service coordinators and other activities; and support resident
    management, business development, capacity building and conflict
    resolution activities.
        Funding for ROSS in fiscal year 2002 is continued at $55 million,
    the same level enacted in fiscal year 2001. Consistent with prior
    practice, it is funded as a set-aside in the CDBG program.
        Through its Youthbuild program, HUD provides young high-school
    dropouts (aged 16-24) with education and job training services,
    counseling and other support activities and onsite paid training in
    housing rehabilitation or construction work. This will help these
    youths find well-paying jobs. The average wage earned by Youthbuild
    trainees is $7.50 per hour and an impressive 84--percent of the
    graduates obtain full-time employment or re-enter school on a full-time
    basis. A wide range of groups are eligible to compete for Youthbuild
    funds, including nonprofit organizations, State and local housing
    agencies and State and local governments.
        In fiscal year 2002, HUD will continue Youthbuild at last year's
    level of $60 million and will continue the program as a set-aside
    within the CDBG program. HUD estimates that this funding will provide
    training to an estimated 3,774 youths.
        HUD has also been active in helping to make ``Welfare-to-Work'' a
    reality. The fiscal year 1999 VA-HUD Appropriations Act included funds
    for up to 50,000 Section 8 vouchers to help families make the
    transition from welfare to work. Housing vouchers can help families
    make progress towards self-sufficiency by providing them with the
    residential stability they may need to focus on obtaining or retaining
    work as well as the opportunity to move closer to a new job. Although
    implementation of the Welfare-to-Work Voucher program has been delayed
    due to the challenges of designing a new program and of coordinating
    the efforts of local housing and welfare agencies, substantial progress
    has been made in recent months.
        The costs of renewing the existing Welfare-to-Work vouchers are
    included as part of the overall Section 8 contract renewals in the
    Housing Certificate Fund. As requested by Congress, HUD's Office of
    Policy Development and Research is in the process of evaluating this
    program.
                       community and economic development
        Beyond housing issues, HUD's other core commitments involve
    community and economic development. Our fiscal year 2002 budget will
    continue to support these programs, which play an essential role in
    helping communities address locally determined development priorities
    and maintaining long-term prosperity.
        Much of HUD's community development work is done under the auspices
    of the Community Development Block Grant Program (CDBG). CDBG provides
    local communities with a flexible source of funds to help them attract
    private investment, maintain a high-quality housing stock, rebuild
    infrastructure and community facilities, provide critical community
    services, and create new high paying jobs. CDBG funds are provided
    directly to approximately 1,000 large cities and counties (known as
    ``entitlement communities'') and to States for distribution to smaller
    communities. For fiscal year 2002, HUD has requested a total of $4.8
    billion in CDBG funds. This is composed of $4.4 billion for CDBG
    formula grants and $403 million in set-asides for specific programs.
    The amount requested for the CDBG formula is the same as the level
    enacted in fiscal year 2001. This represents a record level of formula
    funding and a $160 million increase over the amounts appropriated in
    fiscal years 1999 and 2000.
        During fiscal year 2002, the Department will continue to work to
    increase communities' timely expenditure of previously allocated CDBG
    funds. Although HUD's efforts over the last few years have led to a 34
    percent reduction in the number of communities that are failing to meet
    their timeliness obligations, there are still a number of communities
    that are not spending their CDBG funds in a timely manner.
        The Department intends to work closely with communities to ensure
    that comprehensive plans are implemented fully and funds are used
    expeditiously under the consolidated plan review process.
        Although funding for the CDBG formula is maintained at fiscal year
    2001 levels, HUD has proposed a substantial reduction in funding of
    set-asides within CDBG. The enacted level of set-asides within CDBG in
    fiscal year 2001 was $713 million. The requested level for fiscal year
    2002, by contrast, is $403 million, a reduction of $310 million. The
    principal source of the reduction is the proposed elimination of
    funding for the Economic Development Initiative and the Neighborhood
    Initiative Demonstration. These programs, which together totaled
    $401million, were earmarked for ``special purpose'' grants in the
    appropriations act.
        The growth in special purpose grants has been dramatic over the
    past few years. In fiscal year 2001, the appropriations act contained
    over 800 individual projects. Administering these individual grants is
    costly, time-consuming, and distracts HUD staff from its core programs.
    As most of the special purpose grants would be eligible expenses under
    the CDBG formula, these types of projects can be funded if deemed to be
    priorities by local recipients of CDBG funding.
        The Section 108 Loan Guarantee program provides a means by which
    local communities can leverage their CDBG grants to obtain financing
    for large community revitalization projects. Under this program, the
    government acts as the guarantor of loans secured by current and future
    CDBG funds. Section 108 financing is at work in hundreds of communities
    across America. Over 1,200 projects have been funded since the
    program's inception in 1978.
        In every year since fiscal year 1997, the total loan volume
    authorized for the Section 108 program has been $1.2 billion. Only
    about one-third or less of this loan level has been used each year,
    however, with an average annual utilization of $375 million. To reduce
    the level of the government's outstanding commitment to levels that
    reflect actual usage, while at the same time ensuring that any upward
    surge in loan volume is fully accommodated, the fiscal year 2002 budget
    is requesting a loan volume of $609 million. HUD will reconsider the
    loan volume cap for fiscal year 2003 based on this year's demand for
    the program.
        Another HUD program designed to assist in community development is
    the Empowerment Zones and Enterprise Communities (EZ/EC) Initiative.
    The EZ/EC initiative is an interagency effort to promote economic
    development and community revitalization in distressed areas by
    targeting tax relief and Federal funds to designated Empowerment Zones
    (EZs) and Enterprise Communities (ECs). EZs and ECs are eligible for an
    array of different tax credits and other incentives designed to spur
    investment and economic growth. EZs and ECs also receive some amount of
    Federal funding for revitalization activities. Grants are used for a
    wide variety of activities that assist residents and businesses,
    including workforce preparation and job creation efforts linked to
    welfare reform; neighborhood development; support for financing capital
    projects; financing of projects in conjunction with Section 108 loans
    or other economic development projects. Funds are also used for rental
    assistance and other housing assistance, policing and healthcare.
        To date, there have been two rounds of EZ/EC designations, with a
    third round authorized but not yet made. In the first round, nine
    communities (six urban and three rural) were designated as Empowerment
    Zones and 95 communities were named as Enterprise Communities. Twenty
    new Empowerment Zones--15 urban and 5 rural--were designated in the
    Round II competition, along with 20 new Enterprise Communities, all
    rural.
        In December 2000, Congress approved legislation to designate nine
    new EZs, seven in urban areas and two in rural areas. HUD will
    designate the seven new urban EZs in 2001, while the Department of
    Agriculture will designate the rural EZs. The legislation also
    authorized the designation of 40 Renewal Communities, 28 in urban areas
    and 12 in rural areas, to be designated by HUD by the end of 2001.
    Businesses in Renewal Communities will benefit from local regulatory
    streamlining and a variety of Federal tax incentives to stimulate
    economic growth.
        HUD, originally proposed to provide each of the 15 Round II urban
    Empowerment Zones with $10 million in annual grant funding. Cumulative
    funding to date has not reached this level, but HUD is seeking funding
    of $150 million for fiscal year 2002, equaling the originally proposed
    annual amount.
        This Department is also active in helping to redevelop brownfields.
    Brownfields are vacant or underutilized properties whose redevelopment
    is hampered by the real or perceived threat of environmental
    contamination. A recent survey of over 200 cities by the U.S.
    Conference of Mayors indicated that more than $2.7 billion in
    additional tax revenues and 675,000 new jobs could be created if
    brownfields sites were returned to productive use. For fiscal year
    2002, HUD proposes to fund the Brownfields Economic Development
    Initiative at $25 million, the same level as enacted in fiscal year
    2001.
        The Brownfields Economic Development Initiative makes competitive
    economic development grants available to local governments in
    conjunction with Section 108 loan guarantees. The grants enhance the
    security of the Section 108 loan, facilitating the reclamation of
    brownfields. HUD works closely with the Environmental Protection Agency
    to implement strategies to return brownfields to productive uses.
        In addition to the programs discussed above, several additional HUD
    programs help to support local community and economic development.
        To help reduce the hazards of lead-based paint, the fiscal year
    2002 budget requests a 10 percent increase in funding for the Lead-
    Based Paint Hazard Reduction and Healthy Homes Programs for a total of
    $110 million. Pursuant to Executive Order 13045, a multi-agency task
    force that included HUD, EPA, Justice, and the Centers for Disease
    Control and Prevention developed a comprehensive 10-year plan to
    eradicate the risk associated with lead-paint poisoning from American
    homes. HUD's grants are key to the achievement of this objective. The
    increased funding in fiscal year 2002 will be distributed through a
    competitive process to entities that match every Federal dollar with
    significant additional dollars. All funds, whether private or Federal,
    must be used for hazard reduction or public education on lead-poisoning
    prevention.
        Included in this request is a set-aside of $10 million to continue
    the Healthy Homes Initiative, which helps to develop, demonstrate, and
    promote cost-effective preventative measures to correct multiple safety
    and health hazards in the home that can cause serious disease and
    injuries to children.
        HUD is also funding the National Community Development Initiative
    (NCDI). NCDI is a partnership of public and private funders and
    intermediaries that works to expand the capacity of community
    development corporations and other community-based and nonprofit
    organizations to carry out community and economic development. HUD
    provides NCDI funding to national intermediaries, including Habitat for
    Humanity, the Enterprise Foundation, and Local Initiatives Support
    Corporation, which then provide capacity building services to the
    targeted organizations. The fiscal year 2002 budget requests $29
    million for NCDI, an increase of $1 million over fiscal year 2001
    levels. The additional $1 million will go to Habitat for Humanity to
    increase funding for their capacity building efforts to $4.4 million.
        Colleges and universities can make an important contribution to the
    revitalization of America's cities and neighborhoods by bringing their
    intellectual and financial resources to bear on locally identified
    problems. HUD has several programs that encourage partnerships between
    colleges and universities and local governments and community-based
    organizations. These programs include: the Community Outreach
    Partnership Centers Program, the Historically Black Colleges and
    Universities Program, the Hispanic-Serving Institutions Assisting
    Communities Program, the Alaska Native/Native Hawaiian Institutions
    Assisting Communities Program, and Assistance to Tribal Colleges and
    Universities. In addition, the Community Development Work Study program
    provides stipends and tuition support for economically disadvantaged
    and minority graduate students who plan to pursue careers in community
    and economic development. The fiscal year 2002 budget funds all of the
    university programs at fiscal year 2001 levels.
        In order to assist with the community and economic development
    needs of Native American and Insular Area communities, HUD funds Block
    Grants for Indian and Insular Area Communities within CDBG. The fiscal
    year 2002 budget provides $69 million for Indian community development
    block grants and $7 million for community development block grants to
    Insular Areas (American Samoa, Guam, the Northern Mariana Islands, and
    the Virgin Islands). Funding for Insular Areas is included within the
    set-aside for Section 107 grants.
        A set-aside of $1.25 million in the Indian Community Development
    Block Grant will fund the Native eDGE program, an interagency
    initiative designed to facilitate sustainable economic development
    within American Indian and Alaska Native communities. eDGE includes a
    telephone call center, a publications clearinghouse, a web site, and a
    technical assistance information center. The web site links seventeen
    Federal agencies, educational institutions, and organizations through a
    single portal so that tribes, Native Americans, lending institutions,
    and private businesses can collaborate to promote economic growth.
                    meeting the needs of special populations
        HUD programs provide housing and other essential support to a wide
    range of populations with special needs, including the elderly, persons
    with disabilities, homeless persons, and persons with HIV/AIDS.
        In fiscal year 2002, HUD will continue its strong level of support
    by funding the programs targeted for these populations at or above
    fiscal year 2001 levels. Notable increases include $20 million in
    additional funding for the Housing Opportunities for Persons with AIDS
    (HOPWA) program and $20 million for the Improving Access Initiative,
    which will be used to increase access by disabled persons to the
    facilities of nonprofit organizations.
        In fiscal year 2002, HUD plans to continue its strong support for
    the elderly by providing $783 million for elderly housing programs, an
    increase of $6 million over fiscal year 2001 levels.
        The principal HUD program targeted specifically to the elderly is
    the Supportive Housing for the Elderly (Section 202) program. This
    program provides capital advances to finance the construction and
    rehabilitation of structures that will serve as supportive housing for
    low-income elderly persons and provides rent subsidies (known as
    Project Rental Assistance Contracts (PRAC)) for the projects to help
    make them affordable. For fiscal year 2002, HUD will provide $679
    million for Section 202 grants, an increase of $3 million over fiscal
    year 2001. The fiscal year 2002 budget also includes $3 million for
    PRAC renewals.
        In addition to providing funds for new Section 202 developments,
    the fiscal year 2002 budget includes $50 million to cover the costs of
    converting existing Section 202 developments to assisted living
    facilities and another $50 million for service coordinators that help
    the elderly maintain their independence. Both of these activities are
    funded at fiscal year 2001 levels.
        More than 1.3 million elderly households are also served by public
    housing and tenant-based and project-based Section 8 programs.
        In addition to programs for the elderly, this Department also
    places a strong emphasis on meeting the needs of the disabled. The
    Supportive Housing for the Disabled (Section 811) program provides
    capital advances to construct or rehabilitate rental housing with
    supportive services for very low-income persons with disabilities. (As
    noted below, a portion of Section 811 funds is used for tenant-based
    rental assistance.) For fiscal year 2002, HUD will provide $217 million
    for new Section 811 grants, the same level as in fiscal year 2001. The
    budget will also provide $1 million for PRAC renewals to help keep
    existing Section 811 developments affordable.
        In recognition of the importance of providing non-elderly persons
    with disabilities with mainstream housing opportunities, the Department
    plans to continue to set-aside a portion of Section 811 funds to
    provide these households with tenant-based vouchers that they can use
    to rent private market apartments of their choice. Public housing
    agencies will also continue to have the authority to provide vouchers
    to non-elderly persons with disabilities pursuant to designated public
    housing plans.
        Some 500,000 households with one or more disabled persons are also
    served by public housing and project-based and tenant-based Section 8
    programs.
        As part of a Governmentwide effort to improve the access of
    disabled persons to community services, HUD's fiscal year 2002 budget
    includes $20 million as a set-aside within the CDBG account for the
    Improving Access Initiative. This initiative will provide competitive
    grants to help organizations that are exempt from the Americans with
    Disabilities Act and have limited resources to make their facilities
    accessible to the disabled. Among other eligible organizations are
    civic organizations and religiously affiliated service providers.
        Of particular importance to the Department of Housing and Urban
    Development are the needs of the neediest among us who lack even the
    most basic shelter. The fiscal year 2002 budget continues to provide
    strong support for homeless persons by funding HUD's homeless programs
    at fiscal year 2001 levels. In fiscal year 2002, a total of $1.12
    billion is provided for homeless assistance grants and shelter plus
    care renewals.
        The Department will focus on providing permanent housing solutions
    to those without homes and work closely with the Department of Health
    and Human Services and other agencies to identify and remedy the
    barriers to homeless persons' access to mainstream supportive services
    programs. As specified by Congress, at least 30 percent of Continuum of
    Care funding will be used to provide homeless persons with permanent
    housing.
        The Continuum of Care process allows local communities to determine
    their own priorities for the use of HUD homeless programs funding.
    Under this process, communities submit Continuum of Care plans to HUD
    which describe local priorities and rank specific projects according to
    locally identified needs. HUD provides funding to communities that
    provide for maximum participation by local homeless providers and
    representatives of homeless clients, that clearly identify gaps in
    housing and service needs, and that coordinate homeless assistance with
    mainstream health, social services and employment programs.
        The Continuum of Care funds three programs geared toward the needs
    of the homeless. The first is the Supportive Housing Program, which
    provides funds to develop supportive housing and services that will
    allow homeless persons to live as independently as possible. Funds are
    used for transitional housing (up to 24 months) and permanent housing
    for persons with disabilities.
        The second is the Shelter Plus Care Program, which provides rental
    assistance for hard-to-serve homeless persons with disabilities in
    connection with supportive services funded from sources outside the
    program. This is a form of permanent housing. In fiscal year 2001, a
    special account was created to fund renewals of expiring Shelter Plus
    Care contracts. In fiscal year 2002, HUD will continue to fund these
    renewals at $100 million.
        The third program under the Continuum of Care is the Section 8
    Moderate Rehabilitation for Single Room Occupancy (SRO) Dwellings for
    Homeless Individuals Program, which provides rental assistance for
    homeless persons through the moderate rehabilitation of SRO dwellings.
        In addition to funding these three homeless programs, HUD will
    provide approximately $150 million in Emergency Shelter Grants by
    formula. These grants are used for the rehabilitation or conversion of
    buildings into homeless shelters, as well as certain related social
    services, operating expenses, homeless prevention activities, and
    administrative costs.
        Finally, the Department will continue to work in fiscal year 2002
    to implement the Congressional mandate to develop and implement new
    systems to track homeless individuals as they enter and exit the
    network of homeless services programs and to provide unduplicated
    counts of the number of homeless persons served. HUD believes it
    essential to get a fix on the reach of HUD's homelessness programs so
    that the performance of these programs can be measured.
        HUD is also concerned about the special housing needs of those
    suffering from HIV/AIDS. The Housing Opportunities for Persons with
    AIDS (HOPWA) program funds housing assistance and related supportive
    services for low-income persons with HIV/AIDS and their families.
    Grants are provided by formula allocations to States and metropolitan
    areas with the largest number of cases and highest incidence of AIDS.
    In addition, a small portion of funds is awarded competitively among
    projects proposed by State and local governments and nonprofit
    organizations.
        In fiscal year 2002, HUD will provide $277 million for the HOPWA
    program, an increase of $20 million over fiscal year 2001 levels. This
    will support an increase in the number of jurisdictions eligible for
    funding based on increases in the number of persons with AIDS as
    reported to the Centers for Disease Control and Prevention.
                          enforcing fair-housing laws
        HUD is committed to vigorous enforcement of the fair-housing laws
    to help ensure that all households have equal access to rental housing
    and homeownership opportunities. For fiscal year 2002, the Department
    plans to increase the amount of funding available for fair-housing
    enforcement and education activities by 16 percent over current levels.
    The Department also plans further steps to decrease the incidence of
    predatory lending.
        HUD contributes to fair-housing enforcement and education by
    directly enforcing the Federal fair-housing laws and by funding State
    and local fair-housing efforts through two grant programs.
        The first grant program is the Fair Housing Assistance Program
    (FHAP), which strengthens nationwide enforcement efforts by providing
    grants to State and local agencies to enforce laws that are
    substantially equivalent to the Federal Fair Housing Act. For fiscal
    year 2002, HUD will provide $23 million for FHAP, an increase of $1
    million over current levels.
        The second program is the Fair Housing Initiatives Program (FHIP),
    which provides funds to public and private fair-housing groups, as well
    as to State and local agencies, for activities that educate the public
    and the housing industry about fair-housing laws--including
    accessibility requirements, investigate allegations of discrimination--
    and help to combat predatory lending practices and reduce barriers to
    minority homeownership.
        In fiscal year 2001, FHIP was funded at $24 million, of which $7.5
    million was dedicated to the National Survey of Housing Discrimination,
    a major study of housing discrimination being conducted by the Urban
    Institute. This left $16.5 million for FHIP grants. As no additional
    funding for the survey is needed in fiscal year 2002, the fiscal year
    2002 level of $23 million provides an effective increase for FHIP
    grants of $6.5 million.
        The additional $6.5 million in fiscal year 2002 FHIP funding will
    be directed towards increasing the number of organizations that receive
    funding for activities to enforce the rights granted under the Fair
    Housing Act and substantially equivalent State and local laws through
    education, outreach, prevention, and other enforcement activities. This
    funding increase will significantly expand the geographic distribution
    of FHIP awards to communities that are currently underserved or not
    served at all by fair-housing organizations. In fiscal year 2000, HUD
    was only able to fund 42 percent of eligible applicants. With the
    increase in funds, HUD will be able to fund 72 percent of the eligible
    applicants.
        During fiscal year 2002, HUD also plans to continue its efforts to
    combat predatory lending. The Department will work closely with
    interested parties, including consumer groups, Federal, State and local
    regulators, and the industry to put an end to predatory lending
    practices, increase financial literacy, and expand access to
    homeownership and private mortgage credit. As part of this overall
    effort, HUD will consider ways to better enforce existing laws--which
    may include strengthening existing regulations--as well as assess the
    need for legislative action to better protect consumers and stop unfair
    lending practices.
                           improving hud's management
        Despite the progress of the last twelve years, much more needs to
    be done to resolve HUD's serious management challenges. Although HUD is
    no longer listed by the General Accounting Office as a ``high-risk''
    agency, many of its major programs continue to bear this label. This
    Administration has made improving the management and restoring the
    focus of this Department its number one priority. It is a message that
    Congress has told HUD repeatedly throughout the years. And this
    Administration is finally listening.
        The starting point for any improvement in how this Department
    operates is proper use of staff. During fiscal year 2002, HUD will
    review staffing levels against program needs to rationalize the
    distribution of staff resources. HUD's efforts will be aided by the new
    Resource Estimation and Allocation Process which will help the
    Department to assess where staffing should be increased or decreased to
    administer its programs effectively. HUD is also working to develop a
    long-term staffing strategy to meet the rapid increase in retirements
    expected over the next several years. Currently, the average HUD
    employee is 48 years old with 18 years of Federal service. To ensure
    HUD's continued ability to deliver its programs in an effective and
    timely manner, HUD must develop a strategy for dealing with this loss
    of talent and experience.
        HUD will also continue its efforts to improve oversight of the
    local housing agencies and property owners who administer its housing
    programs. Although the Department recognizes that the physical
    inspections protocol used to assess public housing and multifamily
    assisted housing needs further refinement to ensure consistent and fair
    results, it plans to continue to assess the physical condition of HUD-
    assisted housing to ensure that it is decent and safe.
        The Department will also take steps to improve income and rent
    determinations to reduce subsidy overpayments. HUD overpays hundreds of
    millions of dollars in low-income rent subsidies due to the incomplete
    reporting of tenant income, the improper calculation of tenant rent
    contributions, and the failure to collect fully all outstanding rent.
    During fiscal year 2002, HUD will implement a number of measures to
    resolve this problem, including the development of tools to assist
    housing agencies and housing owners in the determination of income and
    calculation of rent, and the introduction of a quality control program
    to monitor the performance of these intermediaries. HUD also plans to
    review the current laws and regulations regarding income and rent
    determinations to ascertain whether their simplification would
    facilitate program compliance.
        The Department is greatly concerned that some recipients of HUD
    funding are either failing to utilize all of the funds provided by HUD
    or failing to obligate and spend the funds in a timely manner. These
    practices significantly diminish the effectiveness of HUD's programs.
    HUD will be reviewing the following programs to determine how to
    increase the rates of expenditure of funds: Section 8 vouchers and
    project-based renewals, the Section 202 program, CDBG, and the Public
    Housing Capital Fund.
        Inadequate information systems have weakened FHA's ability to
    monitor lenders that use its guarantees and contributed to HUD's
    failure to obtain a clean opinion from its auditors in 1999. A
    fraudulent scheme known as ``property-flipping'' recently highlighted
    internal weaknesses in FHA's single-family systems and controls. To
    combat this scheme last year, FHA implemented emergency foreclosure
    moratoria to protect borrowers in areas where property flipping was
    prevalent. During fiscal year 2002, FHA will strengthen the integrity
    of its internal systems and controls to eliminate the need for
    foreclosure moratoria and other emergency responses. Actions will
    include improving the loan origination process and providing better
    monitoring of lenders and appraisers.
        The Department is committed to the continued review and evaluation
    of its programs to determine what is working well and what needs to be
    improved. HUD is also committed to continuing to conduct surveys and
    research to collect the factual information on housing markets and
    conditions necessary to inform the policy decisions of HUD, Congress
    and State and local governments. To this end, the fiscal year 2002
    budget provides $43 million in funding for basic research and
    technology, the same amount as in fiscal year 2001.
        Finally, HUD recognizes the importance of the work being conducted
    by two Congressional Commissions: the Millennial Housing Commission and
    the Commission on Affordable Housing and Health Care Facility Needs in
    the 21st Century. HUD is prepared to assist Congress in assembling
    factual information on the extent of the Nation's housing needs,
    analyzing HUD's programs, and developing proposals for improving
    current housing programs.
        This Administration is openly and strongly committed to focused
    programs and an efficient government that works. And my approach to the
    task will focus on four governing principles.
        First, our mission will be to serve people, not programs.
        Second, we will have the discipline to stick to our mission.
    Mission creep is mission death.
        Third, we will be good stewards of our resources.
        Fourth, we will observe the highest ethical standards. This means
    more than prosecuting graft. It means rejecting the subtler corruption
    of settling for good appearances rather than insisting on good results.
        As we seek to fulfill our mission, this Department is committed to
    continuing a strong relationship with Congress so that together we can
    make the Department of Housing and Urban Development an efficient and
    effective fighter on behalf of America's housing and community
    development needs.
        Thank you.

        Mr. Martinez. Yes it is.
        Senator Mikulski. We are going to, in the interest of our
    colleagues here, our first round of questions will be five
    minutes each so that everyone has a chance to ask their
    questions if they want. And I know that Senator Bond and I will
    probably have a second round. Of course our colleagues are
    welcome for a second round.

                               PREDATORY LENDING

        I would like my first set of questions to deal with the
    issue of predatory lending. And again, we want to thank you for
    assigning Ms. Maggiano to us. She is absolutely engaged in the
    Baltimore Task Force, which is the laboratory. And also your
    responsiveness in holding back those foreclosures until we get
    a real plan. And thank you for including it in your testimony.
        Mr. Secretary, what steps do you think we can take in this
    year's legislation or even recommend to the authorizing to
    prevent flipping on a national basis? Because it is pretty bad
    in Baltimore, but Senator Stabenow, Senators Dorgan and
    Fitzgerald, many are very concerned about this nationwide.
        Mr. Martinez. Well, Madam Chairwoman, let me say that you
    are good to recognize the people at HUD who have been making
    this program work in a way that allows us to have the good news
    that we see to be coming out of Baltimore. And Ms. Maggiano was
    here today. I want to make sure we recognize her and Bryant
    Applegate, who is also with her, who have been working
    diligently on this. Because I think as we often talk about this
    Department and shortcomings and all of that, that we often
    overlook the people--the career people--that are there day in
    and day out who really try to do an outstanding job for the
    people who are hurting.
        One of the things we have learned is that there cannot be
    this flipping practice without fraudulent appraisals. And that
    I would say would be key area of our focus. It is our focus
    administratively to do what we can to make sure that these
    appraisals that are the cornerstone of any fraudulent
    transaction do not take place. So I would say if we can focus
    our legislation on that issue and how we can best regulate
    appraisals. Also, I think the second issue might be the
    timelines of resales once an FHA deal is done.
        We are also looking internally as to how some of the
    transactions took place in Baltimore and in other areas as
    well. One of the issues that we have to look at is our
    personnel allocations and how we are devoting personnel to
    oversee some of these areas. I think one of the problems we
    have had at HUD is that we have seen the numbers at HUD drop
    over the years of people. Sometimes that can be pennywise and
    pound-foolish because we have also seen that the oversight that
    is necessary for all of these vast programs around the country
    has not been there at times. So we will be looking at those
    issues as well. But I would say the issue of appraisals is at
    the heart of this.
        Senator Mikulski. Well, I think, would you consider--this
    is just a recommendation for further discussion--do you think
    we should go back to a system where FHA approves the appraiser?
        Mr. Martinez. I think something like that would be very
    healthy and I would like to have further discussions on that.
    But I think a approval of a rated and a well-regarded appraiser
    is preferable to just allowing appraisals to come in that
    sometimes lack the credibility.
        Senator Mikulski. Well the Baltimore advocacy groups feel
    that again the appraiser--and most appraisers are honest and
    meet very tough standards and so on, but then perhaps there
    needs to be like a HUD-approved list. We ask you to come up
    with those series of recommendations.
        Let's go to the question, though, on--first of all, we look
    forward to the task force and the final mark up on this bill.
    We look forward to their recommendations we can implement now.
        Mr. Martinez. I think they will have some recommendations.
        Senator Mikulski. Second, though, is this whole issue of
    property disposal of FHA. There are two issues. One, the way
    often the FHA house itself has been so rundown and the
    flippers--the ones that buy it for like $12,000 and sell it for
    $72,000 with the balloon payment. Essentially the plumbing is
    bad. The toilets are not working. The roofs are awful. The
    people default because they cannot keep it going.
        Two questions: One, do you think--would you think we could
    use FHA money to rehab a HUD house before it goes back on the
    market? And how do you think we can look at property disposal
    of HUD houses when they have occurred essentially in almost
    blocks or in groups of neighborhoods? We are not talking about
    the single house in a suburban neighborhood where there has
    been a default on the mortgage. We are talking about--gosh
    there are blocks in Baltimore where there are twenty and thirty
    and so on houses.
        Mr. Martinez. Well, the whole issue of property disposition
    is so important because it obviously affects not only the
    particular homeowner or home involved, but also affects an
    entire neighborhood. As this happens, it is a blight on an
    area. But HUD has designed a program of accelerated claims
    disposition and we are currently preparing regulations to
    implement this program. We anticipate that those regulations
    will be in place in September.
        Additionally, we will also conduct a demonstration program
    involving five thousand assets prior to finalizing the details
    of the administration of this program, which should be in July.
    We are committed to working with local governments and non-
    profits to ensure that HUD's property disposition program
    serves as a catalyst for neighborhood revitalization. We have
    designated over 800 hundred revitalization areas and have
    executed asset control agreements in 14 cities. We are working
    with our local partners to identify what additional areas of
    program improvements we could have. But we think those are good
    efforts in the right direction.
        Senator Mikulski. Well, I think those are very good
    efforts. One of the things that I would like to be able to
    discuss with you further is the use of FHA funds or other funds
    to rehab the home. Let's say--let me just say that there are
    two hundred homes you would want to turn over to either
    Baltimore city government or Prince George's County's
    government or it could be to a community group, like St.
    Ambrose housing--a community development organization. But they
    do not have the bucks to then rehab it to then sell it and you
    see where it is.
        Mr. Martinez. I think we should look at that with you and
    see what possible returns there could be or where the returns
    would go if we can enhance the property value. But we should
    look into that and that is clearly part of the problem is that
    even turning the house over to a group you still need to have
    rehab money in order to make it happen.

                                   SECTION 8

        Senator Mikulski. Well, my time is up. Senator Bond.
        Senator Bond. Thank you, Madam Chair. As I said everything
    goes wrong. As I got over there they said they are about ready
    to start another vote.
        Senator Mikulski. So you waited.
        Senator Bond. So I waited. And guess what? They vitiated
    the yeas and nays. But in any event, my apologies again. I
    appreciate the fact that you went ahead. The question I have is
    for you Mr. Secretary as well as Mr. Dave Gibbons. And I
    wondered if he might be able to join us at the table as HUD's
    Senior Budget Officer because we need to get to the bottom of
    this Section 8 problem. As you know, every year we go through
    some period during which we look to rescind what people call
    excess Section 8 funds. Rescission of Section 8 funds have
    banked many other congressional priorities over the last few
    years--floods, disasters of all kinds, anything that members
    and the Administration wanted to spend money on.
        In this year's supplemental, the House is proposing to
    rescind one hundred and fourteen plus million dollars from
    Section 8 funds and the Housing Certificate Fund. In addition,
    last year we rescinded $1.833 billion. We really need to
    understand from your viewpoint what is available for
    rescission, when it's available, and why it is available.
        And I am also very much concerned that HUD and/or OMB will
    maybe slowing down the availability vouchers to eligible low-
    income families in order to meet rescission requirements.
        So, Mr. Gibbons, first can you please explain the status of
    the $114-plus million rescission that is being discussed?
        Mr. Gibbons. First of all, I have not seen the language.
    They have not shared the language with us so I am going to have
    to take this two different----
        Senator Mikulski. Pull the microphone closer, sir. It's
    hard for us to hear you.
        Mr. Gibbons. To date we haven't seen the actual language of
    the rescission so I am going to have to approach this from a
    couple of different----
        Senator Bond. Well first I guess we also need to know the
    status of the rescission of the $1.8-plus billion in excess
    section 8 funds from last year's fiscal year 2001 VA/HUD
    appropriations bill. Maybe start with that and we can build on
    that.
        Mr. Gibbons. That's fair enough. All total, the amount of
    recaptures that we are required to get pursuant to the 2001
    appropriations bill is $3.4 billion, of which $1.83 billion was
    rescinded in the 2001 bill. The remainder had been assumed as
    form of recaptures in offsets to total renewal costs in 2001.
    To date, we have recaptured $2 billion in funds. Most of that
    was recaptured at the end of last year, at the end of fiscal
    year 2000, carried over into 2001 to help meet the total needs
    of the $3.3 billion to $3.4 billion that we must recapture. Of
    the $2 billion that we recaptured, $1.6 billion of it has been
    redirected back into the programs as is required.
        We are amending both long-term project-based contracts as
    well as to meet renewal of tenant-based contracts. That leaves,
    at this moment, $400 million that we have available towards the
    $1.83 billion rescission. So we still need $1.4 billion in
    recaptures between now and September 30th of this year to meet
    the full requirements of the existing 2001 bill. If you add the
    additional $114 million we would need $1.5 billion between now
    and September 30th.
        I have no idea whether all that additional $100 million is
    available. We will not do the recapture until late in August on
    both the tenant-based and project-based program. So we hope
    that it will be available but it may not be. There are four
    things that are working a little bit against it. You mentioned
    one of them in your opening remarks.
        The first is utility costs for both project-based and
    tenant-based programs are a lot higher this year. And that has
    two effects. One, is that PHAs will use more of their funds
    which otherwise might be in excess and available to recapture.
    They will be sending more of those funds to the project owners
    so there will be less available than we might have anticipated
    due to higher utility costs.
        The same is true for the project-based program. We have
    already seen an increase this year in project-based costs for
    project owners come in for additional resources of about $75
    million to $100 million. So those funds which would normally be
    available due to expired long-termed contracts, are being
    plowed back into the program.
        The third and fourth reason is, you remember, I think you
    pointed out earlier Senator that in the beginning we identified
    a total of about $10 billion which had been excess. None of
    those funds are left. They have all been rescinded. So we don't
    have that old pot to go back to as we have had in prior years
    if we were running short.
        Senator Bond. In your best estimate are you going to be
    able to meet the $1.833 billion figure that was established
    last year? That is beginning to sound questionable from what
    you said.
        Mr. Gibbons. The way the language was written last year,
    you had to do the rescission. If you couldn't get it out of
    Section 8, then you went someplace else to get it. I do not
    know what the language says for the one----
        Senator Bond. I am just talking about last year.
        Mr. Gibbons. We will absolutely get those funds. They will
    either come out of Section 8 or, according to the statute, that
    if we can't find them in Section 8 we are to go to some other
    heading in HUD and take it from unobligated balances in other
    programs. I do not know what the language says for the $114
    million.
        Senator Bond. Thank you very much.
        Senator Mikulski. This is a topic we will return to because
    the issues raised by Senator Bond are issues that I was also
    going to raise. We will pick back up on it. But Senator Kohl,
    let me turn to you and then we will turn to Senator Shelby in
    turn.

                                ELDERLY HOUSING

        Senator Kohl. Mr. Secretary, as a member of the Special
    Committee on Aging, I have taken a special interest in meeting
    the housing needs of seniors, particularly seniors in rural
    communities. Our programs have played a critical role in
    helping many urban and rural seniors age in place and provide
    an alternative to nursing homes and other expensive options.
    One program that has been helpful in Wisconsin is the Service
    Coordinator Program. This program is an excellent way to
    connect people who are frail with resources existing in their
    community in order to enable them to stay in their homes. The
    administration has included level funding of $50 million in its
    proposed budget for Service Coordinators and the Congregate
    Services Housing Program, which brings services to senior
    housing complexes. And yet there is a demand to expand this
    program, beyond renewing existing contracts, to allow more
    seniors to age in place independently and with dignity.
        According to one study as many as 20 percent of seniors in
    202 housing have no Service Coordinator. Given the tremendous
    pressure to provide more options to seniors to age in place,
    how do you propose we meet this need and would you support a
    proposal to prevent Service Coordinators to be included as part
    of a facility's routine operating expenses? Do you anticipate
    future increases in funding for Service Coordinators? And is
    this an area where there could be a collaboration with HHS?
        Mr. Martinez. I think the last part of the question hits
    the nail right on the head, which is the need for cooperation
    between HUD and HHS. I have begun a series of conversations
    with Secretary Thompson beginning with the issue of
    homelessness, but I think this issue of the elderly is very
    ripe for this as well. Clearly we need to try to assist our
    elderly population, our aging population, to age in place
    whenever possible and to have facilities that have sufficient
    support to allow them to avoid the need to be transported to a
    nursing facility and things like that. So I think the things
    you are raising in your question are precisely the kind of
    thinking we need as we go forward.
        The Congress has impaneled a commission, to study aging,
    housing needs of the aging for the 21st century. And I think
    that, and certainly with my background in coming from Florida,
    I am well aware of the needs of this population as well as the
    forward thinking types of ideas we must have in order to allow
    folks to age in place.
        In the 202 program, we clearly understand the need for
    there to be supportive services. What I would like to do is to
    bring in the services that are available through HHS and bring
    them to bear on this population in a way that can allow us to
    provide coordination of services and the counseling services
    and all the other services that are necessary in order for
    folks to age in place. So, I think your question is headed in
    precisely the right direction and I hope that we can move in
    that fashion.

                            HOMEOWNERSHIP COUNSELING

        Senator Kohl. Okay. Mr. Secretary yesterday the New York
    Times ran a story--well two days ago--noting that the number of
    American's falling behind on their mortgage payments has
    increased sharply in this past year. The percentage of home
    owners with FHA mortgages with loan payments more than thirty
    days overdue went above ten percent for the first time ever. At
    the same time the President has embarked upon an initiative to
    increase first time house ownership among low income families.
    We need to do everything we can to ensure that these families
    have all the tools they need to stay in their homes.
        So now Freddie Mac has just come out with a study that says
    that borrowers that get counseling have a 34 percent lower
    delinquency rate than borrowers without counseling. And yet
    this budget includes level funding of $20 million for housing
    counseling. So are you concerned about the rising delinquencies
    and shouldn't we be doing more in the counseling area to
    counter this trend, Mr. Secretary?
        Mr. Martinez. No question, I think that there is a great
    concern for the rising of delinquencies. We think that as we
    are striving to increase homeownership, particularly among our
    low-income and minority populations, anytime we have a
    foreclosure is essentially a failure or a set back. So anything
    we can do to continue to allow folks to own their homes is a
    very positive step.
        The Lost Mitigation and Forbearance Program that FHA has
    works to prevent families from losing their homes by modifying
    the terms of their mortgage and delaying the foreclosure while
    there is reason to expect that they will be able to make good
    on the default. We have also put a moratorium on foreclosures
    in selected areas, including Baltimore, as we look into that
    area of predatory lending.
        Yesterday I had a meeting with one of our largest private
    mortgage holders in the country and they were talking to me as
    I raised the issue with them because I think a lot of this
    happens in the private market as well. They were telling me,
    Countrywide happens to be the company I am speaking of, of the
    very aggressive efforts that they have of counseling and
    bringing assistance at a time when people seem to be having the
    same experience in the private markets that we are seeing in
    the FHA.
        So the fact is that this is a sign of the times as we have
    had a little bit of an economic slowdown. But the fact is that
    not only through the FHA but also even in the private sector
    there seems to be a great deal of effort in counseling and
    helping families restructuring debt so we can help keep them in
    their homes.
        Senator Kohl. Well, I quite agree with you. The facts seem
    to coincide with what you have just said, and yet your budget
    includes level funding of $20 million for housing counseling.
    All of the facts seem to indicate that the greater the degree
    of counseling, the lower degree of mortgage foreclosures. So,
    but I do not square what you are saying with the facts.
        Mr. Martinez. Well I just do not know that it is necessary
    for us to increase the budget in that area in order for us to
    continue the efforts that we have underway. I do not think it
    is a monetary problem. I think what we have to do is implement
    and be aggressive about what we are doing and so I believe we
    can carry out the function with the current funding level we
    have available.
        You have to remember that it is about the quality of the
    counseling that takes. It is about the expertise of those
    people involved in the process and the help that they can
    provide to a family in need. So I am not sure additional funds
    in that area are going to make a difference. I think what we
    have available in the current funding levels will allow us to
    carry out the mission.
        Senator Kohl. Well I thank you so much. Thank you Madam
    Chairman.
        Senator Mikulski. Your questions were excellent Senator and
    very parallel to my own. Thank you. Senator Shelby, you have
    been waiting very patiently.

                               PREDATORY LENDING

        Senator Shelby. Thank you Madam Chairman. Mr. Secretary, I
    want to get back into the flipping of mortgages and the dynamic
    basically being created with a fraudulent appraisal, a
    misleading appraisal, or something like that. Has the Justice
    Department been called upon to get into these cases where
    there--and they are all over the country.
        Mr. Martinez. They have. I am just verifying that they
    have, but I am sure they have.
        Senator Mikulski. Senator, through the U.S. Attorney's
    office.
        Mr. Martinez. There are investigations that go on and we do
    get success from time to time in this area. We need to do all
    we can there.
        Senator Shelby. But it is very, very important in your
    position, and in ours too, to help root out the fraud that will
    destroy good programs quickly such as this. The key to any
    loan, I suppose, whether it is in the private sector period or
    if it is a HUD FHA-insured loan, a VA guaranteed loan, would be
    the appraisal. What does the appraisal show? If there is a
    history of this, it seems to me like an investigation would
    uncover it fairly quickly and you could put a stop to it. I
    know it is easier said than done.
        Mr. Martinez. It is about our manpower and our ability to
    supervise. Before my phone starts ringing from all my appraiser
    friends, I think we should all--and as a lawyer I am always
    sensitive about good lawyers versus those who may stray outside
    the line--but there are many good appraisers out there. It
    isn't about the industry or the profession. It is about the
    people----
        Senator Shelby. Most of them are probably honest.
        Mr. Martinez. Absolutely. And it is just about those few
    that seek to step out for a momentary gain and we should
    prosecute those and have a sure prosecution for them.
        Senator Shelby. What they do, Mr. Secretary as you know, is
    they hurt good programs and they will destroy good programs if
    we don't root it out. And I have confidence in you to know that
    you are going to turn over every rock to get to it because it
    will destroy what you are trying to do.
        Mr. Martinez. Thank you Senator.

                               HUD LOCAL OFFICES

        Senator Shelby. Mr. Secretary in another area I think it is
    very important that your people on the regional level and in
    the national level here in Washington get along with people in
    various cities spread all across the country. We have had some
    evidence of that in my State of Alabama and you have worked
    some of that out and I appreciate that. But when local
    officials work well with the regional officials, when regional
    officials work well with your offices here, it just calls for a
    much better function in our offices, doesn't it sir?
        Mr. Martinez. Absolutely. Yes sir.
        Senator Shelby. And what are you doing to foster this?
        Mr. Martinez. Well, first of all, I think it is important
    to improve the morale in our Department and I have been working
    hard to do that. Also as I travel, this sounds simple but it is
    something that hasn't been done in many years, I visit our HUD
    offices in each of the localities.
        Senator Shelby. That's good.
        Mr. Martinez. And I got a clear message to our folks in HUD
    which is we need to work and cooperate with our local
    officials. I am trying also to give more authority to our field
    offices. I am trying to give more autonomy to HUD's regional
    directors and State representatives so they can have the
    ability to more closely work, not only with local government,
    but also with the private sector in their local communities; be
    able to make the decisions, be able to set direction and be
    able to work in the kind of cooperative way that I think you
    are describing.
        Senator Shelby. And hold them totally accountable for what
    they do, correct?
        Mr. Martinez. Absolutely. Absolutely hold them accountable.
    And you know there is no room for us to be the problem. I do
    not think that HUD should ever be the problem as it relates to
    dealing with the mayor's office or as it relates to dealing
    with a private developer who may be trying to do a project. All
    too often we hear that HUD is difficult to deal with; that you
    cannot get answers. Those are the kinds of things, frankly, I
    am determined to make a difference in and put an end to.
        Senator Shelby. Thank you Mr. Secretary. Thank you.

                                   SECTION 8

        Senator Mikulski. Mr. Secretary, I would like to come back
    to Section 8 and follow up on Senator Bond's questions. One of
    the things that both the Republican Chair and a Democratic
    Chair have faced is that whenever there was a shortfall they
    turned to HUD and usually the Section 8 accounts to pay the
    bill for other programs. Most often when FEMA, because they
    were responding to natural disasters, needed more money. So we
    were the bank. Senator Bond and I have been sending warnings
    now for a number of years and we are afraid now that we have
    really hit the bottom. And for the last several years Congress,
    as I said, has rescinded these large amounts. We hear that over
    in the House they are going to keep pushing this concept of
    getting more money out of ``something called a rescission.'' Is
    there any amount of money currently available for rescissions?
    Just plain English.
        Mr. Martinez. I will let Mr. Gibbons give an answer to that
    question.
        Mr. Gibbons. No.
        Senator Mikulski. That's pretty plain.
        Mr. Gibbons. Right now I have $400 million and I owe you
    $1.8 billion. So the answer is no, not at this time.
        Senator Mikulski. So we could conceivably be in a situation
    where you are going to have to find $1.8 billion in other
    programs and none of them are cushy.
        Mr. Martinez. No. That is absolutely right. We do not have
    extra funds available. And the idea that HUD should be raided
    for the benefit of other programs, I just do not find that to
    be an attractive prospect and I will fight hard for that not to
    happen.
        Senator Mikulski. Well we really encourage you to be in
    contact with the House about this particular situation. And
    then second, we are going to need a plan for this $1.8 billion.
    And I do not know what your thoughts are on that.
        And let me come to the utilization rates which is also one
    of our problems. Year after year it seems that the same public
    housing authorities have difficulty utilizing vouchers and
    their funding is at risk of being recaptured, or they return
    these vouchers. Some of this is due to poor management and the
    other is due to simply because of prosperity and the lack of
    other apartments being built.
        Mr. Secretary what we have discussed, landlords do not want
    to rent to Section 8. Now there is all kinds of reasons they do
    not want to rent to Section 8. Some are despicable and illegal.
    But others Section 8 does not pay enough when they can get
    higher rents. Could you tell us your views on this and how you
    intend to address this issue?
        Mr. Gibbons. Again, I will take the first part of your
    question. There is a scheduled recapture, additional recapture
    of the both tenant-based and the project-based in late August
    with the hope that it will garnish enough to meet the $1.83
    billion that Congress rescinded in the 2001 appropriation bill.
        Senator Mikulski. So we are counting on the return vouchers
    in August to be the bridge that brings us over these troubled
    waters?
        Mr. Gibbons. Yes that is correct.
        Senator Mikulski. We will already have marked up our bill?
        Mr. Gibbons. This is from 2001's appropriation bill that we
    owe and we were due to recapture in August and we hope that
    there is sufficient recaptures available in the Section 8
    program to fully meet that need. If there is not, then the
    Secretary will be required to go to another program in HUD that
    has unobligated balances, wherever that would be, and take
    whatever we do not have in the Section 8 program. If you add
    the $114 million to that amount then that, just as an
    additional $114 million that we will either have to get out of
    Section 8 or some other program by the end of September. But
    there is a scheduled recapture of funds again in
    August.
        Senator Mikulski. Well the Committee really needs to be
    kept apprised of this. I know Senator Bond has a follow-up but
    what about the utilization issue?
        Mr. Martinez. Well, I was going to say that in utilization
    there are some things we are doing. Following up on
    congressional initiatives in the past but increasing the local
    flexibility to raise the subsidy levels. We think that is a
    very important initiative. Public housing authorities now have
    discretion to raise the subsidy levels to 110 percent of the
    local fair market rent. In addition to that, more surveys of
    localities so we can more accurately forecast and predict what
    fair market rents might be in different communities. As we do
    more surveys we will then have a better, more up-to-date list
    of what fair market rents should be. We think these things will
    help. In addition to that, the program is going to allow our
    Section 8 voucher holders to purchase a home with your Section
    8 vouchers, I think all these things in concert will help the
    utilization rate.
        Senator Mikulski. My time is up. Senator Bond.
        Senator Bond. Thank you very much Madam Chair. Lots of
    tough issues to deal with. Let me hit on a number of them. In
    last year's Senate Report, we instructed the Department to
    develop transition plans to transfer the mark-to-market
    functions from the Office of Multifamily Housing Assistance
    Restructuring, OMHAR, to HUD's Office of Housing. What is the
    status of the transition? How is HUD going to ensure that it's
    restructuring deals are not affected? Do you have the staffing
    resources and capacity to continue the program?
        Mr. Martinez. Yes sir we do. There is still a need for the
    program. We are seeking the authority to extend the
    restructuring tools of the Mark-to-Market Program. HUD does
    plan to extend OMHAR for 3 years but bringing it in-house with
    two exceptions. The Office will not be PAS appointment and the
    office will be under the jurisdiction of the Assistant
    Secretary of Housing. So that is the way in which we intend to
    bring it about, but we are very much engaged in that
    transition, which I think, will take place in September.
    September is the time we anticipate--September 30th actually I
    guess the end of fiscal year would be the time for that.
        Senator Bond. Mark-to-Market authorization expires at the
    end of this fiscal year. Your budget justification shows you
    intend to submit legislation to extend and modify the
    restructuring authorities. One area that troubles me is the
    inability of the Administration to force owners into full
    restructuring deals, leaving some of these properties at
    increased risk to fiscal and financial problems. A draft GAO
    report I have heard, found there were eleven properties
    identified as troubled and twenty three more as potentially
    troubled because the properties were not properly restructured
    by OMHAR.
        Can you give us an overview of your position on the Mark-
    to-Market reauthorization and your views on how long the
    program should be extended, what specific areas the
    Administration intends to modify, and any forcing mechanisms
    you plan?
        Mr. Martinez. I think there is no question that the program
    needs to be continued. I think a 3-year timeframe is what we
    are talking about. Frankly, that may not be long enough. I
    think that as we talk about it we wonder whether we should
    really look at 5 years. But we are looking at a 3-year request
    right now and see where that puts us. I think there has been
    great success in some of the OMHAR restructuring. I have no
    doubt that from time to time they may miss the mark because
    they are dealing with properties that sometimes might be
    troubled at the front end and might be difficult to restructure
    them in a way that will make them solvent.
        But we estimate that the savings in Section 8 for the next
    5 years are really pretty significant. They are in the mid-$150
    million range for the next several years. So we believe it is
    worthwhile to manage our program in a way that continues to
    make that stock of housing that is so needed available to
    Section 8 holders.
        Senator Bond. I have a problem of particular concern in my
    State. Several months ago we heard that Section 202 property,
    the Boulevard Apartments were going to be shut down. The
    elderly were going to be moved out to a spot far away from
    their health care facilities and from the amenities that made
    living for the elderly there appropriate. We were delighted and
    everyone was excited when Washington University agreed to work
    with us on developing a new mixed-income multifamily property
    in the same neighborhood, so the current residents would not be
    adversely displaced. And all we had to do was have the
    cooperation of the
    Department.
        Instead, for some reason, the Department is apparently bent
    on forcing the relocation of the residents and sale of the
    property by September, which really has the residents upset.
    They are pushing them to an isolated and distressed area. It
    seemed to me that we had a tremendous opportunity. What
    happened?
        Mr. Martinez. Well, Senator, this is a project that
    apparently the conditions of the housing was such that it was
    deemed unsafe. There was fire hazard and so forth.
        Senator Bond. We understand that.
        Mr. Martinez. What I am told is that HUD has never required
    a specific relocation to a certain place, but that we have
    given the folks a Section 8 voucher that they can utilize at
    their choice. So I do not think that has been a HUD
    requirement. We have had some regulations that have made it
    difficult or impossible for us to simply allow the program to
    go as we hope.
        I have now special counsel who is reviewing the entire
    project and will continue to work with your staff to find a
    good resolution to it. I do not think our goals are any
    different. I just think we are constrained at times in the
    Department as to what we can do by the regulations that may be
    applicable.
        Senator Bond. Well, actually they were actually directing
    them to be moved to Council Towers. Have you had any
    discussions with the current owners, or Washington University
    or Fannie Mae about working this out. These are all the
    partners that were willing to work out the development of this
    facility for the benefit of these disabled tenants.
        Mr. Martinez. Senator I have not. I think what we should do
    is try to find a way going forward to continue to work with
    your staff and the HUD staff to continue to do what we can to
    solve the problem in a way that is amicable to everyone
    concerned. I do not think HUD ought to be the problem in the
    deal. But there are some limitations in what we apparently can
    do. We cannot give preference to any given bidder as a
    preference to the outcome to the program. We may have a desired
    outcome we would like to see happen or seems to be the most
    sensible. But we just cannot give preferential treatment to
    anyone of the bidders. That would be outside what is possible
    or appropriate for us to do.
        But I will pledge to you that we will certainly work
    closely with your staff to continue to move the project forward
    that makes the residents happy and allows us to get out of a
    property situation that was really a trouble property based on
    the safety situation.
        Senator Bond. Well a lot of the entities I mentioned were
    willing to make significant concessions because of the
    importance of this to the area. Initially from our discussions
    with HUD and all the others, it looked like a tremendous win-
    win situation. So if you will make sure that everybody's is
    working together we will have a tremendous celebration when we
    move them all in.
        Mr. Martinez. Well, I would love to come to your place and
    have that celebration when we get it done. But rest assured
    that the direction has been to do what we can to make sure that
    this happens in a positive way, within the bounds of what I
    know we would all want to do which is the right thing legally
    speaking.
        Senator Bond. Thank you Mr. Secretary. Madam Chair.
        Senator Mikulski. I would like to return another point on
    Section 8. Exactly the point you made sir, you cannot tell
    anybody where to go under Section 8 because one, I think our
    Constitution prohibits it and two, our Fair Housing laws. But
    there is also another side to this. And what we are seeing is
    that now with the vouchers we are having new concentrations of
    poverty.
        And you might recall that the point of HOPE VI in tearing
    down high-rise public housing was to get rid of--to deal with
    these concentrations, these zip codes of poverty. And because
    of the concentration, they went from poverty to also really
    systemic social
    pathology.
        Okay, now what is happening is, we have gone from vertical
    poverty to horizontal poverty. That there are new
    concentrations emerging in Section 8 areas. I wonder, and I
    know you are going to be meeting also with the urban county
    people tomorrow--this is an issue they want to raise. Do you
    have any type of thinking going on number one to identify this
    and be able to track this? And then number two, are you working
    on some type of saturation index like we had once in tenant
    housing?
        Mr. Martinez. We do monitor that Senator and clearly what
    you say is a concern to us all. We don't want to end up in a
    situation like we had at one time, and still do in some areas,
    but not intended to continue the perpetuation of these high-
    rises with large concentrations of poverty. But we note your
    concern, and we have heard your concern on this, and our
    efforts have really focused on relocating families with
    information, and when we do at one of these HOPE VI housing
    projects on a range of different housing options, and
    assistance to help them access options they can afford.
        We do have studies underway to track the outcome of
    families that do relocate from HOPE VI developments. As someone
    in the recent past in local government, I am a great believer
    in the HOPE VI program. I think it is a tremendous thing. Some
    of the things I have seen it do in my former community in
    Orlando have been very positive. The fact is that the
    relocation is something that has always concerned me as to what
    happens to these people. Where do they go? I think that is one
    of the weaknesses in the HOPE VI program and I think we need to
    strengthen that.
        I think overall as the project comes up for
    reauthorization, I think it is a great program--one that we
    need to celebrate and enhance. But we need to pay close
    attention to what is happening to the relocations----
        Senator Mikulski. There's a very eager staffer sitting in
    back of you writing notes--white shirt with the burgundy tie.
    Did you have something you wanted to add to amplify this? But
    you seemed to know that we were on the right track.
        Voice. We are very interested in working with you.
        Senator Mikulski. What did you say?
        Mr. Martinez. He said he is very interested in working with
    the Chairwoman.

                              HOUSINIG PRODUCTION

        Senator Mikulski. This then, of course though, takes us
    to--one of the issues that Senator Bond and I have been
    concerned about along with many members of the authorizers is
    the need for new housing production. We need to do something
    about the lack of affordable housing. We need to be able to
    increase production. Senator Bond, Sarbanes, and I looked at
    some of this. We wonder what are your thoughts on this? What
    plans do you have? What would you like to bring to the
    committee? And what perhaps could we do in this year's
    appropriations?
        Mr. Martinez. Well we appreciate your interest in
    production. I know that Senator Bond shares that passion. I am
    well aware of the statistics that point us in the direction to
    the fact that more housing production needs to be a part of our
    strategy. I had hoped that we would look at least in terms of
    my own thinking to have this year allow the Millennial Housing
    Commission, which is meeting--and I understand moving along
    very rapidly----
        Senator Mikulski. Very hard working.
        Mr. Martinez. Very hard working under the leadership of Mr.
    Ravitch and also former Congresswoman Molinari. They are doing
    a great job and I am looking forward to meeting with them. I
    have had staff in conversations with them to see what they come
    up with and the range of options they bring back to us in terms
    of where we might go. I believe that in this year's budgetary
    cycle it would be very difficult for me to come to you and say
    here is where we can have additional funds for----
        Senator Mikulski. So you think that is premature.
        Mr. Martinez. I think it is. I would prefer to work very
    closely with the Chairwoman and the ranking member as well as
    with this Millennial Commission as we look to next year in a
    concerted effort that we then might come up with a production
    program that I think we all could really see to fruition. That
    would be my counsel and my plea to you as we defer by a year.

                                      FHA

        Senator Mikulski. I think that's prudent though we are
    anxious about it. Let me just exercise a minute. One of the
    areas--I am going to go to private sector housing because we
    just talked about the tight squeeze in apartments, the
    rejection of Section 8 people. Rents are increasing. Utilities
    are going are up so rents are going to increase--just the
    nature of doing business.
        I understand in the budget and also members of my rental
    community have talked to me that you made a proposed 25 percent
    increase in FHA multifamily loan limits. Am I correct?
        Mr. Martinez. That is correct.
        Senator Mikulski. And that this has the strong support of
    mortgage bankers, realtors, AFL-CIO, mayors, home builders.
    Could you comment on that? And do you think that these are not
    the same issues but we need more production in the area of
    rental areas, we are doing it. Do you want to comment on it and
    then could you share with the committee do you think you can do
    this by regulation? Do you need our help?
        Mr. Martinez. First thing, let me say that I am delighted
    for that to be the one area where we have had very unanimous
    agreement between the mortgage bankers, the homebuilders, and
    myself, which I think is a great point of building on even more
    areas where we might agree. The fact is this is something that
    has not been raised for 9 years. I do believe that it will help
    spur production because I think that even though we may defer
    by a year the issue of production program, we do need to
    encourage more production.
        So we do need legislative review for that and it would be
    our hope that this could happen in a timely fashion so that we
    can move forward in this area. I do believe that there is much
    that HUD can do, not only in the area, but also as we try to
    work more aggressively with local governments and local
    developers to increase housing production. I think we can
    increase affordable housing production even absent of a
    production program just by what we do and how we do it.
        Senator Mikulski. We would like to work very closely with
    you on this. There have been no new FHA multifamily projects in
    several cities including my own in metropolitan areas. And what
    is being built is really very upscale or very kind of gentry
    oriented in downtown.
        Mr. Martinez. It's amazing the rents they are charging in
    some of those places. I saw a project in West Palm Beach,
    Florida, where the rents are incredible. It is great to see the
    economic and urban revitalization that is taking place in so
    many places around the country. But at the same time we need to
    mix in the affordable housing component, which seems to be
    absent in so many places as we do this.
        Senator Mikulski. Senator Bond.
        Senator Bond. Thank you Madam Chair. Mr. Secretary I know
    you have a lot of other things to do than read old conference
    reports but I have here a last year's VA/HUD conference report.
        Senator Mikulski. Is that yours?
        Senator Bond. Page thirty-six. I take it home and read it
    every night.
        Mr. Martinez. I'll start doing that now.
        Senator Bond. I spilled an ice cream bar on it. Some other
    stains on it.
        Mr. Martinez. I have been looking for some summer reading.
        Senator Bond. Page thirty-six, Section 233, not
    withstanding any other sections of law, to the extent that the
    Secretary determines that a multi-family property held by the
    Secretary is not feasible for continued rental assistance
    payments under such subsections (a), the Secretary may in
    consultation with the tenants of that property contract for
    project-based rental assistance payments with an owner or
    owners of other existing housing properties or provide other
    rental assistance. I wanted you to know that we have written
    into the law something that may be useful to you in dealing
    with the citizens in the boulevard.
        Mr. Martinez. I appreciate that and be assured that our
    staff is going to be in touch with yours. We are going to get
    this problem solved.
        Senator Bond. Oh, I think they will talk about it.
        Mr. Martinez. You better believe it. You better believe
    they will. But, you see, we need to do more than talk about it.
    They got to get some solutions and I will push them on that.
        Senator Bond. You know the Missouri slogan?
        Mr. Martinez. Show me. Is that it?
        Senator Bond. That's right.

                            HOMEOWNERSHIP INITIATIVE

        Mr. Martinez. I thought it was.
        Senator Bond. On the HOME set-aside, as I mentioned
    earlier, the Administration is proposing to set aside $200
    million within the HOME program for downpayment assistance. The
    idea is interesting. I like homeownership. But I find it hard
    to support a set-aside in the HOME program when HUD is not
    proposing to add any additional funds. Taking an eligible
    activity and making it a requirement means a reduction of
    flexibility in local decisionmaking. Is there any good argument
    that I have missed why the decision making should be taken away
    from States and localities with regard to the use of these
    funds?
        Mr. Martinez. Well, I would point out, Senator, that in the
    past, a larger portion of the HOME funds have been used for
    downpayment assistance than what is being directed even now. So
    what I think the President is trying to do in this program is
    to very much focus the attention on downpayment assistance of a
    program that has already included down payment assistance as
    part of what it does. And while I agree with you, it does seem
    to go counter to a lot of what we would like to do, which is to
    give more local authority and more local autonomy. It does deal
    with a very important issue, which is home ownership, and to
    identify down payment as the key issue toward home ownership. I
    think it presents a very strong emphasis and priority into the
    issue of down payment assistance.
        So HOME was already doing it. HOME was doing it largely to
    that extent anyway. So I just think it is now focusing the
    energies of it, and as we say, we propose and you dispose. And
    if more money was to go to that program we would use it wisely.
        Senator Bond. Well we--I certainly share your emphasis and
    enthusiasm for homeownership, but we have a problem with
    production of housing generally and that I would hope we could
    focus on that. I had a question something that has been going
    on at HUD prior to your arrival--HUD's implementing the Single
    Family Property Disposition Program, the asset control areas or
    ACAs. And with regard to one ACA in Chicago, my staff learned,
    that in order to sell the foreclosed properties conveyed to a
    local non-profit, additional Federal subsidies in the form of a
    Special Purpose Grant was provided to pay for the needed
    repairs.
        Now that is taking critically needed Federal housing funds
    out of one pocket and putting into another. It seems to me it
    is contrary to the intent of the 1998 property disposition
    legislation where HUD was to sell properties to local
    governments and qualified non-profits at a price that allowed
    adequate rehabilitation and resale to low-income home buyers
    without the need for additional subsidies.
        And I do not understand why we are getting a Federal grant
    to pay somebody who has just made a bid on a HUD-owned single
    family property. Would you--I would like to have a written
    answer--but if you can figure out what is going on because
    something doesn't look right in that deal.
        Mr. Martinez. I know we are working on that issue and I
    would like to maybe give you a written answer to that. I think
    that would be the best way.

                              homeless assistance

        Senator Bond. Okay. Supportive Services for homeless. Three
    years ago we required HUD to set aside 30 percent of the
    McKinney Funds for permanent housing. HUD had been and
    continues to spend a significant percentage of McKinney money
    on services instead of focusing the funds on housing. With the
    growing demand for permanent housing renewals there is likely
    going to be less money available for new construction and
    supportive services.
        My view is that other agencies, like HHS, Labor, and VA,
    need to be stepping up to the plate to provide the services.
    The name of your agency starts with Housing. What are HUD's
    plans for funding services in permanent supportive housing so
    that we can end chronic homelessness?
        Mr. Martinez. Senator you are precisely correct and I look
    for your support and the Chairwoman's support on this issue as
    I try to move us into the housing business. If we do not
    provide the shelter, no one else will. There are other agencies
    of Federal responsibility that have, as part of the
    responsibility, the issue of services.
        As I said, we have a task force working between HHS and HUD
    on this very issue and the clear indication from Secretary
    Thompson and myself to both of bureaucracies was fix this
    problem. We have got to get to a point where HUD dollars are
    going to housing, to shelter. What HUD was intended to provide.
    And to make sure that these people that are now under some sort
    of housing that HUD has provided are getting the kinds of
    services that they need for drug intervention, for mental
    illness, or for other societal issues that they are dealing
    with that really fall under the purview of HHS, or quite
    frankly as you mentioned so appropriately, Education or Labor.
        I am determined that we should focus our efforts on housing
    while allowing these other social services to be provided by
    those agencies that provide it to the population at large.
    Frankly, I do not want to go back into this issue--I do not
    want to go back into it at all. But I will mention that it is a
    little bit like this Drug Elimination Grant Program. Law
    enforcement agencies, drug elimination programs around the
    country that are funded by the Federal government should also
    touch people in public housing. It should not be our role to be
    diverting what is going to public housing to do a function of
    law enforcement or drug intervention that really ought to be
    done by other agencies. So I don't mean to mix apples and
    oranges here and really even----
        Senator Bond. Good point. You score one on that.

                                    HOPE VI

        Mr. Martinez. Well good. Maybe I should quit right now.
        Senator Bond. But no, I appreciate your focus on that.
        Senator Mikulski. Coming back to the housing business and
    what happens like in Phase II. I want to talk about HOPE VI.
    HOPE VI expires in 2 years and my original thoughts around HOPE
    VI will be--was that we needed not only a new fiscal
    architecture but a new social architecture. Very much along
    your lines which was getting rid of the zip codes of poverty
    and pathology, enlisting the tenants in a way to community
    building and personal capacity building. And that we would be
    creating a new social architecture building on family, always
    building on family. Now the program expires in 2 years, but I
    would like to look ahead.
        Now I am not into automatically renewing or rubber stamping
    or whatever. We have had a lot of experiences and I think most
    of it has been good. There has also been other problems. I
    wonder, what are you, what within the Department are you doing
    in terms of the anticipated expiration of HOPE VI? Are you
    looking to have a task force? Are you looking at lessons
    learned? Best practices? What it meant to people? What were
    some of the shadow sides like the reconcentration in
    neighborhoods and therefore creating hollow opportunities
    rather than real opportunities? I wonder what your thoughts are
    on proceeding.
        Mr. Martinez. Senator I agree with you that we should be
    looking forward and I must confess to you that having only a
    recent tenure at the Department that we really have not begun a
    serious process of analyzing HOPE VI. The fact is that is an
    area we should address. I think the issues that you bring to
    bear are all that should be on the table. We should look at all
    of those issues as part of how we approach continuation of HOPE
    VI.
        But let me also add to that that I think it would be a
    great opportunity for us to look to the faith-based and
    community organizations that the President intends to engage in
    a more direct way, and partnership with us to look into this
    area as to how we might accomplish a better mix of residential
    areas within the communities of the relocation of the HOPE VI
    residents and even these new properties that are emerging.
        I believe that there is a limited amount that government
    can do in order to make people live in certain places. I think
    community-based organizations and some of our faith-based
    organizations might be in a better position to provide
    assistance as we try to not only work on the relocations, but
    also work on the whole social structure that is necessary for
    these families to be successful.
        I would hope that we can bring them into the equation as we
    look to the future. But I think clearly we should have a task
    force that would work closely with the Congress in going
    forward with a program that I think has been largely seen as
    incredibly successful. We also need to make sure it goes
    forward in a way that makes it even better and tweaks those
    areas that I think tweaking is needed.
        Senator Mikulski. Well, first of all Mr. Secretary, those
    lights mean again that we are going to have a vote. And I
    anticipate we adjourn we would be through for the day. So let
    me just move quickly here. First of all on HOPE VI, there has
    been research done. Urban Institute done a lot of evaluation
    and Dr. Arthur Napperstack has put in a lot of time. I would
    hope that there would be a task force, just looking ahead.
        And also, sir, I am looking ahead to the large urban
    counties. Often programs have been concentrated in cities. And
    in big cities we had the big public housing. This HOPE VI was
    in response to the distressed public housing and a task force
    on this.
        Now when I go into my suburban communities, and
    particularly those that are so-called urban beltway
    communities, what we have found is that landlords are running
    public housing by proxy. They have taken large apartment
    buildings, rent only to Section 8. They take the money but they
    do not do any of the maintenance. They become again public
    housing by proxy.
        I think the urban counties are going to talk with you about
    that again. This is a dialogue that will go on between you and
    I and the committee and the authorizers and so on. I am not
    looking for new programs, government as Big Brother, or
    permanent brother. But I think we need to look also at what is
    happening in our older communities and also where public
    housing exists by proxy in which there are these large
    apartment units, which now quite frankly I have got county
    executives--your kind of guy you know--that wants me to help
    them buy them and tear them down.

                            FAITH BASED INITIATIVES

        So we have got a lot cooking. But before we break, first of
    all, thank you so much for the community tech initiative, I
    think it is empowerment. See I am a self-sufficiency advocate.
    So it is not only about housing. It is about personal capacity
    housing and strengthening neighborhoods. Now could you share
    with us, for my last question, what is the President's Faith-
    Based initiative for HUD?
        Mr. Martinez. Well let me say that I think is the most
    exciting thing that will be coming about as a result of this
    Administration. I think it is the opportunity to empower Faith-
    Based organizations to work in close partnership with
    government to provide those kinds of services as we have been
    discussing here today. I think that the President's intent is
    to ensure that as we set our Office at HUD and other offices in
    the various five agencies that are involved with the Faith-
    Based offices, that we will have a close connection with
    private sector, with the not-for-profit, and the community-
    based organizations--some of which might not be animated by
    faith--in order to deliver the services that government alone
    cannot do.
        So it is about bringing in a close working partnership. It
    is not about taking a role of government and making it
    paramount or eliminating the role of government, but taking
    government to do what it can, but then also allowing these
    organizations--like Catholic Charities which you and I are so
    familiar with--to work in the fullness that they can.
        We have been doing it for years in many ways as you pointed
    out. The Jewish communities, the Methodist communities, and the
    Catholic communities have had elderly housing that has been
    very successful. It is replicating that model again and again
    and again as we attempt to deliver the whole gamut of social
    services in our society. I think it has got great promise. I am
    very, very positive about it. Our faith-based office at HUD is
    already up and running. It is all still very embryonic, but I
    think the hope and the potential that it has, I think is
    tremendous.
        Senator Mikulski. Is this new money?
        Mr. Martinez. Well, it's not now new money. There will be,
    I think, programs that will be geared to them. But it isn't new
    money in order to initiate the current offices. We do have
    certain dollars that we have earmarked for the office at HUD to
    be functioning. But it isn't new money in the sense of a new
    set of grants that are going to be awarded or something like
    that.
        Senator Mikulski. Is this some kind of catcher's mitt? In
    other words, churches who say how can I get involved with HUD,
    build my community and so on, is this like a gateway into HUD?
        Mr. Martinez. It is. And it is also the reach out by HUD.
    It is the going to people like Reverend Lutz in Philadelphia
    who are doing so much to revitalize their communities, to
    engage them and say here is what HUD has available. How can we
    work with you?
        Senator Mikulski. I want to give my colleague time.
        Senator Bond. Thank you very much.
        Senator Mikulski. We have a lot to talk about with that.
        Senator Bond. Again this has been very helpful and we
    sincerely appreciate it. I just noticed in your written
    statement, Mr. Secretary, that you are happy to announce that
    Section 8 voucher holders will be able to use up to one year's
    worth of assistance toward a down payment on a home because of
    the American Homeownership and Economic Opportunity Act. Permit
    me to call your attention to Title 3, Section 301, paragraph A,
    sub-paragraph 7: Down payment assistance may provide assistance
    for the family in the form of a single grant as a contribution
    towards a down payment in connection with a purchase of a
    dwelling to the extent provided in advance in appropriations
    acts.
        So if you wouldn't mind waiting until we appropriate funds
    for that before you go down that road, I think you would save
    us all some problem. We believe in homeownership, but we need
    to make sure that we can include that in the appropriations act
    before you do it.
        Mr. Martinez. Yes sir. We just wanted to be ready for when
    the money is there.
        Senator Bond. Okay, we will work with you anyway we can. We
    very much appreciate it and looking forward to working with
    you. As we all know, even before this hearing, there are lots
    of interesting challenges which are going to make it a very
    rewarding and exciting several months. We thank you for your
    willingness to take on this very important responsibility.

                             conclusion of hearings

        Mr. Martinez. I look forward to working with the Committee.
        Senator Mikulski. Mr. Martinez, I do have one issue, which
    I will give to you--FHA loan limits in Howard County. They are
    being treated like Baltimore although they are closer to
    Washington. Let me hand this to you. This committee--first of
    all we thank you and we thank you for your patience. Again we
    apologize. This concludes not only this hearing but all of the
    hearings for VA/HUD for fiscal year 2002. And on this, the
    subcommittee stands recessed and we will be seeing everybody as
    we mark up.
        [Whereupon, at 4:20 p.m., Thursday, June 14, the hearings
    were concluded, and the subcommittee was recessed, to reconvene
    subject to the call of the Chair.]
                           NONDEPARTMENTAL WITNESSES

        [Clerk's note.--The following testimonies were received by
    the Subcommittee on VA, HUD, and Independent Agencies for
    inclusion in the record. The submitted materials relate to the
    fiscal year 2002 budget request.
        The subcommittee requested that public witnesses provide
    written testimony because, given the Senate schedule and the
    number of subcommittee hearings with Department witnesses,
    there was not enough time to schedule hearings for
    nondepartmental witnesses.

                        ENVIRONMENTAL PROTECTION AGENCY

       Prepared Statement of the University Corporation for Atmospheric
                                Research (UCAR)

        On behalf of the University Corporation for Atmospheric Research
    (UCAR) and the university community involved in weather and climate
    research and related education, training and support activities, I
    submit this written testimony for the record of the U.S. Senate
    Committee on Appropriations, Subcommittee on VA, HUD and Independent
    Agencies for the fiscal year 2002 budget.
                university corporation for atmospheric research
        UCAR is a non-profit, university membership consortium composed of
    66 North American institutions that grant the Ph.D. in atmospheric,
    oceanic, and related sciences. It is a Colorado-based corporation that
    manages and operates the National Center for Atmospheric Research
    (NCAR) and the UCAR Office of Programs (UOP). UCAR is supported by the
    National Science Foundation (NSF) with additional funding from the
    National Aeronautics and Space Administration (NASA), the National
    Oceanic and Atmospheric Administration (NOAA), the Department of Energy
    (DOE), the Environmental Protection Agency (EPA), the Department of
    Defense (DOD), and the Federal Aviation Administration (FAA). In
    addition to its member universities, UCAR has formal relationships with
    approximately 100 additional undergraduate and graduate schools
    including several historically black and minority-serving institutions
    and 38 international universities and laboratories. The UCAR mission is
    to support, enhance, and extend the capabilities of the university
    community, nationally and internationally; to understand the behavior
    of the atmosphere and related systems and the global environment; and
    to foster the transfer of knowledge and technology for the betterment
    of life on earth.
                                  introduction
        Now, more than at any other time in our nation's history, our
    security, our quality of life, and our economy depend on our
    investments in science and technology. The President's budget request
    states that, ``Scientific knowledge is becoming the most sought after
    commodity in the world. The U.S. ranks only 6th among OECD nations in
    the share of GDP devoted to research and development.'' Yet the
    Administration's request for nonmedical scientific research for the
    nation does not even keep pace with the rate of inflation. The recently
    released report of the Hart-Rudman Commission on National Security
    supports that statement, as do leading economists, including Alan
    Greenspan, who agree that federal R&D investments have fostered the
    technological progress that has produced more than half our nation's
    economic growth over the past 50 years. Last year, Congress made
    genuine bipartisan commitments to strengthen science, engineering and
    long-term growth by significantly enhancing basic research investments
    across agencies. But the Administration's proposed budget for fiscal
    year 2002 falls short of constructing a strong and balanced science
    portfolio for the country.
                       national science foundation (nsf)
        For educational progress to be continued and enhanced, and for new
    scientific achievements to be realized, the fiscal year 2002 NSF budget
    simply must exceed the Administration's total request. The
    Administration's budget request for NSF states, ``The productivity of
    the U.S. scientific and engineering community--depends critically on
    NSF support of fundamental research.'' But the proposed budget includes
    only a very modest 1.3 percent increase for the agency, or $4.472
    billion, an amount insufficient to cover even the cost of inflation.
    Last year, Congress wisely set a course to double the funding for the
    agency over five years when it provided a 13.6 percent increase. I ask
    the Committee to make a second installment on your fiscal year 2001
    investment by supporting a 15.0 percent increase for a total NSF budget
    of $5.14 billion in fiscal year 2002. This is an increase that the
    science community has the capacity to use immediately and well. Each
    year NSF receives approximately 30,000 proposals and has the resources
    to fund about 9,000 of them. Nearly $2 billion worth of proposals rated
    very good to excellent through the merit review process go unfunded.
    Recent national competitions have produced success rates as low as 7
    percent, not because of a paucity of excellent proposals, but because
    of lack of adequate funding. These low proposal success rates reflect a
    capacity for progress in this country that is not being realized.
        A 15 percent increase can also be productive in terms of the NSF
    grant size and duration. Currently, grants average approximately
    $106,000 over three years. I am pleased to see the Administration
    directive to the Foundation for a study involving U.S. research
    universities in determining whether increasing the average grant size
    and duration will impact research productivity in a positive manner.
    UCAR and its university members look forward to the opportunity to work
    with NSF on the Administration's suggestion to examine this issue.
        Within the NSF, I would like to comment on the following specific
    initiatives and programs:
    Research and Related Activities (R&RA)
        Regarding R&RA programs, the budget request language states,
    ``These activities support areas of inquiry critical to long-term U.S.
    economic strength, security, and quality of life. Research activities
    spur new knowledge, ideas, tools and approaches that open doors to
    understanding and solving problems and offer increased opportunities
    for economic growth.'' Yet the request for R&RA, the heart of the
    nation's nonmedical basic research budget, is 0.5 percent below the
    fiscal year 2001 Current Plan numbers. This decrease is then reflected
    in the budgets of all the NSF Research Directorates. As the budget
    request states, ``NSF investments in R&RA reflect the Foundation's
    three strategic goals: People, Ideas and Tools,'' the three
    cornerstones of education and opportunity for all citizens, scientific
    research achievement, and technological advancement. I urge the
    Committee to allocate for Research and Related Activities an amount
    that reflects an overall 15 percent increase for NSF as requested
    above.
                Geosciences (GEO) Directorate
        The fiscal year 2002 request for GEO is 0.6 percent below fiscal
    year 2001 Current Plan numbers. I do not understand how this decrease
    can possibly ``support the operation and enhancement [my italics] of
    national user facilities,'' as the request language states. The GEO
    Directorate is this country's principal source of funding for
    university-based research in the atmospheric, earth and ocean sciences.
    GEO activities address the nation's ability to understand, predict and
    respond to environmental events and changes. Through involvement in
    such interagency programs as the U.S. Weather Research Program (USWRP),
    the National Space Weather Program, and the U.S. Global Change Research
    Program (USGCRP), GEO research advances our ability to predict natural
    phenomena such as severe storms, solar variability, and climate
    patterns that impact society. The potential threat of weather and
    climate disruptions to our economy is significant; both the Federal
    government and the private sector estimate that over $2 trillion of the
    U.S. gross national product is affected annually by weather and
    climate. Given the current struggles within our energy sector and
    within the economy as a whole, this is an unfortunate time to decrease
    research efforts that could help to anticipate weather and climate
    variability more effectively. I urge the Committee to allocate for the
    Geosciences Directorate an amount that reflects an overall 15 percent
    increase for NSF.
        Atmospheric Sciences (ATM) Research Support.--The fiscal year 2002
    request for ATM research support is 1.0 percent below fiscal year 2001
    Current Plan numbers. This ATM activity funds university research that
    advances our understanding of the Earth's atmosphere as well as its
    interactions with the Sun. As our ability has increased to do more
    complex research on solar-terrestrial interactions and the interactions
    of the earth's systems, so has the cost of necessary research tools
    such as computation time and instrumentation. If enacted, the fiscal
    year 2002 request for ATM will compound this problem and cause a
    setback for university research including the improvement of models to
    advance predictions of atmospheric and Earth system processes, and the
    further examination of biogeochemical cycles and human impacts on
    weather and climate. I urge the Committee to allocate for Atmospheric
    Sciences Research Support an amount that reflects an overall 15 percent
    increase for NSF.
        National Center for Atmospheric Research (NCAR).--Funded within
    ATM, this world-class center for atmospheric research supports the
    entire atmospheric and related sciences community through observational
    and computer facilities, instrumented research aircraft, and an
    extensive visiting scientist program. In fiscal year 2001, more than
    1,500 researchers and students will use the NCAR facilities and
    approximately 150 visiting scientists will stay for extended periods.
    The Administration's request for fiscal year 2002 decreases the NCAR
    budget by 1.1 percent based on Current Plan fiscal year 2001 amounts. I
    urge the Committee to allocate for the National Center for Atmospheric
    Research an amount that reflects an overall 15 percent increase for
    NSF.
        As a contribution within the GEO budget to the NSF Learning for the
    21st Century overall priority area, we appreciate the $2.45 million
    being allocated for innovative approaches to education including the
    development of the geosciences community's Digital Library for Earth
    Systems Science (DLESE). We would also like to point out the UCAR
    program, Significant Opportunities in Atmospheric Research and Science
    (SOARS). SOARS, funded directly by ATM within GEO, is having a positive
    impact on the number of ethnically diverse atmospheric sciences
    graduate students through its model mentoring approach and research
    orientation. It is an excellent example of NSF's efforts to produce a
    diverse, internationally competitive workforce to meet the challenges
    of this new century.
                Computer and Information Science and Engineering (CISE)
        Within R&RA, CISE computer science research has contributed to
    advances in computers, software, and computer use that have benefited
    almost every academic discipline and revolutionized the manner in which
    much research is conducted. CISE provides advanced computing and
    networking capabilities needed by academic researchers for leading
    research in all science and engineering fields. The Administration's
    request for CISE is down 1.6 percent from the fiscal year 2001 numbers.
    I urge the Committee to allocate for Computer and Information Science
    and Engineering an amount that reflects an overall 15 percent increase
    for NSF.
    Major Research Equipment (MRE) Programs
        In the Tools section of the budget request, it is stated that,
    ``Investments in research facilities are necessary for scientists and
    engineers to do world-class research.'' Yet the MRE account, the major
    NSF resource for nonmedical research facilities in this country, is cut
    by 20.6 percent from fiscal year 2001. I urge the Committee to examine
    the Major Research Equipment account cuts carefully and reconsider
    funding for programs that have been planned carefully and that promise
    tremendous advances in this country's research capabilities.
                Terascale Computing Systems
        As part of the Information Technology Research Initiative included
    within the MRE account, I urge the Committee to support the President's
    fiscal year 2002 request of $55.0 million for Terascale Computing
    Systems that will enable U.S. researchers to gain access to leading
    edge computing capabilities. Our nation lags behind other developed
    nations in high-end computing, a situation that has already adversely
    affected the atmospheric science community's ability to run the complex
    models necessary to understand and predict regional and global climate
    change. As the atmospheric sciences community strives to learn more
    about the effects of solar variability on the earth's atmosphere, space
    weather that impacts satellite communications, climate variability and
    weather patterns, the need for computational power exceeds capacity.
    Any advances in computing capacity will return significant scientific
    advancements in many fields. In the atmospheric sciences, ITR promises
    progress in atmospheric modeling that will enable us to effectively
    address many of our nation's weather and climate policy issues.
                High-performance Instrumented Airborne Platform for
                        Environmental Research (HIAPER)
        While we support the great advances in science and technology that
    all MRE funded programs represent, we were disappointed as a community
    to learn that HIAPER was not included in the fiscal year 2002 budget
    request. Following approval of the program by the National Science
    Board, funding for this modern research aircraft was begun by Congress
    in fiscal year 2000 and continued in fiscal year 2001. We sincerely
    hope that funding is continued since at least one other aircraft
    currently in service at NSF will end its useful lifetime in the next
    three years, and all delays in procurement and instrumentation result
    in higher costs. We look forward to HIAPER's completion and to its
    vital contribution to our understanding of how severe weather and other
    climate phenomena develop and impact the nation and the globe.
                Earthscope
        I encourage the Committee to consider the Earthscope project for
    future funding. This geophysical instrument array will allow scientists
    to make major advances in our knowledge and understanding of the North
    American continent. The initial Earthscope activity, deployment of
    high-capability seismometers throughout the United States, will improve
    our resolution of the subsurface structure and lead to advances in
    understanding fault conditions and the rupture processes of
    earthquakes.
    Education and Human Resources (EHR)
        I urge the Committee to support the President's request of $872.0
    million in fiscal year 2002 for Education and Human Resources, an 11.0
    percent increase over fiscal year 2001. As we enter the 21st Century,
    the importance of science education at all levels and for all people is
    crucial. Within the budget request language pertaining to education, I
    applaud the Administration's call to strengthen NSF's ability to
    leverage institutional partnerships for the improvement of math and
    science education. I support also the request for increased stipends to
    attract our best graduates for research and teaching fellowships.
    However, I ask that these increases not be realized at the expense of
    NSF's current very successful overall programs of the Education and
    Human Resources Directorate, the Major Research Equipment account
    (addressed above), or the core research directorates (such as GEO and
    CISE described above).
        The Administration's recommended new Math and Science Partnership
    Initiative is begun with $200 million in fiscal year 2002, yet the
    total requested increase for EHR is only $86 million. I ask that the
    Committee ensure that proven EHR programs with excellent track records
    such as Teacher Enhancement, Informal Science Education, or
    Undergraduate Education not be penalized.
                National SMETE Digital Library
        We urge the Committee to support the President's request of $26.80
    million for the National SMETE Digital Library (NSDL) within the EHR.
    While this is a 1.3 percent decrease from fiscal year 2001, our
    community appreciates greatly the advances that the NSF digital library
    effort is providing for science education. The NSDL long-term goal is
    to produce a digital library of high-quality educational materials at
    all levels in science, mathematics, engineering and technological
    education (SMETE). This research, teaching and learning resource is
    being developed in response to needs articulated by the academic
    community and corporate leaders. NSDL presents a tremendous opportunity
    to improve access to superior instructional materials and advanced
    classroom technologies.
    U.S. Global Change Research Program
        The President's request for USGCRP activities within NSF is $187.3
    million for fiscal year 2002. This amount is level with fiscal year
    2000 and fiscal year 2001 allocations and therefore represents the
    continued erosion of NSF's contribution to this interagency program
    that addresses interactions among physical, biological, ecological, and
    human systems at various scales. Working with national and
    international research institutions, this program allows the
    atmospheric sciences community to improve prediction capabilities for
    climate fluctuations between excessively wet and dry periods, and for
    long-term climate change. This research is a critical investment for
    the future of this nation, its economy, and the health and safety of
    its citizens. I urge the Committee to allocate for the U.S. Global
    Change Research Program an amount that reflects an overall 15 percent
    increase for NSF.
    NSF Priority Areas
                Biocomplexity in the Environment (BE)
        I urge the Committee to support the President's fiscal year 2002
    request of $58.10 million for Biocomplexity in the Environment. This
    interdisciplinary initiative will advance our ability to understand the
    complex systems that are structured or influenced by living organisms
    and the interactions within biological systems and physical processes.
    We are confident that BE efforts will lead eventually to better
    understanding of human impacts on the environment and enhanced
    predictability of environmental systems, including climate, that will
    assist environmental decision makers and contribute to society's
    ability to adapt to natural hazards.
                Information Technology Research (ITR)
        I urge the Committee to support the President's fiscal year 2002
    request of $272.53 million for Information Technology Research and to
    support the NSF in its role as leader of this multi-agency initiative.
    This investment will produce tools and capabilities that should benefit
    all scientific fields and much of society in the next several years.
    ITR promises innovations that will provide efficiencies in the way
    university researchers process and access data, communicate with
    collaborators, and share research results. Given the enormous earth
    systems and solar-terrestrial data sets that are critical to
    atmospheric sciences research, it is possible that the ITR
    computational effort could advance our field of science through
    innovative processing, archiving, and networking methods which we have
    not yet imagined.
                Nanoscale Science and Engineering
        I urge the Committee to support the President's fiscal year 2002
    request of $173.71 million for Nanoscale Science and Engineering.
    Nanotechnology promises to revolutionize our control of matter in areas
    such as information technology and to change the way in which most
    products are made. We look forward to the manner in which it may
    advance research in the field of the atmospheric sciences, particularly
    through possible major breakthroughs in the development of new research
    capabilities involving technology such as computers, radars, and
    satellites.
                21st Century Workforce
        I urge the Committee to support the President's fiscal year 2002
    request of $125.51 million for the 21st Century Workforce. In order to
    remain a global leader in most scientific fields and competitive in all
    areas, this country must offer the opportunity for all of our citizens
    to increase their understanding of science, mathematics, and technology
    and to meet the challenges of the dramatic global transition to a
    technology-literate workforce. The SOARS program mentioned above is a
    good example of a highly successful effort to broaden involvement in
    the sciences. The 21st Century Workforce is an important focus that
    could help to create and enhance effective programs such as SOARS.
    Blue Ribbon Panel
        I would like to express my support for the section of the proposed
    NSF budget calling for the National Academy of Sciences to create ``a
    Blue Ribbon Panel to assess the effectiveness of the current
    organization of federal support for astronomical sciences.'' Studies of
    this nature can be extremely constructive and we look forward to
    participating in the process. However, the wording of the President's
    original blueprint budget stating that the panel would assess ``. . .
    the pros and cons of transferring NSF's astronomy responsibilities to
    NASA,'' is troubling. NSF and NASA each contribute their own degree of
    expertise, training and infrastructure to the exploration of the
    universe. NSF addresses astronomy using ground-based equipment and NASA
    builds and operates space-based instruments. Both of these arenas are
    critical to the discovery of our universe's mysteries and scientific
    wonders. Transferring astronomical research currently performed at NSF
    into NASA's portfolio, would restrict any new understandings that come
    from a complimentary, two-tiered approach. I want to express my sincere
    hope that our nation continues its diversified approach to astronomy as
    well as other sciences.
              national aeronautics and space administration (nasa)
        The Administration's request for NASA overall is $14.5 billion, a
    2.0 percent increase above fiscal year 2001 estimates. As with NSF's
    budget, this increase obviously does not meet inflation and will
    necessitate the reduction and/or elimination of some excellent
    programs. I urge the Committee to support NASA with a modest 5.0
    percent increase, or a total of $15.2 billion, for fiscal year 2002.
    Science, Aeronautics and Technology
        This year, NASA instituted a new budget structure eliminating the
    Mission Support category and moving those funds into the Human Space
    Flight accounts as well as those of Science Aeronautics and Technology.
    For purposes of comparing fiscal year 2002 proposed numbers with fiscal
    year 2001 estimates, I will comment on aspects of the Science,
    Aeronautics and Technology account using the old, fiscal year 2001
    budget structure that includes Mission Support as a separate account.
    Based on the fiscal year 2001 budget structure, the request for
    Science, Aeronautics and Technology would be funded at $6.17 billion, a
    real cut of 0.23 percent. (This appears under the new structure as a
    16.4 percent increase.) I urge the Committee to support a 5.0 percent
    increase, or $6.49 billion, for Science, Aeronautics and Technology in
    fiscal year 2002 in order to support the following NASA programs that
    are of critical importance to the scientific advancement and security
    of our nation.
                Space Science Enterprise
        The extraordinary mission of the Space Science Enterprise, to solve
    mysteries of the Universe, explore the Solar System, discover planets
    around other stars, understand the behavior of the Sun and its
    interaction with Earth, and search for life beyond Earth, is of great
    interest to the public as well as the academic community. These
    challenges form the basis of the country's space science program over
    the next several decades. I urge the Committee to support the
    Administration's request of $2.45 billion for Space Science, a 5.7
    percent increase over fiscal year 2001. (The request appears in the
    newly structured budget as $2.786 billion, or a 20 percent increase.)
        Sun Earth Connections (SEC).--The SEC program within the Space
    Science Enterprise formulates missions to investigate the effects of
    solar phenomena on Earth and on the space environment. Its overall goal
    is nothing short of understanding the changing Sun and its effects on
    the Solar System, life and society. SEC contains several missions that
    promise great benefit to society, and are of particular importance to
    our community including the following:
      --Thermosphere, Ionosphere, Mesosphere Energetics and Dynamics
            (TIMED), the first science mission of Solar Terrestrial Probes
            within SEC, will help us gain a more detailed understanding of
            the transport of chemicals that influence climate change, as
            well as a better understanding of space weather variables that
            impact spacecraft, astronauts in space, and communications. The
            development phase of TIMED is complete and the launch of the
            TIMED mission is expected to occur this summer. I urge the
            Committee to support the fiscal year 2002 request of $8.4
            million for TIMED mission data analysis.
      --Solar-B, scheduled to launch in 2005, will provide data to help
            understand events such as solar mass ejections that can
            endanger astronauts in orbit and hit Earth's atmosphere with
            enough force to cause expensive communications disruptions. I
            urge the Committee to support the fiscal year 2002 request for
            $21.9 million for the continued NASA development of the Solar B
            mission's instrument subsystems.
        Solar Probe.--I understand that difficult decisions must be made
    during any budget cycle, but I must express the atmospheric science
    community's disappointment that Solar Probe, one of the most exciting,
    promising NASA programs now under development, is eliminated under the
    requested Space Science Enterprise budget. I focus on it because it is
    crucial to unlocking the mysteries of the solar corona which is
    composed of the most energetic material in our visible solar system. If
    this program is eliminated, we will lose humankind's first look at the
    poles of the Sun, an opportunity to better understand the space weather
    disturbances that affect our technological and military infrastructure,
    and years of development of a mission that has remained within budget.
    I urge the Committee to continue to fund Solar Probe without moving
    resources from other planned solar and space physics programs.
                Earth Science Enterprise (ESE)
        ESE's mission is to develop space-based observation systems to
    improve our understanding of the complex Earth system and its response
    to natural and human-induced changes. Analysis of ESE data enables
    improvement of the prediction of climate, weather and the occurrence of
    natural hazards. The fiscal year 2002 budget request states that,
    ``Earth system science is an area of immense benefits to the nation,
    yielding new knowledge and tools for weather forecasting, agriculture,
    water resource management, urban and land use planning, and other areas
    of economic and environmental importance.'' Such critical work should
    not be diminished, particularly at a time when our country's
    environmental and economic resources are under tremendous pressure. The
    fiscal year 2002 budget request proposes $1.51 billion, a 13.9 percent
    cut from fiscal year 2001, for the Earth Science Enterprise. (This
    appears as a 2.0 percent increase in the new budget structure.) I urge
    the Committee to support the Earth Science Enterprise at $1.56 billion,
    or a 5.0 percent increase, in fiscal year 2002.
        Earth Observing System (EOS).--To answer the critical question,
    ``How is the Earth changing and what are the consequences for life on
    Earth,'' ESE deployed the Earth Observing System (EOS) satellites to
    collect data on the major interactions of the land, oceans, atmosphere,
    ice and life that comprise the Earth system. The first phase of EOS
    deployments is approaching completion in the next several years, so it
    is understandable that the EOS budget request is down for fiscal year
    2002. However, I do hope that the proposed, major cut of 10.2 percent
    does not jeopardize beneficial programs already underway such as the
    following:
      --Aura.--The Aura mission (formerly called the EOS Chemistry Mission,
            or CHEM) of EOS focuses on the impact of greenhouse gases on
            the global climate and is therefore key to our understanding of
            climate change. In 2002, all of the Aura instruments will be
            delivered and integrated onto the spacecraft, and observatory
            level testing will begin leading to the scheduled launch in
            2003. In addition to climate change information, this mission
            will provide data to answer such critical questions as whether
            the Earth's ozone layer is recovering and whether air quality
            is deteriorating around the globe. I urge the Committee to
            support the fiscal year 2002 budget request of $80.6 million
            for Aura instrument completion.
        EOS Follow-On.--As the first cycle of EOS missions comes to a
    close, EOS Follow-On missions are being planned. This next generation
    of missions will provide new technology and space systems to continue
    global climate change observations, continue the global land cover
    change data set, and create improved observations of atmospheric
    phenomena such as global precipitation, ocean wind vectors, and aerosol
    levels. I urge the Committee to support the Administration's fiscal
    year 2002 request of $129.6 million for EOS Follow-On.
                        aero-space technology enterprise
    Aviation Safety Program
        The Aviation Safety Program (AvSP) within the Aerospace Technology
    Enterprise has a goal of radically improving air travel, with a major
    emphasis on improving safety. The budget request for AvSP cuts the
    program from $70.85 million in fiscal year 2001 to $70.0 million in
    fiscal year 2002. In real dollars, this is a reduction of almost 4.0
    percent. This very small piece of the NASA budget covers six critical
    areas, one of which is Weather Accident Prevention (WxAP), a program
    that develops and supports the implementation of technologies to reduce
    fatal aviation accidents and delays caused by weather hazards.
        The world-wide demand for air travel is expected to more than
    double in less than two decades. If the current accident rate remains
    the same as it is today, the increased traffic volume could result in
    approximately one major accident per week. According to the National
    Transportation Safety Board, approximately 30 percent of all aviation
    accidents are weather related, and 37 percent of the fatal accidents
    are weather related. AvSP's specific safety goal is to develop and
    demonstrate technologies, many of them through the WxAP, that
    contribute to a reduction in aviation accident and fatality rates by a
    factor of five by the year 2007. I urge the Committee to support
    programs such as the WxAP that are critical to all air travelers by
    providing the Aviation Safety Program a responsible 5.0 percent
    increase, or $74.4 million, for fiscal year 2002.
                                   conclusion
        On behalf of the atmospheric sciences community, I ask that you
    continue the commitment the Committee made last year to invest
    aggressively in our country's future. During this rare time of budget
    surpluses, we can afford to double NSF's budget and to continue NASA
    programs that promise discoveries that will benefit and advance
    society. History has shown that these investments will pay tremendous
    dividends to the country in lives saved, technologies developed, and
    American leadership sustained throughout the world.
        On behalf of the UCAR community, I want to thank the Committee for
    the important work you do for U.S. scientific research, education, and
    training. We appreciate your attention to the recommendations of our
    community concerning the fiscal year 2002 budget of the National
    Science Foundation and the National Aeronautics and Space
    Administration.
                                     ______

                  Prepared Statement of the City of Newark, NJ

        Mr. Chairman and members of the Subcommittee, thank you for giving
    the City of Newark, New Jersey an opportunity to submit for the record,
    about projects under your jurisdiction which are very important to the
    people of Newark and the surrounding region. The support of this
    Committee has been critical in the past, and we wholeheartedly thank
    you for your aid to projects that have truly impacted on the people of
    Newark and our economy. Newark's infrastructure needs are vital to
    enabling us to maintain our position as a regional center for commerce,
    government and entertainment.
        Newark is a City with vast potential, and there is a renewed
    vitality and sense of optimism in Newark. Newark is the largest City in
    New Jersey, with 275,221 residents in 1990, and ranked sixty-third in
    the nation in population. Newark's twenty-four square miles of land
    makes it the smallest of the country's top one hundred cities, with the
    fifth highest population density in the nation. Much of our land is
    taken up by Newark International Airport, higher education and medical
    facilities, and other institutional uses, increasing the density of our
    actual ``livable'' space. As the physical crossroads of the Northeast
    Corridor, the future economic viability of Newark is inextricably
    dependent upon the continued modernization and expansion of our
    intermodal transportation system, as well as systems which support
    these endeavors. Improvements that impact our roadway network, our rail
    system, and our port and airport facilities directly translate into
    jobs and economic prosperity for our City, State and Region. The
    proposals for economic development activities outlined herein may be
    related to water infrastructure projects, but they will actually
    translate to improvements in the quality of life for residents of and
    visitors to Newark.
        The first project for which we ask your assistance is an essential
    wastewater/wet weather regional infrastructure improvement. It will
    have a tremendous impact on the efficiency and future expansion of
    Newark International Airport, the ability of Amtrak and New Jersey
    Transit to maintain railroad service in wet weather, and redevelopment
    of industrial property close to the Airport, known as the Airport
    Support Zone. We seek essential help to address the ever-worsening
    overflow and flooding of the combined sewer overflow system which runs
    through this area, in order to prevent flooding and the threat of
    service disruptions.
        The Queens and Peddie Ditches are the principal stormwater
    conveyances for the East and South Wards of the City of Newark. Both
    ditches feed in to the Southside Interceptor and are in desperate need
    of cleaning and reconstruction. The regulating chamber at the
    intersection of the Queens Ditch and the Southside Interceptor also
    needs massive reconstruction. In their current state, these conveyances
    do not provide the necessary stormwater capacities. An average five-
    year storm event will surcharge these ditches and pose a major threat
    to the operation of Newark Airport and the Major Northeast Amtrak Rail
    link. The surcharge of the ditch is also the primary cause for street
    flooding and sewer backups in the South Ward of the City of Newark.
    Peddie Ditch and Queens Ditch are the two drainage channels primarily
    responsible for the regional flooding. These ditches are heavily silted
    and dysfunctional, the culverts are in disrepair and obstructions need
    to removed. The result is severe flooding in critical areas, including
    a large urban park, the Newark Airport Support Zone, the Airport
    perimeter, and along Amtrak's Northeast Corridor Line. During Hurricane
    Floyd, flooding from the Peddie Ditch caused suspension of rail
    services. This is a regional challenge, but jurisdictionally, falls to
    the already overburdened City of Newark to resolve.
        The project is also critical to the development of the warehouse/
    industrial complex along Frelinghuysen Avenue and the Waverly Yards
    property to support expansion of Newark Airport. Reconstruction of the
    South Side Interceptor will eliminate the flooding problems on
    Frelinghuysen Avenue, especially in the vicinity of the critical
    connections with Route 22 and I-78. The removal of standing water will
    enhance the connections of this area to Newark Airport and further its
    development as an Airport Support Zone. The rehabilitation of the
    Queens Ditch will reduce flooding in the vicinity of International Way
    and Waverly Yards. This area is located immediately adjacent to the
    Northeast Corridor, the Airport Monorail Extension, and the proposed
    conference center and hotel complex.
        The estimated cost of all required work is approximately $20
    million. Congress has recognized the validity of the Queens-Peddie
    Ditch initiative by providing $475,000 through the fiscal year 2000 VA/
    HUD Appropriation. This has enabled us to initiate preliminary studies
    and design efforts to alleviate the flooding problems. The City now
    respectfully requests $20 million for completion of this regional
    project. While the City of Newark has raised the maximum bonding
    financing that it can to invest in its aging and deteriorating
    wastewater system, this regional project is beyond our capability to
    undertake without federal assistance. Critical federally-supported and
    regulated facilities--the airport and rail lines--are repeatedly
    threatened by the flooding of the Queens/Peddie Ditch system.
        The second project I will briefly describe concerns the generation
    of hydroelectric power through the addition of in-line turbines at
    existing water transmission facilities. Newark has an extensive water
    collection and treatment system, spread over a large area in northern
    New Jersey. The City's Pequannock Water Treatment facilities and
    aqueduct downstream of the Charlotteburg Dam and Reservoir present a
    unique opportunity to recover energy that is currently dissipated in
    the diversion of water through various dam gatehouse and intake
    structures, pipeline, and downstream screen chambers. Further, the
    potential hydroelectric power and energy represented in the conveyance
    could, most of the time, offset the existing power and energy
    requirements of the water treatment facilities themselves, including
    the loads present at dams and treatment facilities. With this potential
    in mind, the City performed an evaluation of the power production and
    energy generation potential of its system.
        This project proposes to construct a Water Turbine Hydroelectric
    Facility at the City's Cedar Grove balancing reservoir. Utilizing the
    existing infrastructure, this proposed facility would take advantage of
    the hydrostatic head on the transmission aqueduct between the West
    Milford Treatment plant (elev. 700 feet) and the Cedar Grove Reservoir
    (elev. 380 feet). This proposed facility would be capable of offsetting
    the City's electrical operating expenses in additional to the needs of
    the Water & Sewer Utility.
        The proposed site lies alongside a power company easement which
    makes connection to the grid quite simple. The fairly static flow
    provided by the interceptor makes this a logical location for a turbine
    regulator set up. The revenue realized by this venture could
    potentially offset the cost to construct concrete storage tanks at the
    Cedar Grove site in order to meet Federal compliance for the
    elimination of open potable drinking water reservoirs. This method of
    energy recovery would be the least invasive as it could be implemented
    without significant disruption of our present system. It is estimated
    that costs for planning and design will be $2 million, and construction
    of the project will cost $10 Million, for a total of $12 million.
        The assistance of this committee in funding these projects is
    vital. The rehabilitation of the Queen's/Peddie Ditch system will
    directly impact on service improvements for AMTRAK and Newark
    International Airport, facilities which are critical links in Newark's
    transportation network, and your support for them is crucial to our
    continued economic development. And your support for innovative
    hydroelectric energy generation will further enable the City of Newark
    to impact on its own environmental and economic concerns. Your
    attention and consideration of the needs of Newark, New Jersey are
    deeply appreciated.
                                     ______

    Prepared Statement of Rogene F. Henderson, Senior Scientist, LRRI, The
                    Lovelace Respiratory Research Institute

        It is requested that the U.S. Environmental Protection Agency (EPA)
    continue to support the National Environmental Respiratory Center, a
    government-industry program to determine the apportionment of health
    risks among individual air contaminants and their sources from
    exposures of populations to complex air pollution mixtures. Funds for
    the Center are requested in the fiscal year 2002 EPA appropriation. It
    is further requested that EPA serve as the lead agency in coordinating
    support for the Center from multiple federal agencies.
             what is the national environmental respiratory center?
        The National Environmental Respiratory Center (NERC) is a
    laboratory research program to improve our understanding of the
    contributions of individual air contaminants (and thus their sources)
    to the health hazards of breathing complex mixtures of air pollutants.
        Recognizing a serious gap in our understanding of air quality
    health issues, Congress established NERC through the fiscal year 1998
    EPA appropriation. The program was intended to address a set of common
    fundamental scientific issues faced by multiple federal agencies,
    states, and non-federal organizations. Accordingly, NERC is jointly
    supported by these entities to spread costs and foster consensus
    regarding research results. The Center is operated by the independent,
    not-for-profit Lovelace Respiratory Research Institute (LRRI) in
    Albuquerque, NM. LRRI has experience and facilities uniquely suited to
    this mission, and longstanding, high credibility with both government
    and industry in conducting and interpreting research aimed at
    contentious, high-stakes issues.
        NERC is the nation's sole laboratory program focused directly on
    this issue.
                   what is the ``pollutant mixtures'' issue?
        Simply stated, we do not understand how small concentrations of air
    pollutants from many man-made and natural sources act together to cause
    the health problems associated with dirty air. Conversely, we do not
    have an acceptable ability to predict the health impacts, for better or
    worse, of changing the composition of the complex air pollution
    mixtures we actually breathe.
        Environmental (and occupational) air quality regulations focus on a
    limited number of single pollutants (eg, ozone), pollutant classes (eg,
    particles), and pollution sources (eg, diesel engines), which are
    reviewed and debated one at a time. In reaction, research programs have
    also focused on one pollutant, pollutant class, or source at a time.
    People never breathe only one pollutant, or pollutants from only one
    source, at a time! People are really exposed to very complex, ever-
    changing mixtures of air contaminants from many sources. Congress,
    researchers, regulators, industry, and the public are increasingly
    aware that the ``single pollutant'' approach does not provide a true
    understanding of the relationship between air quality and health. This
    ``pollutant mixtures'' problem has recognized for decades, but has been
    avoided by agencies and research organizations because of its
    complexity and pressures to continue the status quo of the single-
    pollutant, single source regulatory-research cycle.
        Every one of the several air pollution epidemiology studies in the
    U.S. and elsewhere during the past year that have examined more than
    one air pollutant suggests that it is unlikely that any population
    effect can be attributed solely to one pollutant or source. It is
    likely that combinations of pollutants act together to cause effects.
    Because the levels of most pollutants go up and down at the same time
    due to meteorology, it is also true that the few routinely measured
    pollutants may be blamed for effects caused solely or in part by air
    contaminants that are not routinely measured.
        The pollutant mixtures problem is a high-stakes issue. Correctly
    estimating both the health-effectiveness and cost-effectiveness of air
    quality management strategies aimed at specific man-made pollutants and
    sources depends on our resolving this issue.
        The problem is faced by many federal and non-federal stakeholders
    for different reasons. EPA faces the problem in dealing with
    environmental air quality. DOE faces the same fundamental problem in
    understanding the role of energy-related emissions in the public health
    burden, or how changing the composition of emissions will impact
    health. DOD faces the same fundamental problem in dealing with their
    emissions and site contamination issues. DOT faces the problem in
    understanding how different transportation strategies might impact
    public health. Multiple DHHS agencies face the problem. NIEHS has
    concluded that risks from chemical mixtures can not be estimated
    accurately from combining information from single-chemical studies.
    NIOSH acknowledges the difficulty of dealing with mixed exposures of
    workers. ASTDR is trying to place mixed exposures from waste sites into
    context among other exposures. CDC's office of Smoking and Health is
    trying to estimate whether changes in smoke composition from ``safer
    cigarettes'' actually reduce health risks. Many sectors of industry
    face similar problems.
        All of these organization-specific dilemmas have a common
    fundamental underlying problem: our present poor ability to understand
    the health impacts of individual components of a complex exposure, and
    thus how changes in the complex exposure are likely to impact health.
    Although initiated because of environmental air pollution, the work of
    NERC addresses this fundamental issue in a manner applicable to many
    ``mixture'' problems.
                   how does the center approach the problem?
    Management Strategy
        It was recognized from the beginning that the mixtures problem had
    to be approached as a fundamental, or core, issue. It is impossible to
    study the health effects of every possible mixture, so a strategy has
    to be developed to understand the impacts of different classes of
    chemical when contained in a mixture. Moreover, if the work is to be
    responsive to the needs of many organizations, some having conflicting
    interests, management of the program and interpretation of results must
    be independent from sponsorship. Accordingly, a diverse, expert
    External Scientific Advisory Committee (ESAC) was formed and vested
    with authority for guiding development of the research strategy and
    approving research protocols and summary of results. The research
    described below was recommended unanimously by the ESAC, which is
    listed in Table 1.

                Table 1.--External Scientific Advisory Committee

    Morton Lippmann, PhD, Chair, New York University
    Gerald van Belle, PhD, University of Washington
    Michael Bird, MSc, PhD, DABT, C.Chem, FRSC, International Agency for
    Research on Cancer
    John Vandenberg, PhD, U.S. Environmental Protection Agency
    Bill Bunn, MD, JD, MPH, International Truck & Engine
    Ron White, MST, American Lung Association
    Glen Cass, PhD, Georgia Institute of Technology
    Ron Wyzga, MS, ScD, Electric Power Research Institute
    Jonathan Samet, MD, MS, Johns Hopkins University
    Research Strategy
        The Center's research strategy addresses the fundamental
    ``mixtures'' problem in a manner that has both long-term and short-term
    pay-off. The key problem is a lack of a database of exposure vs. health
    effect suitable for analysis in a manner revealing the roles of common
    mixture constituents. Environmental air sampling does not provide
    sufficient detail on exposure composition, and epidemiology does not
    provide sufficient detail on health outcomes. Data from laboratory
    studies using different protocols cannot be combined into a suitable
    single database. The principal goal of NERC therefore, is to create and
    analyze a database on mixture composition vs. health effects. The
    database is being constructed by a series of studies applying identical
    protocols and health measures to animals exposed by inhalation to
    complex mixtures having different, but overlapping, compositions (just
    like real air pollution). By using real-world, source-based pollution
    mixtures, or exposure atmospheres, the program will also provide
    important health comparisons among common pollution sources during the
    several years required to build the combined database.
        The health responses to twelve atmospheres will be measured in 12
    separate, but identically-designed, studies (Table 2). The atmospheres
    recommended by the ESAC include diesel (contemporary and outdated
    engines and fuels) and gasoline (contemporary on-road, catalyst-
    equipped and off-road) engine exhaust, road dust (paved and unpaved)
    wood smoke (hardwood and softwood), cooking fumes (meat and vegetable),
    tobacco smoke, and coal-fired power plant emissions. The atmospheres
    were selected for their variations in composition, and for their
    relevance to current air quality concerns. Measurements will include
    over 400 physical and chemical properties of the atmospheres and over
    200 health variables spanning the five general areas of concern listed
    in Table 2. Four exposure levels of each atmosphere will be used,
    including levels representing realistic human environmental exposures.
    The basic experimental design, the several different animal ``models''
    and the composition measurements were selected on the basis of
    recommendations from peer workshops involving numerous federal and non-
    federal scientists and technical experts.

                                             TABLE 2.--NERC RESEARCH MATRIX
    ----------------------------------------------------------------------------------------------------------------
                                                                                   Defenses     Heart &
                                                        Irritation &   Allergies    against      Lung       Cancer
                                                        Inflammation   & Asthma    Infection   Function
    ----------------------------------------------------------------------------------------------------------------
    Diesel exhaust (contemporary, outdated)...........           +            +           +           +           +
    Gasoline exhaust (on-road, off-road)..............           +            +           +           +           +
    Road dust (paved, unpaved)........................           +            +           +           +           +
    Wood smoke (hardwood, softwood)...................           +            +           +           +           +
    Tobacco smoke.....................................           +            +           +           +           +
    Cooking fumes (vegetable, meat)...................           +            +           +           +           +
    Coal power plant..................................           +            +           +           +           +
    ----------------------------------------------------------------------------------------------------------------

                   what is the center's status and schedule?
        The work of the Center is well underway. After pilot studies to
    refine the experimental design, the study of the first atmosphere,
    contemporary diesel emissions, is underway and will be completed during
    fiscal year 2001. Preparations are underway for beginning the study of
    the second atmosphere, hardwood smoke.
        Data from each atmosphere and comparisons among pairs of
    atmospheres will be published as each study is completed.
        The time required to complete and analyze the combined database
    depends on the level of funding secured. If funding is adequate to have
    studies of two atmospheres ongoing in parallel, the database can be
    built in five years. Some data analysis can be done concurrently with
    completing the database, but analysis of the combined database will
    require approximately a year after the data from the last atmosphere
    are acquired.
    what is the center's financial status and what support is being sought?
        Completing the current research agenda within 6 years will require
    approximately $6 million/year. Support is being sought from multiple
    federal agencies and non-federal government and industry sources.
    Significant progress has been made, but the critical level of funding
    has not yet been reached. Our goal is to develop $5 million/year from
    federal agencies complemented by $1 million/yr from non-federal
    organizations.
        Non-EPA sponsorship has grown continuously. Among federal agencies,
    the Department of Energy's Office of Heavy Vehicle Technologies has
    provided $300 thousand and the Department of Transportation has
    committed $375 thousand in fiscal year 2001 funds to NERC. Non-federal
    sponsorship has grown, and will approach $500 thousand by the end of
    fiscal year 2001. Funds have been received from the California Air
    Resources Board, American Chemistry Council, American Petroleum
    Institute, American Trucking Association, California Trucking
    Association, Caterpillar Inc., Cummins Engine Co., General Motors
    Corp., John Deere and Co., Detroit Diesel Corp., ExxonMobil Corp., Ford
    Motor Co., International Truck & Engine Co., Japanese Automobile
    Manufacturers Association, Phillips Petroleum, Salt River Project,
    Southern Co., and individuals. Discussions are underway with a number
    of additional organizations.
        EPA's continued involvement in this program is critical. EPA bears
    the primary, although certainly not sole, mandate for the environmental
    air contaminants NERC is studying. Moreover, EPA funding continues to
    be the foundation upon which the remainder of the necessary funding is
    being developed. A continued commitment from EPA is thus key not only
    to continuing the program, but to securing continued funding from other
    federal and non-federal organizations.
        Dialogue is being sought among relevant agencies (EPA, DOE, DOT,
    DOD, DHHS) to develop a multi-agency strategy for funding the program
    in a planned, collaborative manner, in contrast to independent
    contributions sought piecemeal by LRRI. It is unlikely that this
    important program will fulfill its mandate without an improvement in
    the stability and level of funding that could come from interagency
    agreements to incorporate the program into multiple agency budgets.
    Current and potential non-federal sponsors have noted their likely
    increased willingness to commit support to the program if there is
    evidence of a federal commitment to the program's success. In the view
    of LRRI, it is logical that EPA play the lead agency role in this
    interagency, government-industry program.
        Lovelace respectfully requests that $3 million be designated for
    the National Environmental Respiratory Center in the fiscal year 2002
    EPA appropriation, and that EPA be charged with the lead agency role in
    coordinating multi-agency support and participation in the program.
                                     ______

      Prepared Statement of Dr. Robert Rubin, President and CEO, Lovelace
                     Respiratory Research Institute (LRRI)

        It is proposed that the Department of Housing and Urban Development
    through its constituent agencies support the renovation of the LRRI
    clinical facilities and purchase of necessary equipment to support
    LRRI's ability to maintain its high research and clinical standards,
    and to better provide appropriate patient data security.
        LRRI has committed to a building campaign using $10M in private
    funds to improve its laboratory facilities and equipment. LRRI's
    clinical study facility is in need of renovation to better accommodate
    the thousands of outpatients recruited for these studies and to better
    maintain security of their patient information. LRRI requests $2M to
    help renovate this facility.
    Project Impact:
        LRRI, as a private non-profit research institute, places top
    priority on its ability to translate its basic science findings from
    animal models, into protocols designed to evaluate new approaches for
    treating respiratory disease. These protocols lead to new innovative
    techniques and approaches to health care.
        LRRI conducts clinical studies requiring the recruitment of
    thousands of patients that provide the basis for making the link
    between genetic and cellular defects and clinical disease presentation
    and demographic characteristics. Currently, LRRI is conducting
    population-based genetic studies in:
      --Chronic obstructive pulmonary diseases (COPD),
      --Early detectors for lung cancer,
      --Pulmonary fibrosis, and
      --Mechanisms of asthma and other lung diseases in Hispanic and Native
            American children.
        Two events have greatly enhanced the ability to better understand
    the mechanisms of human disease in communities. One is the dramatic
    advance in molecular and cellular biology over the last 10 years,
    especially in human genetics. The other is the ability to collect and
    process data using advance computer systems and statistical techniques.
    This process called ``molecular epidemiology'' makes the link between
    genetic and cellular defects and clinical disease. LRRI has formed
    collaborations with national and local a private health providers to
    collect and manage patient data to carry out their ``molecular
    epidemiological'' studies. These partners include, the:
      --Lovelace Health Systems (LHS),
      --Albuquerque Veterans Administration Medical Center (VA),
      --University of New Mexico School of Medicine (UNM), and the
      --University of Miami School of Medicine (UMSM).
        Given the nature of the clinical studies performed, LRRI's facility
    requires security mechanisms well beyond those of ordinary medical
    clinics. As one can well imagine, this facility is the repository of
    very sensitive personal data, including that linked to an individual's
    DNA. To carry out this responsibility for privacy and confidentiality,
    there is a need to renovate the facilities and equipment necessary to
    be physically and electronically impenetrable to all but those who have
    specific and authorized access.
        The existing 8,000 sq. ft. facility was constructed in the 1950's
    and requires renovation and upgrades to provide a suitable, efficient,
    functional and secure facility. The proposed project would require
    reconfigured space, upgrades to meet current fire and safety codes, new
    interior finishes, new plumbing, upgraded electrical and a new heating,
    ventilation and air conditioning system.
        The current clinical trial's facility is occupied in part by other
    LRRI functions. Some of these functions will need to be relocated to
    provide the required additional space for the clinical studies.
    Unfinished space is being made available in the new research facility
    included as part of the $10M LRRI campaign. The proposed project will
    include the completion of 8,000 square feet of the unfinished space for
    this purpose.
        Accordingly, to meet this responsibility and to improve LRRI's
    ability to conduct its clinical studies, we respectfully request $2M.
    The responsible Federal agency is the Department of Housing and Urban
    Development--EADI.
                                     ______

    Prepared Statement of Dr. Floyd J. Frost, Jr., Ph.D., Senior Scientist,
                 Lovelace Respiratory Research Institute (LRRI)

        It is proposed that the Environmental Protection Agency (EPA)
    support the funding request of a consortium of agencies, led by the
    Lovelace Respiratory Research Institute (LRRI). This diverse and expert
    team, which includes the University of New Mexico (UNM), New Mexico
    School of Mining and Technology (NM Tech), state and local public
    health and environmental agencies, and municipalities will provide a
    comprehensive study on the health and other risk effects from
    waterborne arsenic.
                                  the problem
        The U.S. Environmental Protection Agency (EPA) recently lowered the
    maximum contaminant level (MCL) for arsenic from 50 to 10 parts per
    billion (ppb). According to the EPA, this revised MCL will affect
    thousands of community water systems located primarily in areas of the
    country with high naturally occurring arsenic in surface and ground
    water, such as New England and the western states. Because of the
    expense of removing arsenic and the large number of systems affected,
    revising the arsenic MCL will have significant economic consequences.
    EPA estimates the annual costs of compliance to be $218 million.
    However, a study by the American Water Works Association Research
    Foundation (AWWARF) estimates the costs to be closer to $600 million.
        EPA based their assessment of arsenic-related risks primarily on a
    report by the National Research Council (NRC) that concluded, ``there
    is sufficient evidence from human epidemiological studies in Taiwan,
    Chile, and Argentina that chronic ingestion of inorganic arsenic causes
    bladder and lung cancer, as well as skin cancer.'' However, the NRC
    also noted important limitations of the scientific data and recommended
    further research to characterize a possible dose-response relationship
    at low exposures to arsenic in drinking water. The NRC report
    emphasized that ``With minor exception, epidemiological studies of
    cancer are based on populations exposed to arsenic concentrations in
    drinking water of at least several hundred ppb. Few data address the
    degree of cancer risk at lower concentrations of ingested arsenic''.
        According to the EPA, removing arsenic from drinking water will
    prevent the occurrence of and death from arsenic-related bladder and
    lung cancers and possibly cardiovascular and hypertensive diseases. The
    EPA estimated that lowering the arsenic MCL from 50 ppb to 10 ppb will
    prevent 28 bladder and lung cancers each year. The number of
    cardiovascular and other deaths prevented was not quantified. These
    estimates of prevented cases or cancer were obtained by extrapolating
    cancer risk from populations in southern Taiwan consuming high
    waterborne arsenic levels (about 500 ppb) to U.S. populations consuming
    low waterborne arsenic levels (less than 50 ppb). The EPA acknowledged
    that their linear model ``could overestimate risk at low doses'' and
    that the overestimate increases as the exposure level decreases. The
    NRC estimate of the number of arsenic-caused cancers was \1/74\th the
    EPA's estimate (0.4 cases vs 28 cases). Recent epidemiological
    information also suggests there may be no increased risks from low dose
    arsenic exposures in U.S. and European populations. Given the
    uncertainty in the risk assessment, the EPA concluded ``decisions about
    safe levels are public health policy judgments''.
        The NRC recognized the limitations of the available data and
    recommended additional studies to refine the dose-response relationship
    between arsenic ingestion and cancer of the skin, bladder, and lung,
    especially at low doses. Such studies are ``deemed to be of critical
    importance for improving the scientific validity of risk assessment''.
        The EPA's own Science Advisory Board recommended that EPA set an
    interim standard that would affect only a small number of drinking
    water systems. This would allow time to improve arsenic health risk
    estimates, as well as to examine uncertainties over the feasibility of
    treatment and the cost of compliance. Although the proposed treatment
    technologies have been used for many years for other purposes, they
    have never been used for arsenic removal, and there is no information
    beyond laboratory experiments to demonstrate that these technologies
    will work in full scale treatment plants. Many of these concerns are
    addressed by this proposal.
        Until recently, there were no studies of U.S. populations exposed
    to elevated drinking water arsenic levels. Thus, it was not clear
    whether the Taiwan findings could be extrapolated to U.S. populations.
    Drinking water at lower levels of arsenic. However, several recent
    studies suggest that U.S. populations exposed to lower arsenic levels
    may not be at elevated risks of bladder and lung cancer. In 1999 the
    EPA published a study of a cohort or group of 4,045 Millard County,
    Utah residents exposed to drinking water with 14 to 166 ppb arsenic.
    This cohort was formed from Church of the Latter Day Saints records.
    Participants were followed to determine if they had died. If so, the
    cause of death was identified. Efforts were made to determine the
    waterborne arsenic exposures (arsenic level and number of years the
    person drank the water) for each cohort member. Of the participants,
    2,203 had died at the time of the study. The authors observed no
    association between arsenic exposure in drinking water and mortality
    due to bladder, lung, liver or kidney cancer in the Utah cohort. No
    increased risk of death was found for heart disease or stroke. These
    were unexpected results based on findings of the Taiwan and South
    American studies.
        Another U.S. study and one European study found that there was no
    association between the risk of bladder cancer and arsenic exposure.
    The authors concluded that their findings were not statistically
    consistent with the findings of the Taiwan study.
                              costs of compliance
        The new arsenic standard will affect approximately half of all New
    Mexico drinking water systems. The estimated annual costs of compliance
    for New Mexico drinking water systems range from $49 to $60 million.
    This is a large fraction of the total costs for all drinking water
    utilities in the United States. The average monthly bills will be
    approximately $41-$46 per month for customers of large water systems
    and $90 per month for customers of small water systems. However, for
    some smaller water systems, the average monthly water bills could
    increase to over $500/month. For many rural areas, the costs of
    drinking water will exceed the EPA affordability levels and result in
    considerable reallocation of both community and household resources.
    These costs are very high for economically disadvantaged New Mexico
    populations living in rural areas. Other people living in rural areas
    in other states will also find their water bills drastically increased
    as a result of the regulation. There have been no rigorous studies of
    the costs of this regulation for small drinking water system, or the
    economic consequences of the rule on these communities.
                              transportation risks
        Compliance with the arsenic rule will require transportation of
    massive amounts of toxic chemicals to and from water treatment plants
    in the affected areas. The City of Albuquerque has 92 wells located
    mostly in residential neighborhoods, many of which must be treated. We
    estimated the chemical transportation requirements for meeting the
    proposed arsenic standard and the number of miles traveled by
    employees. Based on the miles traveled and the expected number of fatal
    accidents per million miles traveled, we estimated the number of people
    likely to die and the years of life lost. Depending upon the treatment
    type selected by the utility, we found that the number of years of life
    lost will be greater than or equal to the number saved from reduced
    cancer risks.
        Our study of transportation risks suggested that if the risks from
    water treatment are considered, the regulation may increase rather than
    reduce the loss of life. Furthermore, our study did not look at risks
    to water treatment plant operators or to local citizens and emergency
    response personnel from toxic chemical spills. Since the study was
    limited to Albuquerque, there is considerable uncertainty over the
    nationwide effect of the rule on transportation related deaths.
                             economic consequences
        A study completed for the American Water Works Association (AWWA)
    suggested that an increased water bill of over $50 per household per
    year could raise serious affordability concerns for people living in
    poverty. This might cause low-income households to make tradeoffs that
    would be detrimental to the family's health and welfare. In many
    states, and especially in the U.S. Southwest, the monthly rather than
    yearly increases in water bills will commonly exceed the $50
    affordability threshold.
        A study by the Brookings Institution and the Harvard Center for
    Risk Research came to the same conclusions. They argued that mandated
    increases in the costs of water treatment will force families to
    reallocate their resources away from other expenditures. Some of this
    reallocation will be away from other health risk reduction activities,
    such as diet, medical care, pharmaceuticals, etc. If the reduced risk
    from lowering the arsenic standard is less than the increased risk from
    resource reallocation, then, the rule will cause a net increase in the
    risk of premature morbidity and mortality. The methodologies used are
    relatively new, and there are currently insufficient data to accurately
    estimate the health effects from specific resource reallocations in
    communities affected by the arsenic rule. However, for many rural
    vulnerable economically disadvantaged populations and the elderly on
    fixed incomes, the monthly drinking water bills will increase more than
    $50 rather than $50 per year.
                              the proposed project
        The funding request involves a consortium of agencies, led by the
    Lovelace Respiratory Research Institute (LRRI) and including the
    University of New Mexico (UNM), New Mexico School of Mining and
    Technology (NM Tech), state and local public health and environmental
    agencies, and municipalities (Albuquerque, and Rio Rancho). This team,
    lead by LRRI, was assembled recently to assist the City of Albuquerque
    and other southwest utilities in responding to the EPA's proposed
    arsenic regulation. It has a unique combination of skills in
    epidemiology, water treatment, economics, toxicology, geology and
    applied public health and is centrally located in a region most
    affected by the rule. The following goals are proposed:
        A. Assess the total costs of the arsenic rule and, especially, the
    costs for economically disadvantaged communities.
        Because of new information on treatment technologies and
    clarification on whether treatment wastes may be legally sent to
    landfills, the earlier cost estimates should be updated. More
    importantly, prior cost studies did not extensively examine the costs
    to small communities. These communities do not have the economies of
    scale of larger cities, in which costs can be spread over a large
    number of people. EPA recognized that many small communities may be
    severely affected by the rule but indicated that states will be able to
    subsidize these communities through loans and grants. For New Mexico,
    the revolving fund for all drinking water and wastewater capital
    projects has only $40 million available annually. The total capital
    costs for New Mexico of the arsenic rule will exceed $400 million.
        B. Assess the consequences if small communities and their residents
    reallocate a large fraction of their resources for drinking water
    treatment. (a) Is there is evidence of adverse health effects from
    community or household resource reallocation for mandated water
    treatment? (b) What is the magnitude of the increased health risks? (c)
    How certain or uncertain are those added risks? (d) Are the adverse
    consequences from resource reallocation smaller than the benefits from
    the new water treatment?
        C. Are the adverse public health consequences of water treatment
    greater than the benefits?
        Our preliminary study of transportation risks associated with the
    new arsenic standard was restricted to the City of Albuquerque and did
    not consider anticipated risks from the toxic chemical spills, exposure
    of workers to hazardous substances or construction of new water
    treatment facilities. Since this preliminary study, we have become
    aware of work done by others on risks and benefits of moving hazardous
    material to approved landfills. We propose to extend our work to a
    nationwide study and compare our findings with other studies of adverse
    consequences of environment interventions.
        D. Extend the scientific base for waterborne arsenic health
    effects.
        Although studies conducted in Taiwan and South America have found
    adverse health effects from waterborne arsenic exposure, studies
    conducted in the United States (U.S.) and Europe have not been
    statistically consistent with the risks predicted from the Taiwan
    studies. We feel that research-funding agencies have been reluctant to
    fund U.S. studies because of the likelihood that the studies will not
    find adverse health effects. Similarly, we believe that U.S.
    researchers are reluctant to propose or conduct these studies since
    negative findings are unlikely to further their careers. Therefore, the
    studies most needed to evaluate the justification for the proposed
    multibillion-dollar arsenic rule have the lowest funding priority.
        Health examination studies should be conducted in communities with
    potentially high-risk populations and with high levels of waterborne
    arsenic to determine if there is evidence of predicted elevated risks
    of cardiovascular disease and skin cancer. Cohort mortality studies
    should be conducted in several locations to replicate the Millard
    County, Utah study conducted by EPA. This study did not detect any
    evidence of elevated cancer risks from arsenic exposures. The follow-up
    period for the Millard County study should also be extended to include
    more recent deaths. The requested funding will be used to conduct
    health examination surveys and cohort mortality studies of arsenic
    exposed communities (e.g. Fallon, NV, Socorro, NM)
        E. Water treatment technology evaluation.
        There are a number of unresolved issues related to drinking water
    treatment. These issues arise due to lack of current knowledge and
    experience in building and operating the proposed treatment plants.
    Federal funds are available to help build pilot treatment plants but
    there is insufficient funding to evaluate and summarize their
    performance and calculate the costs of construction and operation. Data
    from several pilot treatment plants need to be reviewed and summarized
    to address these issues. Furthermore, treatment technologies for
    smaller communities need to be evaluated for cost and feasibility.
    Funding will also be used for this evaluation.
        F. To oversee the proposed studies, we will assemble an external
    panel of epidemiologists, drinking water engineers, economists, risk
    assessors and toxicologists.
        This panel will meet and prepare an annual report evaluating the
    project. The purpose of this panel is to insure that the studies
    address the most important public health issues, that they are
    rigorously designed and conducted and that the findings are justified
    by the data.
        Accordingly, we respectfully request $1.6M in funding.
                                     ______

      Prepared Statement of the University of Miami, Coral Gables, Florida

        Mr. Chairman and Members of the Subcommittee: we appreciate the
    opportunity to submit testimony today on behalf of my colleagues at the
    Rosenstiel School of Marine and Atmospheric Science at the University
    of Miami. We respectfully seek your continuing support in fiscal year
    2002 for two important projects.
        First, my colleagues and I seek fourth-year funding through the
    Environmental Protection Agency for the National Center for Atlantic
    and Caribbean Coral Reef Research to conduct research to protect and
    preserve the nation's endangered coral reef resources. Next, we seek
    third-year funding through the National Aeronautics and Space
    Administration for the National Center for Tropical Remote Sensing
    Applications and Resources--the SAR Facility. We have special expertise
    in both coral reef research and in remote sensing technology and
    applications, and it is for these reasons that I appear before you
    today.
        Founded in 1925, the University of Miami is the largest private
    research university in the Southeastern United States and the youngest
    of 23 private research universities in the nation that operate both law
    and medical schools. Through its 14 colleges and schools, more than
    2,300 faculty instruct almost 14,000 students in more than 170 areas of
    undergraduate study and 192 disciplines for graduate and professional
    study.
        The Rosenstiel School is recognized as one of the premier academic
    oceanographic research facilities in the world and ranked among the top
    six nationally. Located on a 16-acre tract on Virginia Key in Miami's
    Biscayne Bay, the Rosenstiel School provides the only subtropical
    marine research facility in the continental United States, and is
    adjacent to and coordinates daily with the national NOAA lab and
    research facility. Because of our unique location--the Gulf Stream is
    immediately offshore; just to the south lies a vast expanse of the only
    living coral reef off the shores of the continental United States; and
    just to the east the Florida-Bahamas Carbonate Platform--we are a
    unique resource for the nation, as well as for Florida and the
    southeast region. Our more than 100 recognized scientists, researchers,
    and educators collaborate closely with other institutions--in Florida
    and beyond--in addressing critical national, regional, and Florida
    natural, environmental, and climatic challenges.
         national center for atlantic and caribbean coral reef research
        The Rosenstiel School is a major national research institute
    focusing on the living coral reef as a unique and critical national and
    international resource, critical to the vitality and health of the
    marine life and coastal marine environment of Florida and the
    southeast. Florida's coral reefs are the only living coral reefs off
    the continental United States. The environmental, climatic and man-made
    challenges to and stress on these precious resources are extensive. To
    preserve and protect our reefs requires the organization and
    coordination of the broadest range of talent and resources.
        We have committed to a major investment of our resources and seek
    to enlist a broad range of Florida, regional, and national expertise to
    coordinate the most advanced and productive research that will ensure
    the protection of living coral reefs. For fiscal year 2002 we seek $3
    million through the EPA to continue and expand the National Center for
    Atlantic and Caribbean Coral Reef Research Center (NCORE), begun in
    fiscal year 1999, a parallel to the Hawaii-based and focused effort.
    Together, these centers will provide a balanced, focused, critical
    scientific mass brought to bear on these precious, unique, and
    vanishing natural resources.
        Coral reefs are the only ecosystems on Earth constructed entirely
    by the secretions of a complex assembly of marine animals and plants.
    They are economically important resources of humans as sources of food,
    medicinals, building materials, and coastal protection. They are
    especially invaluable, in our increasingly crowded world, for the
    spiritual relief they provide the millions of people that journey to
    visit them each year. Unfortunately, changes in water quality due to
    coastal development, environmental changes potentially related to
    global climate change, and over-exploitation of coral reef fisheries
    resources, are contributing to world-wide coral reef deterioration at
    an alarming pace, especially in the Caribbean region. U.S. coral reefs
    in Florida are down-stream of the entire Caribbean coral reef system,
    and are thus dependent on Caribbean reefs for larval recruits and
    maintenance of fisheries stocks. Florida reefs could also be affected
    by pollutants released into marine waters by nations in the region, and
    from our own rivers via discharge into the Gulf of Mexico.
        Scientists are hampered in helping government make critical and
    socially difficult management decisions by our rudimentary
    understanding of coral reef ecosystem processes. Coral reef
    environmental research has historically been piece-meal and under-
    funded with few attempts at true interdisciplinary process-oriented
    research. Local changes in water quality, broad scale environmental
    changes potentially related to global climate change, and fisheries
    over-exploitation of coral reef ecosystems, are thought to be
    contributing to deterioration of coral reefs worldwide.
        NCORE initiated a new approach to coral reef research. The Center
    seeks to coordinate U.S. coral reef policy and research, and assemble
    major national and international initiatives pertaining to coral reefs.
    The Center fosters organization and collaboration within the U.S.
    scientific community, leads the development of a new level of
    understanding of the processes and environmental conditions necessary
    for the establishment, survival and sustainable use of coral reef
    ecosystems public. The initial focus is on problems faced by coral
    reefs in Florida and U.S. possessions in the Caribbean region (Puerto
    Rico and the U.S. Virgin Islands), but also to coordinate these efforts
    with those of coral reef researchers within the Caribbean region, in
    recognition of the importance of larger scale relationships between
    coral reef systems within the Inter-America Seas.
        NCORE invites nation-wide participation of scientists with
    expertise in coral reef research, and involves scientists from related
    disciplines. The specific functions of the National Center for Atlantic
    and Caribbean Coral Reef Research are: (1) to study fundamental
    scientific aspects of the function of coral reef ecosystems; (2) to
    establish a database of past and ongoing coral reef research in the
    United states; (3) to directly interact with resource managers at local
    to national levels; (4) to provide accurate, but non-technical
    syntheses to the public; and (5) to develop instrumentation and
    observational strategies for coral reef research.
     national center for tropical remote sensing applications and resources
        Synthetic Aperture Radar (SAR) is a powerful remote sensing system,
    able to operate in all weather, day or night. Space-based satellite SAR
    systems are able to monitor the movement of targets on land or ocean in
    near real-time, map topography with unprecedented accuracy, assess
    storm and flood damage to urban and rural infrastructure, localize
    forest and wildfires, and assess the soil properties of farm land (soil
    moisture) and health of vegetation. SARs provide data that can be used
    to forecast major volcanic eruptions and understand the earthquake
    process, and a host of other military, civilian, and scientific
    applications. SAR can make a major contribution to Southcom's various
    missions, especially in the area of drug interdiction, civil defense
    (e.g., storm damage assessment) and natural hazard mitigation (e.g.,
    volcano forecasting).
        The University of Miami uses SAR data for a variety of terrestrial
    and oceanographic applications, and has a large amount of experience in
    the analysis and use of SAR data, and expertise in the operation of
    satellite downlink facilities.
        The SAR receiving facility currently under construction by the
    University of Miami will provide a unique capability for the Caribbean
    and southeastern U.S. region. Applications of this ground receiving
    station will be extremely diverse. They will include a wide range of
    scientific applications in earth, atmosphere and ocean sciences, as
    well as more practical applications in the fields of environmental
    monitoring, natural hazard assessment, civil defense and defense
    tactical applications. The station will initially operate at X-band,
    and will be capable of receiving data from a wide variety of low-Earth
    orbiting satellite systems. Our initial operational capability will
    focus on SAR and visible and infrared imagery. The combination of these
    sensor and imaging types will provide an unprecedented wealth of
    information of the earth's surface. Future upgrades of the Center's
    system should include the capability to collect L- and S-band
    downlinks, as well. In all cases a high priority will be placed on high
    reliability data reception to low elevation angles (2 degrees above the
    local horizon). A heavy launch schedule over the next few years will
    place numerous new satellites with SAR and other radiometric sensors in
    space that requires at least two antennas to enable data recovery in
    the case of simultaneous satellite passes or situations with a blocked
    line-of-sight. The voluminous flow of data associated with high-
    resolution satellite sensors such as SAR will require high reliability
    data archiving with rapid retrieval, rapid dissemination of data (both
    raw and analyzed to some specified level) to selected users, full data
    analysis capability, and higher level software products to aid in data
    interpretation.
        In fiscal year 2000 you provided support to launch this vital
    initiative and continued your support in fiscal year 2001. We hope to
    continue our partnership with the National Aeronautics and Space
    Administration in fiscal year 2002 and seek $1.5 million for the NASA
    Advanced Tropical Remote Sensing Center, the SAR Facility.
        For purposes of illustration, I will provide three example
    applications for the SAR Facility: natural hazard mitigation, drug
    interdiction, and educational opportunities.
                  natural hazard mitigation and civil defense
        It is appropriate that NASA's remote sensing research program
    include a component of natural hazard mitigation for Central America,
    South America, and the Caribbean region. The reason is that the
    nation's long-term security is best served by having prosperous,
    politically stable democracies in this hemisphere. The U.S. has a role
    to play in promoting the economic and political ``health'' of the
    region. Even ignoring strictly humanitarian considerations, problems
    such as poverty and civil unrest can negatively impact the U.S.
    directly and indirectly. Examples include illegal immigration, reliance
    on a drug economy, and lost market opportunity for U.S. business. The
    poor infrastructure that is endemic to much of the hemisphere is
    exacerbated by natural disasters via negative feedback: poor countries
    generally have weak infrastructure that is easily damaged by natural
    disasters (witness the recent devastation in Honduras during passage of
    tropical storm Mitch). The region is especially vulnerable to
    earthquakes, volcanic eruptions, and hurricanes. Techniques to mitigate
    the effects of these disasters can be of enormous benefit.
        Volcano Hazard.--For volcanoes, SAR interferometry generates
    accurate topographic data (DEMs) enabling accurate prediction of the
    direction and speed of lahars, a type of volcanic mudslide. Lahars are
    often the major ``killer'' from volcanoes, claiming more than 20,000
    lives at Nevado del Ruiz, Colombia in 1985. A mudslide from a dormant
    volcano was responsible for most of the casualties in Honduras during
    the recent passage of tropical storm Mitch. SAR interferometry also
    allows detection of pre-eruption swelling of a volcano, which can be
    used to help predict eruption. Such studies are only of academic
    interest at present, because it takes so long to acquire imagery from
    available ground stations (three month or longer waits are typical). A
    South Florida ground station can provide at least several weeks warning
    of major eruption to authorities in the affected area.
        Earthquakes.--Are a major hazard for much of the western Americas.
    A relatively small earthquake in Los Angeles several years ago caused
    $20 billion in damages. An earthquake in the 1970s in Managua, the
    capital of Nicaragua, so severely damaged the city that parts of it
    were never rebuilt. The associated economic devastation is believed by
    many social scientists to have been a contributing cause to two decades
    of civil war. At present most researchers do not feel it is feasible to
    predict earthquakes. Nevertheless, SAR can play a critical role, by
    precise mapping of ground displacement during earthquakes, which can
    lead to better understanding of the earthquake process. SAR is probably
    the best tool available for this type of study. In some cases, SAR is
    the only tool, e.g., in inaccessible parts of South America.
        Hurricane Damage Assessment and Civil Defense.--As more people and
    societal infrastructure concentrate in coastal areas, the U.S. is
    becoming more vulnerable to tropical cyclones. Hurricanes are the
    nation's costliest natural disaster. Early and accurate warnings can
    save millions of dollars and reduce the detrimental impact of storms.
    Quick-look SAR can assess storm damage and identify areas of immediate
    need. SAR images can also provide information on sea state and surface
    wind speed, important to weather forecasters and civil defense
    planners. Radar frequencies are also sensitive to the intensity of rain
    and can better locate concentrations of strong rainfall within tropical
    storms. Such real time observations can provide better estimates of
    storm strength prior to landfall.
                               drug interdiction
        Small, fast moving boats are one of the major vectors for drug
    delivery to the coastal southeastern United States. These boats travel
    exclusively at night without running lights, and are very difficult to
    detect. Their low radar cross sections mean the P3 Orion surveillance
    aircraft equipped with standard ocean surface radar only rarely detect
    them (the targets have to be fairly close to the aircraft). Given the
    large area of ocean used by traffickers, and the relatively small
    numbers of surveillance flights, detection success rate is low.
        SAR can easily detect such targets. It does so not by direct
    detection of the boat, but by wake imaging. The center line wake of a
    small fast moving boat is typically 100-200 meters long, and is
    relatively smooth compared to the adjacent ocean surface, and thus is
    easily detected by standard civilian SAR. A recent test by the Office
    of Naval Intelligence had virtually 100 percent success at detecting
    this class of target during nighttime RADARSAT passes. The test target
    was a fiberglass boat operated by the University of Miami.
        At the present time, there are two civilian SAR satellites that a
    South Florida ground station can access, RADARSAT and ERS-2. On an
    average, we can expect to image a given ``patch'' of ocean every few
    days with these systems, and thus would not detect and track all
    targets. On the other hand, we could expect to track a much larger
    number of targets than are currently possible, and could generate, with
    ``post-diction'' analysis, an accurate picture of where most illegal
    traffic is originating and landing. Over the several day transit period
    of these small craft to the southeastern U.S., approximately 30 percent
    to 40 percent of targets would be detected in ``real time'' with
    available satellite coverage, enabling direct interdiction by the Coast
    Guard. This assumes, of course, that the data can be made available
    quickly. The South Florida SAR Facility will make this possible.
        In summary, satellite SAR data could make a major impact on the
    drug interdiction program. However, realizing its full potential
    requires a dedicated facility in South Florida, integrated into the
    chain of command of the drug interdiction effort, and integrated into
    academic efforts in the area of rapid data processing and raid image
    analysis. The proposed University of Miami SAR ground station is an
    excellent vehicle for this collaboration.
                 education: k-12, undergraduate, graduate level
        The Florida Space Grant Consortium (FSGC) is a voluntary
    association of seventeen public and private Florida Universities and
    Colleges, all the community colleges in the state, Kennedy Space Center
    Astronaut Memorial Foundation, Higher Education Consortium for Science
    and Mathematics, and Spaceport Florida Authority. Collectively, it
    serves more than 230,000 university students (100 percent of the public
    enrollment and approximately 75 percent of total Florida enrollments).
    FSGC represents the State of Florida in NASA's Space Grant College and
    Fellowship Program. As one of the sixteen founding Space Grant
    Consortia, it was formed in 1989 when the federal Space Grant program
    was implemented. With programs now in place in fifty states plus Puerto
    Rico and the District of Columbia, Space Grant now joins the Land Grant
    and Sea Grant Programs to form a triad of federally mandated programs
    addressing critical national needs in education, research and service.
        The new National Center for Tropical Remote Sensing at the
    University of Miami would provide a unique opportunity for FSGC to
    begin dedicated education and training of the use of space-based remote
    sensing and imagery. Furthermore, opportunities also exist to broaden
    the educational use of the Tropical Remote Sensing site through a K-12
    education partnership with Miami-Dade County Public Schools. We
    envision the development of a magnet studies program in space science
    that would be modeled after a very successful existing program in
    marine science and technology in collaboration with the University of
    Miami. This partnership would educate first-rate students and help
    produce the next generation of scientists, engineers, and technology
    experts for the nation.
        Mr. Chairman, we recognize that this will be another difficult
    year. However, we hope that you and your colleagues on the Subcommittee
    will find it possible to continue to support these two important
    initiatives that deal with issues of crucial national importance. The
    results of the work at the National Center for Atlantic and Caribbean
    Coral Reef Research will make important contributions to the national
    effort to save our endangered coral reef communities. Similarly, our
    proposal for the SAR Facility will enable us to continue our
    partnership with NASA in developing a vital resource in South Florida
    that will benefit the entire nation.
                                     ______

     Prepared Statement of the California Industry and Government Central
                    California Ozone Study (CCOS) Coalition

        Mr. Chairman and Members of the Subcommittee: On behalf of the
    California Industry and Government Central California Ozone Study
    (CCOS) Coalition, we are pleased to submit this statement for the
    record in support of our fiscal year 2002 funding request of $2.5
    million from the Environmental Protection Agency (EPA) for CCOS as part
    of a Federal match for the $8.7 million already contributed by
    California State and local agencies and the private sector.
        Ozone and particulate matter standards in most of central
    California are frequently exceeded. In 2003, the U.S. Environmental
    Protection Agency (U.S. EPA) will require that California submit SIPs
    for the recently promulgated, national, 8-hour ozone standard. It is
    expected that such SIPs will be required for the San Francisco Bay
    Area, the Sacramento Valley, the San Joaquin Valley, and the Mountain
    Counties Air Basins. Photochemical air quality modeling will be
    necessary to prepare SIPs that are acceptable to the U.S. EPA.
        The Central California Ozone Study (CCOS) is designed to enable
    central California to meet Clean Air Act requirements for ozone State
    Implementation Plans (SIPs), as well as advance fundamental science for
    use nationwide. The CCOS field measurement program was conducted during
    the summer of 2000 in conjunction with the California Regional
    PM10/PM2.5 Air Quality Study (CRPAQS), a major
    study of the origin, nature, and extent of excessive levels of fine
    particles in central California. CCOS includes an ozone field study, a
    deposition study, data analysis, modeling performance evaluations, and
    a retrospective look at previous SIP modeling. The CCOS study area
    extends over central and most of northern California. The goal of the
    CCOS is to better understand the nature of the ozone problem across the
    region, providing a strong scientific foundation for preparing the next
    round of State and Federal attainment plans. The study includes six
    main components:
      --Developed the design of the field study
      --Conducted an intensive field monitoring study from June 1 to
            September 30, 2000
      --Developing an emission inventory to support modeling
      --Developing and evaluating a photochemical model for the region
      --Designing and conducting a deposition field study
      --Evaluating emission control strategies for the next ozone
            attainment plans
        The CCOS is directed by Policy and Technical Committees consisting
    of representatives from Federal, State and local governments, as well
    as private industry. These committees, which managed the San Joaquin
    Valley Ozone Study and currently managing the California Regional
    Particulate Air Quality Study, are landmark examples of collaborative
    environmental management. The proven methods and established teamwork
    provide a solid foundation for CCOS. The sponsors of CCOS, representing
    state, local government and industry, have contributed approximately
    $8.7 million for the field study. The federal government has
    contributed $500,000 for some data analysis. In addition, CCOS sponsors
    are providing $2 million of in-kind support. The Policy Committee is
    seeking federal co-funding of additional $8.5 million to complete the
    data analysis and modeling portions of the study and for a future
    deposition study.
        For fiscal year 2002, our Coalition is seeking funding of $2.5
    million from the Environmental Protection Agency (EPA). There is a
    national need to address issues related to the 8-hour ozone and
    PM2.5 standards set by EPA. Nationally, research and data
    gaps exist in effectively coordinating particulate matter and ozone
    control strategies, in understanding ozone deposition, and in using
    models for future ozone and particulate matter SIPs (and updating
    existing SIPs). Federal assistance is needed to address these issues
    effectively, and CCOS provides a mechanism by which California pays
    half the cost of work that the federal government should otherwise
    pursue. California should not have to bear the entire cost of
    addressing these issues.
        The CCOS field study took place concurrently with the California
    Regional Particulate Matter Study--previously jointly funded through
    Federal, State, local and private sector funds. The quality and
    concurrency of these studies brought both technical and financial
    benefits that merit EPA funding for the purpose of addressing national,
    SIP-related issues.
        Financially, CCOS was timed to enable leveraging of the efforts for
    the particulate matter study. Some equipment and personnel served dual
    functions to reduce the net cost of the CCOS field study. The study
    itself was also very cost-effective since it builds on other successful
    efforts including the 1990 San Joaquin Valley Ozone Study.
        From a technical standpoint, carrying out both studies concurrently
    was a unique opportunity to address the integration of particulate
    matter and ozone control efforts. Regarding the need for ozone
    deposition research (how much ozone is removed from the ambient air by
    plants and soil surfaces), California is an ideal natural laboratory
    for studying deposition given the scale and diversity of the various
    ground surfaces in the region (crops, woodlands, forests, urban and
    suburban areas). With respect to SIP-based modeling, evaluating and
    testing various models with the extensive data provided by both CCOS
    and the California Regional Particulate Matter Study will advance the
    use of models for future SIPs nationwide since the region covered by
    the study is large and technically challenging. Improving model
    performance for SIPs is essential since models drive emission reduction
    targets and control strategies. The federal government should fund
    continuing efforts to improve the performance of models used in SIPs.
        Thank you very much for your consideration of our request.
                                     ______

    Prepared Statement of the Integrated Petroleum Environmental Consortium

        It is proposed that the U.S. Environmental Protection Agency
    continue to support a focused, university-based program, the (IPEC),
    with the goal of increasing the competitiveness of the domestic
    petroleum industry through a reduction in the cost of compliance with
    U.S. environmental regulations. Continued Federal support of $2 million
    is specifically requested as part of the fiscal year 2002 appropriation
    for the Environmental Protection Agency through the Science and
    Technology account or other source the Subcommittee may determine to be
    appropriate
        Mr. Chairman, on behalf of the Integrated Petroleum Environmental
    Consortium (IPEC), I would like to take this opportunity to thank the
    Subcommittee for providing $1.5 million in funding for IPEC in the
    fiscal year 1998 and fiscal year 1999 appropriations bills and $750,000
    in the fiscal year 2000 and fiscal year 2001 appropriations bills for
    the Environmental Protection Agency (EPA). Under the Subcommittee's
    leadership both houses of Congress and the final appropriations bills
    included funding for this Consortium each year. Specifically this
    funding was provided for the development of cost-effective
    environmental technology and technology transfer for the domestic
    petroleum industry. With funding under the Science and Technology
    account of EPA, IPEC is implementing a comprehensive mechanism (Center)
    to advance the consortium's research expertise in environmental
    technology. IPEC's operating practices and linkages to the independent
    sector are ensuring that real problems in the domestic petroleum
    industry are addressed with real, workable solutions. The consortium
    includes the University of Tulsa, the University of Oklahoma, Oklahoma
    State University, and the University of Arkansas.
        We are pleased to report that, as envisioned and proposed by the
    Consortium, State-level matching funds have been obtained to support
    IPEC, creating a true Federal-State partnership in this critical area.
    In fiscal year 1998 and fiscal year 1999, IPEC received $375,000 in
    matching funds from the Oklahoma State Reagents for Higher Education.
    We anticipate receiving an additional $185,000 from the Reagents as
    matching for each of the fiscal year 2000 and fiscal year 2001
    appropriations when received from the EPA. A similar amount has been
    pledged by the Reagents as matching funds for a fiscal year 2002
    appropriation.
        Since December, 1997 IPEC has worked closely with the EPA to meet
    all internal requirements for funding of research centers. These
    efforts have resulted in an excellent working relationship with the
    Environmental Engineering Division of the EPA National Center for
    Environmental Research and Quality Assurance with IPEC's grant from EPA
    (fiscal year 1998 appropriation) finalized September 2, 1998.
        Since September 1998 IPEC has funded 18 research projects that
    promise to help ease the regulatory burden on the domestic petroleum
    industry. These funded projects include: the use of plants to clean
    contaminated soils; the natural biodegradation of gasoline by
    microorganisms in the absence of oxygen; the beneficial use of
    petroleum wastes as road materials; the control of the formation of
    toxic hydrogen sulfide in oil wells; the development of simple sampling
    devices to replace expensive live organisms to assess toxicity in
    contaminated soils; the treatment and disposal of naturally occurring
    radioactive material (NORM) in oil production equipment; the
    remediation of brine-impacted soils; development of a sound scientific
    basis for ecological risk assessment of petroleum production sites;
    improving the economics of well plugging; improving the efficiency of
    oil-water separation; and enhancing the remediation of oil contaminated
    soils. These projects were first reviewed and approved by our
    Industrial Advisory Board (dominated by independent producers) as
    relevant to our mission of increasing the competitiveness of the
    domestic petroleum industry and finally reviewed and approved by our
    Science Advisory Committee (SAC) on the basis of scientific quality.
    The EPA has endorsed each member of the IPEC SAC.
        IPEC has provided $1,612,071 in funding for these projects.
    However, another $1,432,226 in funding for these projects have been
    secured by the investigators as matching funds from industry and
    industry organizations such as the Gas Research Institute, the American
    Petroleum Institute and the Petroleum Environmental Research Forum.
    This is over and above the matching funds provided by the Oklahoma
    State Reagents for Higher Education. IPEC has pledged to Congress to
    work for a 1:1 match of federal dollars. As you can see IPEC is living
    up to that promise! IPEC is a true public/private partnership.
        IPEC's technology transfer program is directed toward providing
    useful tools for environmental compliance and cost reduction to
    independent producers. The first objective of this program is to raise
    the level of technical training of the field inspectors of the oil and
    gas regulatory bodies of Oklahoma and Arkansas including the Oklahoma
    Corporation Commission, the Arkansas Oil and Gas Commission, and the
    Osage Agency of the Bureau of Indian Affairs with regard to first
    response to spills, pollution prevention, and remediation of oil and
    brine spills. The second objective of this program is the development
    of checklists for independent producers to assist them in environmental
    audits (``staying out of trouble checklists''), remediation of oil and
    brine spills, and first response to spills. Oklahoma and Arkansas
    regulatory field agents are being used to deliver these tools to the
    independent producers.
        IPEC's technology transfer flagship is the International Petroleum
    Environmental Conference. In November, 2000 IPEC held the 7th
    International Petroleum Environmental Conference in Albuquerque, NM.
    There were 348 in attendance from all facets of the oil and gas
    industry including independent and major producers, service industry
    representatives, and state and federal regulators. The program for the
    7th conference featured several plenary lectures, over 135 technical
    presentations, exhibits, a poster session and a special symposium on
    characterization and remediation of the subsurface. Co-sponsors of the
    conference included the Interstate Oil and Gas Compact Commission, the
    Railroad Commission of Texas, the Texas Independent Producers and
    Royalty Owners Association, the Gas Research Institute, the Oklahoma
    Independent Petroleum Association, the Oklahoma Energy Resources Board,
    the EPA Office of Research & Development, and the National Petroleum
    Technology Office of the U.S. Dept. of Energy. IPEC sponsors the
    participation of fifteen state regulators from Oklahoma and Arkansas
    each year at the conference. The 8th International Petroleum
    Environmental Conference will be held November 6-9, 2001, in Houston,
    TX.
            the continuing crisis in the domestic petroleum industry
        Much attention has been paid recently to the high costs to
    consumers of gasoline and natural gas. Energy experts agree that the
    price increases currently being experienced were brought on by short-
    term shocks that resulted from sudden changes in supply and demand. On
    the demand side there has been increasing demand for petroleum
    worldwide, especially in the Far East. On the supply side, OPEC and
    several non-OPEC countries have removed significant amounts of crude
    oil from production. Once again America has been held hostage to the
    marketing whims of foreign producers and we are in no position to
    respond. Since 1990 there has been a 27 percent decline in the number
    of jobs in the U.S. exploring and producing oil and gas and the number
    of working drilling rigs has seriously declined. Thirty-six refineries
    have closed since 1992 and no new refineries have been built since
    1976. Most energy analysts agree that we need to ``drill our way out''
    of the current high prices and shortages; however, the industry's
    infrastructure (in terms of equipment and trained personnel) cannot
    support the amount of drilling activity current prices would otherwise
    encourage.
        In order to regain energy security the U.S. must have a coherent
    domestic energy strategy. Some may be willing to entrust the health of
    the U.S. economy to windmills and solar-powered cars, but it will be a
    stable and profitable domestic oil and gas industry that is the
    nation's best defense against OPEC market manipulations. The current
    upswing in crude oil prices may eventually stimulate the industry.
    However, the record low prices that preceded the current increases have
    left many companies in financial positions that make it impossible to
    launch new exploration activities. Additionally, many in the industry
    are simply uneasy with the volatility that has come to characterize the
    industry. Much of U.S. domestic oil production is carried out by
    independent producers who are producing from mature fields left behind
    by the majors. Although there is a significant resource base in these
    fields, this is the most difficult and the most costly oil to produce.
    The independent producer has only one source of revenue--the sale of
    oil and gas. There is no vertical depth to his business.
        A major factor in the high cost of production in the domestic
    petroleum industry is the cost of environmental compliance. IPEC is
    working to strengthen the domestic petroleum industry and reduce the
    impact of market volatility by providing cost-effective environmental
    technologies to solve those problems that are having the greatest
    impact on production costs. These efforts are especially needed now as
    we develop new sources of natural gas such as coal-bed methane. This
    new source of natural gas is desperately needed to meet our nation's
    energy demand but coal-bed methane presents some unique environmental
    problems which must be addressed in a cost-effective manner. A strong
    and stable domestic petroleum industry is our best hedge against
    foreign market manipulation.
                   ipec's response to critical research needs
        IPEC is continuing to fulfill its pledge to you of responsiveness
    to the needs of domestic petroleum industry and fiscal responsibility.
    IPEC continuously probes our Industrial Advisory Board for new ways to
    assist the industry and seeks out cost-effective technical solutions to
    these problems through an aggressive solicitation and review process.
        IPEC will continue to work with the domestic petroleum industry to
    provide technical solutions to those environmental problems that
    represent the greatest challenge to the competitiveness of the
    industry. In addition, IPEC proposes to launch two new technology
    transfer initiatives.
                              new ipec initiatives
    Petroleum extension agents
        There are over 3,500 independent oil producers in Oklahoma and
    Arkansas. Most of these are very small companies, the ``mom and pop''
    operations whose business is run from the pickup truck and the kitchen
    table. These small producers are especially vulnerable to industry
    volatility. The ongoing crises in the domestic petroleum industry
    requires a multi-level response with a specific outreach effort to the
    smallest of the independents, those without in-house experts, to advise
    them on the latest production techniques to minimize costs; how to
    prevent spills and the accompanying clean-up costs; and how to comply
    with state and federal regulations to avoid fines and costly loss of
    production. This type of assistance is not currently provided by the
    private sector engineering and service companies because the small
    producers cannot afford private sector services of this kind.
        IPEC proposes to provide these services to small independent
    producers through a system of petroleum extension agents (PEAs). Up to
    ten (10) full-time equivalent petroleum professionals will be hired in
    a pilot program to call on small independent producers throughout
    Oklahoma and Arkansas to provide direct assistance in every aspect of
    operating a profitable and environmentally friendly business as an oil
    producer. These PEAs will be seasoned veterans of oil and gas
    production in the state in which they will operate and operate from the
    major oil producing areas of the states. PEA services will be made
    known to producers through advertisements and through field agents of
    the Oklahoma Corporation Commission and the Arkansas Oil and Gas
    Commission. PEAs will also seek out and call on small producers in the
    same way that county agricultural extension agents call on small
    farmers. In difficult situations PEAs will be able to draw on the
    significant resources of the IPEC institutions and the IPEC Industrial
    Advisory Board. Since representatives of the state regulatory bodies
    serve on the IAB, IPEC can also serve to help resolve problems.
        The results expected from this program are: a reduction in the
    costs of production and increased profitability among small independent
    producers; lesser numbers of small producers going out of business;
    less abandoned resources; greater state tax revenues; and increased
    compliance with environmental regulations and greater protection of
    natural resources. The Oklahoma and Arkansas PEA program will serve as
    a model and pilot program for other oil-producing states.
    Train the trainer--Expanding environmental know-how among Native
            Americans
        Historically much of the oil and gas produced in Oklahoma has come
    from Indian land. In the culture surrounding the early days of oil and
    gas production there were few environmental regulations or concerns.
    This past lack of proper environmental practice resulted in damage that
    is still visible and problematic today. The most persistent problems
    are soil and groundwater contamination resulting from spills and
    discharge of produced water brine. Historic brine are seen today as
    scars on the land, devoid of vegetation, and highly eroded. Because of
    the age of these spills many of the companies responsible are no longer
    in business. Historic brine scars not only represent a loss of use of
    land but also a continuing source of pollution of valuable surface
    waters and groundwater. These brine impacted sites contain salt which
    jeopardizes public and private sources of drinking water through runoff
    and drainage. The sole solution to this continuous source of salt
    pollution is remediation. Many Oklahoma tribes occupy lands scarred by
    brines and the salt in these scars threatens tribal recreational and
    drinking water sources.
        IPEC proposes to provide tribal organizations with an in-depth
    training program in environmental know-how related to these oil and gas
    problems resulting in the education of Native American environmental
    specialists. Further IPEC proposes to give these specialists the skills
    and resources to allow them to train others in methods of remediation
    of oil and brine spills and pollution prevention.
        The remediation of crude oil spills and brine scars does not
    require expensive instrumentation or highly specialized equipment. The
    major equipment required is simply earth-moving equipment. Most tribes
    have equipment of this type currently used for road work and other
    municipal projects. Therefore, remediation of oil and brine spills is
    not economically beyond the reach of the tribes. By ``training the
    trainer'' IPEC extends its reach beyond the classroom into the tribes
    building self-sufficiency within the tribes to solve environmental
    problems on tribal lands and protect precious natural resources.
                                funding of ipec
        IPEC is seeking appropriations of $2 million for fiscal year 2002
    through the Environmental Protection Agency. This request is a $1.25
    million increase over the fiscal year 2001 appropriation. The
    additional funding will be used to expand our activities into coal-bed
    methane and fund the PEA pilot program and the Train the trainer
    program. The consortium will be responsible for at least a 50 percent
    match of federal appropriations with private sector and state support
    over any five-year period. The Consortium will be subject to annual
    review to ensure the effective production of data, regulatory
    assessments, and technology development meeting the stated goals of the
    Consortium.
                                     ______

     Prepared Statement of the American Lung Association and the American
                                Thoracic Society

        The American Lung Association and the American Thoracic Society
    appreciate the opportunity to submit written comments to the Senate VA-
    HUD Appropriations Subcommittee. The American Lung Association is the
    nation's oldest voluntary non-profit health organization. For the
    better part of a century, the American Lung Association has fought for
    better lung health for all Americans.
        The American Thoracic Society (ATS), founded in 1905, is an
    independently incorporated, international professional and scientific
    society which focuses on respiratory and critical care medicine. The
    ATS has approximately 13,500 members. The Society's members help
    prevent and fight respiratory disease around the globe, through
    research, education, patient care and advocacy.
        Lung disease is the third leading cause of death in the U.S.,
    responsible for one in every seven deaths. More than 25 million
    Americans suffer from a chronic lung disease. Lung diseases cost the
    U.S. economy an estimated $89.1 billion annually. Lung diseases
    represent a spectrum of chronic and acute conditions that interfere
    with the lung's ability to extract oxygen from the atmosphere, protect
    against environmental of biological challenges and regulate a number of
    metabolic processes. Lung diseases include: emphysema, chronic
    bronchitis, lung cancer, tuberculosis, pneumonia, influenza, sleep
    disordered breathing, pediatric lung diseases, occupational lung
    diseases, sarcoidosis and asthma.
        Nearly all of these lung diseases are severely impacted by air
    pollution.
        How well or how poorly our lungs perform is contingent on the
    quality of air around us, making the impact of air pollution
    inescapable. Air pollution remains a primary contributor to a high
    prevalence of respiratory diseases.
        For the past 35 years, the American Lung Association and the
    American Thoracic Society have conducted scientific, public health and
    educational programs to fight air pollution and to improve the quality
    of air we breathe. We remain strong supporters of the Clean Air Act and
    its amendments. We can attest to the significant impact the Clean Air
    Act has had upon cleaning our nation's air and allowing us all to
    breathe a little easier.
        While the nation has made great strides in improving air quality,
    many areas across the nation experience unhealthy levels of air
    pollution many days each year. The EPA reported that in 1997,
    approximately 59 million American lived in counties that did not meet
    the current federal air pollution standards. The number of people
    living in non-attainment counties jumps to 107 million when the revised
    air quality standards are used. Tens of thousands of Americans still
    die prematurely each year from complications associated with exposure
    to air pollution.
                    oppose clean air act legislative riders
        Mr. Chairman, the American Lung Association and the American
    Thoracic Society are greatly concerned that the VA-HUD appropriations
    bill has become a target in the past for substantive legislative riders
    seeking to change laws that protect the public health and our
    environment. Often these riders seek to delay the implementation of
    clean air standards that protect our clean air or reduce the level of
    protection to our environment.
        In particular, the Clean Air Act has become the target of narrow
    changes attached to EPA's appropriation. Actions taken by the EPA to
    improve air quality enjoy broad public support. A recent poll conducted
    by the American Lung Association found that a majority of Americans
    support cleaner burning fuels and cleaner burning cars. In the same
    poll, 60 percent of respondents felt that the air quality was worse
    than it was ten years ago. Clearly, Americans are aware and concerned
    about air quality issues.
                  the u.s. supreme court and the clean air act
        The American Lung Association and the American Thoracic Society are
    very pleased with a recent series of decisions issued by the U.S.
    Supreme Court related to the Clean Air Act. Recent high court rulings
    have affirmed the founding principle of the Clean Air Act adopted more
    than thirty years ago: that clean air standards should be based on
    protecting public health--not on cost.
        The Court upheld the constitutionality of EPA's 1997 standards for
    particle pollution (soot) and ozone (smog). The Court rejected without
    reservation all challenges to the EPA standard for soot. EPA estimates
    that meeting this standard will save 15,000 lives each year.
        In the same decision, the Court remanded the implementation of the
    1997 8-hour ozone standard back to the Environmental Protection Agency.
    The Court did not question the underlying health science or the level
    of the standard, but rather ruled that EPA must develop a reasonable
    approach to implementing the standard.
        Underlying both components of the U.S. Supreme Court's decision was
    the affirmation of the health-based standard setting process and it
    reliance on the best available scientific data. The high court
    preserved the vital role that sound science should play in setting
    those standards.
        In a separate decision, the Supreme Court rejected without comment
    an appeal from seven states and several power companies of a Federal
    Court of Appeals, D.C. Circuit upholding EPA's ``NOX SIP
    Call.'' This regulation requires 22 states east of the Mississippi and
    the District of Columbia to reduce nitrogen oxide (NOX)
    emissions from power plants in the Southeast and Midwest that
    contribute to smog in the Northeast. A 2000 study for the Clean Air
    Task Force found that power plants in the Midwest, Southeast and
    Northeast contribute about 25 percent of the NOX emissions
    that result in unhealthy levels of smog in these areas. The study
    estimated that excess smog in these areas causes more than 200,000
    emergency room and hospital admissions and 6 million asthma-attacks
    each year.
        EPA found these reductions necessary in order to achieve compliance
    with the old one-hour ozone standard, not the more stringent eight-hour
    standard affirmed by the Supreme Court last week. However, the emission
    reductions resulting from this rule will be essential for areas in the
    eastern U.S. to meet the 1997 eight-hour ozone standard.
                                 the epa budget
        The Administration has indicated it will seek $7.3 billion for EPA
    for fiscal year 2002. This is one-half billion less than Congress
    provided in fiscal year 2001. We are concerned that a one-half billion-
    dollar cut in the EPA budget will significantly reduce the
    effectiveness of EPA programs.
        From the information made available to the public, it is unclear
    what the Administration's spending priorities for EPA are. The overall
    priorities released so far indicate that the President will propose an
    overall increase in State and Tribal Grants to administer programs and
    will grant increased flexibility to meet environmental goals.
        We strongly urge Congress and the Administration to maintain the
    commitment to Sound Science Clean Air research activities of the
    Science and Technology programs. Recent studies supported by EPA grants
    are adding new understanding to the role outdoor and indoor air have on
    the initiation and progress of respiratory diseases. Now is clearly not
    the time to reduce EPA's commitment to research that is essential to
    providing the underpinning sound science needed for future air quality
    standards reviews and pollution control regulations.
                              epa and state grants
        Much of the work in implementing, monitoring and enforcing the
    Clean Air Act is conducted at the state and regional level. While much
    of the key leadership is provided by EPA, a good share of the work is
    done by states. The proposed increase is a positive step forward.
    However, given the work load remaining, meeting the existing new ozone
    and particulate standards, the preparation needed for new standards and
    ongoing work in other clean air activities like air toxics, other
    criteria pollutants attainment programs, and permits--additional
    support for state clear air activities is needed.
                  epa: niehs superfund basic research project
        Mr. Chairman, the ALA/ATS would like draw special attention to the
    NIEHS Superfund Basic Research project. This program focuses on the
    health effects of toxic chemical exposure at Superfund hazardous waste
    sites, and devises methods for minimizing the relative health risks of
    exposure for clean up site employees. The ALA/ATS believes the EPA has
    made an excellent investment in the future of human protection and
    worker safety by supporting this research and training program. We
    recommend $45 million for transfer to the National Institute of
    Environmental Health Sciences (NIEHS) for superfund research and an
    additional $23 million for Superfund worker training. The NIEHS
    Superfund research program is conducting exciting research to develop
    biomarkers for measuring the actual burden of environmental toxics in
    humans.
                the va medical and prosthetics research program
        The American Lung Association and the American Thoracic Society
    strongly encourages the Subcommittee to support the VA medical and
    prosthetics research program by recommending an fiscal year 2002
    appropriation of at least $395 million. Equally important, we urge the
    Committee to make a commitment to support sustainable funding increases
    in subsequent years. For too long, this program has suffered from a
    roller coaster of threatened cuts and flat funding, with an occasional
    hard won increase of significant size. This instability has made it
    difficult for the VA research program to maintain its momentum and to
    attract to VA the talented and skilled personnel necessary to conduct
    cutting edge research and to care for veterans. It has also caused low
    morale among clinician-scientists who, based on their experience caring
    for veteran patients, spend years developing research proposals only to
    learn their projects have been approved, but cannot be funded, or whose
    budgets are cut before the work is done.
        Three core needs justify the ALA/ATS recommendation:
        1. Increase investigator-initiated research to foster recruitment
    and retention of high quality physician-investigators and to
    continuously strive to advance diagnosis and treatment of conditions
    that particularly afflict veterans.
        VA has identified four areas where there is a critical need for
    more effort and in which VA is uniquely positioned to make substantive
    contributions: treatment of chronic diseases; diagnosis and treatment
    of degenerative diseases of the brain; improving quality of care; and
    research involving special populations, particularly those who suffer
    from spinal cord injury, stroke, diseases of the nervous system and
    post traumatic stress disorder.
        2. Expand training programs to attract the next young generation of
    clinician-scientists to careers in the VA health care system. VA's
    Career Development programs are a national resource for training the
    next generation of clinician scientists, those health care
    practitioners who treat patients and address questions that have a
    direct impact on care.
        3. Accommodate biomedical research inflation so that, at a minimum,
    VA can maintain its current level of research activity on conditions
    prevalent in the veteran population such as prostate cancer, diabetes,
    heart diseases, Parkinson's disease, mental health, spinal cord injury
    and aging related diseases. Additional funding is also required for VA
    to implement more stringent controls on research involving human
    subjects and to ramp up new oversight programs.
        In summary, the VA medical research and prosthetic research program
    is a high quality, peer-reviewed scientific program that is leading the
    way to new treatments and cures for veterans and all Americans. The
    ALA/ATS strongly urge the Subcommittee to provide $395 million for the
    VA medical and prosthetic research program to continue its excellent
    work.
        Mr. Chairman, the American Lung Association and the American
    Thoracic Society appreciate the support you and the Subcommittee has
    shown for the EPA and the VA medical and prosthetics research program.
    We look forward to continue to work with you on these valuable
    programs.
                                     ______

      Prepared Statement of the Upper Mississippi River Basin Association

        The Upper Mississippi River Basin Association (UMRBA) is the
    organization created 20 years ago by the Governors of Illinois, Iowa,
    Minnesota, Missouri, and Wisconsin to serve as a forum for coordinating
    the five states' river-related programs and policies and for
    collaborating with federal agencies on regional water resource issues.
    As such, the UMRBA has an interest in the budget for the U.S.
    Environmental Protection Agency (EPA), particularly as it affects
    funding of water quality programs administered by the states.
                  state pollution control grants (section 106)
        Funding for Section 106 State Pollution Control Grants would
    decline by $2.0 million under the Administration's fiscal year 2002
    budget request. While the UMRBA is pleased that this request comes
    close to matching the substantial funding increase implemented in
    fiscal year 2001, the states are reluctant to see any reduction in
    resources for this important program. The federal Section 106 funds, in
    combination with the states' matching dollars, support the core state
    water quality programs, including water quality assessment and
    monitoring, surface and ground water standards, point source
    permitting, and training and public information. Adequate funds are
    particularly critical to supporting the states' development and
    implementation of total maximum daily loads (TMDLs). The tasks
    associated with developing TMDLs for impaired waters include watershed
    characterization, computer modeling and related analyses, allocation of
    permissible loads, development of TMDL reports and plans, and public
    outreach and stakeholder development. These responsibilities have the
    potential to overwhelm state agency resources that are in many cases
    already strained. Regardless of how controversies surrounding EPA's
    TMDL rule are ultimately resolved, TMDL planning and implementation
    promises to be a major challenge. Further increases in funding to
    enable states to meet these challenges, as well as base program needs,
    will be imperative.
                       clean water state revolving funds
        The UMRBA is deeply concerned about the lack of support in the
    Administration's fiscal year 2002 budget proposal for the Clean Water
    State Revolving Fund (CWSRF), which helps address wastewater
    infrastructure needs. The CWSRF has made tremendous contributions to
    improving the nation's water quality. In contrast to fiscal year 2001
    funding of $1.35 billion, the budget request for fiscal year 2002 is
    only $850 million, a reduction of 37 percent. Given the flexibility to
    redirect wastewater funds to the Drinking Water State Revolving Fund
    (DWSRF) and Section 319 nonpoint source grants, even less than $850
    million might well be available for the wastewater SRFs. While the
    flexibility to shift among these three programs can help the states
    address their most pressing needs, it is no substitute for adequate
    funding. Estimates of the nation's wastewater infrastructure needs
    certainly vary, and EPA is scheduled to release an updated Clean Water
    Needs Survey next year. However, there is absolutely no doubt there are
    substantial unmet needs. The high demand for these funds underscores
    the need to reauthorize CWSRF funding and increase annual federal
    appropriations to $2 billion.
                         sewer overflow control grants
        The UMRBA strongly supports efforts to address the problems of
    combined sewer overflows (CSOs) and sanitary sewer overflows (SSOs).
    Wet weather events are a major source of water pollution and require an
    integrated effort to address them. However, the states do not support
    the Administration's proposal to provide $450 million for CSO/SSO
    grants while simultaneously reducing CWSRF funding by $497 million. The
    fiscal year 2001 Omnibus Appropriations bill authorized the new sewer
    overflow grants, but only in years when the CWSRF receives at least
    $1.35 billion. This provision clearly reflects Congress' judgment that
    both programs address critical needs and should not be traded off
    against one another. The UMRBA concurs with this judgment and urges
    Congress to maintain the requirement.
                   state nonpoint source grants (section 319)
        The Administration has requested $237.5 million for the Section 319
    state nonpoint source (NPS) grant program. This is the same amount that
    was appropriated for fiscal year 2001 and $37.5 million above the
    fiscal year 2000 enacted level. Nonpoint sources are one of the major
    causes of water pollution in the Upper Mississippi River Basin, which
    drains the nation's agricultural heartland. Adequate funding for
    Section 319 and complementary efforts, including the USDA's
    conservation programs, is essential to meeting the region's major water
    quality challenges. While the UMRBA is pleased that the Administration
    is seeking to maintain last year's increase, it should be recognized
    that continued progress in addressing nonpoint pollution will require
    increased resources for Section 319.
                                    research
        The UMRBA is concerned with the adequacy of water quality research
    funding under the Administration's budget. The budget request includes
    increased funding in some important areas, including almost $1 million
    for research on suspended solids and sediment. Turbidity and sediment
    are major problems on the Upper Mississippi River. This research
    promises to help inform development of criteria for non-contaminate
    suspended solids and sediment and to identify cost-effective strategies
    for managing these materials. Another notable increase is $1.9 million
    in new funding for decision support tools to help states in developing
    TMDLs. However, these increases should not come at the expense of
    equally important research efforts. The Administration's budget
    proposes cutting $690,000 from EPA's work to develop integrated water
    quality criteria. These criteria, which will incorporate sediment
    guidelines and aquatic life and wildlife criteria, represent a
    promising risk-based approach to protecting aquatic life in complex
    systems such as the Upper Mississippi. The URMBA is also concerned with
    a proposed $339,000 cut in research on habitat alteration, biocriteria,
    nutrients, eutrophication, and harmful algal blooms. This is precisely
    the sort of information needed to inform efforts to address the Gulf of
    Mexico hypoxia problem. As states, federal agencies, and local
    communities struggle with increasingly complex water quality problems,
    it is essential to support the research that will provide the
    scientific underpinnings of sound solutions.
                                     ______

      Prepared Statement of the Upper Mississippi River Basin Association

        The Upper Mississippi River Basin Association (UMRBA) is the
    organization created 20 years ago by the Governors of Illinois, Iowa,
    Minnesota, Missouri, and Wisconsin to serve as a forum for coordinating
    the five states' river-related programs and policies and for
    collaborating with federal agencies on regional water resource issues.
    As such, the UMRBA has an interest in the budget for the Federal
    Emergency Management Agency (FEMA).
        Mitigation.--Of particular interest to UMRBA is funding for
    mitigation of future flood hazards. Mitigation, which is the on-going
    effort to reduce or eliminate the impact of disasters like floods, can
    include measures such as relocating homes or community facilities off
    the floodplain, elevating structures, or practicing sound land use
    planning. Mitigation planning and implementation measures are essential
    to reducing the nation's future disaster assistance costs.
    Unfortunately, FEMA's fiscal year 2002 budget proposes a dramatic
    reduction in funding for mitigation activities. In particular, the
    Hazard Mitigation account would be cut from its fiscal year 2001 level
    of $46 million, to only $19 million in fiscal year 2002. The National
    Flood Mitigation Fund would also be reduced from $29 million to $20
    million.
        The Hazard Mitigation Grant Program (HMGP) is a particularly
    popular and enormously helpful program. Authorized under Section 404 of
    the Stafford Act, the HMGP provides grants to states and local
    governments to implement long-term hazard mitigation measures after a
    major disaster declaration. Because grant funds are made available
    during the immediate recovery from a disaster, it offers a particularly
    attractive option for communities that may not otherwise consider
    mitigation. It is not yet clear what the full impact of this spring's
    flooding along the Upper Mississippi River may be and whether HMGP
    funding will be made available for mitigation activities. However,
    following the disastrous 1993 Midwest floods, the demand for HMGP funds
    was so high that Congress provided two supplemental appropriations.
    Since 1993, mitigation funds have been used to acquire or elevate
    10,372 flood prone properties in 236 communities in the five UMRBA
    states. The effectiveness of this mitigation investment is demonstrated
    by the fact that many of these were repetitive-loss properties that
    will no longer experience flood damage. The tax payer savings are
    evident.
        Given the effectiveness of the HMGP and other mitigation programs,
    the UMRBA urges Congress to restore funding for mitigation programs in
    FEMA's fiscal year 2002 budget. In addition, UMRBA recommends that
    Congress reject the Administration's proposal to reduce the federal
    share for HMGP grants from 75 percent to 50 percent. By reducing the
    cost-share for mitigation, the incentive for communities to take
    advantage of these grants is also reduced. Frequently, out of
    compassion for those affected by a disaster, the nonfederal cost share
    for federal disaster recovery assistance is often relaxed or
    eliminated. In those instances, affected communities and their
    residents may find such disaster relief a more attractive option than
    mitigation, which would reduce their future risk. We need to ensure
    that mitigation remains a viable option for floodprone communities.
        National Flood Insurance Program.--The President's budget proposes
    two cost saving reforms for the National Flood Insurance Program
    (NFIP). Of particular concern to UMRBA is the proposal to terminate
    flood insurance coverage for repetitive loss properties after one more
    claim. While repetitive loss properties need to be brought into
    compliance with flood risk standards, strategies to do so should
    include a one-time offer of mitigation assistance to enable repetitive
    claimants to floodproof or relocate their homes. Such a proposal is
    currently before Congress in legislation sponsored by Representatives
    Bereuter, Blumenauer, and Costello (H.R. 1428). Under the ``Two Floods
    and You Are Out of the Taxpayers' Pocket Act,'' a repetitive claimant's
    refusal to mitigate would then result in NFIP premiums being set at the
    actuarial rates. In the absence of such a program, denying insurance to
    policy holders with repetitive claims will likely increase the public
    demand for federal disaster relief, with no real opportunity to prevent
    future damages. The UMRBA therefore urges Congress to reject the
    President's proposal to deny flood insurance coverage to repetitive
    loss properties without first ensuring that affected property owners
    are offered viable mitigation opportunities.
        Flood Map Modernization.--UMRBA supports the proposed budget
    provisions that would allow $15 million of disaster relief funds to be
    used for flood map modernization activities in post-disaster situations
    and authorize the transfer of $7 million in unexpended previously
    collected NFIP fees to support on-going flood map modernization. Among
    other things, flood maps are used to determine risk-based NFIP premium
    rates and develop disaster response plans for federal, state, and local
    emergency management personnel. However, most flood maps are over 15
    years old and are rapidly becoming obsolete. Many flood maps are
    outdated by the effects of land use changes in the watersheds. When
    out-dated maps underestimate flood depths, it can often lead to
    floodplain development in high risk areas. It is therefore important
    that flood maps be updated on an ongoing basis and in a timely way.
        The Corps of Engineers is currently conducting a Flow Frequency
    Study that will update the discharge frequency relationships and water
    surface profiles of approximately 2,000 river miles of the Upper
    Mississippi, Lower Missouri, and Illinois Rivers. This data will have a
    variety of uses, including updating Flood Insurance Rate Maps (FIRMs)
    used by hundreds of flood prone communities along these rivers. The
    Corps and FEMA have estimated that 4,180 map panels in the 7-state
    study area will need to be revised at a cost of approximately $30
    million. Using data from the Corps study will be a far more cost-
    effective way to update FIRMs than having FEMA independently study
    flood hazards and update the maps. UMRBA therefore urges Congress to
    provide funding for the Upper Mississippi flood mapping project and
    direct FEMA and the Corps to coordinate their efforts to advance FIRM
    updates.
                                     ______

               Prepared Statement of the Nuclear Energy Institute

        Mr. Chairman and members of the subcommittee, my name is Ralph
    Andersen. I am the chief health physicist at the Nuclear Energy
    Institute. I have worked in the areas of radiation protection, site
    cleanup and decommissioning, and nuclear waste management for 28 years.
    Before joining NEI nine years ago, I was superintendent of radiation
    protection at Detroit Edison Company's Fermi 2 nuclear plant, and the
    director of environmental protection and probabilistic risk assessment.
    Earlier in my career, I was a radiation safety officer and lecturer in
    the Department of Physics and Astrophysics at the University of
    Colorado and associate radiation safety officer and principal
    researcher at the University of Maryland Medical Center.
        The Nuclear Energy Institute develops public policy for the U.S.
    nuclear industry. We represent 270 member companies with a broad
    spectrum of interests, including every U.S. utility that operates a
    nuclear power plant, their suppliers, fuel fabrication facilities,
    architectural and engineering firms, labor unions and law firms,
    radiopharmaceutical companies, research laboratories, universities and
    international nuclear organizations.
        In my testimony today, I would like to discuss two issues: federal
    support for nuclear engineering education and the Environmental
    Protection Agency's (EPA) continuing duplicative regulation of Nuclear
    Regulatory Commission (NRC) licensees.
                         ending duplicative regulation
        This committee has cautioned EPA against duplicative regulation,
    but the agency has persisted, and this has been of ongoing concern to
    the nuclear energy industry.
        The nuclear industry's highest priority is protecting public health
    and safety as well as the environment during all aspects of facility
    operation. Achieving this goal depends on clear and consistent federal
    policy that:
      --assures protection of public health and safety;
      --makes the best use of available public and private funds and
            resources; and
      --helps build public trust and confidence in federal decisions and
            programs.
        The current situation--one of duplicative and conflicting
    regulation by two federal agencies--works against those principles.
        On behalf of the nuclear industry, I want to commend you for your
    continued oversight of EPA--in particular, the agency's administration
    of the National Priorities List, also known as the Superfund program.
    Public Law passed by Congress earlier has discouraged the allocation of
    funding for dual regulation by EPA of nuclear energy facilities that
    are undergoing decommissioning and license termination under NRC
    regulation. In doing so, the Congress is holding the Administration
    accountable for regulatory reform policy by deterring regulatory
    activities that are ``inconsistent, incompatible, or duplicative of
    those of other federal agencies.'' \1\
    ---------------------------------------------------------------------------
        \1\ Executive Order 12866, ``Regulatory Planning and Review,'' at
    58 Fed. Reg. 51735, dated October 4, 1993.
    ---------------------------------------------------------------------------
        EPA has continued to interject itself into the NRC's regulatory
    process for site decommissioning and license termination. Further, EPA
    has threatened to list NRC-licensed facilities on the National
    Priorities List after such facilities have been decommissioned in full
    compliance with NRC regulations which, I should emphasize, were
    established to be fully protective of public health and safety.
        EPA has inserted itself into the NRC's regulatory process through
    interaction with state agencies, the industry and the public in a
    manner that represents an inefficient use of government resources and
    undermines public confidence in government and industry efforts to
    protect public health and safety.
        In 1998, the House Appropriations Committee adopted report language
    that recognized the NRC's ability to oversee the full remediation of
    nuclear facilities. This language specifically prohibited EPA from
    using federal funds to place NRC licensees on the National Priorities
    List.\2\ However, there has been no evidence that EPA intends to comply
    with the committee's guidance and no indication that it will not
    persist in challenging the NRC's authority to regulate decommissioning
    and site cleanup activities.
    ---------------------------------------------------------------------------
        \2\ U.S. House of Representatives, Report 105-175 to accompany H.R.
    2158.
    ---------------------------------------------------------------------------
        In 1999, the House Appropriations Committee expressed heightened
    concern about EPA actions. The committee pointed out that ``any
    reversal of the long-standing policy of [EPA] to defer to the NRC for
    cleanup of NRC-licensed sites is not in the public interest and is not
    a good use of public or private funds.'' \3\ Further, the committee
    recognized that attempts at dual regulation by EPA have created
    legitimate stakeholder concerns regarding the authority and finality of
    NRC licensing decisions, the duration and cost of site cleanup, and the
    potential future liability of parties associated with affected sites.
    ---------------------------------------------------------------------------
        \3\ U.S. House of Representatives, Report 106-286 to accompany H.R.
    2684.
    ---------------------------------------------------------------------------
        The House Appropriations Committee also encouraged EPA and the NRC
    to enter into an MOU to clarify the circumstances for EPA's involvement
    at NRC-licensed sites--when requested by the NRC. The agencies were
    directed to report to the committee by May 1, 2000, on the MOU status.
    As the deadline passed, the two agencies advised the committee that
    there has been no substantial progress on the development of an MOU.
        The General Accounting Office (GAO) reviewed the status of the MOU
    in June 2000 and examined the underlying issues associated with it. GAO
    acknowledged the Congress' efforts to encourage the agencies ``to
    clarify their conflicting regulatory roles related to nuclear facility
    cleanup and decommissioning.'' \4\ However, GAO concluded that ``given
    the agencies' historical differences and lack of recent progress,
    without congressional intervention, they may not resolve their
    differences.''
    ---------------------------------------------------------------------------
        \4\ GAO/RCED-00-152, ``Radiation Standards: Scientific Basis
    Inconclusive, and EPA and NRC Disagreement Continues,'' June 2000.
    ---------------------------------------------------------------------------
        In its most recent report accompanying H.R. 4635,\5\ the House
    Appropriations Committee said ``that both agencies have not worked in
    good faith to resolve the problem of dual regulation by the federal
    government in NRC-licensed site decommissioning.'' The committee
    directed the EPA administrator ``to undertake a review of EPA action on
    the MOU, the costs to NRC licensees associated with dual regulation by
    NRC and EPA on site cleanup, the potential costs associated with
    listing these facilities on the [National Priorities List], and options
    for resolving this issue by regulation, litigation or legislation.''
    The committee set a deadline of March 31, 2001, for submittal of the
    report. We have no indication that the EPA has conducted the
    comprehensive review directed by the committee--despite the rapidly
    approaching deadline.
    ---------------------------------------------------------------------------
        \5\ U.S. House of Representatives, Report 106-988 to accompany H.R.
    4635.
    ---------------------------------------------------------------------------
        Last year, EPA issued a guidance memorandum to its regional
    Superfund managers clarifying EPA's role under the Comprehensive
    Environmental Response, Compensation, and Liability Act (CERCLA) at
    facilities licensed by NRC.\6\ Unfortunately, this memorandum makes
    clear EPA's intent to continue to impose additional regulation on NRC
    licensees. The guidance memorandum:
    ---------------------------------------------------------------------------
        \6\ OSWER No. 9272.0-15P, ``Interim Final Guidance on Evaluation of
    Facilities Currently or Previously Licensed by NRC under CERCLA,''
    dated February 17, 2000.
    ---------------------------------------------------------------------------
      --does not acknowledge that the NRC is the lead agency for regulating
            its licensees;
      --does not place any constraint on EPA involvement at NRC sites when
            not requested by the NRC; and
      --does not include any suggestion that EPA should consult or
            otherwise coordinate with the NRC on these issues.
        With such glaring omissions, this document--now standing as EPA
    policy on the agency's role regarding NRC-licensed sites--stands in
    direct conflict with guidance this committee provided to EPA.
        EPA persists in efforts that undermine the credibility of the NRC's
    regulatory process and erode the trust and confidence of public and
    government stakeholders in the NRC's health and safety standards.
        A telling example occurred this past year in Maine. The Maine
    legislature last August passed a law \7\ to establish cleanup standards
    for decommissioning nuclear facilities patterned after EPA's continued
    undermining of the validity of NRC's cleanup standards. EPA was heavily
    involved in shaping this legislation. For example, the agency provided
    testimony and subsequent guidance to the state legislature on the
    proposed law and stressed its support of Maine's efforts and
    legislative intent ``to mirror EPA's policies.'' EPA also sent a letter
    to the Maine legislature, clarifying differences between the standards
    promulgated in the act and EPA's standards that ``may have arisen
    inadvertently during the drafting of the legislative language and
    [were] not discovered until after the legislation was enacted.'' The
    letter commits EPA to ``working closely with [the state] to provide
    closure on the matter,'' although it notes that ``it is not possible to
    further analyze the issue'' until the final license termination plan,
    required by NRC regulations, is available from the nuclear power plant
    undergoing decommissioning in Maine.
    ---------------------------------------------------------------------------
        \7\ An Act to Establish Clean-up Standards for Decommissioning
    Nuclear Facilities, enacted by the Second Regular Session of the 119th
    Legislature of the State of Maine, Chapter 741, S.P.1084-L.D.2688.
    ---------------------------------------------------------------------------
        Mr. Chairman, we do not dispute the propriety and legality of the
    actions taken by the state in carrying out its authority and
    responsibility to the people of Maine. In fact, we view the active
    involvement of state and local government and the public as essential
    to the NRC regulatory process for decommissioning a facility. Indeed,
    NRC regulations expressly provide for such participation. However, we
    object to EPA's engaging in duplicative and conflicting regulatory
    efforts, taking every available opportunity to undermine the legitimacy
    of the NRC's regulatory process and standards.
        There has been little progress by the two agencies in the past four
    years toward resolving this issue. Contrary to the guidance of this
    committee, EPA continues to engage in activities that impose
    duplicative and conflicting requirements. And, there has been no
    substantive progress in developing an MOU between the EPA and the NRC.
        The industry continues to support the development of an MOU between
    the EPA and the NRC to clarify their respective roles and authorities
    in the decommissioning of NRC licensee facilities. In fact, we are
    hopeful that the recent change in leadership at EPA will lead to the
    kind of cooperative and constructive inter-agency dialogue that is
    necessary to produce such an MOU. The industry encourages the committee
    to work with the Bush administration and EPA Administrator Christine
    Todd Whitman to address this important issue. However, based on the
    record, the industry is skeptical that an MOU--even if one is concluded
    between EPA and NRC--will provide a lasting resolution to the issue of
    dual regulation. The agencies entered into a similar MOU in 1992,\8\
    and EPA previously has deferred to the NRC as a matter of policy under
    CERCLA. It is the breach of that agreement between the two agencies
    that has created the existing dual regulation.
    ---------------------------------------------------------------------------
        \8\ Memorandum of Understanding between Ivan Selin, Chairman,
    USNRC, and William K. Reilly, Administrator, USEPA, on Guiding
    Principles for EPA/NRC Cooperation and Decisionmaking, dated March 16,
    1992.
    ---------------------------------------------------------------------------
        In our view, an MOU alone cannot solve this issue. Provisions in
    CERCLA set the stage for conflicting and overlapping authority between
    the NRC and EPA, which inhibits the remediation of NRC-licensed sites
    in a timely and economical manner. The conflict stems from the fact
    that the Atomic Energy Act gives the NRC responsibility to regulate the
    civilian use of nuclear materials. Under this authority, the NRC has
    overseen the successful remediation of more than 70 sites in a manner
    that fully protects public health and safety. By comparison, CERCLA
    assigns EPA primary responsibility to administer the remediation of
    contaminated sites included on the Superfund list.
        Given the lack of progress over the past three years, in spite of
    the efforts of the Congress, the industry believes that a legislative
    solution is needed to resolve the problem. In the interim, we
    respectfully offer several suggestions for the committee's
    consideration that may help avoid duplication in site cleanup
    regulation, and the imposition of unwarranted additional costs, until
    such legislation is enacted:
        1. The committee should explicitly prohibit the EPA from using
    appropriated funds for dual regulation of NRC-licensed facilities.
        2. The committee should reconsider its previous report language
    regarding an NRC-EPA Memorandum of Understanding (MOU) and provide
    definitive direction and guidance on what the MOU should address, as
    well as establishing a firm deadline for completion of the MOU.
        3. If the EPA does not submit a report on the committee-directed
    review of the situation, the committee should consider initiating an
    independent audit of EPA actions and expenditures of resources with
    regard to the previous direction of the committee.
                    supporting nuclear engineering education
        NEI also would like to take this opportunity to thank the committee
    for recognizing the importance of nuclear technology research and
    education. In last year's bill passed by Congress, the National Science
    Foundation was directed to review academic interest in nuclear
    engineering education and to provide recommendations on how NSF can
    provide support in this area.
        To remain the global leader in nuclear technologies, the United
    States must ensure that the associated expertise and scientific
    infrastructures are maintained. Our nation must increase research in
    nuclear technologies, which have yielded extraordinary benefits in
    medicine, scientific research, electricity production, food safety and
    many industrial applications. It is essential to attract new scientists
    to these programs and maintain university programs to train them. The
    United States must stay on the cutting edge of these vital
    technologies.
        When the National Science Foundation submits its report, NEI would
    like to have the opportunity to work with the committee to help assure
    that the appropriate level of support at NSF will be made available for
    nuclear technologies next year.
        In addition, NEI is working on behalf of the industry to determine
    staffing and subsequent education needs for engineers, health
    physicists and technical tradespeople. The industry is also developing
    staffing strategies and communications that encourage students to
    pursue careers in nuclear technology. A potential shortage of nuclear
    engineers, health physicists and professionals with expertise in other
    areas is a matter the industry takes very seriously.
                                     ______

       Prepared Statement of the Mickey Leland National Urban Air Toxics
                                Research Center

        The Mickey Leland National Urban Air Toxics Research Center
    (NUATRC) is requesting a $2.2 million appropriation for fiscal year
    2002 to continue the air quality public health research on air toxics
    in urban areas as directed by the U.S. Congress. The Leland Center is a
    501(c)(3) institution, which was authorized by Congress in the Clean
    Air Act Amendments of 1990 (Title III, Section 301 (p)).
        The Leland Center has been operational for eight years and receives
    EPA Assistance Awards based upon Congressional appropriations. We
    leverage these federal funds with private sector funding, with
    industrial firms being the major contributors. Our private contributors
    include ten major U.S. companies, whose year 2000 contributions were
    the highest in our history. NUATRC utilizes an administrative services
    agreement with The University of Texas-Houston Health Science Center in
    the Texas Medical Center complex. This arrangement allows the Leland
    Center to take advantage of the world-renowned scientific community at
    The University of Texas and the Texas Medical Center, as directed by
    Congress, while still remaining an independent entity.
        The Leland Center's mission is to sponsor and direct sound, peer-
    reviewed scientific research on the human health effects of air toxics
    in urban populations. It is an integral part of the air toxics strategy
    established by Congress to assess the risks posed by these materials to
    individuals living in areas where air quality concerns have been
    expressed by both medical and scientific experts and urban community
    leaders.
        The NUATRC is governed by a nine-member Board of Directors,
    appointed pro rata by the Speaker of the U.S. House of Representatives,
    the Majority Leader of the U.S. Senate, and the President of the United
    States. In turn, the Board appoints a 13-member Scientific Advisory
    Panel, selected from national research institutions, academic centers
    and the private sector. The current membership of both the Board of
    Directors and the Scientific Advisory Panel is carried in Attachment 1.
    We are awaiting Congressional action on the appointment of three new
    Board Members.
                                  achievements
        We are pleased to bring to the Subcommittee a positive and
    promising report on the progress of the research work being sponsored
    by the Mickey Leland National Urban Air Toxics Research Center. We have
    established the following major scientific achievements over the last
    several years that are in keeping with our Congressional charge in the
    Clean Air Act Amendments of 1990:
        1. Establishment of how important indoor toxic air pollutants are
    and how important personal exposure to the specific levels of these
    pollutants are. These findings are resulting in a reevaluation of the
    national emphasis on outdoor levels and sources.
        2. Development of inexpensive and accurate technology to allow
    measurements of individual personal exposures to air toxics. This
    provides a new and, for the first time, direct view of the possible
    public health risks of air toxics.
        3. Results that support a new focus on those air toxics that exist
    on particles and may be a factor in the claims of increased mortality
    from these exposures.
        4. Initiation of community-based studies that involve participation
    by those citizens directly exposed to urban levels of air toxics. This
    includes early data from our involvement in the National Health and
    Nutrition Examination Survey (NHANES).
        We owe these advances in large part to the work of our Scientific
    Advisory Panel, made up of world class scientists from the public
    (EPA), private and academic sectors, who have spent considerable time
    and effort to develop and refine these studies in a collegial and
    efficient manner. We also are fortunate to have had the encouragement
    of the Congress, which has consistently supported the NUATRC with
    annual appropriations in the EPA budget, without which we would not be
    able to continue.
        We continue to work closely with the US EPA, through which we
    access the Congressionally-appropriated funds. We have still been
    unable to have EPA include our research funding in their budget without
    the necessity of the appropriation process, but non-scientific factors
    continue to hinder this effort and result in less effective and time-
    consuming processes. We have an excellent working relationship with the
    EPA scientists that serve on our research panels, and we are continuing
    to interact with their administrative counterparts to establish a
    firmer base for our EPA financial support.
                               current activities
        The Leland Center has begun three new air toxics research
    initiatives, all of which address the national concerns about asthma.
    We want to determine whether air toxics play a major role in the
    exacerbation of asthma, which is a multi-faceted and complex public
    health issue. The NUATRC has had several discussions with the
    scientific staff at the National Institutes of Environmental Health
    Sciences (NIEHS) to understand how we can best leverage our experience
    in personal exposure assessment with the NIEHS' well known expertise in
    public health effects. We are hopeful of developing considerable
    support in 2001-2002 for joint NUATRC-NIEHS programs on urban air
    toxics and asthma exacerbation.
        The NUATRC is also starting a major new research program in Houston
    on children's asthma and the effects, if any, that result from
    exposures to air toxics. We expect that this study, which will not
    involve federal funding, will begin in the second quarter of 2001 and
    last for 20 months. Aside from generating important health data in
    Houston, it will help define the cost and scope of any national study
    of this kind, similar to what we are discussing with NIEHS. Our ability
    to discern specific personal exposures to those air toxics that are
    thought to play a role in asthma exacerbation will allow us to pinpoint
    and separate those effects from the many urban confounders that often
    mask the important factors in the spread of this disease. We have
    relied on scientific input from our expert Panel and submit all
    proposals to external peer-review. This process has led us to select a
    team of physician/scientists from major medical research institutions
    at the Texas Medical Center. Specifically, we are nearing agreement
    with a interdisciplinary research team whose members represent Baylor
    College of Medicine, The University of Texas School of Public Health
    and Texas Childrens' Hospital to carry out this work with asthmatic
    middle school children in the Houston area. This research will be
    supported through funding from local philanthropies and state, county
    and city offices, along with private sector contributions. No federal
    monies are included, but we are hopeful that the success of this
    program will lead to NIEHS involvement in a wider ranging study of
    asthma and air toxics with a national focus, and part of our
    appropriations request is for leveraging the NIEHS support.
        In addition to this field research study, the NUATRC is hosting a
    major scientific Symposium in late May, 2001 at the Texas Medical
    Center, which will also focus on asthma, entitled ``Environmental Air
    Toxics: Role in Asthma Occurrence?''. The draft program for this
    Symposium is carried as Attachment 3. We are delighted that a highly
    recognized team of national experts will participate in this Symposium,
    which again is being supported by contributions from diverse parties
    and does not depend on EPA Grant monies. In all of our work, we seek to
    leverage federal funds, especially that appropriated to us by this
    Subcommittee. We have jointly funded work underway with the Health
    Effects Institute in Cambridge, MA., SKC, Inc., the National Center for
    Health Statistics, the Houston-based funding group assembled for our
    Houston asthma research, and a private (ExxonMobil, American Chemistry
    Council, etc.)/public (NIEHS, University of Texas) consortium
    underwriting our Asthma Symposium.
                           research findings to date
        As we indicated in our submission last year, we are continuing our
    research efforts to better understand the individual personal exposures
    of people living in urban areas to a number of the 188 toxics defined
    in the Clean Air Act. However, we are also beginning to receive data
    from our new health effects studies, an emphasis area on which we will
    continue to focus in 2002.
        We have achieved pioneering accomplishments in measuring levels of
    personal exposures to toxic air pollutants. These studies in New York,
    New Jersey, Los Angeles and Houston are nearing their end and the
    information generated has been reported at a number of major scientific
    meetings over the past 12 months. The investigators at Columbia
    University, EOHSI in New Jersey and The University of Texas have
    obtained massive amount of important data which will be the subject of
    many analyses and publications over the next several years. These data
    point conclusively to the importance of the indoor environment and the
    assessment of personal exposures to air toxics, in terms of assessing
    the actual public health risk from these materials. In Attachment 4 to
    this submission, we provide examples of the kind of information we are
    obtaining, which suggests that the nation's environmental resources
    need to be refocused on indoor and personal situations, as opposed to a
    continuing emphasis on fixed site urban air monitors.
        These fixed site monitors, which play a key role in determining
    overall urban air quality and air quality standard attainment, are not
    precise enough to address public health risks. The support we have
    received from this Subcommittee has been instrumental in creating a new
    scientific emphasis on personal exposures. The US EPA has now accepted
    the importance of such approaches and is instituting its own program in
    this area.
        The NUATRC research programs at Harvard and Washington State
    University are our first ventures into health effect studies and both
    these programs are focused on the air toxic component of fine
    particles, notably metals, in terms of possible effects on peoples'
    heart rate and pulmonary functions when exposed to fine particles.
    These ongoing epidemiological studies will also allow us to better
    define future research, which will combine personal exposure
    measurements, the apportionment of source contributions and the health
    effects end points, as are being developed in this work at Harvard and
    Washington State. Of course, the NUATRC's asthma studies in Houston
    this year and hopefully nationally in 2002, will be a major advance in
    the public health science area.
        We have also expanded our involvement in community-based
    environmental health research, which is an important element in our
    charge, as air toxics health effects can be expected to
    disproportionately impact the economically and medically underserved
    people in our urban populations. We have research underway in Baltimore
    under a Johns Hopkins University research grant to address exposures to
    air toxics in a residential community in close proximity to an
    industrial complex. This research also has a goal of keeping the
    community informed as to the results of our studies, which is all too
    often ignored or neglected in our haste to complete these studies and
    submit them for publication. This causes an understandable and
    unfortunate backlash in such communities. We have a somewhat similarly-
    intentioned program in progress at the University of Illinois at
    Chicago, which deals with the levels of polycyclic aromatic
    hydrocarbons (PAH) in indoor environments.
                                 administration
        The Leland Center operates with a small administrative staff of
    five full-time equivalent employees, one consultant, and important in-
    kind support from The University of Texas. Our staff are all employees
    of The University of Texas, which obviates the need for considerable
    personnel support services and allows us the benefit of residence at
    the University, while remaining an independent institution. This
    provides important scientific and administrative benefits, including
    access to Medical School and School of Public Health faculty. We are
    proud of the high rate of monies spent directly on research compared to
    administrative costs, and we continue to strive for additional
    economies.
                             budget rationalization
        As discussed in detail earlier, our initial asthma work on the
    local Houston scene will hopefully be expanded to embrace a national
    study with NIEHS, which we will cost share. With the completion of our
    two major personal exposure studies at EOHSI and Columbia University,
    we are planning to have these data subjected to more thorough and
    detailed analyses than was believed necessary when the programs were
    started. We would plan to offer RFA's to the scientific community to
    ``mine'' this complex and deep data base. We also would continue our
    involvement with the NHANES program run by the National Center for
    Health Statistics, in which our participation is highly leveraged. This
    work has become a more expensive federal program over the last several
    years, but our leveraged participation in such an important study makes
    it worthwhile to continue. The particle personal exposure monitor
    development is progressing nicely and was anticipated to be a multiyear
    effort. It has drawn considerable attention from the scientific
    community, including the federal agencies. The Health Effects Research
    at Washington State University is continuing and is showing interesting
    results on the effects of toxic exposures on human respiratory
    functions. The successful NUATRC Small Grants Program is a continuation
    of the current work at Johns Hopkins and the University of Illinois at
    Chicago and we have received considerable comment and support on these
    approaches. We must also initiate work to validate the accuracy of our
    passive exposure monitors at the very low concentrations that are
    becoming more common in the field. The emphasis we place on having
    Workshops and/or Symposia every year has proven cost-effective in
    advancing our understanding of these health effects. The Research
    Support category is very significant in providing funds for scientific
    peer-review, publications, reports and other activities of the
    Scientific Advisory Panel. The budget carried below is a ``hold the
    line'' effort recognizing the budget pressures that we all face. We
    will continue, as noted elsewhere, to seek alternative funding sources
    for our research program.

    Budget

    Asthma/Air Toxics Research Program............................  $250,000
    Population-based Air Toxics Exposure Studies..................   250,000
    Collaboration with NHANES.....................................   150,000
    Particle Monitor for air Toxics...............................   250,000
    Health Effects Research.......................................   100,000
    Small Grants..................................................   100,000
    Personal Monitor validation studies...........................   100,000
    Workshops, Symposia...........................................    50,000
    Research Support..............................................   200,000
    Administration................................................   750,000
                        --------------------------------------------------------------
                        ____________________________________________________

          Total................................................... 2,200,000

     Prepared Statement of the People for the Ethical Treatment of Animals

        Chairman Bond and Members of the Subcommittee: People for the
    Ethical Treatment of Animals (PETA) is the world's largest animal
    rights organization, with more than 700,000 members. We greatly
    appreciate this opportunity to submit testimony regarding fiscal year
    2002 appropriations for the Environmental Protection Agency. My
    testimony will focus on the EPA's Endocrine Disruptor Screening Program
    (EDSP). The EDSP is the largest government-sponsored animal-testing
    plan in U.S. history. Millions of animals are slated to die in painful
    toxicity tests in this program.
        Congress included language in the 1996 Food Quality Protection Act
    mandating a screening program to determine whether pesticides and
    certain other chemicals disrupt the human hormonal (endocrine) system.
    It's a laudable goal. However, the scientific justification of the
    EPA's large-scale testing program, with regard to human health effects,
    has been widely questioned.
        For example, the chair of the EPA's joint Scientific Advisory
    Panel/Science Advisory Board (SAP/SAB) subcommittee on endocrine
    disruptors stated at the conclusion of its deliberations on the EDSP
    that ``there was an undercurrent through the whole [SAP/SAB] discussion
    that the EPA program was ahead of science.'' \1\
    ---------------------------------------------------------------------------
        \1\ Bureau of National Affairs, Daily Environment Report, 2 July
    1999.
    ---------------------------------------------------------------------------
        As Dr. Bernard Schwetz, acting deputy commissioner of the Food and
    Drug Administration, has written, ``With the passage of the Food
    Quality Protection Act in 1996, enormous amounts of resources were
    plowed into developing agreement on test batteries to detect hormonal
    activities of chemicals [while] determining whether there were, in
    fact, adverse effects in humans seemed a much lower prior-
    ity. . . . We do not know if there is a causal relationship between
    adverse health effects in humans and exposure to endocrine disruptors
    in our environment. It seems obvious that our focus should be on
    determining whether such a relationship exists and, if so,
    characterizing the extent of the problem.''\2\
    ---------------------------------------------------------------------------
        \2\ Bernard Schwetz, Acting Deputy Commissioner, U.S. Food and Drug
    Administration, ``Responding to Environmental Issues: Lessons
    Learned,'' Environmental Health Perspectives, v. 107(10), October 1999.
    ---------------------------------------------------------------------------
        A senior scientist with the National Institute for Environmental
    Health Sciences who concurred with an international expert panel
    critical of the existing structure of the program has stated
    nevertheless that ``due to commitments by laboratories and government
    agencies and the availability of funding, the program will proceed--
    justified or not.'' \3\
    ---------------------------------------------------------------------------
        \3\ Michael Shelby, Director, Laboratory of Toxicology, National
    Institute of Environmental Health Sciences (NIEHS), at the Third World
    Congress on Alternatives and Animal Use in the Life Sciences, Bologna,
    Italy, 1 September 1999.
    ---------------------------------------------------------------------------
        The Food Quality Protection Act states that the program will
    provide for the testing of all pesticide chemicals (of which there are
    only several hundred) to determine whether their effects in humans are
    similar to effects produced by naturally occurring estrogen. However,
    the law gives the EPA administrator authority to include other
    chemicals suspected of having estrogenic effects or other endocrine
    effects. Although it was not the intent of Congress, this allowed the
    program to mushroom into its current proportions. The EPA has used this
    leeway to include all 87,000 chemicals on the market and has broadened
    the scope of effects to include androgen and thyroid as well as
    estrogen effects. Meanwhile, other sections of the law, including the
    requirement to consult with the Department of Health and Human Services
    and the requirement to use appropriate validated tests, are being
    ignored.
        Currently, the EPA is planning to test tens of thousands of
    chemicals. Yet the agency is unable even to define what an endocrine
    disruptor is, and officials cannot agree on what constitutes an adverse
    effect. Worse, the agency is planning to proceed with tests that have
    not been appropriately validated, thereby generating huge amounts of
    data that cannot be interpreted.
        Current scientific estimates are that between 600,000 and 1.2
    million animals will be killed for every 1,000 chemicals tested under
    the EPA's plans--thus resulting in the suffering and death of an
    astronomical number of animals. In addition to ethical concerns raised
    both by animal protection organizations and by a joint subcommittee of
    the EPA's Science Advisory Board and Scientific Advisory Panel,\4\ the
    proposed tests also raise questions concerning the reliability of the
    data. Numerous reports, including the National Academy of Sciences'
    exhaustive 1999 study,\5\ cite not only the enormous differences
    between animal and human endocrine systems, but also widely varying
    differences between the endocrine systems of different strains of the
    same species of animals.
    ---------------------------------------------------------------------------
        \4\ U.S. Environmental Protection Agency, Review of the EPA's
    Proposed Endocrine Disruptor Screening Program by a Joint Subcommittee
    of the Science Advisory Board and Scientific Advisory Panel, 1999.
        \5\ National Research Council, Hormonally Active Agents in the
    Environment, National Academy Press, 1999.
    ---------------------------------------------------------------------------
        With the EPA's present plan, millions of dollars, hours of labor,
    and animals' lives will be spent to generate data that will be
    meaningless. However, there are several concrete steps that the EPA can
    take to reduce unnecessary animal tests, ensure that all test methods
    are appropriately validated, utilize other research methods, which will
    provide more scientifically relevant data on how humans are affected by
    endocrine disruptors, and put the millions of dollars for this program
    to use in ways that will actually benefit human health and the
    environment. We request that the Senate Appropriations VA-HUD
    Subcommittee include report language to ensure that these steps are
    taken.
                           high-throughput pre-screen
        At the outset of the program, the EPA's Endocrine Disruptor
    Screening and Testing Advisory Committee (EDSTAC) recommended to the
    EPA that a non-animal test method, known as the ``high-throughput pre-
    screen'' (HTPS) be the first step before any other testing. The HTPS is
    crucial to the efficiency of the program, because without the data
    generated by the HTPS, the chemicals cannot be prioritized into a
    logical testing sequence. Although the EPA claims it will use structure
    activity relationship (SAR) modeling in place of the HTPS, SAR cannot
    be used without the data generated by the HTPS.
        The HTPS could screen out many chemicals from further testing.
    Without it, millions of animals will be killed to test chemicals that
    would have been eliminated early on in the program.
        Congress appropriated $4 million in fiscal year 1999 to develop and
    implement the HTPS for chemicals proposed for the EDSP. After spending
    only $70,000 and conducting one feasibility study, it appears that the
    EPA is not applying the balance of the funds to develop the HTPS. The
    EPA appears to have abandoned further development of the HTPS, despite
    the ongoing progress being made on this technology by researchers in
    Japan.
        Currently, the EPA intends to begin animal testing before the HTPS
    is completed. In response to a suggestion that the EPA take more time
    to develop the HTPS, Penelope Fenner-Crisp, senior science adviser in
    the EPA's Office of Pesticide Programs, explained that the agency is
    unwilling to miss legislative deadlines, saying, ``We have to do
    something that looks like implementation.''\6\
    ---------------------------------------------------------------------------
        \6\ Bureau of National Affairs, Daily Environment Report, 1 April
    1999.
    ---------------------------------------------------------------------------
        We request that the Senate Appropriations VA-HUD Subcommittee
    stipulate that no funds be used for animal tests until the development
    of the HTPS has been completed, and no funds be used to conduct animal
    testing on a chemical until that chemical has been analyzed by the
    HTPS.
                           validation of test methods
        The Food Quality Protection Act states that all tests must be
    ``appropriate'' and ``validated.'' However, at present none of the
    animal tests planned for the EDSP are being validated for their
    relevance to human health effects. Therefore, the resulting data will
    not prompt any meaningful regulatory action to protect human health.
        The EPA does not plan to require the rigorous validation of the
    animal tests that is required of all non-animal tests. Indeed, the
    agency recently awarded a $34 million contract to a laboratory for the
    development and validation of tests for the EDSP from a proposal in
    which validation experience was barely even mentioned.
        The Advisory Committee on Alternative Toxicological Methods (ACATM)
    for the National Toxicology Program (NTP) has expressed ``grave
    concern'' over the EPA's double standard in validation and has twice
    unanimously recommended that all proposed test methods for the EDSP be
    validated through the Interagency Coordinating Committee on the
    Validation of Alternative Methods (ICCVAM).\7\ However, the EPA
    rejected this recommendation. Although it does indeed require the
    validation of all non-animal tests to be assessed through ICCVAM with
    very rigorous and thorough standards, the EPA follows a dangerous
    double standard by not requiring this same validation assessment of the
    animal tests. Allowing quicker and less rigorous validation procedures
    for animal tests not only creates a bias against non-animal tests, it
    compromises the reliability of the resulting data as well.
    ---------------------------------------------------------------------------
        \7\ National Toxicology Program Advisory Committee on Alternative
    Toxicological Methods, resolution passed unanimously at its meeting on
    28 November 2000.
    ---------------------------------------------------------------------------
        We request that the Senate Appropriations VA-HUD Subcommittee
    stipulate that no funds be used for validation of test methods unless
    the validation of those test methods (both animal and non-animal
    methods) is assessed through ICCVAM and that all necessary funds for
    this assessment be provided to ICCVAM by the EPA as needed.
                            non-animal test methods
        Although the EPA requires more chemical toxicity tests on animals
    than any other federal agency, it currently spends virtually none of
    its $500 million research budget on developing non-animal test methods
    and has not adopted a proactive approach in this area. Frequently, non-
    animal test methods are more economical, more reliable, more relevant
    to human health than animal tests, and are also more humane.
        We request that the Senate Appropriations VA-HUD Subcommittee
    stipulate that at least 20 percent of the funds appropriated for the
    EDSP be used to research and develop non-animal test methods.
                   the need for studies on human populations
        There is much controversy in the scientific community regarding the
    existence, nature, and severity of adverse effects in humans from
    exposure to endocrine disruptors. For example, two of the most
    frequently cited effects in humans are an increase in the rate of
    hypospadias and a decrease in sperm counts. However, several recent
    independent studies have concluded that there has been no change in the
    rate of either of these occurrences.\8\
    ---------------------------------------------------------------------------
        \8\ ``Hypospadias Rate May Not Be Increasing,'' Endocrine/Estrogen
    Letter, v. 6(6), 22 March 2000; Acaio, B.D., T. Gottfried, R. Israel,
    and R.Z. Sokol, ``Evaluation of a Large Cohort of Men Presenting for a
    Screening Semen Analysis,'' Fertility and Sterility, v. 73(3), March
    2000.
    ---------------------------------------------------------------------------
        The Food Quality Protection Act directs the EPA administrator to
    consult with the Secretary of Health and Human Services to utilize
    ``other scientifically relevant information'' (in addition to testing)
    in order to determine whether certain substances have endocrine effects
    in humans.
        Contrary to those instructions, the EPA has no plans to involve the
    Department of Health and Human Services and is using no other source of
    information than its testing program. However, without knowledge of how
    human populations are being affected by endocrine disruptors, the EPA
    will not have the real-world data it needs to prompt regulatory action.
        We request that the Senate Appropriations VA-HUD Subcommittee
    stipulate that at least 10 percent of the funds appropriated for the
    EDSP be given by the EPA to the Department of Health and Human Services
    to be used for human epidemiological studies, including short-term
    studies such as monitoring for biomarkers of estrogenic exposure, in
    order to characterize the existence, nature, and severity of adverse
    human health effects caused by exposure to endocrine disruptors.
                                    summary
        In summary, PETA requests that the appropriations for the EDSP for
    fiscal year 2002 be provided with the following stipulations stated in
    the report accompanying the appropriations bill:
        (1) No funds may be used for animal tests until the development of
    the HTPS has been completed, and no funds may be used to conduct animal
    testing on a chemical until that chemical has been analyzed by the
    HTPS.
        (2) No funds may be used for validation of test methods unless the
    validation of those test methods (both animal and non-animal methods)
    is assessed through ICCVAM.
        (3) All necessary funds for the validation assessment of both
    animal and non-animal test methods by ICCVAM must be provided to ICCVAM
    by the EPA as needed.
        (4) At least 20 percent of the funds appropriated for the EDSP must
    be used to research and develop non-animal test methods.
        (5) At least 10 percent of the funds appropriated for the EDSP must
    be given by the EPA to the Department of Health and Human Services to
    be used for human epidemiological studies, including short-term studies
    such as monitoring for biomarkers of estrogenic exposure, in order to
    characterize the existence, nature, and severity of adverse human
    health effects caused by exposure to endocrine disruptors.
        These steps will promote the sound scientific practices needed for
    the tangible protection of human health and the environment, as well as
    a significant reduction in the use of animals. Thank you for your
    consideration of our request.
                                     ______

               Prepared Statement of the Doris Day Animal League

        Mr. Chairman and members of the Subcommittee, thank you for the
    opportunity to submit testimony relevant to the fiscal year 2002 budget
    request for the U.S. Environmental Protection Agency's (EPA) Office of
    Research and Development (ORD) and the Endocrine Disruptor Screening
    Program (EDSP). I hope the Subcommittee will consider the concerns of
    the 300,000 members and supporters of the Doris Day Animal League and
    take steps to ensure the EPA recognizes the necessity of sound science
    approaches in its research, development and validation of new and
    revised toxicological test methods. These methods can significantly
    reduce the numbers of, and ultimately replace, animals in its testing
    programs. In addition, I am hopeful that this Congress, with
    appropriate input from all stakeholders, can improve the coordination
    of science priorities at the EPA, perhaps by authorizing a new
    position, Deputy Administrator for Science.
     research, development and validation of non-animal, alternative test
                                    methods
        In the previous two fiscal years (2000, 2001), the enacted budget
    for the Office of Research and Development has hovered at approximately
    $500 million ($534 million and $492 million, respectively). Within
    these appropriations, we have found it difficult, if not impossible, to
    track funding by ORD for specific non-animal, alternative test methods
    to meet the EPA's needs in new testing programs. It is our contention
    that many emerging technologies, which often prove to be faster to run,
    less expensive and at least as predictive as current animal tests used
    for hazard and risk assessment, would benefit from research and
    development dollars. Therefore, we request that $10 million, from the
    current budget request or over and above the President's budget, be set
    aside for research, development and validation for regulatory
    acceptance of non-animal, alternative test methods. Activities funded
    by these allocations shall be designed in consultation with the Office
    of Pollution Prevention and Toxic Substances. It is our preference that
    these test methods have direct relevance to new EPA testing programs,
    including the High Production Volume chemical testing program, EDSP and
    Children's Health initiative. Our request for $10 million represents
    just 2 percent of the total ORD budget and would be perceived by all
    stakeholders as a genuine commitment by EPA to new non-animal,
    alternative test methods.
        I also request that the Subcommittee require the EPA report to the
    Subcommittee by March 30, 2002 regarding expenditures and plans for
    additional expenditures for fiscal year 2002 funds.
                  endocrine disruptor screening program (edsp)
        The Environmental Protection Agency has been mandated, under the
    Food Quality Protection Act and the Safe Drinking Water Act Amendments
    of 1996, ``to determine whether certain substances may have an effect
    in humans that is similar to an effect produced by a naturally
    occurring estrogen, or such other endocrine effects as EPA may
    designate.'' This statutory requirement was in response to concerns
    about abnormal reproductive and developmental effects in wildlife
    exposed to various chemicals in their natural environments. The EDSP is
    an effort to primarily assess the health effects to humans, with
    wildlife concerns a component of the program. On its face, it is a
    worthy endeavor.
        However, as currently proposed by the agency, thousands of
    chemicals may be tested by a protocol comprised of 16 test methods,
    most which are animal tests. It has been estimated that as many as 1.2
    million animals will be killed per every 1,000 chemicals tested under
    the current structure of the EDSP. These projections make this proposed
    program the largest use of animals in toxicological testing by a
    federal agency. For this reason, it is being carefully scrutinized by
    concerned animal protection organizations wanting to ensure that all
    concrete steps are taken with this new science to protect animals--both
    wildlife and animals in the laboratories.
        The very language in the FQPA on which the EDSP is based can
    strongly address one of the concerns of the animal protection
    community. To my knowledge, this is the first time that the word
    ``validation'' has been used as a requirement for sound science in
    developing test methods for a federal toxicological program. The
    statutory language required the screens and tests used in the EDSP to
    be validated to ensure appropriately relevant, reliable and
    reproducible tests and screens for the best science. The EPA, as co-
    chair of the Interagency Coordinating Committee for the Validation of
    Alternative Methods, supports the following definition of validation:
    the process by which the reliability and relevance of a procedure are
    established for a specific purpose. (``Validation and Regulatory
    Acceptance of Toxicological Test Methods,'' NIH Report 97-3981).
        In 1996, when the Acts were passed, the Interagency Coordinating
    Committee for the Validation of Alternative Methods (ICCVAM) was in its
    infancy. Since then, federal regulatory and research agencies,
    including the EPA, have benefited from the effective assessment of
    validity of new screens and tests afforded by ICCVAM. The ICCVAM
    assesses the validity of new and revised test methods, including
    alternatives, that have cross-agency application. In light of the
    interest by the Food and Drug Administration and other federal agencies
    and the fact that the proposed test methods for the EDSP are new or
    revised for new endpoints, the ICCVAM could clearly provide a uniform
    assessment of the validity of all EDSP test methods. Indeed, the ICCVAM
    was permanently authorized by Congress last year in recognition of the
    continuing crucial role it can play to facilitate assessment of test
    methods that have cross-agency application, while giving a level of
    confidence in the scientific assessment to various stakeholders.
        The Advisory Committee on Alternative Toxicological Methods for the
    National Toxicology Program, comprised of scientists from the public
    and private sectors, passed unanimous resolutions on two occasions
    strongly supporting the ICCVAM assessment. However, EPA continues to
    assert that the non-animal, alternative test methods can be reviewed by
    ICCVAM, while the animal test methods will solely be reviewed by the
    agency's Science Advisory Board/Scientific Advisory Panel (SAP/SAB).
    This bifurcated approach gives animal protection advocates and other
    stakeholders cause to believe that two different standards of
    scientific validity may be applied. And while the agency claims it will
    use the same criteria for assessment of validation as the ICCVAM, the
    level of confidence in the ICCVAM is stronger. Also, any claim made by
    the agency that ICCVAM assessment may slow down implementation of the
    EDSP is simply hyperbole.
        I urge the Subcommittee to support the assessment of validation of
    tests and screens for the EDSP by the ICCVAM with appropriate fiscal
    support from the EPA. This interagency process can provide appropriate
    peer review of new tests and screens proposed for the EDSP. The ICCVAM
    should work with the EPA's SAB/SAP to avoid unnecessary delay in the
    program. Among other things, ICCVAM's assessment can serve to ensure
    due consideration is given for the replacement, reduction and
    refinement of the use of animals in these new tests and screens. This
    request should in no way be perceived as calling for a reduction of the
    President's request for activities in the Science and Technology
    account addressing endocrine disruption.
        I would also request that the Subcommittee require the Agency
    provide a report to the Subcommittee by March 30, 2002 regarding
    expenditures and plans for additional expenditures for fiscal year 2002
    funds under the EDSP.
                                   conclusion
        I respectfully request that the Subcommittee direct the EPA provide
    $10 million for the ORD to research, develop and validate non-animal,
    alternative toxicological test methods for regulatory acceptance.
        I also respectfully request that the Subcommittee direct the EPA to
    provide appropriate fiscal support to the ICCVAM for assessment of
    validation of all tests and screens to be incorporated into the EDSP.
                                     ______

                  Prepared Statement of The Nature Conservancy

                          introduction and background
        Mr. Chairman and members of the Subcommittee, I appreciate the
    opportunity to submit written testimony on fiscal year 2002
    appropriations for the U.S. Environmental Protection Agency (EPA).
        The Nature Conservancy is an international, science-based, non-
    profit organization dedicated to conserving biological diversity. Our
    mission is to preserve the plants, animals, and natural communities
    that represent the diversity of life on Earth by protecting the lands
    and waters they need to survive. The Conservancy has more than one
    million individual members and over 1,500 corporate members; we have
    programs in every state and in 27 nations. To date, our organization
    has protected more than 12 million acres in the United States and has
    helped local partner organizations preserve approximately 80 million
    acres internationally. The Conservancy itself owns more than 1,300
    preserves--the largest private system of nature sanctuaries in the
    world.
        Biological diversity is important for a number of reasons. Species
    and natural communities harbor genetic and chemical resources that
    contribute to advances and products in medicine, agriculture and
    industry. The value of these goods is enormous. It represents, however,
    only a fraction of the value these ecosystems provide to humanity in
    terms of services, such as waste assimilation and treatment, climate
    regulation, drinking water, and flood control. One estimate of the
    value of these services for the entire biosphere is $33 trillion, which
    is nearly double the gross national product (Costanza et al 1997). In
    addition to these benefits, the environment serves as an instrument
    through which educational, cultural, aesthetic and spiritual values are
    often expressed.
        Last year, the Nature Conservancy and the Association for
    Biodiversity Information released a study documenting America's
    astonishing natural abundance. For example, we now know the United
    States is home to more than 200,000 native species of plants and
    animals and ranks at the top in its variety of mammals and freshwater
    fish. Ecosystems in the United States are also among the most diverse.
    They range from tundra, to deserts, prairies, and various forest types.
    However, as many as one-third of the nation's species are at risk and
    at least 500 species have already gone extinct or are missing. The
    single biggest threat to species survival is loss of habitat, which
    generally occurs as a result of human activities. Almost 60 percent of
    America's landscape is already severely altered.
        Reversing the trend will require working at larger scales and
    across state and other jurisdictional lines. The Nature Conservancy is
    committed to this effort. In fact, we are pledging to invest $1 billion
    in private funds over the next several years to protect critical
    natural areas around the country and abroad. These investments alone,
    however, will not be enough. True conservation success will only be
    achieved through the work of partners, including the Federal
    government. Funding is needed at the Federal level to support on-the-
    ground conservation projects and to ensure policies that promote a
    sustainable environment.
                           summary of recommendations
        EPA is responsible for administering a number of programs that
    protect public health and the environment. The Nature Conservancy
    recommends funding for seven programs with which we have had direct
    experience and that we believe help preserve biodiversity. The seven
    programs include the following:

      THE NATURE CONSERVANCY'S FISCAL YEAR 2002 FUNDING RECOMMENDATIONS FOR
                              SELECTED EPA PROGRAMS
    ------------------------------------------------------------------------
                                           Fiscal Year 2002 Recommendations
                Program Name             -----------------------------------
                                             EPM Account      STAG Account
    ------------------------------------------------------------------------
    Clean Water Act State Revolving Fund  ................    $1,350,000,000
     (CWASRF)...........................
    Coastal Watersheds and National        \1\ $70,000,000  ................
     Estuaries Program..................
    Non-point Source Management Program         16,900,000       250,000,000
     (Section 319)......................
    Wetlands Protection Program.........        18,000,000        18,000,000
    Great Lakes National Program Office.        16,000,000  ................
    Gulf of Mexico Program..............         5,000,000  ................
    Regional Geographic Initiative......        15,000,000  ................
    ------------------------------------------------------------------------
    \1\ Includes $35 million recently authorized for the National Estuary
      Program under the Estuaries and Clean Waters Act of 2000 and $35
      million for other coastal activities.

        These programs benefit public health, the environment, and, by
    extension, biodiversity conservation. For example, loans made under the
    CWASRF to establish or restore riparian corridors along streams (to
    address non-point pollution) will improve water quality, while also
    improving or providing important aquatic and terrestrial habitat.
    Section 319 funds can be used to produce a similar range of benefits.
        The seven programs referenced generally satisfy niches filled by no
    other federal programs. For example, unlike Farm Bill programs, the
    Section 319 program can be used to address non-point pollution from
    diverse sources such as urban runoff and leaking septic systems, not
    just pollution from agricultural sources. Its broader focus reaches
    more vulnerable habitats such as grassed swales that are important to
    grassland birds, which as a group are the most threatened in the United
    States.
        In general, the seven programs for which the Conservancy is
    advocating are holistically based. The geographically focused programs,
    in particular, enable multiple pollution problems to be addressed in an
    integrated rather than singular fashion for a given resource.
        The Conservancy supports level or increased funding for each of the
    seven programs mentioned. Our remaining comments, however, focus on
    three of the seven programs: the Great Lakes National Program Office,
    the Gulf of Mexico Program, and the Regional Geographic Initiative. We
    would be happy to provide comments on the programs not covered below at
    the request of the Subcommittee.
                      geographic-specific recommendations
        EPA's geographic programs are extremely important to conserving and
    restoring areas of ecological, cultural and economic significance.
    Moreover, they address diverse environmental and public health threats
    in a non-regulatory fashion. They also provide opportunities for public
    and private parties to collaborate to achieve mutually beneficial
    goals. As Director of the Conservancy's Great Lakes Program, I know
    first-hand the importance of such collaborative efforts. EPA's Great
    Lakes National Program Office has helped catalyze some of the
    Conservancy's protection efforts in the region. The Conservancy, in
    turn, has significantly leveraged this federal investment to advance
    the science necessary for proper management and protection of the
    unique ecosystems of the Great Lakes region.
        The Nature Conservancy recognizes the overall constraints through
    which EPA's fiscal year 2002 budget must be determined. As such, we
    recommend only modest funding increases. We wish to emphasize, however,
    the need for comprehensive legislative packages to be crafted to
    address the range of needs facing our Nation's geographic specific and
    important resources.
    1. Great Lakes National Program Office
        EPA's Great Lakes National Program Office (or GLNPO as it is
    commonly called) promotes activities that protect the safety of food
    and water drawn from the Lakes and seeks to protect and restore
    critical habitats vital to supporting healthy and diverse communities
    of plants, fish, and wildlife. GLNPO also has responsibility for
    meeting U.S. obligations under the Great Lakes Water Quality Agreement
    with Canada.
        The Nature Conservancy considers GLNPO to be a significant
    conservation partner in the Great Lakes ecoregion. GLNPO provided 40
    percent of a $500,000 Conservancy led effort involving over 400 public
    and private partners to develop a broad-based, ecoregional conservation
    plan for the Great Lakes region. The Conservancy's plan includes the
    Great Lakes watershed, an area covering 294,000 square miles. The plan
    identifies priority conservation areas that, if protected or restored,
    would conserve the full range of the region's unique biodiversity.
    GLNPO has also provided five percent toward an $838,000 Conservancy
    effort to identify priority aquatic communities in the near shore areas
    of the Lakes. These examples demonstrate how GLNPO, The Nature
    Conservancy, and other organizations have significantly leveraged
    resources to develop tools and preserve actual places for future
    generations to cherish and enjoy.
        The Great Lakes Basin is a region of superlatives, of both great
    beauty and industrial strength. The Great Lakes represent the largest
    system of fresh surface water on Earth. They span parts of eight U.S.
    states and one Canadian province and house more than one-tenth of the
    U.S. population and one-fourth of Canada's. The lakes influence climate
    and hydrology, creating an ecologically unique environment in which a
    wealth of species and communities thrive. Among the many interesting
    features found in the Great Lakes region are thousands of freshwater
    islands (including Manitoulin Island--the world's largest freshwater
    island); the largest freshwater river delta on earth (St. Clair River
    Delta); the largest collection of sand dunes of freshwater origin in
    the world; wild, unfragmented northern forests; and 185 globally rare
    plants, animals and natural communities.
        Activities in the region, however, have exacted a toll: vital
    wetlands have been dredged and filled, deepwater fisheries have been
    depleted, and vast forests have been cleared. Exotic plants and
    animals, such as purple loosestrife and zebra mussels, have been
    unwittingly unleashed in water and on land, decimating native species
    and inflicting massive economic costs. Species in trouble include the
    prairie whitefringed orchid, dwarf lake iris and lake sturgeon. High-
    impact recreation and tremendous loss of grasslands to farming and
    urban development pose threats as well.
        Time is running out to protect the biodiversity of the Great Lakes
    region. For example, over half of the 271 sites identified by the
    Conservancy as harboring significant and viable species or natural
    communities are irreplaceable. That is, these sites represent the only
    opportunity to protect certain species or communities unique to the
    Great Lakes region. One-third of the sites need action right now.
    Partnerships with farmers and foresters, hunters and anglers, industry
    and homeowners, and various government agencies like GLNPO are vital if
    the Great Lakes region and all of its inhabitants are to remain
    healthy.
        The Nature Conservancy, therefore, respectfully requests an
    appropriation of $16 million for EPA's Great Lakes National Program
    Office in fiscal year 2002. The additional funding should support
    GLNPO's grants program, which enables organizations like the
    Conservancy to further develop the science and tools needed to protect
    Great Lake resources. These funds have been considerably restricted in
    recent years, thereby limiting opportunities for the Conservancy and
    others to leverage GLNPO funds for environmental protection.
    2. Gulf of Mexico Program
        EPA's Gulf of Mexico Program protects public health, abates
    nutrient enrichment problems, conserves and restores habitat, and
    controls invasive species in the Gulf region. The program reaches its
    goals by providing technical and financial assistance to Gulf States
    and private partners to promote voluntary, incentive-based activities
    to remedy threats to the region's coastal rivers and estuaries.
        The Nature Conservancy directly matched funds provided through the
    Gulf of Mexico Program to develop an ecoregional plan for the northern
    Gulf of Mexico. Like the Conservancy's other ecoregional plans, the
    Gulf plan identifies priority areas that, if protected or restored,
    will conserve the region's unique biodiversity. The plan was developed
    in consultation with approximately 75 partners, including some of the
    nation's leading experts in coastal and marine sciences. The
    Conservancy is presently working with the Gulf of Mexico Program and
    the United States Geological Survey to make the plan and its data
    available to all partners working in the region so that it can be used
    as a management guide.
        The northern Gulf of Mexico is a productive environment, ranking as
    one of the nation's leading producers of finfish and shellfish. NOAA
    estimated the commercial value of the 1997 harvest to be $823 million.
    The Gulf of Mexico has been ranked as the number one region for seafood
    harvest in both poundage and monetary value. The health of the Gulf and
    ultimately its productivity is at risk. Over 60 percent of the
    continental U.S. drains into the northern Gulf, thereby contributing
    excess nutrients and other pollutants. Additional stresses include
    hydrologic alterations in the watershed and direct and indirect habitat
    destruction. Excess nutrients flowing from watersheds, especially in
    the upper Midwest, have created an area of low oxygen that extends
    thousands of miles off the cost of Louisiana (an area commonly referred
    to as the ``dead zone''). Few animals can survive in these conditions
    of low oxygen. This situation has emphasized to planners,
    conservationists, citizens, and decision-makers the importance of
    recognizing land and water connections on a broad scale in order to
    solve problems such as those found in the Gulf.
        Now that a large-scale plan has been developed for the region, a
    greater infusion of federal resources is needed to fully address the
    critical and far-reaching threats facing the ecosystem. The Nature
    Conservancy recommends an appropriation of $5 million for EPA's Gulf of
    Mexico program in fiscal year 2002. These additional funds will enable
    the program to continue playing a critical organizing role for
    environmental protection and restoration activities in this region. The
    additional funds should also be used to support a more comprehensive
    monitoring and modeling program to evaluate the full range of the
    ``dead zone.'' Additional funds should also be used to promote
    incentives and other voluntary measures to reduce nutrient loads to the
    system. Success in this area will require activities at multiple levels
    and by various public and private partners.
    3. Regional Geographic Initiative
        EPA's regional offices provide grants under this program for
    projects addressing complex ecological relationships, such as those
    occurring between land, water and air. Most EPA programs address
    environmental problems in an isolated fashion. That is, they approach
    problems within the confines of a single, environmental media, economic
    sector, or pollutant. The Regional Geographic Initiative, on the other
    hand, enables practitioners to address threats to multiple
    environmental resources simultaneously at a single site. Project sites
    can vary in scale according to the problems being addressed, thereby
    enabling sites to extend beyond state jurisdictional boundaries. These
    factors enable more comprehensive solutions to environmental problems
    to be derived. Examples of these multi-faceted projects include those
    that protect drinking water sources and aquatic habitat by preserving
    forest ecosystems and adjacent wetlands, remedy lead paint and air
    quality problems in low-income communities; and address exotic and
    invasive species, habitat loss for native species, and pollutant
    inputs.
        The Nature Conservancy, in partnership with the Colorado, Montana,
    and Wyoming Natural Heritage Programs, received funding through this
    Initiative to inventory the critical biological resources of the South
    Platte, Upper Arkansas, and Upper Yellowstone watersheds. The data have
    been integrated with water quality, monitoring, land use, pollutant,
    GIS and other data to create comprehensive pictures of the threats
    facing these systems. The data, in turn, are being used to inform the
    threat abatement strategies of local partners, such as the Conservancy,
    and government stakeholders.
        The Nature Conservancy recommends an appropriation of $15 million
    for the Regional Geographic Initiative in fiscal year 2002. Significant
    progress has been made in addressing some of the nation's most
    fundamental pollution problems. The problems that remain, however, are
    diffuse and will require comprehensive solutions if significant
    breakthroughs are to be made. EPA's Regional Geographic Initiative is
    one means through which the federal government can significantly foster
    such innovations in thinking and application.
                                    closing
        Thank you for the opportunity to provide these brief comments and
    for your attention to the important role EPA programs play in
    protecting public health and the environment and in conserving
    regionally-unique ecosystems. While the charge to conserve biodiversity
    is a daunting one, public and private partnerships such as those
    afforded under EPA's programs offer the promise of success. The
    Conservancy would not be investing so heavily with its own resources if
    we did not believe this to be true. We look forward to continuing our
    work with Federal agencies, state and local governments,
    nongovernmental organizations, and the private sector to ensure the
    long-term protection and sustainable use of the environment toward the
    ultimate goal of preserving the diversity of life on Earth. We
    appreciate the Subcommittee's support for the EPA programs that help
    make this important work possible.
                                     ______

     Prepared Statement of the National Jewish Medical and Research Center

        Mr. Chairman, and Members of the Subcommittee, thank you for the
    opportunity to submit testimony to the hearing record regarding the
    Environmental Lung Center at the National Jewish Medical and Research
    Center in Denver, Colorado. The National Jewish Center, formerly the
    National Jewish Center for Immunology and Respiratory Medicine, is the
    world's foremost center for the study and treatment of lung disease.
        As you know, funds for research at the Environmental Lung Center
    were included in recent EPA Appropriations. We successfully completed
    the Environmental Protection Agency peer review process and are now in
    our fourth year of working with the Agency. First, I would like to take
    this opportunity to thank the Subcommittee for its support and to
    report on the excellent research that is being undertaken as a result
    of this support. We believe that a very productive relationship with
    the agency has been fostered. Essentially, the mission of the
    Environmental Lung Center will be to provide the sound science
    necessary to assist the agency with regulatory policy in specific
    areas, specifically respiratory health effects of air pollution.
        The goals of the Center include determining the health effects of
    air pollution in patients with pre-existing lung disease and the
    mechanisms whereby air pollutants produce adverse health effects. We
    are investigating the effects of air pollution in children with asthma
    and adults with chronic obstructive pulmonary disease (emphysema). We
    are working to improve our understanding of the scientific basis for
    evaluating health hazards and the risk for patients with pre-existing
    lung disease.
        This research is extremely important given the fact that in the
    United States, lung disease is a leading cause of death. It is now well
    known that man-made environmental and occupational pollutants
    contribute significantly to the rising numbers of those afflicted,
    particularly impacting residents and commuters to urban areas and those
    who work in occupations such as mining, construction, textiles and
    manufacturing. Indoor air pollution and improper ventilation also cause
    the spread of respiratory illnesses. To eradicate these illnesses and
    address general environmental concerns, the Clean Air Act authorized
    EPA to set exposure standards for six widespread air pollutants. As you
    know, these standards continue to provoke heated debate in the
    scientific and regulatory communities. Our task is to find out the
    extent to which the exposure thresholds are true, as measured against
    individual susceptibility, and to assist the regulatory bodies in this
    country to come up with decisions regarding toxic thresholds of
    compounds and the medical relevance of the EPA's fixed testing-station
    data to surrounding populations.
        As the only high ranking institute in the nation that concentrates
    on lung disease and the only one that sees patients as well as conducts
    research, National Jewish has made great contributions to the
    advancement of medical knowledge about the effects of environmental
    pollutants on the human pulmonary system. Its location in Denver is
    significant in that the city is plagued with environmental pollutants
    (nearly 300,000 Colorado residents have chronic lung disease, which is
    well above the national average, although our patients come from all 50
    states). Our dedicated research at National Jewish has shown definite
    linkages between certain types of ambient air pollutants and asthma and
    chronic obstructive pulmonary disease (COPD). We are currently
    exploring this further.
        The Environmental Lung Center's research efforts will range broadly
    from studies of molecular biology and immunology to direct studies of
    air pollution on patients with lung disease. The focus of our work is
    on the special features of the lung as an immune organ, the
    pathogenesis of oxidant and particulate inhalation injuries, and the
    effects of ambiant air pollution on two specific cohorts of patients,
    childhood asthma and adults with emphysema. For the purposes of this
    testimony, I will describe the proposed studies in a very general way
    that will give the Subcommittee a view into the complexities of
    determining safe levels of airborne toxins given human susceptibility
    factors.
        Our research program is designed to determine the effects and
    mechanisms of injury of particulates and oxidant gases on the
    respiratory system. We have chosen particulates because of the national
    concern expressed by the Environmental Protection Agency and the
    National Academy of Sciences on how little we know about the health
    consequences of exposures to particulates. Our institution has great
    strength in respiratory medicine and immunology, so we can readily
    bring scientific expertise to bear on this program. Funding will have
    an immediate impact on our understanding of the scientific basis of the
    effects of air pollutants on the respiratory system. We have chosen to
    focus our clinical studies on two groups of patients who are thought to
    be very susceptible to air pollution. The first group are children with
    asthma. We have a school on site for children with asthma. We will have
    a unique opportunity to evaluate the relationship of particulate air
    pollution to asthma symptoms, clinical and physiologic changes, and
    medication use. The other group that we have chosen are patients with
    chronic obstructive pulmonary disease (COPD). This group of patients
    have a higher mortality rate during times of heavy particulate air
    pollution. To learn more about the mechanisms whereby air pollutants
    effect patients with asthma and COPD, we have developed unique murine
    models of these two human conditions. We will expose mice with
    genetically defined respiratory and immunologic abnormalities to air
    pollutants in a defined, well-characterized manner in order to
    determine the mechanisms of how air pollutants effect the respiratory
    system. Finally, we have two projects which will determine the effects
    of ozone on specific critical proteins and cells of the respiratory
    system. These systems might provide a new sensitive biomarker to detect
    adverse health effects without having to use complex clinical
    indicators of hospital admissions and morbidity.
        In fiscal year 2002 we are again requesting $1.75 million to
    continue these projects. We are particularly proud of our studies on
    two susceptible populations of individuals with pre-existing
    respiratory disease. Children with asthma are a special patient
    population requiring additional studies to define the health risks of
    air pollution by the EPA. The second patient group are patients with
    moderately severe COPD or emphysema. It is in this latter group that
    epidemiologic evidence has indicated an increase in hospitalization and
    mortality related to particulate air pollution. We are in a unique
    position for studying the effects of air pollution on individuals with
    pre-existing respiratory disease.
        The major thrust for the next few years is to take advantage of
    modern molecular biology and genetics in order to study environmental
    lung disease. Never before have researchers had the ability to
    determine the genetic basis for individual susceptibility and the
    molecular mechanisms of disease. Our institution is internationally
    known for its research in immunology, and we want to utilize this
    expertise to study environmental lung disease.
        Mr. Chairman, we believe that we are the best partner to provide
    the type of sound scientific research necessary to assist the agency
    with its regulatory decision-making goals. Our desire is to grow this
    relationship and hope that the subcommittee will again provide $1.75
    million for fiscal year 2002 to continue this relationship for another
    year. This federal investment will enhance our nation's commitment to
    protecting the health and safety of its workers, citizens and
    individuals the world over. The research conducted by the Center will
    lead to medical breakthroughs and environmental findings that will
    assist the federal government to set new standards for both government
    and business. Your support for these efforts will save lives and
    ultimately, save costs for the federal government and for businesses
    who are currently struggling to comply with new standards.
        Thank you.
                                     ______

     Prepared Statement of the Association of Minority Health Professions
                                    Schools

        Mr. Chairman and members of the subcommittee, thank you for the
    opportunity to express the views of the Association of Minority Health
    Professions Schools (AMHPS).
        I am Ronny B. Lancaster, M.B.A., J.D., Senior Vice President for
    Management and Policy at the Morehouse School of Medicine, and
    President of the Association of Minority Health Professions Schools.
    AMHPS is an organization which represents twelve (12) historically
    black health professions schools in the country. Combined, our
    institutions have graduated 50 percent of African-American physicians
    and dentists, 60 percent of all the nation's African-American
    pharmacists, and 75 percent of the African-American veterinarians.
        AMHPS has two major goals (1) to improve the health status of all
    Americans, especially African-Americans and other minorities; and (2)
    to improve the representation of African-Americans and other minorities
    in the health professions. We are working toward achieving this goal by
    seeking to strengthen our institutions and fortify other programs
    throughout the nation that will improve the role of minorities in the
    provision of health care and research.
                agency for toxic substances and disease registry
        Congress created the Agency for Toxic Substances and Disease
    Registry (ATSDR) to implement the health-related sections of law that
    protect the public from hazardous wastes and environmental spills of
    hazardous substances. The mission of ATSDR is to prevent exposure and
    adverse human health effects and diminished quality of life associated
    with exposure to hazardous substances from waste sites, unplanned
    releases, and other sources of pollution. ATSDR works in partnership
    with Environmental Protection Agency, the Centers for Disease Control
    and Prevention, and the National Institute of Environmental Health
    Sciences to carry out its public health activities.
        ATSDR is performing critical work in the field of environmental and
    toxicological studies that has a profound impact on public health. In
    order to carry out the level of activity that is called for in its
    mission statement, AMHPS recommends an appropriation of $75 million for
    ATSDR in fiscal year 2002, level funded from fiscal year 2001.
       the atsdr/amhps cooperative agreement on environmental health and
                              toxicology research
        In 1992, ATSDR identified a need for enhanced information on 38
    hazardous substances. Through a cooperative agreement between ATSDR and
    the Minority Health Professions Foundation (MHPF), the historically
    black health professions schools that I represent are engaged in
    research on twelve of these priority hazardous substances. They
    include:
    (1) Lead
    (2) Mercury
    (3) Benzene
    (4) Cadmium
    (5) Benzo (a) pyrene
    (6) Flouranthene
    (7) Trichlorocthylene
    (8) Toluene
    (9) Zinc
    (10) Manganese
    (11) Chlordane
    (12) Di-n-butylphthalate
        Mr. Chairman, I would like to express my appreciation to the
    subcommittee for its support again last year of the ATSDR/MHPF
    Cooperative Agreement. The productivity of this research program is
    evidenced by the number of publication and scientific presentations
    made by the funded investigators. To date, more that 55 manuscripts
    reporting the finding of the various research projects have been
    published in peer-reviewed and prestigious scientific journals. These
    journals include: ``Brain Research'', ``Neurotoxicology'', ``Journal of
    Neurochemistry'', and ``Environmental Health Prospectives''.
        Moreover, investigators have made more than 120 presentations at
    national and international scientific meetings, including the annual
    meeting of the Society of Toxicology, the Experimental Biology meeting,
    the International Congress of Toxicology meeting, and the International
    Society of Psyschoneuropharmacology meeting. Finally, the ATSDR/MHPF
    Cooperative Agreement has contributed significantly to the training of
    students in toxicology and environmental health. Annually, more than 30
    students, both graduate and undergraduate, are actively involved in the
    research program.
        Unfortunately, Mr. Chairman, it is our understanding that ATSDR is
    proposing a significant reduction in funding for the Cooperative
    Agreement in fiscal year 2002. Currently, funding for this program is
    $3.1 million. However, given ATSDR's budget constrains, we understand
    that support for the Cooperative Agreement in fiscal year 2002 may be
    reduced by as much as 75 percent.
        Mr. Chairman, if this reduction were to materialize, it would:
      --Terminate nine out of twelve ongoing research projects in their
            final year;
      --Deprive science of some of the most significant findings from the
            research program;
      --Waste $15 million invested to-date in research projects that will
            not be completed; and
      --Terminate employment for approximately eighty percent (80 percent)
            of all project personnel.
        The member institutions of the Association of Minority Health
    Professions Schools encourage the subcommittee to continue to support
    the ATSDR/MHPF Cooperative Agreement at the current level of funding.
    We should continue to build on the progress we have made through this
    important partnership, not abandon our efforts to improve our
    understanding of the effect that hazardous substances have on some of
    our nation's most at-risk populations.
        Mr. Chairman, thank you very much for the opportunity to present
    the views of the Association of Minority Health Professions Schools.
                                     ______

          Prepared Statement of the National Treasury Employees Union

        Chairman Bond, Ranking Member Mikulski, and distinguished Members
    of the Subcommittee, my name is Colleen Kelley, and I am the National
    President of the National Treasury Employees Union. NTEU represents
    more than 150,000 federal employees, including the professional
    employees who work at the Environmental Protection Agency. I appreciate
    this opportunity to present testimony to you today on behalf of the men
    and women who work to ensure a cleaner and healthier environment for
    all Americans.
        Day in and day out, the employees at the EPA are working to reduce
    the health risks to the American public through the enforcement of our
    environmental laws, the cleanup of contaminated lands and waterways,
    and the development of new scientifically sound environmental
    standards. If we want to continue our nation's progress in cleaning up
    our environment, then Congress must work to ensure the EPA gets the
    staffing and resources the agency needs to effectively carry out its
    mission. Unfortunately, the budget President Bush has proposed for the
    Environmental Protection Agency falls far short.
        The Bush budget severely undercuts current EPA operations and fails
    to provide funding to support efforts to combat future environmental
    threats. Most troubling is the Bush proposal to cut the EPA workforce--
    those on the front lines in protecting the American public from
    environmental dangers--by 500 employees. Specifically, the budget would
    cut EPA's enforcement staff in Washington, DC, and in regional offices
    by 9 percent. While cutting the staffing and funding levels for the
    EPA, the Bush budget shifts significant power from the federal
    government to the states, many of which have questionable environmental
    enforcement records, and to private contractors, who are often more
    concerned with their quarterly financial reports than developing and
    enforcing fair and consistent environmental standards.
        Environmental protection and enforcement programs and federal clean
    water and clean air programs take severe hits under the Bush budget.
    The budget proposed by President Bush slashes $500 million from the
    level of funding appropriated by Congress for 2001. The $500 million
    cut from the EPA budget includes a cut of $158 million from EPA's
    efforts to enforce laws that keep polluters from contaminating our air
    and our drinking water. It also includes cuts to the Safe Food Program,
    which is aimed at ensuring a food supply free of harmful pesticides;
    the Pollution Prevention Program, which helps reduce toxic emissions in
    our air; the Waste Management Program, which fosters the safe
    transport, storage, and disposal of solid waste; and the Global and
    Cross Border Environmental Risk Program, which helps reduce global
    atmospheric environmental health threats.
        President Bush's budget even slashes $56 million from EPA's Science
    and Technology Account, the agency's primary stream of funding to
    support scientific and technological research into how best to protect
    the health of American families. This is particularly ironic since
    President Bush has rolled back many Clinton Administration
    environmental protection regulations--including the revised standard
    for cancer-causing arsenic in America's drinking water--claiming the
    EPA needs to conduct more scientific studies.
        As the number and complexity of threats to our environment and to
    human health continue to increase, it is critical that the Congress
    provide additional funding for staffing at the EPA. We owe it to future
    generations of Americans to leave them with a clean environment. We are
    all stewards of the earth, and as such, we should continue to foster
    science-based innovation and public policy that protects the public
    health and our environment. The professional employees at the EPA are
    the ones who have years of expertise in these critical areas, and they
    are the ones who are in the best position to foster environmental
    progress. We cannot expect the EPA to continue to protect the public
    health without the staffing and resources necessary to do the job.
        The work performed by the men and women at the EPA is often taken
    for granted. Yet thanks to persistent work by EPA employees, we are
    reducing air pollution, improving the quality of our drinking water
    systems, and allowing Americans to live longer and healthier lives. EPA
    scientists, analysts, lawyers, and others who have dedicated their
    lives to serving the public continue to work to find the most cost
    effective and most efficient solutions to addressing our country's
    greatest environmental threats.
        Now is the time to build on our science base so that we can be
    assured that the planet we leave to our next generation is cleaner and
    in better shape than the one we inherited from earlier generations. The
    American people expect that their tax dollars are being spent to
    continue to expand the science base at the EPA so that we can better
    mitigate and prevent environmental threats. Unfortunately, the budget
    President Bush has proposed for the EPA would likely reverse years of
    environmental progress. I urge you to reject President Bush's EPA
    budget proposal and pass a budget that provides the EPA with the
    staffing and resources required to do its job.
        I would like to thank this Subcommittee for giving NTEU the
    opportunity to present our views on the EPA budget for fiscal year
    2002. As you continue your subcommittee's deliberations, I hope you
    will give special consideration to EPA's dedicated workforce, a team of
    public servants who have committed themselves to cleaning up our
    environment and protecting the health of the American people.
                                     ______

     Prepared Statement of the State and Territorial Air Pollution Program
       Administrators and the Association of Local Air Pollution Control
                                   Officials

        The State and Territorial Air Pollution Program Administrators
    (STAPPA) and the Association of Local Air Pollution Control Officials
    (ALAPCO) appreciate this opportunity to provide testimony regarding the
    fiscal year 2002 proposed budget for the U.S. Environmental Protection
    Agency (EPA), particularly regarding grants to state and local air
    pollution control agencies under Sections 103 and 105 of the Clean Air
    Act.
        STAPPA and ALAPCO are the national associations representing air
    quality officials in 54 states and territories and more than 165
    metropolitan areas across the United States. Under the Clean Air Act,
    state and local air quality officials have the primary responsibility
    for implementing our country's clean air program on behalf of our
    citizens. This extremely complex and diverse program requires state and
    local air agencies to address particulate matter, ground-level ozone,
    toxic air pollution, acid rain and other types of air pollutants, many
    of which cause significant adverse health effects, including cancer,
    severe respiratory ailments and premature death. Air agencies must
    continue to carry out the core elements of our programs, which serve as
    the foundation of our nation's clean air effort, while, at the same
    time and with the same staff and resources, address new initiatives
    that focus on emerging problems.
        With respect to fiscal year 2002, the President's proposed budget
    calls for $208.5 million for state and local air agency grants under
    Sections 103 and 105 of the Clean Air Act, which represents level
    funding from last year. While we understand that there are constraints
    throughout the federal budget, we are concerned that level funding will
    make it far more difficult for state and local air quality agencies to
    meet their health-based and environmental requirements under the Clean
    Air Act. Accordingly, we strongly urge that Congress recognize the
    severe and growing budget shortfall facing state and local air agencies
    and provide an increase of $33 million under Section 105 of the Clean
    Air Act.
                     air pollution is a significant problem
        Although we have made substantial progress in improving air
    quality, air pollution still presents a pervasive national public
    health and environmental problem. In fact, the health risks from
    exposure to air pollution are significant and far exceed those from
    almost every other environmental medium. Over 60 million people live in
    areas of the country where health-based air quality standards are
    violated. Further, 125 million people live in areas with air quality
    that does not meet the new health-based eight-hour ozone standard.
    Aside from our traditional air contaminants, more hazardous pollutants
    are emitted into the air than are released to surface water, ground
    water and land combined. In view of the importance of what is at
    stake--public health--and the difficulty and complexity of the task we
    still face, it is critical that we focus the necessary resources on
    ensuring that the air our citizens breathe is clean.
        The magnitude of the national problem posed by air pollution and
    the tremendous risk to public health this problem presents demonstrate
    clearly that our nation's air program budget warrants far more
    resources than are currently being appropriated. No matter what efforts
    we make to address air pollution, and in spite of any innovations or
    plans we develop, we will not reach our goal--healthful air quality--
    without adequate funds. We believe increased funding for the air
    program should be a top priority--commensurate with the relative risk
    to public health and the environment.
             state and local air agencies need additional resources
        Several years ago, STAPPA, ALAPCO and EPA conducted a collaborative
    effort to assess funding needs, which concluded that federal grants to
    state and local air pollution control agencies under Section 105 of the
    Clean Air Act continue to fall short by nearly $100 million each year.
    Unless the fiscal year 2002 budget includes significant increases over
    recent years, state and local air agencies will continue to face a
    serious funding shortfall that would impede our ability to address the
    important public health problems throughout the country that result
    from air pollution.
        This shortfall is growing larger because the demands being placed
    on state and local agencies are increasing. Since the completion of the
    collaborative effort, new ambient air quality standards have been
    promulgated for fine particulate matter and ozone, the regional haze
    program has been implemented and numerous standards to control toxic
    air pollution have been promulgated. Each of these has placed an
    increased resource burden on our agencies without commensurate
    increases in our Section 105 grants.
        There are many who mistakenly believe that the federal permit fee
    program under Title V of the Clean Air Act, which requires the
    collection of fees from major sources to cover the costs of the permit
    program, is the solution to the funding woes of state and local air
    agencies. While the permit fees collected pursuant to Title V are
    essential to our efforts, they do not solve our funding problems for
    several reasons.
        First, Title V fees may only support the operating permit program
    and cannot be used for other activities. Second, the fee program only
    applies to major sources, while most permits are issued for non-major
    sources, which do not pay Title V fees. The issuance of minor source
    permits is quite resource intensive. Finally, increases in costs for
    air quality programs (except for permit programs themselves) are not
    addressed by permit fee programs.
        In other words, federal grants and permit fees support separate
    activities and cannot be mingled. Even if fees are adequate for major
    source permit programs, which they may not be in many cases, the funds
    are not available for the other elements of air quality programs.
        Since fees are not the answer, federal grants are critical to the
    effective operation of our programs. While we feel the Section 105
    program should be increased in fiscal year 2002 by at least the entire
    amount of the shortfall that the study identified, we recognize that
    this is unlikely in view of the very difficult task facing Congress in
    distributing finite resources to many worthy programs. We believe,
    therefore, that it is reasonable for the increase to be phased in over
    a three-year period, beginning with an increase of $33 million in
    fiscal year 2002.
        On what would we spend additional resources? Increased grants would
    help to support many activities. For example, there is much that still
    must be done to address toxic or hazardous air pollution. We must
    assess the extent of the problem through monitoring and data analysis,
    implement technology-based (or ``MACT'') standards, develop strategies
    for addressing national and local problems, and issue permits to many
    minor sources (an expensive undertaking that is not covered by permit
    fees under Title V of the Clean Air Act), among other things. In
    addition to toxic air pollution, we must continue to address criteria
    pollutants, such as ozone and particulate matter, and regional haze and
    visibility. In fact, the list of our responsibilities for which
    additional funds are necessary is long and includes, among others, the
    following: transportation-related projects; land use and air quality
    programs; development, replacement and/or upgrading of monitors (apart
    from fine particulate matter monitoring); collection of essential
    emission and pollutant data; minor source inspections and permits;
    training; implementation of ozone strategies; multi-state approaches to
    regional air quality problems; and public education and outreach.
        As we work to confront our air quality problems, we grow in our
    understanding of the nature of air pollution. This experience has
    allowed us to better define the issues we face and to recognize that
    the air quality problems before us are different from those of the past
    and will require new solutions. While many of the approaches that have
    served us well in the past will continue to play an essential role, it
    is imperative that we also explore new strategies to augment our
    programs and add more tools to our repertoire. For example, there is a
    greater need to reduce emissions from small industrial, mobile and area
    sources, which is more resource intensive than the traditional
    stationary source program. This has increased the demand for outreach,
    inspection, enforcement and compliance assistance. These innovative
    strategies, including additional flexibility for both state and local
    agencies and the regulated community, which the new Administration
    strongly supports, do not come without a price. The development and
    implementation of these new and flexible innovative strategies will
    also require significant resources.
                               enforcement grants
        The President's budget request includes $25 million for a state
    enforcement grant program. While we are very gratified by the
    Administration's vote of confidence in the important work of state
    enforcement programs, and we hope Congress will include this program in
    the final appropriations, we wish to express two concerns.
        First, STAPPA and ALAPCO are extremely concerned that EPA's current
    framework does not include local air pollution control agencies among
    those entities eligible to compete directly for enforcement grant
    funds. We find this omission to be very troubling, particularly in that
    Congress specifically recognizes local air pollution control agencies
    in the Clean Air Act and goes so far as to include such local agencies
    in the definition of ``air pollution control agency'' under Section 302
    of the Act. Further, under Section 105 of the Act, Congress authorizes
    the EPA Administrator to make grants to local air agencies. But perhaps
    most important is the fact that many local air pollution control
    agencies across the country have been delegated direct responsibility
    for enforcement of programs under the Clean Air Act and, in effect,
    function similarly to state agencies with respect to enforcement. In
    fact, in some cases, local air agencies have greater knowledge and
    understanding of the sources in their respective jurisdictions,
    enabling them to bring unique and very valuable expertise to
    enforcement activities. Not allowing local air pollution control
    agencies to apply directly to EPA for enforcement grants and to be
    awarded such grants directly by EPA seriously undervalues the integral
    role of local air agencies and, moreover, is counter to the federal/
    state/local partnership principles upon which the air enforcement
    program is built. Therefore, we strongly urge that EPA's enforcement
    grant program ensure that local air pollution control agencies be
    allowed to compete directly for and be directly awarded enforcement
    grant funds.
        Second, while some of the funds for the grant program are
    additional, approximately $10 million are merely resources transferred
    from EPA's own enforcement budget. While we think the new grant program
    will be very worthwhile, we do not believe these increases should be at
    the expense of EPA's enforcement budget, particularly if it leaves the
    agency with insufficient funds for important enforcement activities
    (e.g., enforcing consent decrees against heavy-duty diesel
    manufacturers). We would not want the national enforcement program to
    suffer--both EPA and state/local grants need to be adequate. We
    recommend, then, that the enforcement grant program remain at the $25-
    million level, but that EPA's enforcement budget also be preserved.
                                  epa's budget
        During decades of air pollution control, state and local
    governments have gained substantial experience and expertise to employ
    in our quest for clean air. We have learned a great deal about the
    science of air pollution, the technology of control and strategies for
    addressing local problems. As a result, state and local agencies
    welcome the flexibility to craft and tailor programs that will best
    suit our needs. However, we cannot solve the problems related to air
    pollution alone; we need EPA to perform those duties that are best
    suited to a federal agency. It is only through federal, state and local
    cooperation that we will succeed. Accordingly, we welcome and support a
    strong federal role in the national air quality program.
        Among the responsibilities EPA has undertaken and upon which we
    will continue to rely are establishing (and revising) strong national
    standards for pollutants, industries and sources, including motor
    vehicles; developing national guidance, conducting research, providing
    training and carrying out enforcement oversight and appropriate
    enforcement actions. As a federal agency with a national perspective,
    EPA is best suited to these tasks.
        In order for EPA to fulfill its responsibilities with respect to
    the air program, it needs to be adequately funded as well. We touched
    upon this issue above, with respect to the enforcement budget. We urge
    Congress, therefore, not to reduce EPA's budget, since decreasing EPA's
    ability to carry out its programs will adversely affect the job state
    and local air agencies are able to do. In fact, we believe EPA's air
    quality budget should be increased to allow the agency to fulfill its
    responsibilities the way the Clean Air Act intended.
                                   conclusion
        In conclusion, we strongly urge you to ensure that state and local
    air agencies receive significant increases in grant funding in fiscal
    year 2002, specifically by providing an increase of $33 million to
    state and local grants under Section 105 of the Clean Air Act in fiscal
    year 2002, as the first part of a three-year phase-in of at least a
    $100-million increase. Further, we recommend that the enforcement grant
    program be funded, but not by diverting EPA enforcement resources, and
    that local air quality agencies be permitted to apply directly to EPA
    for grants and receive grants directly from EPA under the program.
    Finally, we recommend that EPA programs be adequately funded.
        Thank you very much for this opportunity to provide you with our
    testimony. Please contact us if you have questions or require any
    additional information.
                                     ______

     Prepared Statement of the Southwest Center for Environmental Research
                                   and Policy

    scerp's role in improving environmental conditions in the u.s.-mexican
                                 border region
        Mr. Chairman and Members of the Subcommittee: Thank you for this
    opportunity to submit testimony regarding the current state of the
    U.S.-Mexican border environment and the region's need for the (SCERP).
        As elaborated in the testimony below, the growth of trade and
    population in the region has exacerbated the environmental degradation
    and the resultant impacts on residents along the border. Despite
    SCERP's successes, this growth has outpaced the capacity of SCERP and
    other agencies in the region to effectively manage the environmental
    deterioration. Consequently, SCERP respectfully requests $6,000,000 for
    fiscal year 2002 to initiate needed programs that have been delayed for
    the past two years due to insufficient resources and to broaden the
    coverage of the programs to larger segments of the border region. Past
    funding has included $2,500,000 for fiscal year 2001, $2,375,000 for
    fiscal year 2000, and $3,000,000 for fiscal year 1999.
            scerp's mission is to help u.s.-mexican border residents
        The human population living on the U.S.-Mexican border, currently
    estimated at over 12 million, is expected to double to over 24 million
    by 2020, making it the largest rapidly growing region of North America.
    Most of the growth will occur in the already burgeoning twin cities of
    San Diego-Tijuana and El Paso-Ciudad Juarez, although smaller border
    communities such as Nogales, Arizona, and Laredo, Texas, have annual
    population growth rates that exceed the capacity of local governments
    to provide infrastructure and maintain environmental quality. This
    dynamic frontier, characterized by rapid environmental and social
    change, demands that border stakeholders not only have a comprehensive
    understanding of its current socio-economic and environmental
    conditions, but that we are prepared for alternative scenarios in the
    future.
        The Southwest Center for Environmental Research and Policy (SCERP)
    is a binational consortium of five U.S. and four Mexican universities
    created in 1990 to respond to that challenge. Its original mission as a
    precursor to the United States and Mexican governments' Border XXI
    Program was to ``initiate a comprehensive analysis of possible
    solutions to acute air, water and hazardous waste problems that plague
    the United States-Mexico border region.'' Since then, the consortium's
    mission has expanded from focusing solely on applied environmental
    research to include policy development as well as outreach, education,
    and regional capacity building for border communities--SCERP's ultimate
    customers.
        SCERP achieves its mission by uniting academic expertise from
    multiple disciplines with policymakers at the binational, state,
    tribal, and local levels; with nongovernmental organizations; and with
    private industry to address pressing transborder issues. In addition to
    being a current partner of the Border XXI Program, SCERP has emerged to
    support the border activities of many organizations. Many federal,
    state, and local agencies have come to rely on SCERP as a source of
    high quality information and analysis, to support them in their work.
        As agencies face the daunting task of satisfying growing community
    needs with already strained budgets, they value SCERP's flexibility in
    partnering across jurisdictions, using well-established crossborder
    networks, and providing the cutting-edge information that develops
    solutions. SCERP's vision is a vital region with a dynamic and diverse
    economy, sustainable environmental quality, intact ecological systems,
    and a high quality of life for all border residents.
               scerp has demonstrated value on over 200 projects
        In its first ten years SCERP has produced a critical mass of data
    and analysis related to air, water, and hazardous pollution through the
    successful completion of applied research projects. The findings from
    these projects have been applied to grassroots environmental health
    education, to the development of new technologies, and to policy
    recommendations. Among our successes are:
      --Informing communities about general environmental issues and
            solutions
      --Providing safe drinking water for low-income residents throughout
            the border region
      --Reducing risk from lead, cadmium, selenium, and arsenic to pregnant
            women in the El Paso-Ciudad Juarez area
      --Developing membrane filtration methods to treat drinking water from
            the Rio Grande
      --Developing training materials to facilitate conversion of Ciudad
            Juarez brick kilns to clean fuels that have applications
            throughout Mexico
      --Producing Visual Decision-Support Systems based on our work on
            integrated cross-border Geographic Information Systems
      --Developing pollution prevention and removal strategies for the
            Tijuana River watershed
      --Influencing national legislation, such as the Border Smog Reduction
            Act of 1998 (H.R. 8) based on our advanced understanding of
            transborder air pollution sources and solutions
        SCERP responds to grassroots concerns and priorities; applies data
    to binational management, monitoring, and enforcement decision-making
    challenges; and directly addresses key environmental threats. At the
    same time, SCERP is developing the local capacity of researchers,
    students, and organizations to handle current and future needs through
    advanced education, training, and partnering.
    scerp budget request is justified in light of growth and pressing needs
        SCERP has proven its ability to select timely projects that target
    high priority environmental concerns in the U.S.-Mexican border region,
    carry them out effectively, and disseminate their results to border
    stakeholders. Through the Transboundary Watershed, Paso del Norte Air
    Basin, Tribal Environment Resource Development, and Emissions Permit
    Trading programs, SCERP has also combined promising localized projects
    into muli-year, multi-disciplinary programs that cover broader segments
    of the border region.
        In the past, SCERP has been very successful despite minimal levels
    of funding. By working with border stakeholders and providing education
    and training of the next generation of border leaders, SCERP has
    completed over 200 applied research projects with concrete benefits to
    border communities. Nevertheless, the unprecedented 151 percent
    expansion of trade due to NAFTA since 1994 and the immense increase in
    border traffic have overwhelmed existing infrastructure, thereby
    creating new environmental problems and exacerbating old ones. In
    addition, the population boom on both sides of the border has meant
    that border communities are falling further behind in their ability to
    handle key environmental problems.
        Now, more than ever, border communities need SCERP to address this
    gap between the growing environmental problems and local capacity to
    analyze and manage problems. Despite SCERP's success in improving
    environmental conditions in some parts of the border region, there is
    still much to be done. Border stakeholders, including the U.S. EPA,
    BECC and NADBank, border states, tribes, nongovernmental organizations,
    cities, and other SCERP partners have asked SCERP to address the
    following high priority issues and their impact on public environmental
    health:
      --the sustainable use of water
      --the intersection of trade, energy, and air pollution
      --pollution prevention and control of hazardous materials controls
      --the future of agriculture in arid regions
      --invasive species displacing economically important ones
        SCERP program initiatives for 2002 will deal with these issues with
    thorough consideration of economic, legal, political, and social
    factors. For SCERP to effectively address these issues, it is
    imperative that SCERP's funding be increased to $6 million for fiscal
    year 2002.
        The following table illustrates how funding has been used in the
    past and plans for the future. The program years marked with one
    asterisk (*) indicate that the program was leveraged and/or subsumed by
    outside funding sources. The program years marked with two asterisks
    (**) indicate that the program was delayed and/or downscaled due to
    insufficient resources.

    ----------------------------------------------------------------------------------------------------------------
                               RESEARCH YEARS                              1999     2000     2001     2002     2003
    ----------------------------------------------------------------------------------------------------------------
    MANAGEMENT & ADMINISTRATION........................................      450      380      360      500      500
    OUTREACH, TRAINING & COMMUNICATIONS................................      185      180      190      250      400
    RESEARCH, DEVELOPMENT & POLICY:
        Researcher Initiated (Competitive) Projects....................      250    1,440    1,250    2,000    3,000
        Trans-Border Watershed Research Program........................      413    ( * )  .......  .......  .......
        Paso del Norte (Fine Particulate) Air Program..................      400    ( * )  .......  .......  .......
        SCERP Tribal Environment Development Program **................      300      150      125      250      250
        Binational Emissions Permit Trading Program....................      308    ( * )  .......  .......  .......
        Border Environment Scenario Prediction Program **..............      250      125      300      750      750
        Border Water Quality and Supply Issues Program **..............  .......   ( ** )       20      500    1,000
        Trade, Energy and the Environment Program **...................  .......   ( ** )   ( ** )      750      750
        Human Environmental Health Program **..........................  .......   ( ** )   ( ** )      300      750
        Living Resources and Restoration Program **....................  .......   ( ** )   ( ** )      300      750
        Research Planning and Faculty Development......................      444      100      255      400      500
                                                                        --------------------------------------------
          TOTAL........................................................    3,000    2,375    2,500    6,000    8,650
    ----------------------------------------------------------------------------------------------------------------

        While SCERP continues to leverage its congressional funding with
    support from other government, private, and philanthropic sponsors, the
    congressional support is still critical to maintaining current
    projects, developing new programs, and translating the results of those
    projects and programs to the communities that need them.
        The federal component of support is key to our ability to leverage
    sustainable partnerships with other agencies in the immediate future.
    Congressional funds provide important seed money for critical projects
    that are later adopted and institutionalized by other funding sources,
    leaving a lasting impact in the region. The preliminary results of one
    SCERP member university's survey found that in the past ten years, the
    $2.5 million invested in SCERP by Congress leveraged another $3.4
    million. At this university alone, one SCERP grant of $75,000 brought
    in five others that totaled about $1,000,000 from agencies as diverse
    as the Department of Defense and the National Science Foundation.
      scerp wants to address more of the critical issues of importance to
                              border stakeholders
        The EPA, border states, tribes, BECC and NADBank, NGOs, and other
    SCERP partners have identified the need for applied research and
    projects in the following areas. Increased funding leveraged with other
    resources will enable SCERP to expand its focus and incorporate
    projects in these areas.

    --------------------------------------------------------------------------------------------------------------------------------------------------------
                  Area                             High Priority                          Medium Priority                  Lower Priority, but Important
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Air.............................  Agricultural Burns....................  Air Deposition of Mercury and Other     Fugitive Dust Sources and Transport
                                      Air Emissions Inventory...............   Airborne Pollutants and their
                                      Cost-Benefit Analysis.................   Potential Impacts to Water Quality.
                                                                              Solid Waste Dumps.....................
    Water...........................  Drinking water........................  Phosphates............................  Drinking Water Collection Systems
                                      Toxic Plumes..........................  Watersheds and/or Total Maximum Daily
                                      Regionalization of Water Systems......   Loads (TMDLs).
                                      Tracking System for BECC/NADB Proj-     Satellite Water Treatment.............
                                       ects.                                  Santa Cruz River......................
                                                                              Groundwater...........................
    Hazardous Materials.............  Used Tires............................  Spill Analysis and Damage Prediction..  Risk Analysis of Transport, Storage
                                      Needs Assessment for Hazardous and      Vulnerability Atlas...................   and Disposal of Hazardous Waste
                                       Solid Waste Management Infrastructure. Site Remediation......................   Through State and Bordering Cities
    Natural Resources...............  Endangered, Transboundary and           Riparian Habitat......................
                                       Migrational Species.
    Environmental Information.......  ......................................  Technology Transfer...................  ......................................
                                                                              Source Books..........................
    Pollution Prevention............  ......................................  Analysis of Installation and Operation  Industrial Ecology
                                                                               of Fueling Facilities with
                                                                               Underground Storage Tanks (USTs).
                                                                              NAFTA Effects on Transportation Sys-
                                                                               tems.
                                                                              ISO 14000 and Voluntary Activities
    Environmental Health............  Human (Environmental) Health..........  Biomarkers............................  ......................................
                                      Potable Water Storage.................
    Contingency Planning and          ......................................  Landfills.............................  Fires
     Emergency Response.                                                                                              Agua Prieta Chemical Accident Hazards
    Economics.......................  ......................................  Economic Assessments..................  ......................................
                                                                              Environmental Accounting..............
    --------------------------------------------------------------------------------------------------------------------------------------------------------

                                   conclusion
        SCERP seeks to improve the quality of life of the people living in
    communities along the border through applied research information,
    insights, and innovations that address the complex environmental and
    socioeconomic issues they confront. Enhanced congressional support of
    SCERP will contribute significantly to the commitment of citizens of
    the United States to the principles of a sustainable border region, and
    our partnership with the people of Mexico.
                                     ______

      Prepared Statement of Casey Kroon, Chairman, Board of Supervisors,
                           Sutter County, California

        Mr. Chairman and members of the Senate VA-HUD and Independent
    Agencies Appropriations Subcommittee, I would like to thank you for
    this opportunity to testify before this committee. My name is Casey
    Kroon and I am the Chairman of the Board of Supervisors for Sutter
    County, California. On behalf of the County of Sutter, California, I
    would like to request your support for two of the County's highest
    priorities for fiscal year 2002.
        Sutter County, located north of the City of Sacramento, is an
    economically depressed rural region which relies heavily on agriculture
    for economic stimulus. Sutter County ranks among the highest in
    unemployment rates--averaging two to three times the statewide figure--
    and among the lowest in household incomes. The County has one of the
    largest percentages of population on public assistance and one of the
    lowest employment growth rates in California. Given these demographics,
    the County must diversify its economy in order to improve the lives of
    its citizens.
        First, Sutter County requests your support of an earmark of
    $300,000 under the Economic Development Initiative (EDI) account to
    complete preliminary design and environmental clearance work on water,
    wastewater, drainage, and transportation projects for industrial
    development in the County.
        The South Sutter County Industrial/Commercial Reserve is well
    positioned geographically to provide an opportunity to develop
    approximately 3,500 acres of land near the Sacramento International
    Airport and major transportation corridors, including Interstate 5.
    While this area provides real economic development and diversification
    opportunities, the County lacks the financial resources to stimulate
    significant interest and development.
        As part of its General Plan Update, the County prepared a South
    Sutter County Facilities Plan, which addresses infrastructure needs
    related to water, wastewater, drainage, and transportation facilities
    in the area to be developed. The requested earmark will be used for
    further design and environmental clearance work necessary to fully
    prepare the area for development. This work is the critical next step
    in the County's efforts to improve its economy by way of attracting
    industrial development.
        Second, the County requests your support of an earmark of $3
    million under the Environmental Protection Agency's State and Tribal
    Assistance Grants (STAG) Program to improve the Yuba City sewer and
    wastewater treatment system and extend it into an urban area
    immediately adjacent to the incorporated area.
        Sewer treatment and disposal for developed areas west of Yuba City
    are provided by on-site sewer systems. The systems were constructed
    pursuant to obsolete standards and many of the systems are failing.
    Developing a sewage collection system to service these areas would
    replace the on-site septic tanks and leach fields currently in use. The
    septic tanks are responsible for many drinking water wells exceeding
    allowable nitrate levels. In addition, eliminating leach fields will
    reduce groundwater contamination. The alleviation of these problems
    will provide an opportunity for much-needed business expansion and
    economic growth. The City of Yuba City is in full support of the sewer/
    wastewater system expansion. The total cost of the project, including
    construction, is estimated at $14 million.
        Once again, thank you for this opportunity to testify before this
    committee.
                                     ______

        Prepared Statement of the Sacramento County Regional Sanitation
                                    District

        Mr. Chairman and members of the Senate VA-HUD and Independent
    Agencies Appropriations Subcommittee, I would like to thank you for
    this opportunity to testify before the committee. My name is Roger
    Niello and I am the Chairman of the Board of Directors for the
    Sacramento County Regional Sanitation District. On behalf of the
    citizens and communities of Sacramento River watershed, I request your
    support of a $3 million earmark under the Environmental Protection
    Agency's Environmental Programs and Management fund to continue the
    Sacramento River Toxic Pollutant Control Program (SRTPCP) and the
    Sacramento River Watershed Program (SRWP).
        The SRTPCP, a multi-year water quality management effort, and its
    companion stakeholder process, the SRWP, have worked together to
    successfully organize a regional program that includes representatives
    of federal, state, and local agencies, agriculture and industry
    organizations, environmental organizations, and citizen groups. The
    program uses a stakeholder-based, watershed management approach to
    develop and implement non-point and point source strategies addressing
    water quality standards for a number of toxic pollutants of concern to
    the Sacramento River watershed and downstream Bay-Delta.
        The proposed earmark would allow the SRTPCP and the SRWP to
    continue the Sacramento River water quality monitoring program--
    including internet accessible data reporting--assess water quality
    problem areas and pollutant sources and trends, implement effective
    management strategies to meet water quality objectives, and promote
    public awareness of watershed issues through a strategic communications
    plan.
        In the past year, the SRTPCP and SRWP have: continued work to
    develop stakeholder-led water quality management strategic plans for
    mercury and organophosphate pesticides in the Sacramento River
    watershed; implemented educational programs for landowners on
    management practices for OP pesticides; completed the third year of an
    integrated water quality monitoring program in the Sacramento River
    watershed linking multiple agency and watershed monitoring efforts;
    produced the second annual water quality monitoring report for the
    watershed that identified water quality problems and tracked progress
    of management efforts in the Sacramento Valley; coordinated and linked
    activities of watershed groups and local agencies within the Sacramento
    River watershed; established a resource center and website to provide
    technical information and assistance to local watershed groups and
    individuals; secured significant television coverage, distributed
    informational publications and regularly published newsletters, and
    hosted a watershed conference, and implemented K-12 educational
    programs to inform the public of watershed management and water quality
    issues.
        The program has regional and statewide impacts that affect the
    Sacramento River watershed and downstream areas of the San Francisco
    Bay and Sacramento-San Joaquin Delta. Water quality management
    activities included in the program are geared toward the protection of
    human health, aquatic life, and drinking water and will benefit
    millions of Californians. The program will also assist local agencies,
    communities, and citizens by providing an open and equitable process
    for managing water quality and by promoting efficient use of resources
    through collaborative efforts of federal, state, and local entities.
        Once again, I thank you for this opportunity to testify before this
    committee.
                                     ______

     Prepared Statement of Steve Miklos, Mayor, City of Folsom, California

        Mr. Chairman and members of the Senate VA-HUD and Independent
    Agencies Appropriations Subcommittee, I would like to thank you for
    this opportunity to testify before the committee. My name is Steve
    Miklos and I am the mayor of the City of Folsom, California. On behalf
    of the citizens of Folsom, I request your support of two to the City's
    highest priorities.
        The City of Folsom is one of California's fastest growing
    communities. Folsom is expected to reach its build-out population of
    70,000 citizens by the year 2010. Additionally, Folsom continues to
    attract major corporate and industrial developments such as the
    Kikkoman Soy Sauce plant, the Gekkeikan Sake plant, and the continued
    expansion of Intel Corporation's major R&D facility that serves as one
    the Northern California's top employment centers. While growth benefits
    the City in many ways, the regional nature of the growth and related
    infrastructure needs puts significant strain on local government
    attempting to keep up with development.
        First, the City requests $2 million under the Environmental
    Protection Agency's State & Tribal Assistance Grants (STAG) Account for
    engineering, construction and inspection to upgrade and replace failing
    portions of the City's sewer system.
        The City's older, existing sewer system is heavily impacted by
    growth and needs immediate improvements. A critical consideration is
    the fact that Folsom is situated upon the American River, and problems
    with the City's sewer system may have immediate and damaging impacts
    upon this heavily used and highly exposed water resource. In January
    2000, a significant storm event caused a great increase in infiltration
    and inflow of stormwater into portions of the City's older sewer
    system. Unfortunately, the sewer system was not capable of handling the
    event, resulting in a sewer spill into the American River. The State of
    California Regional Water Quality Control Board issued an
    Administrative Civil Liability Fine of $700,000, which was paid by the
    City. Currently, the City is undertaking an analysis of its sewer
    system, which is expected to identify the need for significant
    rehabilitation of the City's older sewer system.
        Federal funding will be used to improve and enhance the safe
    transmission of sewer water to treatment facilities. The City is
    prepared to share the costs associated with this project at the
    required forty-five percent level.
        Second, the City requests your support of a $4 million earmark
    under the Economic Development Initiative Account (EDI) for the design
    and construction of a new fire station facility.
        As I mentioned before, the City of Folsom is experiencing great
    expansion and needs $4.0 million to design and construct a new fire
    station and training facility in the central business district area of
    the City. The new station would service the major portion of the
    population and the heaviest requests for service. The strategic
    location of this new station will improve response times, will
    consolidate services, and will take full advantage of a 360 deg.
    response radius from the facility. The new fire station would, in
    addition to fire apparatus, house two paramedic staffed transporting
    medic units (ambulances) providing advanced life support to the growing
    number of citizens and those commuters on nearby U.S. Highway 50.
        Thank you again for this opportunity to testify before this
    committee.
                                     ______

          Prepared Statement of the American Public Power Association

        The American Public Power Association (APPA) is the service
    organization representing the interests of the more than 2,000
    municipal and other state and locally owned utilities throughout the
    United States. Collectively, public power utilities deliver electric
    energy to one of every eight U.S. electric consumers (about 40 million
    people) serving some of the nation's largest cities. The majority of
    APPA's member systems are located in small and medium-sized communities
    in every state except Hawaii. We appreciate the opportunity to submit
    this statement concerning fiscal year 2002 appropriations for programs
    under this Subcommittee's jurisdiction.
                           clean air partnership fund
        APPA supports continued funding of the Clean Air Partnership Fund
    in the fiscal year 2002 budget. As locally-owned providers of
    electricity to nearly 40 million consumers across the country, we are
    strongly interested in pursuing projects that benefit the environment.
    Along with the states, local governments, business and the
    environmental community we lend our enthusiastic support for this
    program that offers an innovative approach to addressing multi-
    pollution problems in a cost-effective way. The fund would help finance
    environmental technologies and environmentally related energy
    technologies and programs.
        We believe at an adequately funded level, the Clean Air Partnership
    Fund could become a significant incentive available to locally owned,
    not-for-profit electric utilities to make new investments in renewable
    and clean energy projects. Such projects have the potential of
    providing important economic and environmental benefits to the
    communities served by the municipal utility. Along with significant air
    quality benefits resulting from accelerated use of emissions-free
    energy sources, new jobs are created each time these technologies are
    deployed.
        Among other projects, we would look to the Fund to spur development
    of landfill gas-to-energy projects. These projects are valuable in
    reducing methane gas emissions. As municipally owned electric
    utilities, we have unique opportunities to partner with cities and the
    landfills they operate.
    Green Lights Program
        The Green Lights program encourages use of energy efficient
    lighting to reduce energy costs, increase productivity, promote
    customer retention and protect the environment. Program partners agree
    to survey lighting in their facilities and to upgrade it, if cost-
    effective. Environmental benefits result from more efficient energy use
    and from reductions in emissions of carbon dioxide, sulfur dioxide and
    nitrogen dioxide, thus improving air quality. EPA provides program
    participants public recognition and technical support. Both large and
    small APPA member systems participate in this program including City
    Utilities of Springfield, MO; Concord Municipal Light Plant, MA; City
    of Georgetown, TX; Grant County Public Utility District, WA; Gray's
    Harbor County PUD, WA; Greenville Utilities Commission, NC; Indiana
    Municipal Power Authority, IN; Los Angeles Department of Water & Power,
    CA; Mason County PUD, WA; New York Power Authority, NY; Norwood
    Municipal Light Department, MA; Omaha Public Power District, NE;
    Orlando Utilities Commission, FL; Port Angeles City Light Department,
    WA; Puerto Rico Electric Power Authority, PR; Sacramento Municipal
    Utility District, CA; City of St. Charles Electric Utility, IL; Salt
    River Project, AZ; Virgin Islands Water & Power Authority, VI;
    Springfield Utility Board, OR, and Taunton Municipal Lighting Plant,
    MA.
    Energy Star Programs
        A number of EPA's Energy Star programs build on the successes of
    Green Lights. These important EPA programs are examples of successful
    public/nonpublic partnerships that promote the use of profitable,
    energy-efficient technologies as a way to increase profits and
    competitiveness while at the same time minimizing pollution. They
    include Energy Star Buildings, the Energy Star Transformer Program,
    Energy Star office equipment and the Residential Energy Star Program.
    APPA member systems participate in and support EPA's Energy Star
    efforts.
    Landfill Methane Outreach Program
        The Landfill Methane Outreach Program provides environmental
    benefits by encouraging utilities to make use of landfill gas as an
    energy source. Several APPA member systems participate in this program,
    including Illinois Municipal Electric Agency, IL; Jacksonville Electric
    Authority, FL; Emerald People's Utility District, OR; Los Angeles
    Department of Water and Power, CA, and Orlando Utilities Commission,
    FL. Utilities voluntarily agree to take advantage of the best
    opportunities to use landfill gas in generating power. EPA recognizes
    and publicizes the utility's efforts and provides technical assistance.
    One of the success stories cited by EPA occurred with APPA member
    system Emerald People's Utility District in Eugene, OR. This public
    power utility worked collaboratively with the State of Oregon, Lane
    County officials and a private investment company to develop a 3.4 MW
    plant at the Short Mountain Landfill. EPUD's general manager says
    landfill energy recovery is like ``turning straw into gold,'' providing
    additional revenue to EPUD as well as a fee to the county.
                     council on environmental quality (ceq)
        APPA supports level funding in fiscal year 2002 of $3,020,000 for
    the Council on Environmental Quality (CEQ). As units of local
    government APPA member utilities have a unique perspective on
    environmental regulation. Public power utilities and others from
    industry have experienced a general lack of consistency in federal
    environmental regulation. While additional layers of government should
    be avoided, a central overseer can perform a valuable function in
    preventing duplicative, unnecessary and inconsistent regulations. The
    council is responsible for ensuring that federal agencies perform their
    tasks in an efficient and coordinated manner. For these reasons, APPA
    supports the existence and continued operation of CEQ.
        Again, APPA member systems appreciate your consideration of our
    views on priority appropriations issues for fiscal year 2002.
                                     ______

     Prepared Statement of the Metropolitan Water Reclamation District of
                                Greater Chicago

        I am Terrence J. O'Brien, President of the Metropolitan Water
    Reclamation District of Greater Chicago, and on behalf of the Water
    Reclamation District, I want to thank the Subcommittee for this
    opportunity to present our priority for fiscal year 2002, and express
    our appreciation for your support of our requests over the years. The
    Metropolitan Water Reclamation District (District) is the sponsor for
    the federally approved combined sewer overflow (CSO) project, the
    Tunnel and Reservoir Plan (TARP), in Chicago, Illinois. Specifically,
    we are asking that $15 million be included to continue construction of
    this project in the Subcommittee's VA, HUD and Independent Agencies
    Appropriations Bill for fiscal year 2002. The following outlines the
    project and the need for the requested funding.
                                  introduction
        The District was established in 1889 and has the responsibility for
    sewage treatment, and is also the lead agency in providing sponsorship
    for flood control and stormwater management in Cook County, Illinois.
    In fact, the District was established in response to an epidemic of
    waterborne diseases caused by drinking polluted Lake Michigan water,
    which killed 90,000 people in 1885. By 1900, the District had reversed
    the flows of the Chicago and Calumet Rivers to carry combined sewage
    away from Lake Michigan, the area's main water supply. The District has
    been involved with major engineering feats since its inception.
        In an effort to meet the water quality goals of the Clean Water
    Act, to prevent backflows into Lake Michigan, and to provide an outlet
    for floodwaters, the District designed the innovative TARP. The TARP
    tunnels, which were judged by the Environmental Protection Agency (EPA)
    on two occasions as the most cost-effective plan available to meet the
    enforceable provisions of the Clean Water Act, are a combined sewer
    overflow elimination system. The TARP reservoirs, also under
    construction, will provide flood control relief to hundreds of
    thousands of residents and businesses in he Chicagoland area.
                           tunnel and reservoir plan
        The TARP is an intricate system of drop shafts, tunnels and pumping
    stations which will capture combined sewer overflows from a service
    area of 375 square miles. Chicago will remove three times the amount of
    CSO pollution as Boston's projected removal--for approximately the same
    cost. The remaining Calumet tunnel system will provide 3.1 million
    pounds of biological oxygen demand (BOD) removal versus Boston's one
    million pounds of BOD removal per year. In fact, Chicago's CSO
    pollution problems are worse than the combination of Boston, New York,
    and San Francisco's pollution problems. The Chicago Metropolitan Area's
    annual BOD loading is 43 million pounds per year. This contrasts with
    the combination of Boston, New York and San Francisco's combined annual
    BOD loading of 35 million pounds.
        A good portion of the remainder of the TARP system is to be built
    in the southeast side of Chicago and the southern suburbs (Calumet
    system), a low-income, high neglected and highly polluted area. This
    community suffers from tremendous land, air and water pollution--
    literally a dumping ground for multi-media pollution ranging from
    chemical waste to serious water pollution.
        Due to the enormous risk to the community, the District as the
    local sponsor cannot afford to leave the citizens vulnerable.
    Therefore, it is imperative that this work must continue. Because the
    construction industry is already doing work in the area, the climate is
    favorable for proceeding with this work at this time, producing
    significant cost savings. What we are seeking, then, is funding to
    advance federal work.
        We have a proven and cost-effective program. In fact, we have
    estimated that TARP's cost is about a quarter of the cost of separating
    the area's existing combined sewer systems into separate sewage and
    stormwater systems. Upon reanalysis, the EPA has consistently found the
    TARP program to be the most cost-effective solution that will reduce
    the impacts by the greatest degree to meet the enforceable requirements
    of the Act, with the least amount of dollars. The project, while
    relating most specifically to the 52 tributary municipalities in
    northeastern Illinois, is also beneficial to our downstream communities
    such as Joliet and Peoria. These benefits occur because of the capture
    of wastewater in the tunnels during the storm periods and by treatment
    of the discharge before being released in to the waterways.
        Since its inception, TARP has not only abated flooding and
    pollution in the Chicagoland area, but has helped to preserve the
    integrity of Lake Michigan. In the years prior to TARP, a major storm
    in the area would cause local sewers and interceptors to surcharge
    resulting in CSO spills into the Chicagoland waterways and during major
    storms into Lake Michigan, the source of drinking water for the region.
    Since these waterways have a limited capacity, major storms have caused
    them to reach dangerously high levels resulting in massive sewer
    backups into basements and causing multi-million dollar damage to
    property.
        Since implementation of TARP, 358 billion gallons of CSOs have been
    captured by TARP, that otherwise would have reached waterways. Area
    waterways are once again abundant with many species of aquatic life and
    the riverfront has been reclaimed as a natural resource for recreation
    and development. Closure of Lake Michigan beaches due to pollution has
    become a rarity. After the completion of both phases of TARP, 99
    percent of the CSO pollution will be eliminated. The elimination of
    CSOs will reduce the quantity of discretionary dilution water needed
    for flushing of Chicago's waterway system, making it available as
    drinking water to communities in Cook, DuPage, Lake, and Will counties,
    which have been on a waiting list. Specifically, since 1977, these
    counties received an additional 162 million gallons of Lake Michigan
    water per day, partially as a result of the reduction in the District's
    discretionary diversion in 1980. Additional allotments of Lake Michigan
    water will be made to these communities, as more water becomes
    available from sources like discretionary diversion.
        With new allocations of lake water, more than 20 communities that
    previously did not get to share lake water are in the process of
    building, or have already built, water mains to accommodate their new
    source of drinking water. The new source of drinking water will be a
    substitute for the poorer quality well water previously used by these
    communities. Partly due to TARP, it is estimated by IDOT that between
    1981 and 2020, 283 million gallons per day of Lake Michigan water would
    be added to domestic consumption. This translates into approximately 2
    million additional people that would be able to enjoy Lake Michigan
    water. This new source of water supply will not only benefit its
    immediate receivers but will also result in an economic stimulus to the
    entire Chicagoland area, by providing a reliable source of good quality
    water supply.
        TARP was designed to give the Chicago metropolitan area the optimal
    environmental protection that could possibly be provided. More
    importantly, no other project was found to be as cost-effective. In
    addition, the beneficial use of the project is being enhanced by the
    addition of the flood control reservoirs now being designed and
    constructed by the Corps of Engineers, which will be connected to the
    tunnels for additional capture and storage of combined sewage during
    flood events. We believe TARP stands as a tribute to our nation's Clean
    Water goals and one that is being accomplished within the most
    economical constraints.
                                requested action
        The $15 million we are seeking in fiscal year 2002 funding in the
    Subcommittee's bill will help keep the local sponsor whole for the
    advance construction it plans to accomplish on the Torrence Avenue and
    Little Calumet Legs for the Calumet System of the congressionally-
    authorized TARP project. While the TARP project was originally
    authorized at 75 percent federal funding, the District as local sponsor
    has been contributing at least 50 percent of the total project cost. We
    greatly appreciate the Subcommittee's endorsement of our request over
    the years to advance the construction of this work. This fiscal year
    2002 will go a long way to address serious water quality, stormwater
    and safety problems. It will have a tremendously beneficial impact on a
    community, which suffers from water pollution and significant flooding
    problems. The EPA has approved the facilities plan for the overall TARP
    project and design has been completed. The EPA has identified this
    particular segment of work as the next critical section of the plan to
    be constructed based on significant water quality benefits.
        Once on-line, the Torrence Avenue Leg of the Calumet System will
    capture 2.0 billion gallons of CSOs per year and will protect 15.6
    square miles of the City of Chicago from raw sewage backup and
    flooding.
        We urgently request that this funding be included in the
    Subcommittee's bill for the construction of the Calumet System of the
    TARP project. We thank you in advance for your consideration of our
    request.
                                     ______

                  DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

     Prepared Statement of the People for the Ethical Treatment of Animals

        Chairman Bond and Members of the Subcommittee: People for the
    Ethical Treatment of Animals (PETA) is the world's largest animal
    rights organization, with more than 700,000 members. We greatly
    appreciate this opportunity to submit testimony regarding fiscal year
    2002 appropriations for the Department of Housing and Urban Development
    (HUD). My testimony will focus on HUD funds for the city of Virginia
    Beach, Va., for the expansion of the Virginia Marine Science Museum
    (VMSM).
        PETA respectfully requests that the subcommittee include report
    language stating that no HUD funds shall be given to the city of
    Virginia Beach for any expansion of the VMSM. PETA makes this request
    in light of the city's intent to build a tank for a permanent captive
    dolphin exhibit, the city's repeated violations of the Virginia Freedom
    of Information Act (VFOIA) in connection with prior HUD funds, and the
    city's failure to document how the current proposal will meet the
    criteria established by HUD for the award of funds.
    Funds awarded for the expansion of a stranding center are likely to
            predetermine the construction of an inhumane captive dolphin
            exhibit tank.
        The VMSM currently has a stranding center for the rescue and
    rehabilitation of sick and injured marine animals. It is our
    understanding that the city of Virginia Beach intends to apply for HUD
    funds for the purpose of expanding the existing VMSM stranding center.
        While PETA applauds the good work of the stranding center, we
    oppose the request for HUD funds because the VMSM's plans to expand the
    stranding center have been and are inextricably linked to the
    construction of a new controversial captive dolphin tank. Both a new
    stranding center and the captive dolphin tank are part of what the VMSM
    calls the Phase III Expansion. The city has repeatedly claimed that an
    expansion of the stranding center is not economically feasible absent
    the construction of the dolphin tank for which the sole purpose is to
    display and breed dolphins for profit.
        A coalition of 28 animal protection organizations, including PETA,
    opposes the VMSM dolphin tank project.
    Dolphins suffer greatly in captivity.
        Confining dolphins to tanks shortens their lives through stress-
    related diseases and depression caused by swimming in endless circles.
    According to current U.S. National Marine Fisheries Service records,
    the mortality rates for captive cetaceans is greater than 60 percent.
    It is simply not possible to reproduce in captivity the natural habitat
    that cetaceans require. Because dolphins communicate and navigate by
    echolocation, the small confines of a tank are extremely stressful. The
    eminent marine mammal authority, Jean-Michel Cousteau, explained that
    ``their world becomes a maze of meaningless reverberations.''
        The VMSM intends to populate the proposed dolphin exhibit tank with
    animals bred in captivity who supposedly cannot be released. However,
    the marine mammal science community acknowledges that there are no
    criteria (excluding extreme conditions such as blindness) upon which to
    base an evaluation of whether any individual animal is a suitable
    candidate for release. Even long-term captive dolphins have been
    successfully rehabilitated and released.
        The VMSM also intends to contact other zoos and aquariums for
    dolphins, thereby becoming part of the chain responsible for the
    violent capture of wild dolphins. This trade includes chasing dolphins
    by boat, separating them from their families, netting them, and
    dragging dolphins onto the boat repeatedly until the ``ideal'' animal
    is captured. Frequently in this process dolphins drown or die of
    capture shock. Worse, the museum intends to breed the dolphins for
    display and profit. It is more than likely that either a baby or mother
    will eventually be sold to another facility (whose level of care we
    will never be able to monitor) and another closely-knit family will be
    broken up.
    The city of Virginia Beach violated the Virginia Freedom of Information
            Act in connection with past HUD funds.
        In an attempt to keep the animal protection coalition from learning
    of the VMSM's plans, the city of Virginia Beach has illegally withheld
    plans for the dolphin tank from the public. Beginning in January 2000
    and continuing for fifteen months, PETA requested access to public
    records concerning the VMSM Phase III Expansion pursuant to the VFOIA.
    Museum officials and other city personnel continually denied the
    existence of a great number of public records that were the subject of
    a number of these VFOIA requests. As a result, in March 2001, PETA
    filed a lawsuit against city officials, including the director of the
    VMSM, based on over 100 violations of the VFOIA. In a settlement
    agreement dated April 9, 2001, city officials admitted to violations of
    the statute and released tens of thousands of illegally withheld
    documents.
        Among the city's most egregious violations of VFOIA were the city's
    repeated denials that it had renewed efforts to obtain the funds
    awarded through a fiscal year 2000 HUD Economic Development Initiative
    (EDI) Special Projects Grant less than one month after HUD had denied
    the city's initial request for release of these funds (RROF). The
    initial RROF was strongly opposed by PETA and other citizens.
    Consequently, city officials intentionally hid from the public the
    city's resubmittal of the RROF for more than six months. Moreover, the
    RROF itself was not released until October 20, 2000, well after the
    Virginia Beach city council had already voted to accept the funds.
    Thus, the city was able to avoid timely public debate on this very
    controversial issue. The following chart details the serious nature of
    the city's illegal actions:
        February 15, 2000--City submits request to HUD for release of EDI
    special project funds (RROF). No notice to public even though city
    manager certifies to the contrary.
        February 22, 2000--PETA is made aware of first RROF by city's
    response to VFOIA request.
        February 28, 2000--PETA submits written objection to the grant and
    requests that HUD disapprove the RROF because city did not provide
    proof of notice to public and did not conduct environmental review
    (both of which were required by HUD regulations).
        March 7, 2000--HUD disapproves rrof because city did not provide
    proof of notice to public and did not conduct environmental review.
        March 30, 2000--City submits draft revised RROF. Project
    description changed to avoid requirements for public notice and
    environmental review.
        April 11, 2000--PETA requests all records regarding follow-up
    efforts to obtain HUD funds.
        April 28, 2000--City fails to identify existence of, or release,
    second RROF even though the document was submitted on March 30 and
    resubmitted on the next business day that follows the city's response
    to PETA'S VFOIA request.
        May 1, 2000--City resubmits revised second RROF.
        August 14, 2000--PETA submits VFOIA request for records regarding
    effort to obtain funds but second RROF and related documents are not
    identified or released.
        September 29, 2000--PETA submits VFOIA request for records
    regarding effort to obtain funds.
        October 6, 2000--City council meeting notice lists vote regarding
    second RROF. This is PETA'S first notification of existence of second
    RROF.
        October 10, 2000--City council votes to accept grant.
        October 20, 2000--City releases second rrof to PETA more than 6
    months after submittal to HUD.
        The above is only one example of the city's ongoing crusade to
    avoid public participation in any and all decisions related to the
    controversial Phase III Expansion, in flagrant disregard of state law
    and the principles of open government. Specifically, the city crafted
    the RROF discussed above to avoid HUD regulations concerning public
    notice and environmental review and then violated the state Freedom of
    Information Act by withholding public records related to the submittal
    of the RROF.
    The city of Virginia Beach has failed to demonstrate the existence of
            criteria identified by HUD as relevant to EDI Special Project
            Grants.
        Last year's award of a HUD Economic Development Initiative Special
    Projects Grant to the city of Virginia Beach for the controversial
    Phase III Expansion raised a firestorm of protest by Virginia Beach
    citizens who questioned, and still do question, how HUD funds can be
    considered an appropriate means to finance projects seemingly so
    unrelated to the purpose of the agency, such as the construction of a
    captive dolphin tank and the design and engineering of museum exhibits
    related to the marine mammal stranding center.
        In documents we received as a result of a recent VFOIA request, the
    city of Virginia Beach urged support for the request for the
    appropriation of HUD funds for the expansion of the stranding center
    with no more than a vague reference to a potential increase in
    employment and a potential beneficial tax impact, and thus an alleged
    economic benefit to the neighborhood near the museum. However, these
    statements are mere allegations. To the best of PETA's knowledge no
    details whatsoever--not even a basic description of the types of jobs
    that will be created by the expansion of the stranding center, much
    less an economic impact analysis--have been provided to support these
    statements. At the very least, HUD must require the city of Virginia
    Beach to demonstrate an adherence to the stated national objective of
    such grants, which includes a clear economic benefit to a target low or
    moderate-income neighborhood, before even considering appropriating
    these funds.
                                    summary
        Because of the immense suffering that captive dolphins endure, 28
    animal protection organizations and thousands of local residents oppose
    the VMSM's plans to build the captive dolphin tank that is part of its
    Phase III Expansion. In an effort to bypass public debate, the city of
    Virginia Beach has acted illegally in its pursuits of HUD funds for
    this project. We therefore request that the subcommittee include
    language in the report accompanying the fiscal year 2002 VA-HUD
    Appropriations bill stating that no HUD funds shall be given to the
    city of Virginia Beach, Va., for any expansion of the VMSM.
        If you do not feel that that would be possible, please consider
    including the following language in the report: No HUD funds shall be
    given to the city of Virginia Beach, Va., for the purpose of expanding
    the VMSM unless HUD receives plans from the VMSM specifying that the
    funds will not be used for any project that is part of an expansion
    that includes, now or in the future, a captive dolphin exhibit tank,
    and unless those plans include a meaningful analysis of the independent
    economic viability of the construction and operation of an expanded
    stranding center without the assistance of profits from a captive
    dolphin exhibit tank.
        Thank you for your consideration of our request.
                                     ______

    Prepared Statement of the National American Indian Housing Council and
                  Coalition for Indian Housing and Development

        On behalf of the members and Board of Directors of the National
    American Indian Housing Council and the Coalition for Indian Housing
    and Development, I would like to thank Chairman Bond, Ranking Member
    Mikulski, and other distinguished members of the Subcommittee for the
    opportunity to submit public witness testimony today.
                              hud's budget request
        As Chairman of the National American Indian Housing Council and the
    Coalition for Indian Housing and Development and Executive Director of
    the Navajo Housing Authority, I write today as a voice for Americans
    who daily endure the most deplorable housing conditions in the country.
    These are people within American borders who commonly live 15 to 20
    people in one small house. These are people for whom proper sewage
    facilities, roads, and indoor plumbing is often a luxury, rather than a
    standard. These are people who, like many other Americans, dream of
    owning their own homes.
        Indian housing is at a crucial stage. Many of the housing problems
    that have long plagued Indian communities remain unresolved. The
    passage of the Native American Housing Assistance and Self-
    Determination Act of 1996 (NAHASDA) has given tribes and Tribally
    Designated Housing Entities (TDHEs) incredible new opportunities, and
    with adequate funding, NAHASDA can be the most important tool in
    building sustainable, healthy communities in Indian Country.
        President Bush has requested $650 million for the NAHASDA block
    grant for fiscal year 2002. This is the same amount as was proposed and
    appropriated for fiscal year 2001. I am pleased to see that the
    President has lent his support to Indian housing by proposing funding
    for the program for at least last year's level, but unfortunately,
    maintaining current levels of funding will bring us nowhere near the
    levels tribes need to meet their members' housing needs.
                        funding needs for indian housing
        Indian housing is in more need of federal support than any other
    housing program in this country. The lack of significant private
    investment and the dire conditions faced in many communities mean that
    federal dollars make up a larger portion of the total housing resources
    than in other areas.
        NAIHC estimates that to meet the needs as presented to us now, we
    need at least $1.0752 billion in funding for the NAHASDA block grant,
    the basic housing program for tribes.
        For the Navajo Nation in particular, the immediate need is between
    20,000 and 30,000 housing units. Spanning over 18 million acres of
    land, the Navajo Nation suffers from chronic unemployment and massive
    housing need. Over 56 percent of Navajos live below the poverty level.
    As for many other tribes across the nation, this is a situation that
    requires drastically increased federal assistance to remedy.
        Indian housing needs are many and varied. Basic infrastructure,
    low-rent housing, homeownership and housing counseling services are all
    crucial. The NAHASDA block grant allows tribes to determine their own
    needs and their own course of action. In this respect, NAHASDA is a
    model program and should be supported. In supporting NAHASDA, however,
    the Congress must also support improved technical assistance for tribes
    seeking to efficiently and effectively utilize NAHASDA's unique
    features.
                         the effect of new census data
        Recently released census data for 2000 confirm a major increase in
    the Native American population. Data show a doubling of the number of
    Native Americans and Alaska Natives from 1.96 million to 4.1 million,
    including Americans of mixed-race Native descent. For Native Americans
    and Alaska Natives that are not of mixed-race, data show an increase of
    over 28 percent for a total of 2.5 million.
        For a population struggling intensely to provide adequate shelter
    for its families, an increase of this magnitude puts an incredible
    strain on the restricted funds tribes rely on. These census figures
    only confirm what tribal leaders and tribal housing administrators have
    known for some time--housing needs on reservations have outgrown
    available funding. While not all Native Americans live on reservations
    where housing needs are the most severe, tribal leaders attest to
    population increases across the board, including on reservations.
        In light of this new data, it is NAIHC's hope that Native
    communities will receive the funding increases outlined below to offset
    hardship brought on by rapidly growing need.

    Need for Indian Housing Program Funding, Fiscal Year 2002

            Need Area                                   Appropriation Needed
    Existing Housing........................................    $113,600,000
    Operation Housing Modernization/Improvements............ \1\ 306,600,000
    New Housing Development Implementation/Program
        Operations Costs.................................... \2\ 432,000,000
    Title VI Loan Guarantee Credit Subsidy..................      32,000,000
    Section 184 Mortgage Guarantee Credit Subsidy...........       6,000,000
                        --------------------------------------------------------
                        ____________________________________________________
          Fiscal year 2002 NAHASDA funding total...........\4\ 1,075,200,000
                        ========================================================
                        ____________________________________________________
    Community Development Block Grant Set-Aside............. \5\ 144,000,000
    BIA Housing Improvement Program.........................  \6\ 33,000,000
                        --------------------------------------------------------
                        ____________________________________________________
          Total Request for Indian Housing for fiscal year
          2002..............................................   1,252,200,000

    \1\ NAIHC estimates 52,000 units currently need renovation and an
    additional 19,000 need replacement. This figure assumes an average of
    $26,000 per unit, for 11,792 units in fiscal year 2002.
    \2\ Assumes increase in annual development to 4,500 units at an average
    cost of $96,000/unit. HUD estimates new construction needs at one-third
    of the existing housing stock or approx. 50,000 units. In addition, this
    takes into consideration about 30 new federally recognized tribes that
    will be eligible for housing assistance.
    \3\ Includes $147 million for administration of the Indian housing
    program at the tribal level, and an additional $38 million for
    environmental reviews, planning and technical assistance as required
    under the Act.
    \4\ Compared to fiscal year 2001 Appropriations of $650,000,000.
    \5\ Assumes an increase of the CDBG Indian set-aside from 1.5 percent of
    the proposed $4.8 billion to 3 percent to develop much-needed
    infrastructure resources and economic development opportunities.
    \6\ Compared to fiscal year 2001 Appropriations of $11,000,000.
    ---------------------------------------------------------------------------
               public and indian housing drug elimination program
        Eliminating funding for the Public and Indian Housing Drug
    Elimination Program (PIHDEP) would abruptly halt successful efforts by
    tribes around the country to combat drug abuse and its resulting
    effects on tribal communities. The President proposes an end to this
    program with a redistribution of funds to increase operating subsidies
    for public housing authorities in hopes that PHAs will use the funds
    for more effective anti-drug activities or for other priorities.
        Tribes and TDHEs do not participate in public housing programs and
    therefore receive no public housing operating subsidies. The
    Administration claims the program should be eliminated because of
    general misuse of funds and ineffective anti-drug activities, but in
    Indian Country, these programs have seen remarkable success.
        According to an eleven-month study conducted by NAIHC in 1999 and
    2000, the PIHDEP has created an opportunity for TDHEs to develop
    innovative, creative, unique solutions to crime reduction in Native
    communities. The NAIHC study noted that, prior to the Public and Indian
    Housing Drug Elimination Programs, tribes reported feeling overwhelmed
    with the burden of having to address these problems on their own,
    without knowledge of how to solve the problems or money with which to
    build an infrastructure of programs and services designed to address
    these community issues.
        HUD Secretary Mel Martinez has said that the PIHDEP is too open-
    ended and that HUD has no business being involved in such a program.
    While it is not possible at this point to come to quantitative
    conclusions about the percentage of improvement in these communities in
    regard to any decrease in crime or substance abuse, the NAIHC study
    indicates that the PIHDEP is having a positive effect in tribal
    communities. Decreased crime and improvements in community values can
    do much to support sustainable housing conditions on reservations.
        NAIHC feels it was an oversight on the part of the Administration
    to end this program without arranging for supplemental funding for
    tribes elsewhere. A blanket verdict on the Drug Elimination Program
    does not take into account several successful programs around the
    country, including Indian Drug Elimination activities. If this is the
    direction the Department chooses to go, providing operating subsidies
    to take the place of PIHDEP, then the tribes must be compensated with
    an increase in the NAHASDA block grant to support drug elimination
    programs on reservations.
                 rural housing and economic development program
        Of further concern to NAIHC and CIHD is the elimination of the
    Rural Housing and Economic Development Program from the President's
    budget. Although funded at only $25 million for the past two years, a
    large portion of RHED grant recipients have been tribes and TDHEs.
    Furthermore, although RHED has been said to duplicate USDA programs, on
    the contrary, this program has been able to fill in for tribes where
    other programs have not. It has been a new and useful tool in capacity
    building and for supporting innovative housing and economic development
    activities. Taking into consideration the limited resources available
    in Indian Country, taking away useful programs is counter-productive.
    If the goal is to increase the capacity of tribes and other rural
    communities in order to make them self-sustaining, this is just the
    sort of program that ought to be supported by the Congress and
    Administration.
                      funding for native hawaiian housing
        During the previous legislative session, the Congress enacted the
    Native Hawaiian Housing Assistance program (Title II, Public Law 106-
    568). This is the first such effort to provide aid for Native Hawaiians
    since the Hawaiian Homes Commission Act of 1920. Modeled after the
    NAHASDA, the new Native Hawaiian Housing Assistance program should
    provide the tools desperately needed to improve Native Hawaiian
    housing.
        Although housing conditions for the greater Native American
    population are appalling, Native Hawaiians continue to have the
    greatest unmet need and the highest rates of overcrowding in the United
    States. Overcrowding is seen in Native Hawaiian homes at a rate of 36
    percent as opposed to 3 percent for all other homes in the United
    States. While housing problems are seen in 44 percent of American
    Indian and Alaska Natives homes, the number is actually higher at 49
    percent for Native Hawaiians, and only 27 percent for other homes in
    the United States. Right now there are 13,000 Native Hawaiians, or 95
    percent of those eligible to live on the Hawaiian Home Lands, who are
    in need of housing.
        In light of these desperate conditions in Hawaii, the Coalition for
    Indian Housing and Development requests $9.3 million to go directly to
    the Department of Hawaiian Homelands to support activities for fiscal
    year 2002, the first year of operation of this new program.
                       community development block grants
        The Community Development Block Grant (CDBG) program is a crucial
    tool for the development of infrastructure and economic opportunities.
    The Indian set-aside under the program has been 1.5 percent of the
    total appropriation for several years. NAIHC believes that both to
    develop effective housing strategies and for the economic development
    needed to support homeownership and job creation, this amount should be
    expanded to at least 3 percent of the total requested amount, or $144
    million. Clearly, we must invest in infrastructure and job creation now
    if tribes are going to be successful in the long term. This money can
    do exactly that and eventually lead to stronger on-reservation
    economies.
                                   conclusion
        In closing, I would again like to thank all the members of this
    subcommittee, in particular Chairman Bond and Ranking Member Mikulski,
    for their continuing support for Indian housing programs and the
    tribes. NAIHC and CIHD look forward to working with each of you in this
    session of Congress and I am happy to answer any questions you may
    have.
                                     ______

     Prepared Statement of The National Alliance to End Homelessness, Inc.

        Mr. Chairman and members of the Subcommittee, I am presenting
    testimony on behalf of the National Alliance to End Homelessness (the
    Alliance). The Alliance is a nonpartisan, nonprofit organization that
    has several thousand members across the country. These members are
    local faith-based and community-based nonprofit organizations and
    public sector agencies that provide homeless people with a roof over
    their heads as well as services such as substance abuse treatment, job
    training, and health and mental health care. We testify, however, on
    the needs of homeless people. It is our fervent hope that one day all
    of these wonderful organizations will be able to turn their formidable
    skills to other endeavors because the problem of homelessness will have
    been solved.
        Thank you for allowing us to submit testimony on the appropriations
    for programs that assist homeless people. The National Alliance to End
    Homelessness has focused its work on solutions to homelessness since we
    were first formed in the early 1980s. Since that time, an
    infrastructure of programs has been built to meet the needs of homeless
    people. This homelessness assistance infrastructure, while over-
    subscribed, has learned how to help people manage the experience of
    homelessness. It is supported by substantial federal funding, as well
    as state and local government funds. It has many extremely positive
    attributes, including its ability to leverage tremendous volunteer and
    philanthropic resources and its foundation in social entrepreneurship
    and the faith community.
        But despite the breadth and accomplishments of this infrastructure,
    homelessness has continued to grow. Despite the fact that there are now
    some 40,000 programs to assist homeless people, the number of people
    experiencing homelessness has gone up, from between 1.3 and 2 million
    in 1988 to between 2.5 and 3.5 million in 1998--1 out of every one
    hundred Americans.
        Is this because the homelessness system is doing a poor job? The
    answer is no. The system does a good job of helping the majority of
    those who have become homeless, although it can always be improved.
    Rather, the problem is that the homeless system, itself, cannot stop
    more and more people from becoming homeless. Nor can it create the
    housing that is needed for people's homelessness to end. It can't close
    the front door into homelessness. It cannot open the back door out of
    homelessness.
        The National Alliance to End Homelessness believes that as a nation
    we are at a critical juncture in dealing with the problem of
    homelessness. We can no longer afford to simply manage the problem. We
    must make changes in order to address the continuing flow into the
    homeless assistance system, and the backlog that has been created
    within it. If we do not make these changes--if we simply hold our
    current course--large-scale homelessness will be with us indefinitely.
    This is simply not acceptable.
        The good news is that there is a set of practical and pragmatic
    steps that we believe can change the direction in which homeless
    assistance is moving and make the programs more outcome oriented. Over
    the past several years, you have taken action in many of these areas.
    My first order of business is to thank you. Because of your work on
    permanent supportive housing, data collection, services and
    coordination--and because of your generous funding of the homeless
    programs--we are beginning to turn the tide. This Committee has made a
    real and substantial difference in the direction of homeless assistance
    and the Board of Directors of the National Alliance to End Homelessness
    is deeply grateful.
        There is more to be done, however. There are four areas in which we
    can focus our efforts to end homelessness. First, we can encourage
    local and state jurisdictions to plan for outcomes and not simply to
    manage the problem. Second, we can do a better job of preventing
    homelessness--in effect closing the front door into homelessness.
    Third, we can target the creation of more housing that will help those
    who simply have no where else to go--opening the back door out of
    homelessness. And finally, we can strengthen the infrastructure that
    helps families stabilize so that they are not threatened with
    homelessness.
                               focus on outcomes
        A first step in changing course is for jurisdictions to plan how to
    end homelessness, rather than simply managing the problem. To do this
    every locality must have good data that can tell local planners both
    how many homeless people there are, and even more importantly how they
    utilize the homeless system. Do homeless people enter and exit the
    homeless system quickly? Do they stay in the system for years at a
    time? What services have an impact on housing stability--and which do
    not? For the past two years, this Subcommittee has required the US
    Department of HUD to increase its data collection efforts and create
    real information on the result of spending. These requests are now
    having a major impact both on the Department, and in communities. Last
    year, the Subcommittee further instructed HUD to take the lead in
    working with jurisdictions to develop the types of data systems that
    can provide useful administrative data for planning purposes. We are
    grateful for these actions.
        Recommendation.--We urge the Subcommittee to continue to provide
    funding for data collection efforts that tell us how the federal
    homeless assistance funding is being spent, and the outcomes of this
    spending at the local level. We also urge the continuation of
    requirements that improve administrative data collection and analysis
    at the local level.
                              close the front door
        A next step is to close the front door to homelessness. To do so we
    must ensure that many of the public so-called safety net systems that
    are supposed to prevent homelessness do their jobs better. One agency
    that has a major responsibility for people who are at high risk of
    homelessness is the Department of Veterans Affairs. Despite the rather
    extensive range of income, housing and health care resources that the
    Department has at its disposal, a shocking number of veterans becomes
    homeless. While we do believe that HUD should provide assistance to
    veterans commensurate with their percentage of the homeless population,
    we believe that it is the responsibility of the Department of Veterans
    Affairs to use its substantial resources more effectively to prevent
    homelessness among veterans, and to provide veteran-specific, veteran-
    run assistance to veterans who do become homeless.
        Recommendation.--We urge that the VA Homeless Providers Grant and
    Per Diem program be funded as a line item in the Department at the
    level of $50 million. We further recommend that the Department be
    required to report upon the number of people exiting the VA system and
    entering the homeless assistance system; the number of homeless people
    it serves; and the outcomes of this assistance. We also urge Congress
    to require each VA medical center to describe the services it delivers
    to homeless people and how it plans to reduce homelessness among
    veterans.
                               open the back door
        Perhaps the key element in ending homelessness is to open the door
    out of homelessness. Most homeless people (perhaps 80 percent) enter
    and exit the system successfully and do not return. They are
    essentially very poor people who are experiencing a housing crisis in a
    period of affordable housing shortages. The homeless system essentially
    manages the churning in the bottom of the housing market. But there is
    a group of chronically homeless people for whom shelter is home. This
    group represents around 20 percent of the homeless population. Members
    of this group are almost all chronically disabled and many are unlikely
    to ever generate significant earnings through wages. Accordingly, to
    stay housed they will require long term housing subsidy. They live in
    the shelter system, where by virtue of their long stays, they absorb
    resources far in excess of their number. Further, they are high users
    of other expensive public systems such as hospital emergency rooms.
    Permanent supportive housing is a proven effective strategy for
    addressing the needs of this group. We believe that providing
    supportive housing to chronically homeless people is good public
    policy. It meets a tremendous human need, and also has the potential to
    pay for itself in reduced public service costs. Finally, it will free
    the emergency homeless assistance system to deal more effectively with
    people who are experiencing housing emergencies. This is truly opening
    the back door out of homelessness.
        The Subcommittee has taken extraordinary leadership in this issue.
    HUD Continuum of Care spending on permanent housing for this population
    had been in rapid decline. The Subcommittee set aside 30 percent of the
    funds in the HUD Homeless Assistance Grant program for permanent
    housing for disabled homeless people. We deeply appreciate this step,
    which has made an enormous difference. In the last two year's
    competitions, nearly 30 percent of the funds were spent on permanent
    housing-up from only 18 percent a few years ago. Now we must take the
    next step.
        Recommendation.--We ask the Subcommittee to make permanent the
    provision that requires that 30 percent of the HUD Homeless Assistance
    Grant program funding be spent for permanent housing for people with
    disabilities.
        A second, equally important, measure is to shift the cost of
    renewing these permanent housing units out of McKinney and into the
    Housing Certificate Fund. If these programs continue to be funded from
    McKinney, we will not be able to build an adequate supply of supportive
    housing to achieve our goal. Permanent long-term housing should be
    funded out of housing accounts--the homeless funds cannot be used to
    assist people in crisis if they also have to pay for the continuing
    housing needs of anyone who has ever been homeless.
        To end homelessness among chronically homeless and chronically ill
    people will require approximately 200,000 units of supportive housing.
    Currently there are as many as 80,000 units of supportive housing
    funded through the Homeless Assistance Grants. Creating enough
    supportive housing for all who are in the system is within our reach,
    but this important renewal shift must be made. Last year the
    Subcommittee took the critically important step of establishing a
    special account to cover the renewals of the Shelter Plus Care units.
    This has given stability to the housing of this most vulnerable group.
    We ask you this year to take the next step.
        Recommendation.--We ask that you shift the renewals for Shelter
    Plus Care and permanent housing funded under Supportive Housing Program
    from the Homeless Assistance Grant Program to the Housing Certificate
    Fund. Renewal should be granted if the funds are appropriated and the
    sponsor is in compliance with its contract and with law, and should be
    subject to a verification of need via the Continuum of Care process.
    Compliance can be determined through monitoring by the local HUD
    office, including site inspections. Shelter Plus Care and SHP would
    retain their programmatic provisions.
        We estimate that in fiscal year 2002, $120 million will be required
    for renewal of Shelter Plus Care and Supportive Housing Program
    permanent housing.
        An additional source of funding for disabled homeless people is
    HOPWA (Housing Opportunities for People with AIDS). Stable affordable
    housing is essential to preventing the early onset of illness,
    accessing life-extending medical care and drug therapies, and
    maintaining quality of life for HIV-infected people and their families.
    HOPWA is the only federal housing program that funds comprehensive,
    community-based HIV-specific housing. It gives local communities the
    capability to devise the most appropriate and effective housing
    strategies for people with HIV/AIDS, whether those needs are for short-
    term or transitional housing, rental assistance, or community
    residences. It should be noted that it is far less costly to provide
    someone with HIV/AIDS related illnesses with a permanent place to live
    than to allow them to live on the streets where their exposure to
    opportunistic infection not only shortens their lives but also can
    require expensive medical attention.
        The need for housing assistance among people with HIV/AIDS is
    demonstrated, yet the current level of HOPWA funding does not meet this
    need. The National AIDS Housing Coalition estimates that,
    conservatively, 500,000 Americans living with HIV/AIDS will need
    housing assistance to survive during the course of their illness. Last
    year, HOPWA funding could meet the needs of only approximately 50,000
    people with AIDS and their families. Because there will be between four
    and eight new entitlement jurisdictions this year, failure to provide
    additional resources will result in funding cuts to jurisdictions
    currently receiving assistance, further exacerbating the problem.
        Recommendation.--We ask the Subcommittee to provide $300 million
    for the Housing Opportunities for People with AIDS (HOPWA) program.
        We must continue to generate new supportive housing projects and to
    fund the very effective network of programs that help most people exit
    homelessness.
        Recommendation.--In order to maintain local efforts that help end
    homelessness for tens of thousands of people every year, the Alliance
    supports $1.6 billion in funding for the Homeless Assistance Grant
    program.
        Recommendation.--We urge you to provide $150 million for the
    Emergency Food and Shelter Program administered by FEMA, which has a
    superb record of preventing homelessness and meeting emergency needs of
    homeless people.
                          building the infrastructure
        The provision of adequate housing that is affordable to very poor
    people is, ultimately, the solution to homelessness.
        Recommendation.--The Alliance requests a funding level of $40
    billion for the U.S. Department of Housing and Urban Development. This
    figure is based upon OMB and CBO assessments of what is needed to
    maintain on-going services in the Department, plus a modest increase to
    cover increasing energy costs and to maintain the much-needed growth in
    the incremental Section 8 allocation.
        Senator Mikulski, Senator Bond and members of the Subcommittee, my
    Board members, including our Co-Chairmen Mrs. James A. Baker III and
    Mr. Eli Segal, join me in thanking you for what you have done in the
    past few years to change the nature of the homeless assistance
    programs. The changes you have made--requiring data collection,
    ensuring that a reasonable amount of the funding is spent on permanent
    housing for the most needy, guaranteeing that formerly homeless,
    chronically ill people have stably funded housing, and increasing the
    funding to make sure that such changes did not have an adverse effect
    on the homeless system--these changes have resulted in making the HUD
    Homeless Assistance Grant Program much more outcome-oriented and
    effective. The help and leadership of the Appropriations Committee have
    made a difference in people's lives. Thank you.
        Homelessness is not inevitable. Only 25 short years ago there was
    virtually no homelessness--and this can again be the case. The federal
    programs to help homeless people leverage themselves many times over in
    volunteerism, in-kind donations and money. They are operated by faith-
    based and community-based organizations that are lean and effective
    organizations. Every year they help thousands of people escape
    homelessness forever. Federal funds are the critical element in this
    process, and they can do even more. We hope to continue working with
    you to make sure this money does the best possible job for homeless
    people and for the nation.
                                     ______

                  Prepared Statement of College Partners, Inc.

        Mr. Chairman and distinguished Members of the Subcommittee, I am
    Dr. Audrey F. Manley, President of Spelman College. I am accompanied by
    Dr. Louis W. Sullivan, President of the Morehouse School of Medicine,
    and Dr. Willis Sheftall, Senior Vice President for Academic Affairs at
    Morehouse College representing Dr. Walter Massey, President of
    Morehouse College. We three presidents, have formed College Partners,
    Incorporated (CPI), a non-profit corporation. I want to thank you for
    allowing us to appear before you today as you consider funding
    priorities relevant to the fiscal year 2002 VA-HUD-Independent Agencies
    Appropriations bill. I am Chairperson of CPI, but for the purpose of
    today's testimony, I have asked Dr. Sullivan to deliver our remarks.
    Specifically, we are here today to request that the subcommittee
    provide $10 million over the next two fiscal cycles (@ $5 million a
    year) from the Economic Development Initiatives account to support an
    economic development initiative that is of critical importance to our
    campuses and the surrounding community. The requested funding is half
    of the total cost of the project, $20 million, which will come from
    other project resources. In the time that I have, I would like to talk
    about the CPI partnership, how it originated, and what we are trying to
    do for our institutions and the community in which they are located.
        CPI is a not-for-profit organization comprised of Spelman College,
    Morehouse College, and the Morehouse School of Medicine. This
    partnership evolved out of a shared commitment to utilize and leverage
    existing individual resources in order to expand our individual
    capacities and to enhance the revitalization of the surrounding West
    End community of Atlanta, Georgia, which sits at the boundary of the
    Atlanta University Center (AUC), and is less than three miles from
    downtown Atlanta. Our goal is to integrate the academic community with
    the surrounding neighborhood and to create an educational corridor that
    will focus on quality housing, youth and adult education, job training,
    health services, child development and daycare services, public
    awareness, and scholarship support for at least 50 students.
        In addition to being partners in CPI, Spelman College, Morehouse
    College and the Morehouse School of Medicine are all a part of the
    University Community Development Corporation (UCDC). UCDC was
    incorporated in 1988 and was designed to explore and execute ways for
    each of the six HBCUs that make up the Atlanta University Center (Clark
    Atlanta University, Interdenominational Theological Center, Morehouse
    College, Morehouse School of Medicine, Morris Brown College, and
    Spelman College) to become more involved in improving the physical,
    social and economic condition of the neighborhoods adjacent to, and
    contiguous with the AUC campus. In addition to university members, the
    City of Atlanta's Neighborhood Planning Unit and other community groups
    also are represented.
                             the west end community
        The immediate West End includes the now-demolished Harris Homes
    public housing project, minor retail and commercial properties, an
    insurance field office, and a MARTA rail and bus line. Moving outward,
    the property is three miles southwest of prime commercial developments
    such as Phillips Arena, the Georgia Dome, and the World Congress
    Center. Despite the West End community's strategic location, however,
    the area has been unable to significantly capitalize on the current
    renewed interest in ``in town'' residential and commercial development.
    Recent reports profile the West End as a community with high
    unemployment, low educational attainment, deteriorating and/or vacant
    housing, and a preponderance of families that live at, or below, the
    federal poverty level. According to the 1990 U.S. Census data,
    statistics show that this community suffers from an unemployment rate
    of over 25 percent, while the median income of the Harris Homes
    community in particular was a staggering $5,912. Moreover, while 61
    percent of the families are living below the poverty level, over 70
    percent of the female-headed households are similarly situated.
    Additionally, these and other statistics significantly affect the
    health and mortality rates of city residents. Subsequently, the overall
    mortality rate of Atlanta African American residents, which are the
    overwhelming majority in the West End community, is almost one and one-
    half times that of white residents.
                                   the vision
        Our vision includes transforming the under-developed property in
    the Lee Street Corridor into an inviting entrance to a vibrant learning
    and living environment. The development will integrate the colleges
    with the surrounding neighborhoods to create an educational corridor or
    ``College Town'' and will provide an improved physical linkage between
    the neighborhoods and adjacent college campuses. Ashby Street,
    traditionally a dividing line between the Colleges and neighborhoods
    west of the campuses, will be redesigned with a fabric of public
    spaces, landscaping and local-serving retail uses. Ashby Street will
    become a ``seam'' joining the neighborhoods and the Colleges, as
    opposed to the divider it has been in the past.
        CPI is working in partnership with the Atlanta Housing Authority
    (AHA) to acquire the 11-acre tract of land in a value-for-value land
    swap. As part of an agreement signed in May 1999, CPI agrees to
    purchase real estate in other parts of southwest Atlanta in exchange
    for the 11-acre tract held by AHA. Acquisition of this property is
    critical to our efforts to expand the campuses for future growth. Such
    expansion is currently curtailed by Interstate Highway 20 and the 2,700
    public housing units that are within a one-mile radius of our campuses.
    The requested land will enable the surrounding community development
    process to continue and remain on target with the objectives of the
    city's Empowerment Zone, which already has improved the neighborhoods
    east and north of the campuses.
        With the acquisition of the requested land, the Colleges will be in
    a stronger position to expand their capabilities and establish and/or
    expand programs in our institutional areas of expertise and experience.
    For example,
        Spelman College, through its Education department, plans to provide
    local residents with training in early childhood development and
    childcare while simultaneously providing a hands-on laboratory for
    student education majors. Through the College's Continuing Education
    program, Spelman would be able to work with single heads-of-households
    to transition from welfare to work. Additionally, Spelman would be able
    to expand it's Entrepreneurial Business Development Program, which
    already has provided nearly 200 local community residents with training
    on how to establish, maintain, and expand a home-based or micro-
    enterprise in retail, service, and manufacturing industries.
        Morehouse College anticipates expanding its partnership with the
    Fannie Mae Foundation and HUD to provide leadership training to
    community organizers, local nonprofit organizations, and the members of
    the Neighborhood Planning Units (NPUs). The Fannie Mae project is
    designed to establish mutually beneficial relationships with adjacent
    communities that will result in sustained economic and social
    improvement and provide students with service-learning opportunities
    that cultivate civic growth and development. Additionally, Morehouse,
    in partnership with each of the other AUC institutions, has already
    taken the lead to work with the Atlanta Public Schools in the
    development of an application to establish a charter school, which will
    have an emphasis on mathematics and science and will provide clinical
    experiences for aspiring teachers from each of the AUC institutions.
        The Morehouse School of Medicine has made health services an
    integral part of its focus in developing primary care physicians and
    anticipates expanding its Community Health and Preventive Medicine
    Programs. Several components of the program include a Health Promotion
    Resource Center, a Center for Public Health Practice, and a Preventive
    Medicine Residency Program. Each of these programs is designed to
    partner with communities to provide services to assist with health
    related issues. Additionally, the School would like to expand its
    Benjamin Carson Science Academy, an initiative to introduce minority
    elementary and middle school students to health and science careers
    early in their education. The program, which has worked aggressively
    with youth from Harris Homes, consists of a Saturday academy and a
    four-week summer component.
        Additionally, the acquisition of the property will allow all three
    CPI institutions to expand their campuses, helping to alleviate
    problems associated with projected student enrollment increases and
    limited space within the AUC generally. The combined student enrollment
    for all six AUC institutions is approximately 12,700, up from 8,400 in
    1990, an increase of over fifty percent. Moreover, combined enrollment
    is expected to grow by approximately 2,000 students over the next
    twenty years. All six AUC institutions are in full support of CPI and
    this initiative.
        A study conducted by real estate appraisers Pritchett, Ball, & Wise
    comments on the West End community that, ``within the life cycle of a
    neighborhood, including growth, stability, decline, and revitalization,
    we place this neighborhood in the early stages of revitalization.'' The
    West End's geographic proximity to the downtown epicenter, coupled with
    its balanced set of land uses, lends the area to reap secondary
    benefits from housing to entertainment to small-, mid- and large-scale
    commercial development. CPI acknowledges and appreciates the academic,
    community, and municipal support that it has received from the City of
    Atlanta generally and the West End community specifically. By acquiring
    this land and utilizing it, CPI will be able to give back to the West
    End community and assist it in its development efforts.
        On behalf of Spelman College, Morehouse College, the Morehouse
    School of Medicine, and College Partners, Inc., we want to thank you
    for the opportunity to present this testimony to you today.
                                     ______

     Prepared Statement of the Alachua County Board of County Commissioners

        Mr. Chairman: On behalf of the Alachua County Board of County
    Commissioners, I would like to thank you for the opportunity to submit
    testify before your Subcommittee regarding two critical projects. They
    are the Partners for a Productive Community Enhancement Initiative, and
    the Critical Services to Underserved Areas Initiative.
    Priority # 1: Partners for a Productive Community Enhancement
            Initiative ($2.3 Million in Funding Requested)
        In response to a spiraling crime rate in southwest Alachua County,
    the Alachua County Sheriff's Office requested help from the Board of
    County Commissioners in 1993. Specifically, the Sheriff reported that
    57 percent of its 911 calls came from an area that had only 3.2 percent
    of the County's population.
        The County Commission responded by providing $38,000 in funding for
    a Program Manager to staff the Partners for a Productive Community
    (PPC) Program in fiscal year 1994.
        The PPC was launched as a strategic planning effort with three
    goals: the establishment of neighborhood-based services, the
    development of public/private partnerships and a focus on crime
    prevention. This Program has enjoyed great success due to the
    coordinated efforts of the Sheriff's Office, the Courts and the Alachua
    County Department of Community Support Services. Furthermore, since the
    inception of this Program, the County has budgeted over $1.6 million to
    support the Program through the Community Support Services Department
    and Sheriff's Office. Additionally, over $2.4 million has been leverage
    from other county departments, local social service providers and the
    Sheriff's Office through a local law enforcement grant.
        The goal of the Sheriff's Office was to reduce the number of calls
    from the area, and to develop a relationship of trust with the area's
    residents. The goal of the Courts was to help with the swift
    prosecution of cases, and to increase personnel in key areas. Finally,
    the goal of the County's Department of Community Support Services was
    to develop and implement a neighborhood needs assessment, and to
    determine the social service needs in accordance with the results of
    the assessment. The Community Support Services Department was also
    responsible for developing public/private community partnerships, and
    community based organizations comprised of tenants, property owners and
    managers. Thus, this project represents a multi-agency strategy to
    stabilize, revitalize and sustain five specific neighborhoods of
    Alachua County.
        In addition to improving the area's basic infrastructure, federal
    funding is also being requested to provide community recreational
    programs for the area's youth. These activities will provide positive
    alternatives to crime, and allow youth to participate first hand in
    community improvement programs. In doing so, these programs will build
    and encourage positive self-esteem, leadership skills and academic
    achievement. To complement these programs, additional improvements will
    be made in the community Safe Havens. Finally, the requested funding
    will also allow the PPC to expand this successful demonstration program
    into other at risk Alachua County communities such as Archer, Florida.
    Specifically, the PPC will develop a partnership strategy to address
    the unmet needs of health care, education, training, employment, youth
    recreation and transportation for the residents of Archer.
        This request for federal funding is justified by the tremendous
    improvements and accomplishments that have been made in these
    neighborhoods since 1995. These achievements include: free community
    day care for 75 children, 30 community day care slots, 24 in-home day
    care slots, the creation of 30 new jobs by the Early Progress Center,
    the reduction in 911 calls from 57 percent to 14 percent of total calls
    in the area, and substantial increases in the property values for four
    of the five neighborhoods.
        Furthermore, the implementation of seasonal recreation programs in
    the targeted communities by the Y.M.C.A. has been instrumental in
    providing positive, character building activities for children,
    teenagers and adults. Day camps are provided during the summer months,
    and back-yard sports are provided at the end of the school day during
    the school year. In addition, two 4-H Clubs serving 60 neighborhood
    children were established along with after school and community teen
    programs. Adult literacy and GED classes were made available at a
    nearby school campus. Finally, other programs have been established for
    the purpose of creating a sustainable neighborhood. These programs
    include quarterly informational forums concerning small business
    development, educational opportunities, self-help seminars, budget
    management and landlord/tenant issues.
        With respect to community-wide improvement programs, a total of
    nine neighborhood cleanups were completed this year. With the active
    involvement of the residents of the neighborhoods, the Alachua County
    Office of Codes Enforcement has been able to reduce from twenty to two
    the number of abandoned and vandalized buildings. Furthermore, a new
    Waste Collection Ordinance which was supported by the PPC permits the
    efficient and timely citation of violators.
        The sustaining factor within this program is the formally organized
    Partners for a Productive Community Council. The Council is the guiding
    force that deals with issues and determines unmet needs. For example, a
    block captain organization was started this year with the assistance of
    the PPC Council, and the Alachua County Sheriff's Office. This group
    monitors and manages crime prevention programs block by block.
        In recognition of the numerous accomplishments described above, the
    PPC received the National Association of Counties' Achievement Award in
    1996 for distinguished and innovative contributions to improving county
    government. Additionally, the League of Women Voters presented the
    County with a similar award for outstanding community service.
        Furthermore, in December 1999 Alachua County received Official
    Recognition from the Executive Office of Weed and Seed for two of the
    neighborhoods being served by the Partners for a Productive Community
    Program. Pursuant to this recognition, these communities have been
    awarded a $175,000 Weed and Seed Grant for prevention and intervention
    strategies focusing on Cedar Ridge and Linton Oaks neighborhoods. This
    grant will further strengthen the long-term efforts to improve the
    quality of life in these neighborhoods.
        As noted above, the federal funding requested will also be used to
    expand the successful Partners Initiative into the rural community of
    Archer, which is located in the southwestern portion of Alachua County.
    Archer and the rural areas surrounding it have a population of 6,348,
    of which 16 percent fall below the poverty level. While the City of
    Archer has one elementary school, emergency rescue, fire and police
    services are contracted from Gainesville/Alachua County. There are also
    two public housing communities, and a small obsolete community center
    which is used as a congregate meal site for senior citizens.
    Consequently, many of Archer's residents travel to Gainesville for
    employment, social services, recreational activities, adult and
    continuing education and health care.
        Recently, the University of Florida, School of Nursing received
    $200,000 from the Florida Legislature to provide primary health care
    through a clinic based in Archer. Presently, this clinic is on the
    State Department of Health's list to be eliminated due to the limited
    area that it serves. Should this occur, there will be a need for
    additional funds to meet the health care needs in this area. Thus, a
    portion of the federal funding in this request could be channeled
    through the Alachua County Health Department in our continuing effort
    to develop partnerships, maximize resources and expand services to the
    citizens of Alachua County through our rural service initiative.
        Employment opportunities, recreation for teens and outreach social
    services continue to be a challenge for the community of Archer.
    According to the Alachua County Sheriff's Office, Archer's crime rate
    is disproportionately high for a community its size. In 2000, the
    Alachua County Sheriff's Office received 2,657 calls for service. Of
    the dispatched calls, 30 were assaults and batteries, and 5 were for
    sexual battery. The largest number of dispatched calls (869) concerned
    burglary and theft.
        In conclusion, Alachua County is requesting $2.3 million in federal
    funding to continue its highly successful and award winning
    neighborhood revitalization programs; and to expand these successful
    model programs to other neighborhoods, including the City of Archer,
    Florida.
    Priority # 2: Critical Services to Underserved Areas ($1.81 Million in
            Funding Requested)
        Without a safe and reliable source of public utilities, the
    residents who live in the southeastern portion of the City of
    Gainesville and Alachua County must rely upon the use of obsolete
    private water systems, septic tanks and propane gas for their utility
    services. In addition to the health and safety concerns, this lack of a
    public utility infrastructure serves as a deterrent to the area's
    economic revitalization.
        While several subdivisions in the target area are in immediate need
    of a public utility infrastructure, it is the County's intent to
    approach this model program by focusing on the Kincaid Road subdivision
    as Phase I of the Initiative. This subdivision currently has over 150
    homes on septic tanks, with many of them also using propane gas for
    heating. Historically, there are numerous health risks associated with
    malfunctioning septic tanks, including the possible contamination of
    ground water which could lead to the development of diseases within the
    area.
        Gainesville Regional Utilities (GRU) indicates that the
    infrastructure needed to provide wastewater service to this area
    includes: the wastewater collection system lift stations, grinder pumps
    and on-site plumbing to connect to a new gravity sewer system. GRU
    estimates that the construction and extension of a central wastewater
    system to the Kincaid Road subdivision will cost approximately
    $1,585,000, while the extension of the natural gas lines is estimated
    at about $225,000. Thus, the total cost of Phase I of this model
    program is $1.81 million. Finally, it's important to note that GRU is
    currently planning wastewater facilities to serve the Kincaid Road
    subdivision, and may perform additional engineering work as in-kind
    services. The additional engineering work is estimated to cost
    approximately $121,000.
        While Alachua County is requesting assistance from the federal
    government in funding this portion of the model program for the area's
    revitalization, the County has already begun numerous other programs
    and projects that have had an positive, significant impact on the
    area's redevelopment. For example, in July of 1996, the County began a
    series of neighborhood meetings in Greentree Village, which is a
    subdivision of about 60 households in the target area. Residents were
    encouraged to express their concerns about the area's problems and
    establish priorities. As a result of these meetings, the County
    assisted Greentree Village in the establishment of a crime watch
    program and the creation of a backyard recreation program through the
    Y.M.C.A.
        Several new public buildings and facilities have also been located
    within the target area to encourage its redevelopment. During 1998/99,
    Alachua County expended about $5.5 million to purchase and renovate the
    Eastgate Shopping Center for the Alachua County Sheriff's Office. This
    new facility is 56,200 square feet in area, and it serves as the base
    of operations for the County's 239 sworn deputies, and 260 non-sworn
    administrative and support personnel. Completing this law enforcement
    complex is the new Alachua County Communications and Emergency
    Operations Center which recently opened adjacent to the new Sheriffs
    Office. This facility cost about $5.3 million and operates as a joint
    center for both Alachua County and the City of Gainesville.
        Finally, with a contribution of approximately $430,000 from Alachua
    County, the City of Gainesville is completing a new Technology
    Enterprise Center (TEC) within the target area. This $3.0 million
    business incubator consists of a new, two-story 30,000 square foot
    facility located in the City of Gainesville Enterprise Zone. Over 60
    percent of the construction funds for the TEC were provided by a grant
    from the U.S. Economic Development Administration. The purpose of
    business incubators is to promote the growth and development of new
    enterprises by providing flexible space at affordable rates, a variety
    of support services, access to management, technical and financial
    assistance, and opportunities to interact with other entrepreneurs and
    business experts. Though not yet open, about 13,000 square feet of the
    TEC has already been leased to a leading technology accelerator company
    specializing in speeding pioneering technology entrepreneurs to the
    market. It is expected that when fully operating, the TEC will foster
    the creation of higher wage jobs, the expansion of the tax base and the
    augmentation of new business development within the target area.
        In conclusion, Alachua County is undertaking the redevelopment of
    an existing urbanized area, which includes the modernization of its
    utility infrastructure. These improvements will build upon numerous
    previous programs and projects that have already had a positive impact
    upon the area. Phase I of this model program includes the extension of
    a central wastewater system to the Kincaid Road subdivision, as well as
    the extension of natural gas lines. The support of this Phase of the
    project through federal funding will serve as an impetus for the
    continued revitalization of these residential areas.
                   summary of written statement and testimony
        A detailed review of the two initiatives described above indicates
    a well-conceived program of significant model projects. Moreover, these
    programs have a proven record of creating employment opportunities
    while addressing compelling community needs. Additionally, these
    initiatives have benefitted low and moderate income neighborhoods
    through the elimination of physical and economic distress. Finally,
    these programs demonstrate the County's continuing commitment to those
    projects and initiatives that emphasize a balance between environmental
    protection, economic development and social equity for all of the
    residents of Alachua County.
        Thank you for your consideration.
                                     ______

                      Prepared Statement of Fountain House

        Mr. Chairman and Members of the Subcommittee, I am Anne Mai,
    Secretary of the Board of Directors of Fountain House, which is located
    in New York City.
        Thank you for this opportunity to present a $400,000 proposal for
    Federal Funding that is comprised of two components: $200,000 for
    Fountain House and $200,000 for its parent organization, the
    International Center for Clubhouse Development (ICCD).
        This proposal addresses national, regional and local needs in the
    mental health care and services field. The economic empowerment of this
    grant should be considered along with the many social, community and
    personal benefits that this grant provides. The results of this grant
    can be measured in at least two ways. First, local and state funding
    will be freed to handle more severe patients and pressing needs in the
    community and the system. Second, gainfully employed Clubhouse members
    become taxpaying consumers with purchasing power, reducing State, and
    Federal benefit and service costs.
        The Clubhouse Model of psychiatric rehabilitation begun by Fountain
    House over 50 years ago has spread across the country and around the
    world because it works so well and is so cost-effective. Operating on a
    nonmedical model, Clubhouses consider their participants as members of
    the Clubhouse, not patients, and the staff and membership are taught to
    recognize and stress what is positively working in people rather than
    their illnesses. Members are seen as people, not diagnoses. The therapy
    practiced within the Clubhouse is the healing that takes place in warm
    relationships developed while doing the work of the house in a work-
    ordered day. This is meaningful work, not make-work; the program
    depends on the participation of its members who are active partners in
    its day-to-day operations. The results of this simple, cost-effective,
    commonsense approach are remarkable. Members of Clubhouses recover,
    grow, and thrive in vital and culturally sensitive communities that
    offer hope, respect, support, friendship, education and employment.
    They get their lives back and get back to work in record numbers in our
    innovative transitional employment programs.
                                 fountain house
        The first Clubhouse, Fountain House, was incorporated in 1948. It
    has served over 16,000 members since its inception and now serves 1200
    active members annually. For thirty years Fountain House was alone in
    its unique way of working with ex-patients of psychiatric institutions.
    In the past several years Fountain House has helped to establish more
    than 250 Clubhouses in the United States and more than 100 overseas.
    Last year Fountain House won the Gold Medal Achievement Award from the
    American Psychiatric Association. As the Clubhouse model quickly
    spread, it became evident that a certification and standardization
    process was critical to maintain the quality and integrity of the
    original ideal. Because Fountain House's original mission was to serve
    its New York City membership, the International Center for Clubhouse
    Development was instituted to function as a parent governing and
    supportive body to encourage Clubhouse development and ensure
    programmatic quality control. All Clubhouses, including Fountain House,
    are submitted to a rigorous and ongoing certification process and staff
    and members undergo regular training in what the National Institute of
    Mental Health once described as the best training program they had ever
    funded.
        Other ICCD Clubhouses in the United States serve an estimated
    37,500 people with mental illness annually. The National Mental Health
    Association states that 5.5 million Americans experience one of three
    severe mental illnesses. Today the demand for quality services
    continues to far exceed current resources. The Clubhouse model provides
    members with cost effective, comprehensive supports that are unique to
    the health care system.
    Overview of Fountain House Training Program
        Fountain House, along with four other Clubhouses in the U.S. and
    three Clubhouses abroad, provides training in the Clubhouse model to
    help Clubhouses work toward certification. The training covers a three-
    week period and is based at the Fountain House Clubhouse, 425 West 47th
    Street, New York City. The trainees (colleagues) in each group are
    members and staff drawn from four or five different agencies, with each
    agency sending two or three people. Some of these agencies are
    organizations intending to build Clubhouses, while others are already-
    existing Clubhouses. Fees charged by Fountain House to each
    participating agency finance the program. The training is intense and
    highly effective and the residential action-learning component is
    critical. The guesthouse where the colleagues stay is now in desperate
    need of renovation. The request of $200,000 for the Fountain House
    component is entirely for the renovation of the guesthouse where the
    colleagues stay during their training.
                                      iccd
        The mission of the International Center for Clubhouse Development
    is to build and coordinate a strong network of Clubhouse programs all
    of which meet the highest standards established by the overall
    Clubhouse community. In pursuit of this mission, the Center promotes
    the development and strengthening of Clubhouses; oversees the creation
    and evolution of Clubhouse standards; facilitates and assures the
    quality of training, consultation, certification, research and advocacy
    and provides effective communication and dissemination of information.
        The ICCD has a research affiliation with the University of
    Massachusetts Medical School. The Clubhouse Research Program, housed in
    the Center for Mental Health Research within the Department of
    Psychiatry, provides ICCD a recognized and credible medical research
    base from which to access Federal grant funds for validating Clubhouse
    methods and procedures.
        ICCD Clubhouses annually serve an estimated 37,500 people in the
    United States. As the demand fro quality services continues to exceed
    current resources, the Clubhouse model provides members with cost
    effective, comprehensive support unique to our health care system. The
    ICCD standards that must be met by all certified Clubhouses are aimed
    at securing and promoting the highest level of member growth and
    autonomy in the areas of work, housing and community living.
        New York has a large number of Clubhouses supported by the ICCD.
    This strong network of Clubhouses has promoted an improved range of
    services and provides much needed services to individuals emerging from
    psychiatric hospitals. The Clubhouse concept of empowerment provides
    support, stability and training for those who need transitional
    assistance as they integrate into society as productive and balanced
    individuals. There is a constant shortage of trained and qualified
    Clubhouse directors. It is beyond the ability of the ICCD to raise
    funding for this training through private and state funding. This one-
    time grant will permit ICCD to establish the base needed to meet
    existing and future demand for coordination of certification and
    Clubhouse practices. The grant would allow the ICCD to strengthen its
    core management and coordinating capability.
        This grant will benefit all existing 250 Clubhouses and the 37,500
    people with mental illness whom they serve, as well as future
    Clubhouses (now opening at an average rate of 25 new houses a year).
        We respectfully request your assistance in obtaining this $400,000
    grant for Fountain House and the ICCD through the fiscal year 2002 VA-
    HUD Appropriations Bill.
                                     ______

            Prepared Statement of the City of Palo Alto, California

        Mr. Chairman and members of the VA-HUD and Independent Agencies
    Appropriations Subcommittee, I would like to thank you for this
    opportunity to testify before you. My name is Sandy Eakins and I am the
    mayor of the City of Palo Alto, California. On behalf of the citizens
    of Palo Alto, I request your support for two of the City's highest
    priorities.
        The City requests your support of an appropriation of $500,000
    under the Economic Development Initiative to assist in the
    rehabilitation and expansion of the Children's Library, the first stand
    alone library building in the United States built exclusively for
    children.
        The Children's Library, designed by locally known architect Birge
    Clark and constructed in 1940 within a local Historic Resource complex,
    is a single-story historically significant building. It is currently
    overcrowded and in need of rehabilitation and expansion. It suffers
    from delayed maintenance and many of its original systems need
    replacement. It also has seismic and accessibility deficiencies. The
    adjacent ``Secret Garden'' is heavily used and has already been
    negatively impacted by previous building additions within the complex.
    Except for relatively minor repairs and modern accommodations, the
    building has not been remodeled since construction and is in need of
    rehabilitation to keep its childlike attractiveness and period historic
    appearance.
        The Children's Library opened in 1940 as gift from Lucie Stern, a
    charitable resident of Palo Alto, in honor of her daughter Ruth. It was
    Mrs. Stern's requirement that it be for Palo Alto's children. All
    documentation shows this was a requirement of acceptance of the gift.
    This Library is the first separate public library building in the
    United States designed and built exclusively for children from birth to
    middle school. It is important to the community because it provides
    services that are not readily available at the main library.
    Approximately 115,000 patrons from Palo Alto and surrounding areas
    visit the Children's Library each year and there is a collection of
    about 40,000 volumes.
        Some of the special features of the building and library include:
    1940's decor including light fixtures, furniture, and colors; hand-
    thrown Mission tile roof that is believed to have been handmade by
    Ohlone Indians; Spanish style design by Birge Clark, well-known for
    hundreds of buildings listed on the Palo Alto Historic Resources
    Inventory, and David C. Clark, all surrounded and linked by a series of
    covered walks and landscaped spaces; a locally designed tiled fireplace
    with nursery rhyme themes; and a Secret Garden, bordered by six-foot
    high brick walls and enclosed by a series of high, curved hedges.
        Second, the City requests your support of an appropriation of
    $275,000 under EPA's State and Tribal Assistance Grant for storm drain
    infrastructure improvements.
        The storm drain system serving the Charleston Terrace neighborhood
    currently drains directly into Adobe Creek through a 36 inch-diameter
    outfall. When the creek level rises, the storm drain backs up until the
    water level in the storm drain reaches the creek level. During moderate
    storm events, the storm drain back-up causes ponding and minor property
    flooding on local streets. Sediments and other urban runoff pollutants
    flow directly into Adobe Creek causing degradation of the creek's water
    quality.
        Due to the flood threat and negative water quality impacts
    attributable to the existing conditions, this is a high priority
    infrastructure project for the City. The construction of a pipeline
    connecting the Charleston Terrace storm drain system and the existing
    Adobe Storm Water Pump Station would allow the storm drain to empty
    when the creek is high, whereby, reducing street ponding and property
    flooding. The pump station wet well would capture some of the sediment
    and other associated pollutants from the storm runoff and facilitate
    sediment/pollutant removal.
        This project is consistent with the City's Storm Drain Master Plan
    and with the Urban Runoff Management Plan managed by the Public Works
    Department as mandated by the City's National Pollutant Discharge
    Elimination System (NPDES) permit for discharge of storm water. It is
    also consistent with local, regional, and state goals for management of
    storm water discharges, protection of water quality in local creeks and
    San Francisco Bay, and reduction in pollutant discharges from urban
    runoff sources.
        Thank you again for this opportunity to testify before this
    committee.
                                     ______

            Prepared Statement of the City of Roseville, California

        Mr. Chairman and members of the VA-HUD and Independent Agencies
    Appropriations Subcommittee, I would like to thank you for this
    opportunity to testify before you. My name is Claudia Gamar and I am
    the mayor of the City of Roseville, California. On behalf of the
    citizens of Roseville, I request your support for two of the City's
    highest priorities.
        The City requests your support of a $2.5 million earmark under the
    Economic Development Initiative (EDI) account to renovate the historic
    Roseville Tower Theater into a multipurpose facility.
        The Roseville Tower Theater, located in the City of Roseville's
    historic downtown area, is a 1,000-seat movie theater built in 1940.
    Vacant for the past 15 years, the theater deteriorated due to lack of
    maintenance. The theater is also contaminated by friable asbestos.
        The Tower Theater was acquired by the City of Roseville in 1989.
    The City, in partnership with the Roseville Arts Center, a local
    nonprofit, has been working for the past 10 years to convert the
    theater into a modern multipurpose facility serving live entertainment
    and offering meeting space. Since assuming ownership of the Tower
    Theater, the City of Roseville and Roseville Arts Center have invested
    over $1 million to renovate the theater lobby, remove asbestos from the
    building, and develop a renovation plan for the auditorium. The
    renovation plan for the Tower Theater auditorium includes an auditorium
    space redesign for theatrical productions seating 550 persons,
    renovations to the auditorium floor including leveling and the
    installation of a movable stage, modernization of existing restrooms,
    installation of an elevator, and the 6,500 square foot addition to the
    back of the existing theater.
        Upon completion of the Tower Theater renovation, its new addition
    and an adjoining property owned by the Roseville Arts Center will be
    effectively integrated as one facility offering, galleries, gardens,
    entertainment and a variety of meeting space arrangements. The new
    facility will also meet all current state and federal code regulations,
    including the Americans Disabilities Act.
        The estimated cost for completing the Tower Theater renovation is
    $5 million. The Roseville Arts Center is currently pursuing $2.5
    million in private funding and the City is pursuing $2.5 million. The
    City of Roseville is committed to arranging financing for the Tower
    Theater Renovation Project. However, federal assistance is needed in
    order to complete the theater renovation.
        Second, the City requests a $5.1 million earmark under the Federal
    Emergency Management Agency (FEMA) for the Roseville Flood Control
    Project. This project includes flood control improvements to providing
    increased levels of flood protection to over 200 structures, most of
    which are single family homes.
        Roseville suffered devastating flooding in January 1995. President
    Clinton and FEMA Director James Lee Witt visited the site and promised
    Federal funding for flood control improvements. In 1996, the city was
    awarded $6.27 million in FEMA HMGP funds to pay 75 percent of the cost
    of the City's flood control project, initially estimated to cost $8.3
    million. In 1998, the cost estimate increased to $12.2 million due in
    part to requirements imposed by the State Reclamation Board and FEMA.
        The State Office of Emergency Services (OES) encouraged the City to
    proceed with the project and to submit reimbursement requests beyond
    the $6.27 million in a ``cost overrun'' status. It is the City's
    understanding that OES believed additional FEMA funds would be
    available, as other disaster relief projects in California (e.g.,
    Northridge Earthquake) were not expected to use all of their FEMA
    funding allotments. Based upon the OES position, the City began
    construction in May 1999. To fully fund the $12.2 million estimated
    project cost in the interim, the City overmatched by borrowing from our
    General Fund and road maintenance fund with the expectation of OES
    reimbursement via ``cost overrun'' funds.
        Construction is nearly complete with total costs at $16.1 million
    due to legal challenges, construction costs, and soft costs. On October
    18, 2000, OES surprised the City with the information that no surplus
    FEMA funds were available and that surplus funds had been redirected to
    other projects. The City temporarily used General Fund reserves and
    road maintenance funding to cover the shortfall of $5.1 million
    dollars.
        Thank you again for this opportunity to testify before this
    committee.
                                     ______

            Prepared Statement of the Babyland Family Services, Inc.

        Mr. Chairman: Thank you for giving me an opportunity to submit
    written testimony on behalf of Babyland Family Services, Inc. about an
    extremely important economic development initiative, ``Project NET-TO-
    WORK:'' A Neighborhood Employment and Technology Initiative for Healthy
    Children and Families. The agency is seeking $1 million in fiscal year
    2002 appropriations as an Economic Development Initiative (EDI) under
    the Department of Housing and Urban Development.
        Babyland provides child care and early childhood education services
    for 750 children (0 to five years old) at eight child care centers and
    provides emergency shelter and family support services to 750 other at-
    risk and low-income children and families. Babyland is currently
    Newark's Early Head Start grantee (serving children 0 to 3 years old,
    pregnant teenagers, young fathers and families living with HIV/AIDS)
    and has a partnership with the Newark Public Schools to provide Abbott
    preschool services to over 250 children. The agency has an extensive
    partnership with the New Jersey Department of Human Services for the
    provision of child welfare, family violence and child care services.
                              project net-to-work
        Project NET-TO-WORK is a one-year capital and program start-up
    request in which federal funding will enable the agency to complete the
    construction or renovation of a major facility (approximately 36,000
    square feet) that will thereafter offer the ongoing employment
    training, placement and support services necessary to promote economic
    development. It will also provide the necessary seed funds for program
    operations, which will be sustained through the generation of program
    income, local and state government contracts and grants from
    foundations.
        Project NET-TO-Work will provide a comprehensive safety net and
    partnership--one-stop employment and self-sufficiency services that
    eliminate common barriers to employment for low to very low-income
    families in Newark and surrounding areas. Babyland's current service
    area includes those portions of Newark (Central, West and North Wards)
    and East Orange that are still economically distressed. The project
    will target low-income African-American and Latino families who are
    receiving public assistance or who are near public assistance. In
    particular the initiative will be addressing the needs of single
    mothers, teenage parents and males involved in or at risk of
    involvement in the juvenile justice system.
        The project will create 30 new child care jobs and will provide
    employment training and placement services for 150 residents. In
    addition, the project will address multiple barriers to job training
    and employment retention, including: (1) Full-day year-round child
    care; especially for infants; (2) Pediatric health care services,
    including asthma management and preventive health education; (3) Family
    counseling, especially substance abuse and mental health services and
    (4) Quality of life and violence issues, especially family violence,
    crime and dilapidated housing.
        The main components of the project include the following:
      --Employment training, placement and follow-up support services--
            which includes individualized assessment, planning, basic
            skills development including literacy, mentorship, peer
            counseling, support service referrals, classroom instruction,
            internship placements, job placements and ongoing mentorship
            after placement.
      --Child care and early childhood education services for 137 children,
            from infant to five years old, and their families through
            center-based and family child care options.
      --Health services--basic preventive health services will be provided
            onsite at the facility, including assessment, screening and
            examination, education, referral and follow-up for children and
            families.
      --Access to Computer Technology for community residents through the
            creation of a computer lab and training program.
      --Family counseling to prevent and address family violence and child
            abuse issues, with an emphasis on parent education, substance
            abuse counseling and mental health counseling.
      --Neighborhood safety and quality of life initiative that trains and
            empowers residents to develop a five-block safety zone around
            their neighborhood through the creation and development of
            block associations, community policing, local business
            associations and other community organizing efforts.
        The goal of Project NET-TO-WORK is to help eliminate physical and
    economic distress in the communities that the agency services. Through
    this project, Babyland expects to create at least 180 new jobs,
    especially in the areas of education, human services, food preparation
    and fashion design. The agency also expects to create a facility that
    will serve as a stabilizing force in an economically distressed
    neighborhood. A child care component will promote the healthy
    development of 137 children as well as serve as a job-supporting
    service for 137 parents. A health component will directly benefit over
    1,500 at-risk children in the Babyland service area through the
    prevention and management of childhood illnesses, thereby further
    preventing parent absenteeism from work. A computer technology
    component will provide over 300 low-income residents with access to
    basic and individualized computer technology knowledge that is
    essential to their long-term success at work. Finally, a grass-roots
    neighborhood violence reduction component will promote partnerships
    among residents, law enforcement, churches, businesses and other
    stakeholders and achieve the following: the reduction of physical
    blight (graffiti and dilapidated housing), prostitution, drug dealing,
    car jacking, domestic violence and various forms of crime.
        There is widespread support for this very important initiative.
    Babyland Family Services, Inc. expects to receive funding for the
    project from the following non-federal sources:
      --The Annie E. Casey Foundation Families Count Award--$500,000
            unrestricted funds
      --The Newark Public Schools--approximately $1 million for early
            childhood education
      --Private lending institutions--$1 million for capital support
      --Local foundations and government (City and County)--$250,000 for
            employment training and employment support services.
      --The Dreyfus Health Foundation and Victoria Foundation--$70,000 for
            health and community organizing projects.
      --United Way--$200,000 for program operations
      --Other potential funders include The Healthcare Foundation of New
            Jersey and the Prudential Foundation.
        It is our hope that the Subcommittee will favorably consider this
    one-time request that will enable the agency to leverage funding for
    this much needed economic development project.
        Thank you for your consideration.
                                     ______

           Prepared Statement of the National Federation of the Blind

        Mr. Chairman: My name is James Gashel, and I serve as Director of
    Governmental Affairs for the National Federation of the Blind. My
    address is 1800 Johnson Street, Baltimore, Maryland 21230; telephone,
    (410) 659-9314. Thank you for the opportunity to present this testimony
    concerning appropriations to the Department of Housing and Urban
    Development, Economic Development Fund.
        For fiscal year 2002, the National Federation of the Blind (NFB) is
    requesting $4 million for construction and initial opening of the
    National Research and Training Institute for the Blind (NRTIB). This
    Institute is described more fully in information attached to my
    statement and is also shown in a picture provided.
        Before I discuss the national significance of this project, I would
    like to mention some of its more important economic development
    features. First, you should note that the State of Maryland has
    acknowledged the economic benefits of this project by making a
    commitment of $6 million to be provided over a period of three years.
    The NFB's facility serves as an economic anchor that encourages the
    development of properties in the immediate area of South Baltimore and
    north toward Federal Hill. The present NFB operating budget of $16
    million is projected to double to $32 million in the first ten years of
    the Institute's operation. Over 95 percent of the NFB's revenues are
    raised outside of Maryland, with the vast majority of expenditures
    being made in Maryland. It is estimated that there will be over $320
    million of increased spending in Maryland during the next twenty years
    resulting from the establishment of the Institute, and the present NFB
    staff of sixty will expand to well over one hundred in the first years
    of the Institute's operation.
        With this growth, the NRTIB will provide substantial economic
    benefits for the broader community. However, this project is especially
    important throughout the nation to people who are blind. For example,
    the modern technology being developed presents marvelous opportunities
    and manifold challenges for people who can't see. The opportunities
    include the potential of access to written communications, books,
    magazines, and virtually anything else in writing which would normally
    appear only in print. The challenges include being sure that the new
    devices used to communicate will support and accommodate to nonvisual
    as well as visual use. This can be done, but it will take a focused,
    vigorous, and sustained effort to make it so. The result will be a
    dramatic change in possibilities for people who are blind or become
    blind.
        Providing blind people and those who teach them with literacy
    instruction--the ability to read and write in Braille--is a related
    challenge. Literacy and productivity in the workplace go hand in hand,
    not to mention being essential to just finding a job. Seventy-four
    percent of working-age blind people are unemployed, but eighty-five
    percent of those who can read and write in Braille are also working.
    Therefore, literacy is a critical factor for the Institute to address
    with distance learning technology and other methods.
        Blind people serving as successful role models and planners of the
    program will lead this Institute in collaboration with several academic
    and research institutions including Johns Hopkins University, the
    University of Maryland, and the University of Louisville. In fact,
    leadership by blind people on behalf of blind people is a hallmark
    principle of the National Federation of the Blind and will be carried
    forward in the Institute.
        Mr. Chairman, over half of the amount needed for construction has
    already been contributed by private sources, including our most recent
    grant of $800,000 from the Kresge Foundation. These contributions from
    private sources are in addition to the support already committed by the
    State of Maryland. The Community Development Fund under HUD and
    specifically the Economic Development Initiative or HUD section 107
    earmarks are appropriate authorities for federal support for this
    project. Our request to this Subcommittee would provide sufficient
    funds to complete the project.
        I thank you.
           the national research and training institute for the blind
                               executive summary
        The National Federation of the Blind (NFB), a membership
    organization of blind and visually impaired individuals, parents of
    blind children, and interested others, has maintained its National
    Headquarters in Baltimore, Maryland, since 1978. With a membership of
    over 50,000, the NFB has become the leader in innovations that result
    in improvements in self-determination, employment, and self-respect
    among the blind. The National Federation of the Blind is strategically
    positioned for growth and is in the process of establishing the first
    National Research and Training Institute for the Blind developed and
    operated by a staff responsible to an organization of blind persons.
    This consumer perspective will better ensure that the directions taken
    by the Institute will be those that we as blind people identify as
    critical to our full participation in society.
        The NFB Research and Training Institute, in partnership with
    Maryland's foremost educational institutions, the University of
    Maryland and the Johns Hopkins University, will serve as the nation's
    hub for:
      --Educational programs designed to upgrade the skills of teachers of
            the blind
      --Training programs to inform parents of blind children of the newest
            teaching techniques and technology central to their children's
            success
      --New ways to access computer information with speech and Braille
            technology
      --Research that will improve mobility for the blind
      --Methods that allow easy learning of Braille by older citizens
            losing vision
      --Improving the chances small companies have for getting useful
            adaptive technology to market, through a dedicated adaptive
            technology incubator center
        Just as Gallaudet is known throughout the world as the center for
    research, training, and new innovations for the deaf, the NFB's
    National Research and Training Institute for the Blind will be known
    internationally as the foremost center of major initiatives designed to
    improve the lives of blind individuals. Through technology innovations,
    highly qualified and dedicated staff, and strong collaborative
    agreements, the NFB Research and Training Institute will create the
    learning and research environments essential for true innovation.
        The combination of economic growth, neighborhood and community
    development, and the need for innovation and training in the field of
    the blind serves as the basis for this request.
        We are blind and visually impaired people committed to improving
    our lives and the lives of others. In order to maximize the impact of
    our efforts, we invite you to be our partner, joining thousands of
    individuals, foundations, and corporations throughout the country to
    make the dream of the National Research and Training Institute for the
    Blind a reality.
                         economic development features
        The present NFB operating budget of $16 million is projected to
    double to $32 million in the first ten years of the Institute's
    operation.
        Over 95 percent of the NFB's revenues are raised outside of
    Maryland, with the vast majority of expenditures being made in
    Maryland.
        It is estimated that there will be over $320 million of increased
    spending in Maryland during the next 20 years resulting from the
    establishment of the Institute.
        It is projected that the present NFB staff of 60 will expand to
    well over 100 in the first years of the Institute's operation.
        In 1999 the NFB was awarded a $3 million grant from the U.S.
    Department of Labor (DOL) for the establishment of America's
    Jobline, a text-to-speech telephone-based technology network
    which delivers employment listings over the phone. Jobline,
    first operational in Maryland and now available in 21 states, will soon
    be available throughout the country. In addition to the grant from the
    DOL, $4.5 million will be awarded to the NFB in the next two years from
    the states where Jobline becomes operational.
        Due to the efforts of the NFB, in 2000 The Institute of Museum and
    Library Services, an independent federal agency, received a $4 million
    appropriation designed to expand the NFB's Newsline for the
    Blind. Soon these funds will make it possible for us to offer
    this text-to-speech telephone newspaper directly to all Americans who
    can no longer read newspapers visually.
        The NFB's ongoing relationship with federal agencies such as the
    Office of Special Education, the Rehabilitation Services
    Administration, and the U.S. Department of Labor will be important
    funding sources for large national research and training initiatives of
    the new Institute.
        The NFB's facility serves as an economic anchor that encourages the
    development of properties in the immediate area of South Baltimore and
    north toward Federal Hill.
                                  the building
        The NRTIB will be a five-story structure built on the present
    block-square property known as the National Center for the Blind, which
    is owned by the Jacobus tenBroek Memorial Fund. The tenBroek Fund, a
    501(c)(3) nonprofit organization was established after the death of the
    NFB's founding president, Dr. Jacobus tenBroek.
      --The first story (which is underground on the north side of the
            building) as well as the second story will be for parking. The
            parking area will accommodate cars for visitors, trainees, and
            participants in conferences and is an important feature because
            the neighborhood is already short of parking spaces for the
            residents.
      --The third floor will house an adaptive technology development
            center and instructional space, including classrooms, a
            distance learning center, and specially-equipped technology
            labs.
      --The fourth floor will be designated for a Library Research Center
            and the Center for Braille Literacy, with their associated
            offices.
      --The top floor will consist of a fixed 100-seat auditorium equipped
            with electronic capabilities and a large multi-purpose space,
            which can be separated into a number of smaller spaces to be
            used for the technology access incubator center, meetings,
            conferences, and public education events.
        The NRTIB will be attached to the present headquarters building of
    the NFB at several points, thus integrating access to sleeping rooms,
    dining facilities, the International Braille and Technology Center,
    staff offices, and existing training space.
                                   challenges
        Nonvisual access to computer technology is an ever-increasing
    challenge for the blind. Most educational and employment opportunities
    are now and will continue to be dependent on the blind individual's
    ability to access and use a full variety of technology.
        Presently it is estimated that there are 1.1 million blind persons
    in the country, including 788,000 over the age of 65. As the population
    ages, there will be a larger number of seniors experiencing severe
    vision loss (estimated 1.6 million by 2015). Independent living,
    Braille skills, and general adjustment training opportunities are
    lacking now and will be even more scarce in the future, without a
    significant intervention.
        Despite federal and state annual rehabilitation expenditures of
    over $200 million, 74 percent of working-age blind adults remain
    unemployed.
        The estimated cost for a lifetime of supported unemployment for
    each blind individual is $916,000. This includes only Social Security
    or Supplemental Security Income payments, lost tax revenues, and
    Medicare expenses.
        Less than 10 percent of school-age legally blind children learned
    Braille in 1999, yet studies indicate that Braille is a critical factor
    in successful employment--85 percent of blind adults who use Braille
    are employed.
                                  the programs
        The following six Initiatives and their related programs will
    constitute the primary activities of the Institute.
    Technology Access Initiative:
        As everyday technology such as wireless phones, palmtop note
    takers, Internet access devices, VCRs, microwaves, ATMs, and even
    televisions become driven increasingly by pictures and onscreen menus,
    the NFB must play a critical role to ensure that such technology is
    adapted for the blind. Without nonvisual access to technology (via
    speech and Braille output), blind people will become dependent on
    others to operate devices that sighted people rely on every day. That
    level of dependence is unacceptable, inefficient, and unnecessary.
        Unfortunately, due to the widespread obsession with visual design
    in technology, the shortage of good technology training, the cost of
    equipment, and the rapid advancements in technology applications, blind
    people now face the dismaying prospect of being left out if nonvisual
    access is not continually updated and improved. This means that
    advances in software and hardware must include design that allows
    nonvisual access.
        The National Research and Training Institute for the Blind will be
    the center of technological advancement for the blind:
      --Adaptive technology will be developed and promoted, in partnership
            with the University of Maryland's Technology Advancement
            Program, the Institute for Advanced Computer Studies, and the
            Office of Information Technology, as well as the Lions Vision
            Research and Rehabilitation Center at the Johns Hopkins Wilmer
            Eye Institute
      --Adaptive speech and Braille training programs taught by staff at
            the Institute, using classroom and technology labs, distance
            learning technology, and online course formats, will be made
            available to professionals working with the blind, parents of
            blind children, and adults who are losing vision
      --A technology incubator will be established within the Institute to
            provide entrepreneurs with the infrastructure to develop
            technology that will be useful to the blind and may have other
            applications
        Below are examples of technology applications which will need the
    nonvisual solutions targeted to be developed through the direct and
    indirect programs of the Institute:
      --Informational and service kiosks
      --Electronic voting machines
      --Electronic touch-screen applications
      --Visual, menu-driven appliances
      --The increasingly graphic Internet and the numerous alternative
            technologies to access the Internet
      --Proprietary software used by employers
        The NFB has a long record of helping to develop adaptive
    technology. Starting with Ray Kurzweil's first synthetic speech reading
    machine in the mid-70s, the NFB has assisted dozens of companies in
    designing and testing scores of innovative technological solutions.
        In addition, the NFB continues to develop its own technological
    innovations. Newsline for the Blind and America's
    Jobline, two text-to-synthetic-speech national
    telecommunication projects, demonstrate the NFB's ability to respond to
    blind consumer needs with tailor-designed devices.
    Blind Children's and Braille Literacy Initiatives:
        The National Research and Training Institute will be the center of
    a growing Braille Literacy Initiative that will ensure that the
    progress led by the NFB continues and that Braille is recognized to be
    a communications tool as essential to the blind as American Sign
    Language is to the deaf.
      --Educational classes, both on premises and via distance learning
            technology, will be offered for teachers of the blind,
            vocational rehabilitation professionals working with
            individuals experiencing vision loss, and parents of blind
            children.
      --Model learning strategies will be developed, demonstrated in pilot
            projects, and disseminated throughout the country.
      --Innovative methods for learning Braille will combine new technology
            applications with the experience of competent Braille users.
      --The development of computer-based speech and Braille output
            learning games for blind children will motivate, teach, and
            prepare youth for the computer age.
    Research Initiative:
        A growing partnership with the Johns Hopkins University's Lions
    Vision Research and Rehabilitation Center will be the foundation for
    pragmatic research. This research will combine the expertise of one of
    this nation's foremost medical research institutions with the world's
    largest consumer organization of people who know firsthand what it
    takes to meet the challenges of blindness. The Institute's research
    agenda will include the development, evaluation, and dissemination of:
      --Innovative travel aids for the blind
      --Technology helpful in communication with the deaf-blind
      --New methods for making the Internet easily accessible using
            nonvisual methods
      --Intervention strategies useful to seniors with limited vision
        These activities will result in technologies that aid individuals
    in their transition from medical patients to independent persons who
    happen to be blind.
    Blind Seniors Initiative:
        Less money is spent and fewer services are available to those over
    55 losing vision than to younger blind people. Yet more than 50 percent
    of the 70,000 individuals who become blind in this country each year
    are over the age of 65. New approaches must be developed and taught to
    state and local staff members in rehabilitation, older Americans, and
    older blind programs and to staff and residents in centers for
    independent living.
        The National Research and Training Institute will bring together
    knowledgeable professionals who will:
      --Design education and resource materials useful for the older blind
      --Develop training programs to assist state and local agencies in
            helping blind and visually impaired seniors remain independent
            and continue to participate in the activities they hope for in
            their retirement years
      --Conduct projects to improve technology training methods used with
            this population
    Employment Initiative:
        The NFB has already demonstrated an ability to operate high-quality
    training programs. The NFB residential rehabilitation training centers
    in Ruston, Louisiana, Minneapolis, and Denver have 90 percent or higher
    success rates placing their graduates in competitive employment or
    higher education. The key staff members in each of these centers have
    been trained by the NFB. The blind need more successful centers like
    these, and the NFB needs the space to research and test program
    improvements and provide staff training for the new centers as well as
    refresher courses for existing staff.
        The Employment Initiative of the National Research and Training
    Institute will provide focus, resources, and direction for a
    comprehensive evaluation of contemporary methods for helping the blind.
    From such an evaluation will come the necessary knowledge to develop,
    demonstrate, and replicate innovative training programs to replace
    existing efforts that have failed to bring the blind into the
    workforce. NFB partners in this effort include: United Parcel Service,
    The Gallup Organization, IBM, Marriott Worldwide Reservations,
    Countrywide Home Loans, Premium Office Products, Massachusetts General
    Hospital and Partners Health Care System, and Legal Sea Foods.
                                     ______

             Prepared Statement of the City of Miami Beach, Florida

        Mr. Chairman: On behalf of the City of Miami Beach, Florida, I
    appreciate the opportunity to present this written testimony to you
    today on two extremely important economic development initiatives,
    currently underway within our city. We respectfully request your
    consideration of these projects for funding from your fiscal year 2002
    appropriations legislation.
      --Byron Carlyle Theater Restoration.--The rehabilitation of a large
            downtown theater to serve as a cultural and community center.
      --Atlantic Corridor Greenway Network.--An important project which
            brings together enhanced tourist/commuter transportation,
            alternative transportation, intermodal access, urban
            revitalization and economic redevelopment in a linear park or
            greenway setting.
                       byron carlyle theater restoration
        The City of Miami Beach wishes to pursue direct funding for the
    acquisition and redevelopment of this facility through HUD
    Appropriations as an Economic Development Initiative. The Facility will
    serve as a venue for cultural and non-profit institutions, functionally
    interacting with the North Shore Youth Center. The two primary
    objectives of this facility are: (1) to use cultural institutions as a
    catalyst for the revitalization of the North Beach area, and (2), to
    provide a facility that can house those organizations that are being
    priced out the their current locations. The City is seeking $2.1
    million towards this project.
        The Byron Carlyle Theater is a 7-screen movie theater that is
    located in the central business district of Miami Beach's North Beach
    area of. The theater was closed by Regal Cinemas in 1999, and has been
    vacant ever since, creating a void in what once was a thriving downtown
    neighborhood. The City of Miami Beach has begun the implementation of a
    strategic plan for the revitalization of the North Beach area, which
    includes approximately $124 million in capital improvement projects
    that will be implemented during the next 6 years. The redevelopment of
    vacant buildings such as the theater is crucial to the economic and
    business development components of the North Beach Strategic Plan.
    However, due to the unique layout and structural nature of older movie
    theaters such as the Byron Carlyle Theater, redevelopment options are
    limited and expensive.
        There are two reasons that Miami Beach needs the Byron Carlyle
    Theater as a multi-purpose cultural facility. First, the redevelopment
    of this theater is an integral component of the Strategic Plan for the
    economic revitalization of the North Beach area of Miami Beach. While
    other areas of Miami Beach have enjoyed tremendous economic success
    over the last ten years, the North Beach area has lagged in its growth
    and continues to evidence a concentration of low income households and
    a lack of private sector investment. The emergence of cultural
    institutions during the beginnings of the economic revitalization of
    South Beach's Art Deco District directly contributed to the area's
    continued success. Secondly, the success that cultural organizations
    helped create in South Beach is also a reason for the creation of a
    cultural facility in North Beach. As South Beach boomed, local cultural
    institutions became self sufficient and successful, area market trends
    began to improve and property values appreciated significantly. In
    1993, the primary cultural area in South Beach was on Lincoln Road,
    where rental rates averaged $12 per square foot. In 2000, rental rates
    reached $75 per square foot, and many small businesses and cultural
    organizations were forced to either relocate or dissolve. Additionally,
    many cultural organizations currently housed in City-owned facilities
    will soon have to relocate as the City expands to meet the ever-
    increasing service levels expected by the citizens. A central facility
    that accomplishes both goals is critical to the economic revitalization
    of the North Beach neighborhoods.
        The Acquisition and Renovation of the Byron Carlyle will also help
    develop the entire City of Miami Beach into a world-renowned center for
    the creation and consumption of culture. Miami Beach is home to many
    internationally acclaimed cultural organizations, such as the New World
    Symphony, the Miami City Ballet, and the Bass Museum. These
    organizations, however, are located in a small concentrated area of
    South Beach. The City also has over 75 smaller cultural groups that are
    the true cultural heart of Miami Beach. Organizations such as the
    Concert Association of Florida, Ballet Flamenco La Rosa, and the
    Performing Arts Network continue to struggle for their economic
    survival. The ability to provide a facility that allows these groups to
    remain in Miami Beach will provide a venue where many emerging and
    small organizations can continue to grow and prosper and at the same
    time provide a catalytic cultural component to the revitalization
    effort in North Beach.
        In 1999, in an economic impact report to the City of Miami Beach's
    Mayor's Economic Council, Florida International University identified
    that investment in the cultural arts has the highest economic output
    multiplier of all local industries. The challenge for cities such as
    Miami Beach, however, is, providing the level of Cultural Arts
    investment that is required to generate this ``biggest bang for the
    buck.''
        The City of Miami Beach estimates that the cost to acquire and
    rehabilitate the Byron Carlyle is $7.2 million. The City currently has
    approximately $2.2 million for this project, which will include the
    $1.7 million purchase price. The City has also identified funding
    sources that will be committed to the annual operation of the facility
    once it opens. The City of Miami Beach is requesting and additional $5
    million for the renovation of this facility as an Economic Development
    Initiative.
                       atlantic corridor greenway network
        (An Important and Innovative Program that brings together Enhanced
    Tourist/Commuter Transportation, Alternative Transportation, Intermodal
    Access, Social Justice, Urban Revitalization and Economic Redevelopment
    in a Linear Park or Greenway Setting)
        The City of Miami Beach exists as an eight mile long chain of
    barrier islands that is separated from the mainland of Miami-Dade
    County by the Biscayne Bay Marine Estuary. The historic and scenic
    Indian Creek Waterway system snakes its way through the chain of
    islands. Miami Beach was settled in the late 1800's as a farming
    community. Just after the turn of the century, entrepreneurs recognized
    the area's potential and launched the development of a resort
    community. The result was a development boom which reached its peak in
    the 1930's & 1940's and established Miami Beach as the number one beach
    tourism destination in the world. At that time, an elaborate transit
    network effectively serviced the public's need and automobiles were of
    little use to Miami Beach visitors and business owners. As a result,
    very few parking facilities were developed Citywide.
        The post-war prosperity of the 1950's brought on a vast expansion
    in the development of single family homes and lower density multifamily
    residential facilities to Miami Beach. By the time changes in world
    economic conditions brought new development in Miami Beach to a halt in
    the 1960's, the City of Miami Beach was a completely developed
    metropolitan area. The area remained in economic doldrums until the
    mid-1980's when Art Deco revival and a resurgence in beach tourism
    ignited a wave of redevelopment that has eclipsed any previous period
    of development in Miami Beach history. This resurgence in development
    has also brought on major changes in both Miami Beach's population
    demographics and traffic patterns. Since 1980, the median age of Miami
    Beach residents has dropped from 65 to 44 years old. During that time,
    approximately 25 percent of the City's hotel and apartment facilities
    that historically catered to the City's retiree and seasonal visitor
    populations, were converted to condominiums occupied by permanent
    residents. The number of vehicles owned by residents of Miami Beach has
    increased from approximately 40,000 cars in 1975 to more than 100,000
    in 1995.
        The traffic congestion caused by daily commuters, residents and
    visitors trying to traverse the city and vying for the scarce few
    available parking spaces seriously impedes access to area businesses,
    cultural/entertainment centers, residential facilities, public parks
    and greenspace. This traffic gridlock has also had negative impacts on
    tourist/convention bookings, local business revenues and has limited
    future economic development through concurrency constraints on growth.
        Through the development of the Atlantic Corridor Greenway Network,
    the City of Miami Beach is creating a regional alternative
    transportation network which will interconnect key intermodal centers,
    area business districts, cultural/tourism centers, residential
    neighborhoods, parking facilities, parks, schools and the beaches. The
    Network will be comprised of a citywide system of bicycle/pedestrian
    accessways, enhanced public transit facilities, expanded Electrowave
    electric shuttle service and innovative regional parking improvement
    programs.
        The system of bicycle/pedestrian trails will be created to provide
    continuous, multi-purpose public access corridors throughout the City.
    The access corridors will be developed as Greenways or linear parks
    which will snake their way along the City's beaches, waterways and
    natural ecosystems with connections to residential areas, resort areas,
    business districts, civic centers, transit sites and parking
    facilities. Rest areas, vista areas, waterway access facilities, and
    interpretive signage will be interspersed throughout the greenways to
    provide enhanced heritage and ecotourism amenities and recreational
    opportunities for trail users.
        By connecting the Greenway trails with improved transit sites in
    strategic residential areas, employment centers and regional parking
    facilities, the Network will encourage greater utilization of public
    and alternative modes of transportation for daily commuting, lowering
    transportation costs and freeing critically needed parking in the
    business districts. Through the creation of innovative employee park &
    ride programs for local businesses, the Network will shift additional
    cars away from key business and tourist centers to less utilized
    regional parking facilities.
        The alleviation of some of the traffic congestion and parking
    shortages along the Atlantic Corridor will encourage new economic
    development in Miami Beach by reducing the concurrency restrictions
    currently limiting new development and by increasing local business
    utilization by residents and visitors.
        Local government has already made a substantial investment in the
    development of the Atlantic Corridor. To date, the City has obtained
    more than $12,000,000 in project funding, completed the design and
    permitting of more than 3.5 miles of the Network's trails, and will
    complete the construction of the first 2.5 miles of trail in fiscal
    year 2001-2002. If approved, this $3,200,000 appropriation request will
    allow the City to complete the development of a series of residential
    connector nodes, which will directly link the City's key residential
    areas with regional employment centers, transit facilities and the
    Citywide trail network.
                                     ______

             Prepared Statement of the City of Gainesville, Florida

        Mr. Chairman: On behalf of the City of Gainesville, Florida, I
    would like to thank you for the opportunity to submit testimony before
    your Subcommittee on a major economic development initiative the City
    has undertaken to revitalize the Downtown area of Gainesville. The
    cornerstones of the City of Gainesville's Downtown Revitalization
    Initiative are: (1) the development of the Sweetwater Urban Stormwater
    Park which we are seeking $9.7 million from the U.S. Environment and
    Protection Agency (2) the right-of-way acquisition and construction
    activities of Depot Avenue for which we are seeking $6 million as a
    Housing and Urban Development Economic Development Initiative (HUD/
    EDI).
        The Downtown Revitalization Initiative is a broadly developed,
    multi-faceted initiative that has an established goal of revitalizing
    Downtown Gainesville. The City of Gainesville has experienced a
    renaissance in establishing Downtown as a desirable place to live, work
    and play. The Initiative encourages the redevelopment of existing
    buildings and parking lots within Downtown into mixed residential,
    commercial, and office uses. Already the City has participated in two
    redevelopment multi-use projects in Downtown that have brought in
    residential, commercial and office spaces. The City's participation is
    providing streetscaping and stormwater management, both being vital
    components of the success of any redevelopment initiative. A third
    redevelopment project under way is Alachua County's proposed Judicial
    Complex and associated parking structure.
        The Revitalization Initiative is dependent on a master stormwater
    facility that has been planned as a landmark stormwater park that will
    not only serve as a functional stormwater management facility, but
    provide an urban park setting for Downtown and nearby residents,
    visitors and employees. The proposed park is located on the southern
    boundary of Downtown adjacent to the City's Historic Train Depot (built
    in 1907) and the City's Electric Utility's repowering of the historic
    Kelly Power Plant that is currently underway. The Historic Train Depot
    was purchased by the City and is in the process of being renovated in
    accordance with Federal and State Historic requirements and using
    Federal Transportation Enhancement Program and State Historic
    Preservation funding. The Historic Train Depot will be a vital
    component of the stormwater park to allow a center of activity that is
    complementary of the overall goals of the Downtown Revitalization
    Initiative.
        The stormwater park will also function as a Rail Trail Hub to
    provide linkage of four primary existing and proposed rail trail
    systems. From the south the existing Gainesville Hawthorne Rail Trail
    provides a linkage to the Historic Boulware Springs facility and
    proposed park owned by the City, the State Payne's Prairie Preserve and
    further out to the City of Hawthorne.
        The proposed Downtown Connector will connect the Gainesville
    Hawthorne Rail Trail through the stormwater park and is being
    implemented with funding through the Transportation Enhancement
    Program. From the east the existing Waldo Road Beautification Trail
    connects the stormwater park with the City's recently completed Martin
    Luther King Center, a community sports complex that provides much
    needed community meeting space and recreational programs. In addition,
    the Waldo Trail provides a linkage to many predominately African
    American neighborhoods including the City developed Cedar Grove
    residential neighborhood.
        The proposed 6th Street Rail Trail will provide access to the north
    and west through three historic, and predominantly African American,
    Porters and Pleasant Street Neighborhoods and the Grove Street
    Neighborhood. The 6th Street Trail will be constructed using a
    combination of local, state and federal dollars. The existing Depot
    Avenue Rail Trail connects these trails along the borders of the
    stormwater park and Depot Avenue. The trail and enhanced roadway will
    provide a primary multi-modal transportation corridor connecting the
    University of Florida and Shands Medical Complexes to Downtown.
    Sweetwater Urban Stormwater Park
        The Sweetwater Urban Stormwater Park component will provide
    stormwater treatment for Depot Avenue, the proposed Rail Trails, as
    well as the Downtown portion of the Sweetwater Branch watershed located
    upstream of the park. The site of the proposed Park served as the rail
    transportation hub linking Fernandina Beach on the east coast of
    Florida to Cedar Key on the west coast in the mid-1800's. The Historic
    Train Depot's under-roof, otherwise open loading docks will provide
    open vistas to the proposed Sweetwater Urban Stormwater Park. The
    historic Depot building's unique character and location will serve to
    make it both a lively destination hub for the neighborhood and a
    catalyst for further redevelopment of Downtown. The building is a
    standing testament to and a significant visual emblem of Gainesville's
    rich history. The restoration of this building in conjunction with the
    restoration of the 22-acre Sweetwater Urban Stormwater Park is expected
    to provide a major community destination and regional ``eco-tourism''
    attraction for the community.
        The Park is in the planning stages as the centerpiece of a U.S.
    Environmental Protection Agency (EPA) and Florida Department of
    Environmental Protection funded Brownfields pilot project. This project
    consists of the cleanup costs, construction of the stormwater
    facilities, installation of reuse water system for irrigation, and
    development of the recreational components of the Park. The total cost
    of the Sweetwater Urban Stormwater Park is estimated at $17,200,000.00.
    The City of Gainesville currently has budgeted $571,000 for property
    acquisition, $1 million for construction of stormwater facilities and
    $5 million for coal tar remediation. A state grant of $400,000 is
    available for acquisition costs. Brownfield grant funds are being used
    for site investigation and design activities currently underway. An EPA
    grant for $500,000 is being used for preliminary engineering and
    environmental work for a portion of the stormwater component of the
    project. Federal funding request is for $9,700,000.00.
    Depot Avenue
        This component includes the enhancement of approximately two (2)
    miles of Depot Avenue from SR 331 to US 441. The enhancement will
    encourage increased utilization of mass transit, bicycle and pedestrian
    modes of travel; increase accessibility to a major public heritage and
    recreation destinations for the community; and enhance the linkage
    between Downtown and the University of Florida and Shands Medial
    Complexes.
        Depot Avenue traverses Gainesville from west to east, approximately
    \1/2\ mile south of, and parallel to, SR 26 (University Avenue). Its
    western terminus is at the eastern edge of the campus of the University
    of Florida and associated student housing developments, and its eastern
    terminus is at SR 331 in Southeast Gainesville. It skirts the southern
    edge of downtown Gainesville at its mid-point, and its intersection
    with SR 329 (Main Street) is considered to be the southern ``gateway''
    to Downtown. Main Street is being reconstructed by the State to include
    on-street parking, enhanced bicycle/pedestrian facilities and
    landscaping in conjunction with the Downtown Revitalization Initiative.
        The enhancement of Depot Avenue will also provide infrastructure
    and improved safety while accessing Downtown, University of Florida
    area, the adjoining Porters Neighborhood, just west of SR 329 (South
    Main Street) and the SpringHill Neighborhood in Southeast Gainesville.
    The Porters Neighborhood lies within Census Tract 2, which extends
    north of University Avenue, and the SpringHill Neighborhood lies within
    Census Tract 7. Census Tract 2 is approximately 37.7 percent African
    American and Census Tract 7 is approximately 75.6 percent African
    American (Census, 1990). Approximately 35.1 percent of all families in
    Census Tract 2 are in poverty and approximately 31.6 percent of all
    families in Census Tract 7 are in poverty (Census, 1990).
        The socio-economic conditions of these areas include high crime
    rates, sub-standard housing, and lack of access to services and
    investment. According to the Gainesville Police Department, there were
    over 3,000 reported crimes on the east side of Gainesville during 1996,
    the most common crimes included aggravated assault, burglaries and drug
    sales.
        The enhancement of Depot Avenue provides for safer access to the
    higher employment areas of Gainesville, including Downtown and the
    University of Florida, improving physical infrastructure, including
    drainage improvements, lighting and streetscaping, and providing safe
    bicycle and pedestrian facilities that connect both east and west
    Gainesville to Downtown.
        This project will encourage redevelopment and infill in Downtown
    and the urban core of Gainesville and its adjacent areas. The City, as
    the provider of urban mass transit service, is proposing to develop a
    multi-modal transportation center in the vicinity of Depot Avenue in
    order to take advantage of the transportation linkage between Downtown
    and the University campus. An enhanced Depot Avenue will provide a
    region-based incentive for reducing sprawl development in the
    Gainesville Metropolitan Area by providing an alternative east-west
    corridor to SR 26 that allows for maximum use of alternative
    transportation. As a consequence, this project will increase mobility
    while minimizing pollution and congestion associated with the use of
    single occupant vehicles.
        The City of Gainesville obtained a HUD grant of $277,500.00 that is
    being used towards surveying and mapping costs. The Depot Avenue
    component includes right-of-way acquisition and construction activities
    at a cost of approximately $6 million.
        Federal support is critical for the success of the City's Downtown
    Revitalization Initiative. It is our hope that the Subcommittee will
    give our request every consideration.
                                     ______

            Prepared Statement of the City of Fairfield, California

        Mr. Chairman and members of the Senate VA-HUD and Independent
    Agencies Appropriations Subcommittee, I would like to thank you for
    this opportunity to testify before this committee. My name is George
    Pettygrove and I am the mayor of the City of Fairfield, California. On
    behalf of the citizens of Fairfield, I request your support of a $2
    million earmark under the Economic Development Initiative (EDI) account
    for the construction of the Solano County Government Center.
        Fairfield has been the county seat of Solano County since 1858.
    Today, downtown Fairfield is the administrative center of the Solano
    County government, including the offices of the County Administrator,
    the Board of Supervisors, several general government agencies, and the
    County law and justice center. Solano County has outgrown the existing
    facilities and the County will either build a new county building at
    the current site in the downtown or move county services to other
    suburban areas of the County. The City of Fairfield wants County
    offices and services to remain downtown, thereby maintaining the
    economic viability of the area and promoting redevelopment of adjacent
    private land.
        The City and County jointly funded a Master Plan for the project in
    downtown Fairfield. In its final stages of completion, the Master Plan
    envisions multi-story county government buildings, parking structures,
    and support space. The first phase of the project will include a multi-
    story county government building up to 300,000 square feet in size,
    streetscape improvements and a parking structure with 1,180 spaces to
    serve the new facility and downtown office and retail businesses.
        This project is a key element in the City's strategy to redevelop
    the downtown. It will create a distinctive new landmark in the center
    of Fairfield. By retaining and expanding existing County government
    functions, the project will provide a customer base and an economic
    engine for growth in the adjoining business district. The project will
    also result in significant upgrades to adjoining streets, with new
    street trees, public places, landscaping, and public art. The new
    County Government Center will also encourage intensification of
    development in the City center, leaving raw land in areas outside the
    City's core available for more suitable uses.
        The estimated cost of the first phase of the Solano County
    Government Center is $75 million. Solano County and the City of
    Fairfield are working together to develop a funding plan for the
    project. As part of this joint effort, the City seeks Economic
    Development Initiative funding to leverage city and county funds for
    the design and construction of the new County Government Center.
        Once again, thank you for this opportunity to testify before you.
                                     ______

                          NATIONAL SCIENCE FOUNDATION

          Prepared Statement of the American Society for Microbiology

        The American Society for Microbiology (ASM), the largest single
    life science organization in the world, comprised of more than 42,000
    members, appreciates the opportunity to provide written testimony on
    the fiscal year 2002 budget for the National Science Foundation (NSF)
    and the Environmental Protection Agency (EPA).
        The ASM represents scientists who work in academic, industrial,
    medical and governmental institutions worldwide. Microbiologists are
    involved in research to improve human health and the environment. The
    ASM's mission is to enhance the science of microbiology, to gain a
    better understanding of basic life processes, and to promote the
    application of this knowledge for improved health, and for economic and
    environmental well being.
        The following testimony will outline the ASM's funding
    recommendations for both the NSF and EPA research and development
    programs for fiscal year 2002.
                          national science foundation
        The ASM, as a member of the Coalition for National Science Funding
    (CNSF), endorses the recommendation to provide no less than $5.1
    billion, a 15 percent increase, for the NSF in fiscal year 2002. This
    would raise the NSF budget by $765 million from its current $4.4
    billion level of funding for fiscal year 2001. The ASM strongly
    supports Congress's bipartisan commitment of last year to strengthen
    science and long-term investments in basic research by significantly
    increasing the National Science Foundation's budget. It is critical to
    sustain this strong federal investment in fiscal year 2002 and beyond
    in order to maintain U.S. competitiveness and leadership in science and
    technology, which depends on adequate funding for basic research.
        The NSF is the primary source of nonmedical basic research support
    in the nation's colleges and universities. NSF is the only federal
    agency whose mission consists of comprehensive support for the sciences
    and engineering and is thus a major source of funds for training of our
    nation's intellectual capital. It is a key agency for supporting
    research that uses genomic information in new and creative ways. Other
    NSF initiatives will result in increased understanding of environmental
    and human microbial interactions, which have particular relevance to
    global environmental change as well as infectious diseases and
    represent a new frontier in scientific research.
        NSF's mission to promote and advance research and education in the
    United States is accomplished by funding the highest quality academic
    research and education programs. A 15 percent increase would enable NSF
    to support additional excellent research projects in pursuit of
    important discoveries and innovations. Enhanced support for the NSF's
    efforts to improve education will help expand our nation's intellectual
    capital. Strong links between research and education are essential to a
    healthy research enterprise, an educated public, and a well trained
    future workforce.
        Continued research concerned with the impact of microorganisms on
    the well being of humans, animals, plants, and the environment is
    critical. The ASM supports NSF's increased focus on microbial biology
    and the diversity of microorganisms, an initiative under the auspices
    of the NSF's Directorate for Biological Sciences (BIO). Studies on the
    unknown microbial biomass provide opportunities to discover new
    knowledge about microbial life forms and their potential application in
    industry, medicine and agriculture. In addition, microbiological
    research continues to provide the foundation for advances in
    biotechnology. These advances are based on understanding the molecular
    basis of microbial physiology and the biology, genetics, and molecular
    biology of viruses, yeast and bacteria and the vectors derived from
    them.
                                 biocomplexity
        ASM urges support for NSF's bold initiative to better understand
    the complexity of interactions between organisms and their environment
    so that human impact and trends in our global environment can be better
    understood and properly managed. Advances in the underlying disciplines
    from molecular biology, ecology and the geosciences to mathematics and
    the computational sciences have now made it feasible to begin to
    understand more complex interactions. Microorganisms are key components
    of the soil, water, plant, and animal environments and therefore are
    dominant factors in understanding these interactions. Furthermore, only
    a small percentage of the microbial species on earth are known, leaving
    their functional role unknown. These unknown organisms are the largest
    untapped source of biodiversity and a potential source of new
    pharmaceuticals, enzymes, biocontrol agents, and tools for
    nanotechnologies.
                        genomic research and informatics
        The tremendous advances in DNA sequencing technology have now
    provided the full genetic code for many organisms, and will include the
    sequences of probably 60 microbes by the end of 2001. This information
    is revolutionizing our ability to understand the common features of
    life as well as the differences among organisms. However, to capitalize
    on the sequence information research efforts on functional genomics and
    informatics needs to be enhanced. The function of most of the genes now
    discovered from sequencing are unknown. Functional genomics research
    provides the opportunity to understand the role of these genes.
    Informatics provides the common computer based information about these
    genes and the software tools to mine these data. As a new field in
    science, there is a great shortage of people with appropriate training
    in informatics. ASM recommends that programs in functional genomics and
    informatics be enhanced to meet this major national need.
        The ASM requests that Congress give high priority to increasing the
    NSF's funding by at least 15 percent for fiscal year 2002. Most of
    today's scientific achievements leading to the development of
    biotechnology, antifreeze proteins, improved crops and plant-based
    products, new antibiotics and pharmaceuticals and DNA fingerprinting
    have their roots in basic research supported by the NSF. The many
    future public health and environmental challenges the United States
    will face can only be overcome through the potential of basic research
    to generate crucial new scientific knowledge and advancements that lead
    to new technologies for the future.
                        environmental protection agency
        The EPA's scientific research and development programs are critical
    to researchers in the fields of applied and environmental microbiology.
    Research on environmental microbiology is essential for improving air,
    water, and soil quality; for assuring the safety of potable water
    supplies; for providing safe means for waste disposal; and for cleanups
    of environmental contaminants. The ASM believes that sound public
    policy for environmental protection depends on adequately funded
    programs of intramural and extramural research based on a system of
    peer review to assure that support is awarded to research programs
    having both quality and relevance. The EPA has begun its own peer
    review system based upon the National Science Foundation model.
    Critical peer review of both the intramural and extramural research
    programs of the EPA are necessary for ensuring the quality and
    scientific validity of studies that are funded.
                         safe water and water research
        Control of water pollution in the United States over the past two
    decades has focused on chemical risks, overshadowing the significant
    risks associated with microbial pollutants. Waterborne microorganisms
    pose increasingly greater threats to public health, due to changing
    patterns in water use, increased water pollution, the nation's aging
    water treatment systems, and out-moded risk assessment protocols. The
    Centers for Disease Control and Prevention (CDC) estimates that each
    year in the United States up to 900,000 cases of illness and possibly
    900 deaths occur as a result of waterborne microbial infections.
    Disease causing microbes are responsible for a variety of maladies from
    diarrhea (Cryptosporidium) to respiratory distress to heart disease. In
    1993, the Cryptosporidium outbreak in Milwaukee cost that community
    well over $55 million. The 1997 Pfiesteria bloom in the Chesapeake Bay
    area caused $43 million in economic losses. The ASM believes it is
    imperative to provide support to EPA efforts to address risk associated
    with microbial contamination, such as, the Waterborne Microbial Disease
    Program (WMDP). The WMDP is an internal EPA effort to examine the
    coverage of current programs related to waterborne microbial disease
    and develop an integrated strategy that will assure current and future
    regulatory programs adequately address microbial public health
    concerns. The ASM has recommended that EPA work with the CDC, National
    Institute for Environmental Health Sciences (NIEHS), and other federal
    agencies, as well as universities and other key nongovernment groups to
    provide the needed reliable science.
        The ASM also recommends that biological research could be
    strengthened within EPA by initiating an independent scientific
    assessment that:
      --Focuses on the appropriate and necessary human and financial
            resources needed for research, development, and implementation
            of water protection programs focused on waterborne microbes.
      --Identifies the education and training programs needed to improve
            surveillance of our waters and our human population for
            outbreaks.
      --Determines which programs and methods must be developed or expanded
            to monitor the microbial threat in the nation's water systems.
                       science to achieve results program
        The EPA's Science to Achieve Results (STAR) program is an important
    mission-driven, extramural research initiative. This program funds
    important environmental research proposals from scientists outside the
    federal government and is a valuable resource for the EPA in finding
    solutions to many complex environmental problems. Grants made under the
    STAR program last from two to three years and provide about $150,000 of
    scientific support per grant year. The STAR program funds projects in
    specific focal areas including global warming, drinking water, ecology
    of harmful algal blooms, water and watersheds, ecological indicators,
    and pollution prevention, which have significant microbiological
    components. ASM applauds the EPA's new initiative to develop multi-year
    plans (e.g., for Particulate Matter and other programs) that will
    relate STAR and intramural research products to the Agency's strategic
    goals for different program areas. These plans will help provide a
    framework for the Agency to consider, and to explain the balance of R&D
    performers in individual research areas.
        ASM recommends that 20 percent of the STAR budget remain open for
    exploring broader issues not covered by targeted RFA's. This mechanism
    captures the creativity of the scientific community to foresee EPA
    relevant needs and solutions.
                   graduate environmental fellowship program
        The EPA's Graduate STAR Environmental Fellowship Program has been
    an outstanding success in attracting some of the best young talent to
    environmental research. ASM strongly endorses this program and, based
    on its success, suggests that the funding be increased for fiscal year
    2002. Both the public and private sectors will benefit from a steady
    stream of well-trained environmental specialists. The fellowship
    program has had a major impact in attracting exceptionally talented
    young scientist to pursue careers in environmentally related fields.
    ASM also encourages the EPA to fund additional environmental
    microbiology fellowships in such research areas as bioremediation,
    global warming, and molecular methods to detect water contamination.
    The Fellowship Program will provide the critical expertise this nation
    will need to face today's challenges in industrial pollution, microbial
    contaminated water systems and general environmental quality. ASM also
    believes this program is critical to maintaining the highest level of
    competence in environmental science to address the challenges yet
    unseen.
        During this year's appropriations process, the ASM urges Congress
    to consider these needs and provide the necessary incremental funding.
    The ASM appreciates the opportunity to comment and would be pleased to
    provide additional information.
                                     ______

              Prepared Statement of the American Chemical Society

        The American Chemical Society (ACS) would like to thank Chairman
    Christopher Bond and Senator Barbara Mikulski for the opportunity to
    submit testimony for the record on the Departments of Veterans Affairs
    and Housing & Urban Development, and Independent Agencies
    Appropriations bill for fiscal year 2002.
        As you may know, ACS is a non-profit scientific and educational
    organization, chartered by Congress, representing more than 163,000
    individual chemical scientists and engineers. The world's largest
    scientific society, ACS advances the chemical enterprise, increases
    public understanding of chemistry, and brings its expertise to bear on
    state and national matters.
        We firmly believe that advances in science and engineering have
    produced more than half of our nation's economic growth in the last 50
    years. They remain the most important factor in the productivity
    increases responsible for our growing economy and rising standard of
    living, economists agree. Each field of science contributes to our
    diversity of strengths and capabilities and has given us the
    flexibility to explore new fields and apply science in unexpected ways.
    Over the last 25 years, funding for biomedical research has increased
    while federal support for most other disciplines has remained flat or
    declined. Congress took an important step in the right direction last
    year when it increased funding for scientific research for fiscal year
    2001. To nourish the roots of innovation in all fields and help ensure
    the success of growing investments in biomedicine, balance must be
    restored to the nation's R&D portfolio while supporting overall growth
    in the nation's science and technology budget. This should be a top
    priority for Congress and the administration as fiscal year 2002
    appropriations are considered.
                           nsf budget recommendations
        ACS commends Congress for providing NSF a 14 percent increase for
    fiscal year 2001. To meet the challenges of the nation's 21st century
    scientific, education, and workforce needs, ACS strongly supports
    funding the National Science Foundation (NSF) in fiscal year 2002 at
    $5.1 billion, a 15 percent increase. NSF supports research and
    education programs that are crucial to innovation and help meet the
    demand for a highly skilled workforce. The recommended funding level
    would allow NSF to more fully meet the unrealized opportunities in core
    disciplinary research areas, enhance multi-disciplinary research, and
    increase its impact on science and mathematics education.
                             nsf research programs
        Progress in core disciplines such as chemistry, physics, and
    mathematics is essential to the success of complex, multi-disciplinary
    R&D in areas such as nanotechnology and bioinformatics. Support for
    core programs comes from several NSF directorates, including the
    Mathematics and Physical Sciences Directorate (MPS). MPS supports
    research to investigate the inner structure of matter, origins of the
    universe, dynamic chemical reactions, and new and efficient
    computational techniques. MPS research underpins many other scientific
    endeavors and fuels the development of new technologies, new markets,
    and new tools for discovery. The Society supports providing a strong
    increase for MPS that is proportional to other directorates.
        ACS also supports fundamental, multi-disciplinary research programs
    supported by NSF. These include nanotechnology, information technology,
    and environmental research. With a variety of scientists working to
    study these complex problems, novel fields of investigation may emerge
    that will give us a better understanding of our world. The resulting
    multi-disciplinary workforce will advance the competitive edge of our
    nation's industries by creating innovative tools and technologies.
        Developments in nanotechnology could one day revolutionize
    manufacturing processes, electronics, medicine, and environmental
    protection. NSF supports research on nanoscale chemical, biological,
    and environmental processes and on novel phenomena only visible with
    atom-scale control over matter. Information technology research,
    including computational chemistry, also holds enormous potential for
    technological advances and thus warrants strong support. Research on
    biocomplexity in the environment will improve science-based predictive
    capabilities for decision-making. Understanding the powerful
    interactions that occur within complex biological systems and between
    these systems and the Earth's environment will lead to a better
    understanding of natural processes and the effects of human behavior on
    the natural world.
        NSF traditionally receives high marks for efficiency-less than 4
    percent of the agency's budget is spent on administration and
    management. NSF awards funds to researchers only after a rigorous
    merit-review process using expert peers. Currently, the Foundation must
    decline almost as many highly rated grant proposals as it can fund.
    These are lost opportunities for significant discoveries. Increased
    funding will allow NSF to fund more outstanding proposals and increase
    the size and duration of its grants--a longstanding goal of the
    Foundation--without limiting the number of new awards.
                             nsf education programs
        Improving K-12 science education should be a national priority. The
    Third International Math and Science Study-Repeat showed that the
    longer U.S. students stay in school, the lower they perform relative to
    students in other nations. Our 12th graders should not rank below their
    peers in almost all developed countries in science knowledge. If the
    U.S. is to retain its lead in science and technology, they must not.
        We cannot meet the demand for skilled workers because too few
    Americans are choosing to study science and engineering. We must do a
    better job teaching our children science and mathematics and motivating
    them to choose careers in these fields. Better teacher preparation and
    continuing professional development are essential: of the 300,000
    middle and high school science and mathematics teachers in the United
    States, nearly 30 percent have neither a major nor a minor in the
    subject they teach.
        Although states play the lead role in funding education, the
    federal government must strengthen its long-standing effort to improve
    the quality of mathematics and science education across the nation.
    NSF's Education and Human Resources (EHR) programs are an essential
    part of this effort.
        The nation's investment in EHR helps meet the demand for skilled
    workers and ensure that citizens have lifelong opportunities to learn
    about science and technology in all parts of the country. In fiscal
    year 2001, Congress appropriated $787 million for EHR programs. The 15
    percent increase ACS advocates for fiscal year 2002 will advance
    efforts to improve science and mathematics curricula, reform education
    practices, and equip science teachers for success in the classroom.
        EHR's programs are instrumental in efforts to achieve standards-
    based, inquiry-centered science and mathematics education. With an
    emphasis on curricula, assessments, and teacher preparation and
    professional development, EHR PreK-12 programs improve science and
    mathematics education in urban and rural states and school districts.
        EHR programs help train the nation's technical workforce. Two-year
    college science, technology, and mathematics education is strengthened
    through the Advanced Technological Education (ATE) program. Since the
    two-year college system is especially important for economically
    disadvantaged students, who use it as a point of entry into higher
    education, we encourage EHR to develop other innovative programs to
    attract students from underrepresented groups.
        EHR programs also play a critical role in providing advanced
    training for scientists, mathematicians, and engineers. Funding for
    graduate and post-doctoral fellowships can shorten the time to the
    Ph.D. degree, increase participation of underrepresented groups, and
    significantly broaden research and training opportunities.
                                     ______

                 Prepared Statement of Chicago State University

        Mr. Chairman and other Members of the committee, my name is Elnora
    Daniel, and I am the President of Chicago State University (CSU).
    Established in 1867, CSU is the second oldest public institution of
    higher education in the State of Illinois. The University has a $75
    million budget, sits on 161 acres on the South Side of Chicago and
    enrolls over 8,400 students. Of its student body, 85 percent are
    African American; 70 percent are female; and 80 percent are graduates
    of the Chicago Public Schools. Most students are the first generation
    of their families to attend college. Forty percent of the students have
    full-time jobs and 63 percent have at least one child. More than two-
    thirds of CSU students live within five miles of the campus. Most
    notably, the University enrolls one-third of all African American
    students attending public universities in Illinois, and ranks first
    among public universities in Illinois in conferring master's degrees to
    African Americans.
        Despite the achievements and successes CSU has achieved in
    addressing the needs of a non-traditional student population, there are
    a unique set of challenges the institution faces as an urban campus,
    located in a high-poverty community. Therefore, assistance is needed
    from the federal government to help us (1) maintain our status as one
    of the lead educators of African American college students in the state
    of Illinois, and (2) develop and implement collaborative community
    revitalization and educational strategies needed to address the
    contemporary challenges affecting urban campuses such as CSU.
        Specifically, during the fiscal year 2002 appropriations cycle, CSU
    asks that $1 million be provided to support planning and development
    for a residence hall that will house single parents pursuing
    undergraduate degrees. Funding is sought from the Economic Development
    Initiatives account in the VA-HUD-Independent Agencies Appropriations
    bill.
        As stated previously, most of the students attending CSU are women
    with children. They are the first generation of their families to
    attend college, and more often than not come from low-income
    backgrounds. These circumstances present special challenges, and often
    obstacles, in terms of the University's retention and graduation
    efforts.
        In fact, national student retention data suggest that only about 14
    percent of the full-time students who are single parents persist from
    matriculation to graduation. This trend means that about 86 percent of
    single parents do not graduate--an occurrence that hinders economic,
    social and educational advancement, and fuels the multi-generational
    cycle of poverty that affects so many families who live in the area
    where the University is located.
        The proposed residence hall will have an in-house child care center
    that will be open during the evening hours and on weekends to
    supplement the hours of operation of the current CSU child care center.
    The benefit of the proposed facility will be to address the primary
    factors that prevent single parents from completing college. The long-
    term benefit will be a reduction in the number of children raised by
    parents whose limited educational and academic development has a
    cyclical effect on their children, thus resulting in continued poverty.
    Children raised in a success oriented and educationally sound
    environment generally become success oriented and are more inclined
    toward generational independence, as opposed to the generational
    dependence that feeds urban decay, poverty and illiteracy.
        The ultimate goal of building the facility is to increase the
    graduation rate of the selected single parent participants by 200
    percent--from 14 percent to 42 percent. Moreover, in addition to
    consistent child care and a supportive environment, the parents will be
    able to receive emotional developmental counseling from the CSU
    Counseling Center, as well as academic developmental counseling from
    the CSU Academic support center.
        In addition to this request, as a predominantly black institution,
    CSU supports the recommendations shared with the subcommittee yesterday
    by the National Association for Equal Opportunity in Higher Education
    (NAFEO) in support of increasing funding for the minority serving
    institution programs that are funded by the National Science Foundation
    (NSF) and the National Aeronautics Space Administration (NASA).
    Specifically, we support increased funding at the NSF for the Alliances
    for Graduate Education and the Professorate, the Louis Stokes Alliance
    for Minority Participation, HBCU-UP, and the Major Research
    Instrumentation/Facilities program. At NASA, $75 million is requested
    for the Minority University Research & Education program. These
    programs are playing a critical role in helping minority serving
    institutions like CSU to contribute to national science and technology
    goals.
        Mr. Chairman, this concludes my testimony. I would be happy to
    answer any questions.
                                     ______

     Prepared Statement of the University of Medicine and Dentistry of New
                                     Jersey

        The University of Medicine and Dentistry of New Jersey (UMDNJ) is
    the largest, free-standing public health sciences university in the
    country. The UMDNJ statewide system is located on five academic
    campuses and consists of 3 medical schools and schools of dentistry,
    nursing, health-related professions, public health and a graduate
    school of biomedical science. UMDNJ owns and operates University
    Hospital in Newark, New Jersey, the largest provider of indigent care
    in the state. We also provide health care and educational services
    through our core and affiliated teaching hospitals and our higher
    education partners as well as through an integrated behavioral health
    care delivery system and a statewide system for managed care. No other
    institution in the nation possesses the resources that match our scope
    in higher education, research, health care delivery and community
    service initiatives with federal, state and local government entities.
        The Robert Wood Johnson Medical School (RWJMS) is one of three
    schools of medicine at UMDNJ. Nationally, RWJMS ranks among the top ten
    medical schools in the percentage of minority student enrollment. The
    school ranks in the top one-third in the nation in terms of grant
    support per faculty member. It is home to four major research
    institutes: The Environmental and Occupational Health Sciences
    Institute (the only NIEHS-designated Center of Excellence in
    Environmental Health Sciences), the Center for Advanced Biotechnology
    and Medicine, and two of our top priority centers of excellence--the
    Cancer Institute of New Jersey (CINJ) and the Child Health Institute
    (CHI).
        We appreciate this opportunity to bring to your attention these two
    priority projects--the Cancer Institute of New Jersey and the Child
    Health Institute--which are consistent with the mission of this
    committee. Both projects are statewide in scope and include
    collaboration within the University system and with our affiliates. Our
    research projects also underscore the University's commitment to
    eliminating racial and ethnic health disparities. We appreciate the
    past and continued support of this committee to sustain the high
    standards of excellence in the research and training programs of the
    University of Medicine and Dentistry of New Jersey.
        The Cancer Institute of New Jersey (CINJ) was established in 1990
    with $15 million in grant support, including a $10 million capital
    grant from the federal government. CINJ is a center of excellence of
    the University of Medicine and Dentistry of New Jersey (UMDNJ) and a
    partnership of UMDNJ-Robert Wood Johnson Medical School, Robert Wood
    Johnson University Hospital, St. Peter's University Hospital, and the
    Atlantic Health System. Over the past decade, CINJ has grown to become
    one of the nation's most successful cancer institutes and has garnered
    the distinction of being New Jersey's only NCI-designated cancer
    center. CINJ joins a select group of 60 cancer centers in the country
    to be awarded this designation based on the capability to integrate a
    diversity of research approaches with exceptional patient care.
        CINJ is centrally located in New Brunswick, New Jersey, a city
    known as the ``healthcare hub'' of the state and home to two research
    universities (UMDNJ-Robert Wood Johnson Medical School and Rutgers
    University), two teaching hospitals, and headquarters of a national
    pharmaceutical company--Johnson & Johnson. New Brunswick serves the
    health care needs of nearly 3.5 million people who live within a 30
    mile radius of the city.
        New Jersey is the most densely populated state in the country with
    more than 8 million people occupying 7,500 square miles of space. New
    Jersey is especially devastated by cancer where incidence and mortality
    rates are higher than the national average. CINJ is dedicated to
    providing all New Jerseyans with the best cancer care through its
    comprehensive prevention, treatment and education programs. Its
    scientific research programs are designed to rapidly transform
    promising laboratory discoveries into clinical practice.
        To achieve that mission, CINJ has developed a provider network that
    includes 20 hospital partners across the state that extend CINJ's
    resources to every county in the state and provides patients,
    residents, physicians and health care institutions with seamless access
    to the exceptional cancer programs that are available through CINJ.
    CINJ established the Dean and Betty Gallo Prostate Cancer Center which
    has garnered $9 million in federal support over the past 3 years.
    Because African-American males are 2.5 times more likely to die from
    prostate cancer, the Gallo Prostate Cancer Center has partnered with
    the 100 Black Men of New Jersey organization to offer prostate cancer
    screenings in minority communities throughout the state. Launched in
    1999, this initiative has provided screenings for prostate cancer to
    more than 1500 men living within Essex, Hudson and Union Counties,
    using churches, schools and other community settings. Our goal is to
    extend prostate cancer screening services to all 21 New Jersey counties
    by 2003.
        In New Brunswick, CINJ also works with the Chandler Health Center,
    a federally-qualified community health center operated by RWJMS, on
    early detection programs and examinations for medically indigent adults
    and children. CINJ provides outreach to make the benefits of clinical
    trials more widely available to the state's minority communities.
        Cancer is the second leading cause of death in the United States.
    New Jersey is especially devastated by the disease and ranks 9th in the
    overall number of cancer deaths this year. The American Cancer Society
    estimates that 40,000 new cases of cancer will be diagnosed in the
    state and that about 18,000 New Jerseyans will die of the disease. CINJ
    has formed a partnership with the Environmental and Occupational Health
    Sciences Institute (EOHSI) to study the impact of pollution in New
    Jersey's environment on the high rate of cancer statewide.
        CINJ's mission is focused on providing all New Jersey residents
    with a cancer institute of exceptional quality. CINJ is dedicated to
    the prevention, detection, treatment and care of patients with cancer.
    Its scientific research programs are designed to rapidly transform
    promising laboratory discoveries into clinical practice. CINJ
    physicians and scientists of CINJ are recipients of numerous
    distinguished awards and receive research grants totaling $50 million
    per year.
        CINJ currently occupies a 76,000 square foot research and treatment
    facility, but the demands have outpaced its capacity and existing
    resources. The facility was originally designed to accommodate 16,000
    adult patient visits, but last year there were more than 37,000 patient
    visits representing about 3,000 new patients. Patient visits continue
    to increase at an annual rate of 10 percent. We anticipate 50,000 to
    60,000 patient visits at CINJ by 2003.
        Our immediate objective is to expand our clinical and research
    units by constructing a 120,000 square foot addition to the New
    Brunswick facility. The facility will comprise adult and pediatric
    treatment and evaluation areas, a patient education center, offices and
    research laboratories and the Dean and Betty Gallo Prostate Cancer
    Center.
        The new facility is expected to take two years to construct
    creating numerous construction-related jobs in the New Brunswick area.
    When completed, the new facility will accommodate nearly 200 additional
    employees including 30 additional faculty as well as support staff
    (nurses, social workers, pharmacists and clinical research associates).
        When completed, CINJ's total operating budget is projected to be
    $65 million. Applying a standard economic multiplier of 5, the total
    impact on the New Brunswick area is estimated to be $325 million.
        UMDNJ has approved the construction of the new addition to CINJ's
    New Brunswick facility and has commitments of some $16 million toward
    the construction cost of approximately $30 million. Within the next two
    years, the Cancer Institute of New Jersey will seek designation from
    the National Cancer Institute as a comprehensive cancer center. CINJ
    has completed and won the first two essential designations and is
    moving ever closer toward the crucial comprehensive center designation.
    The next phase of development for CINJ is critical and expansion of its
    New Brunswick facility is essential to achieving that goal. We
    respectfully seek $10 million toward the construction of a new addition
    to the CINJ New Brunswick facility.
        The Child Health Institute of New Jersey (CHI) is integral to the
    long-term plan for the enhancement of research at the Robert Wood
    Johnson Medical School in developmental genetics, particularly as it
    relates to disorders that affect a child's development and growth. The
    program will enable the medical school to expand and strengthen basic
    research efforts with clinical departments at the Robert Wood Johnson
    University Hospital, in particular, those involved with the new
    Bristol-Myers Squibb Children's Hospital.
        The Child Health Institute will fill a critical gap through the
    expansion, by new recruitment, of an intellectual base upon which
    molecular cellular studies of child development and health will build.
    The CHI facility is expected to cost about $40 million with an
    additional $10 million endowment. To date, CHI has achieved $4.8
    million in federal funding; $1.9 million facility grant awarded by the
    National Center for Research Resources of the National Institutes of
    Health (NIH); $30 million from private, individual, foundation and
    other government sources including the State of New Jersey.
        The Child Health Institute will focus research on the molecular and
    genetic mechanisms that direct the development of human growth and
    function. Scientists will investigate disorders that occur during the
    process of development to discover and study genes contributing to
    developmental disabilities and childhood diseases in order to determine
    how genes and the environment interact and to identify the causes and
    possible avenues of treatment of cognitive disorders such as mental
    retardation, autism and related neurological disorders.
        The Child Health Institute will act as a magnet for additional
    growth in research and healthcare development in New Jersey. The
    Institute will encompass 100,000 square feet and will house more than
    40 research laboratories and associated support facilities. Fourteen
    senior faculty will direct teams of M.D. and Ph.D. researchers,
    visiting scientists, postdoctoral fellows, graduate students and
    technicians for a full complement of about 130 employees.
        At maturity, the CHI is expected to attract $7 to $9 million of new
    research funding annually. The Institute's total annual operating
    budget is projected to be $10-$12 million. Applying a standard economic
    multiplier of 5, the total impact on the New Brunswick area is
    estimated to be between $50-$60 million per year.
        The strong support of parents and families of affected children has
    produced important collaborations for the Child Health Institute.
    Advocacy groups are convinced of the value of basic research as a
    critical strategy toward treatment and cures. An example is autism. The
    Child Health Institute serves as the administrative base for the
    Governor's Council on Autism, which distributes $1.5 million annually
    in grants from the State to provide education and treatment services
    for autistic children and their families.
        The Child Health Institute represents the best hope for a sustained
    campaign against childhood diseases and disorders that affect our most
    vulnerable population--our children. Congress has recognized the
    importance of the Institute and has provided close to $5 million over
    the past two years. We respectfully seek $5 million this year to
    complete the federal government's commitment to the development of the
    Child Health Institute of New Jersey.
        We want to thank this committee for supporting the critical needs
    of research and economic development throughout the nation. The ability
    of urban-based academic health centers such as UMDNJ and the Robert
    Wood Johnson Medical School to conduct research to address cancer and
    childhood diseases must continue to grow with federal, state and
    private support. We appreciate the strong support of this committee to
    sustain these efforts as medicine and its associated technologies are
    the engines for economic growth.
        Thank you for your past support and for this opportunity to present
    testimony in support of UMDNJ's top priority projects--the Cancer
    Institute of New Jersey and the Child Health Institute of New Jersey.
                                     ______

      Prepared Statement of the American Association of Community Colleges

        The American Association of Community Colleges (AACC) welcomes this
    opportunity to submit comments on fiscal year 2002 appropriations for
    the National Science Foundation (NSF). AACC represents over 1,100
    public and private degree-granting, regionally accredited two-year
    institutions of postsecondary education.
        Over the last decade, the National Science Foundation and America's
    community colleges have developed a strong partnership that is vital to
    carrying out their respective missions. Participation in NSF's programs
    that improve science, math, engineering, and technology (SMET)
    education has bolstered the educational offerings of community
    colleges. At the same time, community colleges' participation in these
    programs has broadened their reach and enhanced their effectiveness.
        The Administration's fiscal year 2002 budget proposes a $56 million
    increase for the NSF, which is approximately 1.3 percent more than
    fiscal year 2001. This funding level is inadequate for the crucial role
    the NSF plays in the nation's scientific research and education. Fiscal
    year 2001 marked the first year of a five-year plan to double the NSF's
    budget, a plan supported by top appropriators in both parties. AACC
    urges Congress to appropriate sufficient funds next year to eventually
    bring this plan to fruition.
        The majority of the NSF programs in which community colleges
    participate are housed in the Education and Human Resources (EHR)
    Directorate. While the Administration's budget calls for a nominal
    increase in fiscal year 2002 funding for EHR, from $787 million to $872
    million, that increase is deceptive, since the EHR budget request also
    includes a $200 million Math and Science Partnership Initiative.
    Community colleges are ready and willing to participate in this new
    initiative to improve K-12 math and science education. However,
    achieving this goal must not come at the expense of other NSF education
    programs that are engaged in critical activities such as preparing
    students for technical fields, developing the instructional workforce,
    improving core science and math curricula, and providing necessary
    laboratory equipment. The $110 million that would be diverted from
    these programs to the Math and Science Initiative represents
    approximately 14 percent of the entire fiscal year 2001 budget for the
    NSF's Education and Human Resources directorate. Such a cut would
    severely compromise the effectiveness of these programs at a time when
    demand for them is at its peak.
        AACC believes that a net increase in resources should be directed
    towards EHR programs, which improve SMET programs at a great number of
    institutions and provide opportunities for a broad range of students.
    Community colleges are particularly involved in the programs described
    below, and AACC urges the Congress to appropriate the funds specified
    for each of them.
        The flagship of community colleges' partnership with the NSF, the
    Advanced Technological Education (ATE) program, promotes improvement in
    the education of science and engineering technicians at the
    undergraduate and the secondary school levels. The NSF recognizes that
    community colleges are essential to the education and training of
    qualified technicians, and for that reason the ATE program is dedicated
    to funding projects at two-year institutions. ATE grantees are
    producing technicians with the skills to operate cutting-edge equipment
    and the knowledge of science, math and engineering that are sorely
    needed in fields such as information technology, biotechnology,
    manufacturing, and environmental technology.
        The ATE program has achieved these results by funding Centers of
    Excellence and individual projects that: develop and disseminate
    curricula; provide opportunities for faculty development; create
    internships and other hands-on field experiences for students and
    teachers; foster collaboration between community colleges, four-year
    colleges and universities, secondary schools, businesses and
    government; and recruit students into SMET education. The National
    Centers of Excellence are housed at community colleges across the
    country. Each Center focuses on a given field, such as engineering
    technology, and engages in all of the activities described above. The
    Centers are expected to have a national impact and create model
    materials and educational approaches. The approximately 150 projects
    that are active at any given time may engage in only one of the above
    activities and are generally more geographically and topically limited.
    The work of the Centers and the projects is complementary: the Centers
    disseminate materials created by the projects and the projects adapt
    these materials to other disciplines and different student populations.
        In fiscal year 2001, NSF began several new initiatives within the
    ATE program. The program will fund regional information technology and
    manufacturing centers that will focus on reforming academic programs in
    a given region to produce highly qualified workers who meet industry's
    needs. NSF hopes to fund up to five of these Regional Centers each
    year.
        In addition to centers and projects, the ATE program added a third
    category of awards for articulation partnerships in fiscal year 2001.
    Within this new category, NSF plans to fund two subcategories of
    articulation partnerships: those that impact two-year college programs
    for prospective K-12 teachers, and those that ease the transition of
    students in community college SMET programs into programs at four-year
    colleges and universities.
        The NSF has recognized that community colleges play a significant
    role in the preparation of K-12 SMET teachers. Department of Education
    statistics show that 20 percent of all teachers began their higher
    education in community colleges. According to the NSF, that number is
    greater than 50 percent in some states, and many new teachers have
    taken all their mathematics and science courses at a community college.
    Projects funded under this new category will aim to increase the
    number, quality, and diversity of prospective K-12 SMET teachers in
    pre-professional programs at community colleges, and provide
    opportunities for in-service teachers to become certified in
    mathematics, science, or technology.
        The Administration has requested $39.16 million for ATE in 2002,
    level with fiscal year 2001 funding. In fiscal year 2001, this program
    received a record number of proposals--reflecting the growing need to
    produce skilled workers for the technology-based economy. AACC urges
    Congress to appropriate $50 million for this vitally important program.
        The Course, Curriculum and Laboratory Improvement (CCLI) program is
    another important component of NSF's support for community colleges.
    This program improves SMET education for all undergraduates, including
    community college students. Unlike the ATE program, CCLI is not focused
    on particular high-technology fields, but rather core SMET education.
    The work of the two programs is complementary, as students interested
    in technology careers can benefit from the educational materials and
    methods developed under both programs. Like other NSF undergraduate
    programs, CCLI helps institutions of higher education better educate a
    broader array of students in SMET subject areas.
        Funding in real dollars for the CCLI program has been eroding. The
    Administration has requested a modest fiscal year 2002 increase of
    $1.36 million, to a total of $57.54 million in fiscal year 2002. AACC
    supports a more robust increase in the CCLI budget to compensate for
    recent years of neglect. Congress should appropriate $65 million for
    CCLI.
        Community colleges across the country thank this subcommittee for
    its ongoing support of NSF programs that strengthen their institutions
    and communities. AACC thanks the subcommittee for this consideration of
    our views.
                                     ______

                   Prepared Statement of New York University

        On behalf of New York University, I appreciate the opportunity to
    speak in support of public investment in basic research and, in
    particular, to salute the National Science Foundation, whose funding of
    fundamental research is so important to the health and well being of
    our nation.
        The Foundation's support of university-based research is essential
    to our national ability to prepare for the scientific and technological
    challenges that we will face in the 21st century. NSF supports
    established as well as junior investigators, funds research as well as
    equipment, and shapes emerging areas of research in the physical, life,
    computational, and social sciences. NSF funding is critical both for
    its direct support of research, training, and education, as well as its
    indirect impact in enabling extramural (university-based) researchers
    to attract additional funding for research and science infrastructure
    from other federal agencies, private foundations, and industry. In that
    regard, I urge Congress and this Committee to support the proposal of
    the Coalition for National Science Funding for a 15 percent increase
    for NSF for fiscal year 2002.
        At New York University, NSF funding has supported leading-edge
    research across a range of areas from quantum dynamics to computational
    biology to molecular evolution to developmental genetics to theoretical
    particle physics. I would like today to underscore genomics, an
    important and pervasive area of contemporary biological research that
    is a very important priority for NSF and an area in which NYU intends
    to make major contributions.
        We applaud NSF's initiative in soliciting genomics approaches and
    grant applications to its several study divisions, and its special
    initiatives like ``2010 Project'', which aims to determine the function
    of the 25,000 genes in the mustard weed, Arabidopsis Thaliana, by the
    Year 2010. The implications of genomics, and NSF support of it, cannot
    be overstated. Its scope encompasses every living thing--humans,
    animals, and plants--and has the potential to revolutionize our
    understanding of all living things.
                              advances in genomics
        The genome is the recipe or blueprint for life. During the last
    decade--and particularly during the last two years--the unraveling of
    the genetic code has opened up a vast range of new opportunities for
    evolutionary and developmental biologists, chemists, and information
    scientists to understand what genes are, what they do, and how they do
    it. Genomics is revolutionizing biology and is dramatically changing
    the way we characterize and address biological questions. As a field
    that straddles biology, chemistry, computer science, and mathematics,
    genomics is growing at an extraordinary pace and is transforming these
    disciplines as well as the social and behavioral sciences.
        In its first stage, the revolution in genomics was characterized by
    a period of intensive development of techniques to analyze DNA, first
    in simple models, like yeast, bacteria, the worm, and the fruitfly,
    then in the mouse, and now in humans. The structure and function of
    genes are similar in these models, making comparisons useful. The
    second phase was characterized by the use of these tools to address
    whatever biological question was most easily approached, given the
    state of technique development. It may be described as structural
    genomics--which comprises the mapping and sequencing of genomes and is
    mainly driven by technology. The scientific community is now poised to
    enter the third phase of the genomics revolution in which investigators
    bring perspectives from other fields, like immunology, genetics, and
    neurobiology to pursue investigations that are driven by hypothesis
    rather than technique. This third phase is generally termed functional
    genomics and uses the map and sequence information already collected to
    infer the function of genes.
        At New York University, we think the key issues facing genomics
    today are how to translate the enormous quantities of gene sequence
    data into knowledge of gene function. The answers lie, we believe, in
    comparative functional genomics, an approach that looks for the
    occurrence of the same genes in different species that share certain
    structures or functions, and provides a powerful method for
    understanding the function of particular genes. Comparative functional
    genomics uses two primary modes of analysis: (1) identifying what has
    been conserved over long evolutionary periods, and (2) determining
    crucial differences that distinguish two closely related species. This
    focus can provide the key to unraveling the complex regulatory networks
    for crucial biological functions.
        Studies in comparative functional genomics are necessarily
    multidisciplinary. Comparative functional genomics synergizes basic
    science research programs such as those at NYU's Faculty of Arts and
    Science, with computational science, specifically bioinformatics, at
    its Courant Institute of Mathematical Sciences. Further, the scope of
    the enterprise is such to encourage collaboration not only within but
    also between research institutions. As an example, the concentration
    within NYU of strengths in evolutionary biology, neurobiology,
    developmental genetics, human genetics, applied mathematics research,
    imaging and computation is further extended through the University's
    research collaborations and affiliation agreements with major
    metropolitan area institutions. Productive affiliations that were
    recently articulated in response to New York State's major new
    initiative to develop the State's science and technology resources link
    NYU with The New York Botanical Garden and the American Museum of
    Natural History which house the world's largest collections of well-
    characterized specimens from the animal and plant kingdoms
    respectively, and Cold Spring Harbor Laboratory, one of the world's
    centers for molecular biology and genomics research.
        New York University and other major research institutions are
    poised to make important contributions to the next phase of genomics
    research. NSF funding is critical to maintain and strengthen the
    vibrancy of university-based science research.
                  research applications and national benefits
        Research in genomics can offer benefits to our citizens in a wide
    range of domains from new energy sources to crops that resist disease,
    insects and drought to better industrial processes to identification
    (or exoneration) of crime suspects. Genomics can be a major resource
    for directly energizing a range of commercial enterprises, and can
    provide a strong framework for economic development in vital, high-tech
    industries.
        Advances in Biological, Computational, and other Research Fields.--
    The understanding of the human genome has very broad applications to
    cell biology, embryology, developmental biology, and population
    genetics. Genomics connects and illuminates science in all these
    fields. Further, functional genomics research has created a need for
    information processing structures that efficiently compare and analyze
    patterns in enormous data sets and allow ready representation and
    interpretation of their common elements and differences. As an example,
    computer scientists at NYU are working closely with molecular
    geneticists and business entrepreneurs to develop a library of genomics
    software tools. Some of these tools are already being considered by
    medical researchers for use in diagnosing tumors, which have a genetic
    structure different from healthy tissue.
        Applications for Environmental Issues.--Genomics offers important
    new approaches to addressing environmental problems and conservation.
    As an example, knowing the genetic sequence of plants may allow us to
    identify clusters of genes and their function (to produce a flower from
    a shoot) and manipulate them (to cut flowering time); enhance seed
    viability without affecting the quality of a fruit; and increase the
    nutritional value of grains. As we continue to sequence new plants and
    isolate more genetic clusters, we can expect to discover how to develop
    crops that have increased resistance to temperature extremes and
    disease, and that can also grow in less hospitable soils. As we learn
    more about how genes are switched on and off by environmental factors,
    we may be able to predict how a crop will function in a particular
    climate before attempting to cultivate it. These discoveries and others
    can revolutionize agriculture within a decade.
        Commercial Applications.--Fundamental studies in genomics are
    producing new data about the function of genes that will have
    widespread commercial applications for the development of novel human
    and veterinary therapeutics and diagnostics; ``customized'' patient
    care; the development of crops with improved growth capabilities or
    improved resistance to herbicides; and so on, in a list that can impact
    virtually every aspect of our health and well being.
        Economic Development.--R&D investment in genomics is energizing
    biotechnology, pharmaceutical, biomedicine, agbiotech, computer
    software, and engineering enterprises, as genomics research begins to
    spawn a new generation of commercializable technologies, and new
    bioinformatics and software companies and genomics platform companies
    (that generate specific genomic data for product development).
        More generally, investment in research can foster vital university-
    centered concentrations of industrial activity: In a now familiar
    dynamic, industry draws on the faculty's entrepreneurial energies,
    their expertise in training the personnel needed to staff high-
    technology firms, and the fundamental scientific research that can
    translate into practical applications. High-tech firms spring up near a
    research university and, in turn, attract or spin off additional high-
    tech firms in the same or related fields. The interaction of scientists
    across firms makes the spread of information quicker and the
    development of projects more rapid. Initial firms and newer firms share
    a growing pool of highly trained personnel. The expansion of the
    skilled labor pool makes hiring easier and attracts still more firms.
    And, once a core of high-tech industries locates in an area, venture
    capitalists identify the area as ``promising'' and the flow of
    capital--a key ingredient for high-technology growth--increases.
        In a related economic spiral, R&D funding spurs job growth across a
    range of economic sectors. A conservative approximation that uses state
    employment multipliers maintained by the U.S. Commerce Department's
    Bureau of Economic Analysis points to immediate employment impacts: The
    BEA calculates that each $1 million in R&D grants supports roughly 34.5
    full and part time jobs directly within the university and indirectly
    outside the university as the university's expenditures ripple through
    the local and state economy.
        Biomedical Applications for National Health Needs.--An investment
    in genomics research will help us to understand complex, multi-gene
    diseases such as cancer, heart disease, and Alzheimer's; distinguish
    different forms of a disease, permitting precisely targeted treatment;
    and understand why drugs work and how to design better ones. Genomics
    has the potential to revolutionize the development of mass screening
    tests for genetic disorders, ultimately making it possible to identify
    the hereditary contribution to common diseases, predict individual
    responses to drug intervention, and design drugs that are customized
    for individual use.
        In summary, investment in genomic science is a strategic and
    efficient vehicle for advancing fundamental studies in a wide variety
    of scientific fields, facilitating applications that can greatly
    enhance the public welfare, and energizing existing and new industries.
    Increasing the investment in state-of-the-art equipment and in research
    that enables geneticists, computer scientists and physical chemists to
    readily interact with each other is essential for the development of
    this important area. We firmly believe that a federal investment in
    these and other biomedical research fields repays itself many times
    over.
        The commitment of this committee to support the National Science
    Foundation and its genomic initiative is greatly appreciated. We urge
    Congress to continue its commitment to increase the funding of the
    basic sciences and particularly to keep NSF on a doubling track.
                                     ______

          Prepared Statement of the National Corn Growers Association

        The National Corn Growers Association (NCGA) appreciates the
    opportunity to provide the Subcommittee with our recommendations for
    fiscal year 2002 appropriations for the National Science Foundation's
    Plant Genome Initiative. The NCGA represents 30,000 corn growers in 48
    states and the association's mission is to create and increase
    opportunities for corn growers in a changing world and to enhance corn
    utilization and profitability.
        We, strongly, urge you to provide $90 million in fiscal year 2002
    for the NSF Plant Genome Research Program, an increase of $25 million
    above the fiscal year 2001 level with the increase focused, primarily,
    on providing sequences and draft sequences of gene-rich regions
    (including full-length cDNA sequencing) of plants that are economically
    significant to the U.S. Obtaining a publicly accessible draft sequence
    of the gene-rich regions and the full-length cDNA sequence of the corn
    genome is our number one research priority.
        We recognize that $25 million represents a significant increase for
    this program. However, this level will give the NSF the funds necessary
    to begin to support projects that will provide draft sequences of the
    gene-rich regions of large, complex plants, such as corn. The recent
    work to provide draft sequences of the human genome has paved the way
    for us to do comparable work in plants. Finally, it is feasible and
    cost effective to survey sequence the gene-rich regions of large and
    complex plant genomes, such as corn. In March, the Maize Genetics
    Community listed obtaining a draft sequence of the maize genome as its
    number one research priority. Last fall, the Interagency Working Group
    on Plant Genomes recommended that $100 million be invested in
    sequencing the gene-rich regions of economically important crops, such
    as corn, wheat, and barley. The $25 million increase for the NSF plant
    genome program will begin that investment.
        As you know, increasing funding for plant genomics has been the
    number one appropriations priority for the NCGA since 1996. We remain
    convinced that the future of the corn industry is written in corn's
    genetic code and that plant genomics will give us the fundamental
    information necessary to revolutionize American agriculture. Plant
    genomic research offers us the greatest potential to increase the value
    and demand for U.S. crops, thereby increasing grower income and
    reducing grower reliance on Federal farm programs. Advances in basic
    plant science that result from a vigorous plant genomics program will
    allow us to create new hybrids and varieties that will--
      --Improve human and animal health;
      --Reduce medical costs due to more nutritious, healthier, food for
            individuals;
      --Reduce worldwide malnutrition through higher yielding and more
            nutritious crops;
      --Reduce environmental problems for crop and livestock growers;
      --Expand plant-based renewable resources for raw materials,
            industrial feedstocks, chemicals, and energy; and
      --Enable growers to get more income from the market, thereby reducing
            grower reliance on Federal farm programs.
        The NSF plant genome program has revolutionized plant research and
    has rejuvenated the plant research community. Already, the NSF program
    has been a spectacular success during its short life. To date, 54 plant
    genome research projects have been supported by the NSF program, in
    addition to the Arabidopsis sequencing effort. The genome-sequencing
    project for Arabidopsis thaliana (a model plant species) was completed
    this past year, four years ahead of schedule. The biological tools and
    resources to study complex plant genomes, such as expressed sequence
    tags, and new plant-specific genome research technologies are being
    developed. Since the start of the program, there has been a 400 percent
    increase in the number of expressed sequence tags for plant species
    deposited into the public database. The NSF program is supporting whole
    genome research into plant processes that include plant productivity,
    pathogen resistance, and mineral nutrition. All of the tools and
    genetic resources developed under the NSF program are publicly
    accessible.
        Ensuring that basic, fundamental knowledge of economically
    important plants is accessible to everyone is one of the critical
    components of the NSF program. The projects have created massive plant
    genomics databases, tools, and resources that are available to the
    scientific community at large. Now, we must bring into the public
    domain draft sequences of the gene-rich regions of economically
    important plants to make certain that this fundamental knowledge
    remains widely and freely accessible.
        Recently, Monsanto provided a draft sequence of rice to the NSF
    supported International rice sequencing effort. The existence of the
    public sequencing effort encouraged Monsanto to provide its draft
    sequence to the publicly funded, research community. It is essential
    for us to act now to ensure public accessibility to draft sequences of
    other plants that are economically important to the U.S. An increase of
    $25 million for the NSF plant genome research program will help to
    ensure that public and private scientists and plant breeders have
    access to draft sequences of economically significant plants, such as
    corn, and to other basic, fundamental knowledge.
        For fiscal year 2002, we, strongly, urge you to provide $90 million
    for the NSF plant genome research program with the increase focused,
    primarily, on providing sequences and draft sequences of gene rich
    regions (including full-length cDNA sequencing) of plants that are
    economically significant to the U.S.
        Thank you for the opportunity to present our views.
                                     ______

        Prepared Statement of the National Council for Science and the
                                  Environment

                                    summary
        The National Council for Science and the Environment strongly
    supports the bipartisan effort to double the budget of the National
    Science Foundation (NSF) by fiscal year 2006. To that end, we encourage
    the Committee to provide at least $5.1 billion, an increase of 15
    percent.
        We emphasize the need for increased funding for the ``biocomplexity
    in the environment'' initiative and encourage the Committee to strongly
    support full and effective implementation of the National Science Board
    report, ``Environmental Science and Engineering for the 21st Century:
    The Role of the National Science Foundation,'' approved on February 2,
    2000. This report calls for significant improvements in the way that
    NSF supports environmental research, assessment and education, and
    proposes that the Foundation invest an additional $1 billion in these
    areas, to be phased in over 5 years. NSF has begun to implement this
    report and deserves Congressional support.
        We also encourage the committee to at least double funding for the
    Environmental Protection Agency's Science to Achieve Results graduate
    fellowship program to total of more than $20 million.
        Attached is a letter signed by more than 120 university and college
    presidents, business, scientific and environmental leaders calling for
    significantly increased funding for scientific programs about the
    environment in NSF, the Environmental Protection Agency, NASA and other
    agencies.
        We appreciate the Committee's ongoing interest in science for
    environmental decisions.
                                   testimony
        The National Council for Science and the Environment (NCSE) thanks
    the Committee for the opportunity to provide testimony on the National
    Science Foundation (NSF) and its proposed budget for fiscal year 2002.
    NCSE is a nonprofit, nonpartisan organization dedicated to improving
    the scientific basis of environmental decisionmaking. We do not take
    positions on environmental issues, only the need for science and better
    connections between science and decisionmaking.
        Our work is endorsed by nearly 500 organizations ranging, from the
    U.S. Chamber of Commerce to the Sierra Club, including the National
    Association of Attorneys General, National Association of Counties and
    other governmental associations, some 300 colleges and universities,
    and more than 80 scientific and professional societies.
        We greatly appreciate this subcommittee's support over the last
    five years for our efforts to encourage the NSF to expand its
    scientific activities that can help to improve environmental
    decisionmaking. The appropriation provided for fiscal year 2001 and
    NSF's implementation of a new report from the National Science Board
    provide the first real opportunity for the significant realization of
    this goal.
                             overall budget request
        The science, engineering, education and related activities
    supported by NSF are essential to the future well-being and prosperity
    of the nation and deserve the highest priority by Congress. The long-
    term prosperity of the nation and the maintenance of our quality of
    life depend on a steady and growing commitment of this Committee to
    providing support for science.
        The National Council for Science and the Environment strongly
    encourages the Committee to provide at least $5.1 billion (an increase
    of $683 million or 15.3 percent) for the National Science Foundation in
    fiscal year 2002. This funding would be consistent with the bipartisan
    goal to increase the total funding level of the NSF to $10 billion by
    fiscal year 2006. This position is shared by the Coalition for National
    Science Funding, of which NCSE is a member.
                        biocomplexity in the environment
        NCSE is particularly supportive of NSF's biocomplexity and the
    environment initiative. This initiative provides a focal point for
    investigators from different disciplines to work together to understand
    complex environmental systems, including the roles of humans in shaping
    these systems. The resolution of many important environmental and
    societal problems is lagging, in part, because of insufficient
    scientific understanding. In most cases, because the problems are
    cross-disciplinary, an expansion of the biocomplexity approach at NSF
    could lead to significant progress in understanding. Despite the record
    budget increase for NSF last year, an important opportunity was missed
    when Congress provided only $75 million of the $136 million requested
    for this initiative. This innovative interdisciplinary initiative
    demonstrates the future of environmental research. There is strong
    justification for Congress to provide at least the $136 million that
    was requested in fiscal year 2001.
        The time is indeed overdue for NSF to take a lead at providing a
    comprehensive scientific understanding of the environment. NSF is
    already the leading federal sponsor of peer-reviewed research regarding
    the environment, with a portfolio exceeding $700 million. Most of this
    investment is directed at scientific advances within particular
    disciplines. An interdisciplinary approach is needed to build on this
    base to truly understand the environment and the relationships between
    people and the environment. The biocomplexity and the environment
    initiative is the first step towards a comprehensive understanding.
        The biocomplexity approach has been developed by some of the finest
    minds in the nation. There is no question that the scientific community
    is ready to take advantage of this opportunity. In fiscal year 2001 NSF
    received more than 300 full research proposals under this initiative.
    Topics that were funded included: how game fish populations are
    affected by human activities such as lakeshore development which causes
    shoreline erosion, the importance of parasites and viruses in causing
    extinctions of Hawaiian birds, and the biological, physical and human
    impacts of an non-indigenous plant on West coast salt marshes.
    Unfortunately, because NSF was only able to provide $52.5 million for
    biocomplexity in fiscal year 2000, only 16 proposals were funded, a
    success rate of only 5 percent. In fiscal year 2001 NSF will not have
    significantly more money for this competition. The lack of funding for
    such a promising area of scientific investigation is extremely
    unfortunate. Many innovative scientists and engineers will be
    discouraged from taking new approaches, if the growth of funding does
    not match the interest of researchers.
        In fiscal year 2000, NSF also provided 57 awards of up to $100,000
    over two years for ``incubation activities'' in the area of
    biocomplexity. As a result of this relatively small investment, many
    research groups are forming to develop an interdisciplinary approach to
    environmental science and engineering. Many of these awards went to
    smaller institutions that do not yet have the capacity to compete with
    the major universities which received the full awards. Again, if
    funding is not increased, these incubation activities will be for
    nought.
        In fiscal year 2001, NSF is soliciting proposals in four topical
    areas: (1) Dynamics of Coupled Natural and Human Systems (CNH); (2)
    Coupled Biogeochemical Cycles (CBC); (3) Genome-Enabled Environmental
    Science and Engineering (GEN-EN); (4) Instrumentation Development for
    Environmental Activities (IDEA).
        Each of these is a promising area of interdisciplinary science
    that, with sufficient investment, is likely to lead to significant
    advances in understanding the functioning of the environment and the
    way that humans interact with the environment.
        We also encourage the Committee to provide start up funding for the
    National Ecological Observatory Network (NEON), which was proposed by
    NSF, but not funded in fiscal year 2001. NEON would integrate cutting
    edge computing power with a distributed network of environmental
    observation sites. The effect would be to create a nationwide virtual
    laboratory for research to obtain a predictive understanding of the
    environment. Each observation site would be a partnership of
    universities, government laboratories and private research facilities
    that would share equipment and be linked through a high speed
    telecommunication and networking infrastructure. Each site then would
    be linked electronically to create a geographically dispersed national
    network of observatories. Although this idea has yet to receive
    funding, it has already generated interest from other nations, raising
    the possibility of an eventual global environmental observatory
    network. The collaborations that would be facilitated by the network
    will greatly benefit the ability of science to observe environmental
    change, predict future change and support collaborative research to
    better understand the causes and consequences of environmental change.
        New approaches and technologies are really fostering a quantum leap
    in the power of science and engineering to understand the environment.
    NSF's proposed investments in biocomplexity science and the
    collaborative tool of the National Ecological Observatory Network allow
    it to advance the cutting edge. However, if funding does not keep up
    with the intellectual and technological advances, not only will science
    suffer, but our nation that depends on scientific understanding for
    economic prosperity and environmental quality will suffer as well.
     national science board report on environmental science and engineering
        The National Council for Science and the Environment is the primary
    proponent of the effort to expand, improve and enhance the relevancy of
    the scientific efforts of the National Science Foundation regarding the
    environment. We believe that NSF as an independent, non-regulatory
    science funding agency can be the ideal source for credible scientific
    information about the environment.
        Our efforts have had considerable support from this committee. This
    Committee's report accompany the fiscal year 1998 Appropriations Bill
    directed NSF to study how it would establish and operate a National
    Institute for the Environment that, ``provides a major role for
    stakeholders in defining questions needing scientific attention and
    which funds ongoing knowledge assessments, extramural research, on-line
    information dissemination, and education and training through a
    competitive peer reviewed process'' (amendment offered by
    Representative Frelinghuysen and adopted by the Committee).
        Ultimately, the National Science Board (NSB) responded by
    unanimously approving a report, ``Environmental Science and Engineering
    for the 21st Century: The Role of the National Science Foundation,'' on
    February 2, 2000. The NSB report sets out a bold, ambitious set of
    recommendations that could transform NSF's role in support of science
    to improve environmental decisionmaking. The recommendations, if
    implemented effectively, have the potential to accomplish most of the
    objectives that NCSE and its supporters have worked for over the past
    decade and which are represented in the Committee's fiscal year 1998
    report.
        The NSB recommends that ``environmental research, education and
    scientific assessment should be one of the highest priorities for NSF''
    with a significant increase of funding from the present $600 million to
    $1.6 billion annually, over 5 years. It further recommends the
    development of ``an effective organizational approach that meets all
    the criteria required to ensure a well-integrated, high priority, high
    visibility, cohesive and sustained environmental portfolio within
    NSF''. The NSB makes 10 recommendations in the areas of research,
    education, scientific assessments, infrastructure, information, and
    partnerships.
        The NSB recommendations are consistent with the direction advocated
    by the Appropriations Committee and represent an expanded role and
    portfolio for NSF in environmental research, education, scientific
    assessments and information distribution. The recommendations of this
    report will need the support of Congress to become reality.
        NSF has begun to implement the recommendations of the NSB. They
    have appointed an environmental coordinator and created a new position
    in the office of the Director. They have formed an Advisory Committee
    on Environmental Research and Education.
        We respectfully request that this committee ensure that the
    recommendations become reality by providing the necessary funding as
    well encouragement for NSF's implementation activities.
          epa's science to achieve results graduate fellowship program
        Finally, we also wish to comment favorably on the Science to
    Achieve Results graduate fellowship program of the Environmental
    Protection Agency. This is the only federally-supported fellowship
    program specifically aimed at graduate students in the environmental
    sciences and policy areas. Like the environmental programs at NSF, the
    STAR fellowship program suffers from a serious mismatch between
    resources and highly qualified applicants. Investment in environmental
    scientists, engineers, policymakers and professionals is essential for
    the nation to reap the benefits of scientific advances.
        The STAR fellowship program began in 1995 and has funded
    approximately 100 students a year since then. The funding for this
    program has been capped by the appropriations committee at $10 million
    annually. The STAR awards are highly competitive; over the past three
    years 1400 to 1500 students have applied annually, and only 7 percent
    of applicants have been funded.
        NCSE Senior Scientist David Blockstein participated in a review
    panel for fellowship applicants last February. He was extremely
    impressed with the quality of student applicants, but was very
    depressed that the lack of funding prevented many students who were
    rated as ``excellent'' by the review panel from getting funded. A
    majority of Dr. Blockstein's panel sent a letter to the EPA encouraging
    that the funding for the panel be doubled in the shortest possible
    time.
        The National Council for Science and the Environment encourages the
    Committee to double the present appropriation for the STAR fellowship
    program to $20 million. Of the billions of dollars within the
    Committee's domain, this minor investment in our future scientists and
    engineers may have some of the largest payoff in terms of the nation's
    future.
        If the nation is to be serious about taking a scientific approach
    to understanding, resolving, and preventing environmental problems,
    there must be a serious increase in funding for environmental science,
    engineering and education. The role of this subcommittee is pivotal in
    beginning that process. Thank you very much for your support of science
    to improve environmental decisionmaking.
        Attached: Copy of letter calling for significant funding increases
    for environmental science, engineering, and education programs signed
    by more than 120 national leaders of academic, scientific,
    environmental, and business organizations.

        Letter From the National Council for Science and the Environment

                                                     DC, March 8, 2001.
    President George W. Bush,
    The White House,
    Washington, DC.
        Dear President Bush: During your recent election campaign, you
    talked about the importance of basing environmental decisions on
    science. We, as a diverse coalition of academic, business,
    environmental, governmental and community leaders, working with the
    National Council for Science and the Environment agree with you in this
    regard.
        We are writing to urge you to implement your campaign commitment by
    making investment in science for environmental decisionmaking a
    priority in your administration. In particular, we are asking you to
    provide significantly increased funding for scientific programs to:
      --Assess what is known about the environment
      --Better understand the environment
      --Provide scientific information about the environment
      --Support science-based education about the environment.
        These programs include:
      --National Science Foundation's biocomplexity in the environment
            initiative and portfolio of environmental science, engineering
            and education programs
      --U.S. Geological Survey's biological, geological, hydrological, and
            mapping divisions
      --U.S. Environmental Protection Agency's Office of Research and
            Development, especially the Science To Achieve Results (STAR)
            research and fellowship programs
      --National Oceanographic and Atmospheric Administration
      --U.S. Department of Agriculture's environmental research programs
            through CSREES and the Agricultural Research Service,
            particularly the Natural Resource Initiative
      --U.S. Forest Service forestry research
      --Department of Energy's environmental science programs
      --National Aeronautics and Space Administration earth exploration
            programs
      --National Institute of Environmental Health Sciences
        We hope that your initial budget will support science as an
    investment that will lead to a stronger economy, healthy people, and a
    healthy environment.
                Sincerely,
                                       Peter D Saundry,
                                                    Executive Director.
                                       Dick Bartlett,
                                  Vice Chairman, Mary Kay Holding Corp.
                                       Roger McManus,
                    President Emeritus, Center for Marine Conservation.
                                       Joan Verplanck,
                                     President, NJ Chamber of Commerce.
                                       George Colvin,
             Certified Professional Geologist, Cox-Colvin & Associates.
                                       Craig Cox,
             Certified Professional Geologist, Cox-Colvin & Associates.
                                       Martin Schmidt,
             Certified Professional Geologist, Cox-Colvin & Associates.
                                       Michael S. Giaimo,
          V.P. Energy and Environmental Affairs, Business and Industry
                                          Association of New Hampshire.
                                       Richard A. Anthes,
            President, University Corporation for Atmospheric Research.
                                       John T. Gibson,
                                     President, Alabama A&M University.
                                       Mary Lynne Bird,
                 Executive Director, The American Geographical Society.
                                       Richard J. Cook,
                                          President, Allegheny College.
                                       Lattie Coor,
                                   President, Arizona State University.
                                       Jeanne O'Laughlin,
                                           President, Barry University.
                                       David H. Swinton,
                                   President and CEO, Benedict College.
                                       Gloria R. Scott,
                                            President, Bennett College.
                                       Larry Shinn,
                                              President, Berea College.
                                       Oswald P. Bronson,
                                    President, Bethune-Cookman College.
                                       Jon Westling,
                                          President, Boston University.
                                       Jehuda Reinharz,
                                        President, Brandeis University.
                                       Gwen Fountain,
                                  Interim President, Butler University.
                                       James Rosser,
                           President, California State University, L.A.
                                       John D. Welty,
                         President, California State University-Fresno.
                                       Mathew Goldstein,
                               Chancellor, City University of New York.
                                       Claire A. Van Ummerson,
                                 President, Cleveland State University.
                                       Steven K. Katona,
                                    President, College of the Atlantic.
                                       William Cibes,
                       Chancellor, Connecticut State University System.
                                       Joseph R. Fink,
                         President, Dominican University of California.
                                       David R. Black,
                                            President, Eastern College.
                                       William M. Chace,
                                           President, Emory University.
                                       Anthony J. Catanese,
                                President, Florida Atlantic University.
                                       Carl V. Patton,
                                   President, Georgia State University.
                                       Eugene M. Tobin,
                                           President, Hamilton College.
                                       Thomas R. Tritton,
                                          President, Haverford College.
                                       Myles Brand,
                                         President, Indiana University.
                                       Laurence I. Peterson,
                                       Dean, Kennesaw State University.
                                       Wesley C. McClure,
                                               President, Lane College.
                                       Michael Mooney,
                                    President, Lewis and Clark College.
                                       David B. Henson,
                                         President, Lincoln University.
                                       Constance Woo,
                               Dean of Library, Long Island University.
                                       Michael S. McPherson,
                                         President, Macalester College.
                                       Geoffrey Gamble,
                                   President, Montana State University.
                                       Earl S. Richardson,
                                    President, Morgan State University.
                                       Daniel H. Lopez,
              President, New Mexico Institute of Mining and Technology.
                                       Clara Lovett,
                                President, Northern Arizona University.
                                       Delbert Baker,
                                            President, Oakwood College.
                                       Robert Glidden,
                                            President, Ohio University.
                                       Daniel E. Garvey,
                                           President, Prescott College.
                                       Daniel O. Bernstine,
                                  President, Portland State University.
                                       Alice Chandler,
                       Interim President, Ramapo College of New Jersey.
                                       William Nevious,
                                          President, Reinhardt College.
                                       Malcolm Gillis,
                                            President, Rice University.
                                       Paul B. Ranslow,
                                              President, Ripon College.
                                       Richard Yanikoski,
                                    President, Saint Xavier University.
                                       Paul Locatelli, S.J.,
                                     President, Santa Clara University.
                                       James E. Walker,
                               President, Southern Illinois University.
                                       John H. Keiser,
                        President, Southwest Missouri State University.
                                       Audrey F. Manley,
                                            President, Spelman College.
                                       Paul Yu,
                     President, State University of New York-Brockport.
                                       Roger W. Bowen,
                     President, State University of New York-New Paltz.
                                       Horace A Judson,
                    President, State University of New York-Plattsburg.
                                       Beheruz N. Sethna,
                           President, State University of West Georgia.
                                       Peter Likins,
                                      President, University of Arizona.
                                       M.R.C. Greenwood,
                       Chancellor, University of California-Santa Cruz.
                                       Linda Bunnell Shade,
                   Chancellor, University of Colorado-Colorado Springs.
                                       Georgia Lesh-Laurie,
                             Chancellor, University of Colorado-Denver.
                                       Freeman Hrabowski,
                    President, University of Maryland-Baltimore County.
                                       Donald N. Langenberg,
                             Chancellor, University of Maryland System.
                                       Blanch Touhill,
                          Chancellor, University of Missouri-St. Louis.
                                       William McCoy,
          Interim Chancellor, University of North Carolina-Chapel Hill.
                                       James Woodard,
                    Chancellor, University of North Carolina-Charlotte.
                                       Patricia A Sullivan,
                   Chancellor, University of North Carolina-Greensboro.
                                       Charles Kupchella,
                                 President, University of North Dakota.
                                       Jess K. Zimmerman,
                                   Director, University of Puerto Rico.
                                       Terry A. Cooney,
                           Acting President, University of Puget Sound.
                                       Robert L. Carothers,
                                 President, University of Rhode Island.
                                       William E. Cooper,
                                     President, University of Richmond.
                                       Steve Privett,
                                President, University of San Francisco.
                                       John M. Palms,
                      President, University of South Carolina-Columbia.
                                       John T. Casteen III,
                                     President, University of Virginia.
                                       John D. Wiley,
                           Chancellor, University of Wisconsin-Madison.
                                       Thomas F. George,
                     Chancellor, University of Wisconsin-Stevens Point.
                                       Julius E. Erlenbach,
                          Chancellor, University of Wisconsin-Superior.
                                       Philip L. Dubois,
                                      President, University of Wyoming.
                                       Frances D. Fergusson,
                                             President, Vassar College.
                                       Eugene P. Trani,
                           President, Virginia Commonwealth University.
                                       Charles W. Steger,
        President, Virginia Polytechnic Institute and State University.
                                       Bernard Franklin,
                                  President, Virginia Union University.
                                       Karen W. Morse,
                              President, Western Washington University.
                                       Mark F. Deering,
            President-Ohio Section, American Institute of Professional
                                                            Geologists.
                                       Daniel A. Lashof,
                   Senior Scientist, Natural Resources Defense Council.
                                       James Lazell,
                                     President, The Conservancy Agency.
                                       T. Nejat Veziroglu,
              President, International Association for Hydrogen Energy.
                                       M. Lee Pelton,
                                      President, Willamette University.
                                       Perry Moore,
                                      Provost, Wright State University.
                                       Rita McManamon,
                         Director, Conservation Action Resource Center.
                                       William C. Baker,
                                  President, Chesapeake Bay Foundation.
                                       Eugene V. Coan,
                Sr. Advisor to the Executive Director, The Sierra Club.
                                       Gerlad M. Meral,
                  Executive Director, Planning and Conservation League.
                                       John G. Robinson,
                  Senior Vice President, Wildlife Conservation Society.
                                       Donald Brunning,
                   Chairman and Curator, Wildlife Conservation Society.
                                       G. Thomas Bancroft,
                                Vice President, The Wilderness Society.
                                       Gregory H Aplet,
                              Forest Ecologist, The Wilderness Society.
                                       Robert Engelman,
          Vice President for Research, Population Action International.
                                       Mark Shaffer,
                          Senior Vice President, Defenders of Wildlife.
                                       Albert C. Yates,
                                  President, Colorado State University.
                                       Lawrence K. Pettit,
                         President, Indiana University of Pennsylvania.
                                       Joanne V. Creighton,
                                      President, Mount Holyoke College.
                                       Kenneth P. Mortimer,
                                       President, University of Hawaii.
                                       Henry T. Yang,
                    Chancellor, University of California Santa Barbara.
                                       Elliot Norse,
                      President, Marine Conservation Biology Institute.
                                       David F. Brakke,
       Dean College of Science & Mathematics, James Madison University.
                                       Henry N. Tisdale,
                                         President, Claflin University.
                                       Anibal Colon Rosado,
                             President, Universidad Central de Bayamon.
                                       Walter M. Bortz III,
                                     President, Hampden-Sydney College.
                                       Tom Gerety,
                                            President, Amherst College.
                                       Martin J. Muggleton,
                   President, Greater Corning Area Chamber of Commerce.
                                       Karen Hitchcock,
                        President, State University of New York-Albany.
                                       Brian C. Mitchell,
                             President, Washington & Jefferson College.
                                       Nannerl O. Keohane,
                                            President, Duke University.
                                       Robert W. Lawless,
                                        President, University of Tulsa.
                                       George Rupp,
                                        President, Columbia University.
                                       Shirley Kenny,
                   President, State University of New York-Stony Brook.
                                       Judith S. Weis,
                  President, American Institute of Biological Sciences.
                                     ______

      Prepared Statement of the American Society for Engineering Education

        On behalf of the American Society for Engineering Education (ASEE)
    Engineering Deans Council, I would like to express appreciation for the
    opportunity to offer testimony on fiscal year 2002 appropriations for
    the National Science Foundation. This subject holds great importance
    for engineering educators as well as the country as a whole, given the
    NSF's vital role in advancing basic science and engineering research.
        ASEE strongly urges the Administration and Congress to provide no
    less than $5.1 billion, a 15 percent increase, for the NSF in fiscal
    year 2002. We believe this increase to be a necessary step toward
    doubling the NSF's budget by 2006.
        The NSF occupies a unique position at the critical juncture of
    economic strength, learning and discovery, and national well being.
    Pioneering basic research in engineering and the sciences funded by the
    NSF stimulates technological innovation, enables advances in medical
    care, and stretches the limits of human knowledge. In the current
    climate of heightened global economic competition and rapidly evolving
    fields of scientific inquiry, strong and steady support of the NSF
    serves a vital national interest.
        In February of this year, ASEE urged Congress to consider an
    appropriation of $5.1 billion for the NSF in the fiscal year 2002
    budget in order to bring balance to the federal research portfolio,
    maintain the global leadership of the U.S. in basic science and
    research, and educate a new generation of scientists and engineers. For
    these reasons, ASEE enthusiastically encourages the Senate to answer
    the call of Senators Christopher Bond and Barbara Mikulski to double
    the NSF budget over the next five years.
        As innovation comes increasingly to determine market leadership,
    the NSF brings particular expertise to the task of identifying and
    nurturing the basic science and engineering research that underlies the
    dominant position of the U.S. in the global economy. A growing chorus
    touts the importance of this kind of federal engagement with science
    and technology, including Federal Reserve Chairman Alan Greenspan, the
    Council on Competitiveness, and Business Week, to name just a few. As
    David Baltimore, President of the California Institute of Technology,
    recently said of basic science and engineering research: ``It is the
    seed corn of commercial innovation, but it is not carried out by
    industry because its value is too general. Instead it is a key function
    of government.''
        At the leading edge of learning and discovery, the NSF funds path-
    breaking research in core disciplines of science, engineering,
    mathematics, and computing. The performance of this research serves a
    host of broader needs. As the source of more than one-third of all
    federal support for basic engineering research, the NSF makes possible
    work that has led to such important technologies as computer-aided
    design, fiber optics, biotechnology, advanced composite materials, and
    magnetic resonance imaging. These discoveries render a vast range of
    benefits: increased efficiencies in manufacturing processes, more
    robust communications networks, less invasive and more accurate medical
    instruments, and more fuel-efficient cars and trucks.
        NSF-sponsored research also underlies many advances in medical
    care. Harold Varmus, former Director of the National Institutes of
    Health and currently President of the Memorial Sloan-Kettering Cancer
    Center, has noted: ``The NSF has a splendid history of sustaining
    fundamental research across a broad spectrum of disciplines, and this
    approach is especially important now as laboratory work becomes
    increasingly important.'' The field of bioengineering provides one
    venue for engineers to make contributions to such interdisciplinary
    work, applying engineering principles and methods to medicine, biology,
    agriculture and the environment. Such research has led to innovations
    in medical care and instrumentation, including ultrasound, prosthetics
    and synthetic transplants, pacemakers, and ocular implants.
        NSF funding for the research underlying such advances also serves
    to educate the next generation of engineers and scientists. Doubling
    the NSF budget would enhance the development of more of these young
    researchers, whose skills and energy comprise the future of our
    nation's science and technology enterprise. As former Presidential
    Science Adviser Neal Lane recently observed: ``Chief executive officers
    of American industry say that the biggest threat to U.S.
    competitiveness in the next century is a shortage of technologically
    skilled workers. Those future scientists and engineers must come out of
    the nation's universities and colleges. The surest way to leave the
    United States vulnerable to this threat is to cut funding for the
    NSF.''
        NSF support yields outsized results, as it is highly leveraged and
    attracts complementary funds from both public and private sources. For
    example, external support for cost-shared Engineering Research Centers
    registers two-and-a-half times the size of the initial NSF investment.
    The students who graduate with engineering degrees of all levels bring
    highly prized skills into all sectors of the American workforce. The
    most advanced carry on the research that pays off in many surprising
    ways. Other engineering graduates produce and manage many of the
    technological innovations said to account for one-third to one-half of
    the recent growth in the American economy. Still others bring advanced
    analytical abilities and knowledge of high technology to fields as
    diverse as health care, financial services, law, and government.
    Attached is further documentation of the many ways NSF support is
    promoting engineering education and research at U.S. colleges and
    universities (Att. A). This wealth of human capital owes much of its
    capacity to strategic NSF support for engineering education. Attachment
    B describes a range of outreach strategies engineering programs are
    pursuing to extend their science and math education expertise to K-12
    schools in ways that complement these NSF efforts.
        A succession of predictable, sizable increases to the NSF budget
    will permit even greater development of these human resources. A core
    agency focus for fiscal year 2002, the Math and Science Partnership
    Initiative, seeks to involve all the stakeholders in the development of
    human capital--from academe, industry, and government--in an effort to
    prepare Americans for a future that will increasingly require basic
    understanding of the technical material they will face at work, home,
    and in their civic responsibilities. NSF programs have also become
    important resources for broadening the participation of under-
    represented groups such as minorities and women in the fields of
    science, math, and engineering and, through programs like the
    Experimental Program to Stimulate Competitive Research (EPSCoR), for
    strengthening the research and development infrastructure of many rural
    and small states. A plan to double the NSF budget will permit the
    allocation and coordination of the activities needed to promote the
    broadest possible development of science, mathematics, and technology
    skills among all Americans. Attachment B conveys the broad strength of
    support for this position, expressed through the Coalition for National
    Science Funding (CNSF), which ASEE and the ASEE Engineering Deans
    Council have enthusiastically endorsed.
        Doubling the NSF budget will enhance the value of the agency's
    other cross-cutting initiatives. New funding for multidisciplinary
    mathematics research will enhance the transfer of results and
    applications from mathematics and statistics research to science and
    engineering disciplines, expanding the cadre of researchers trained in
    both mathematics and science. Dynamic interdisciplinary work across
    engineering and science disciplines promise startling advances in, for
    example, medicine, manufacturing, and communications. The assurance of
    steady resources over extended periods of time for high-risk, high-
    reward endeavors--such as research in nanotechnology, biocomplexity,
    and high-speed computing--would greatly enhance their prospects for
    success. As Varmus says, ``it is crucial that leaders of science
    agencies be able to anticipate several years of steady growth during
    periods of expansion. These agencies make multi-year awards and are
    responsible for training and research infrastructure, as well as the
    operational costs of doing research.'' In an increasingly
    interdependent research system, the NSF is uniquely situated to foster
    productive exchanges across the full range of scientific and
    engineering disciplines.
        The Engineering Deans Council of the American Society for
    Engineering Education (ASEE) is the leadership organization of the more
    than 300 deans of engineering in the United States. Founded in 1893,
    ASEE is a nonprofit association of 12,000 members dedicated to the
    improvement of engineering and engineering technology education.

        Attachment A.--NSF-Funded Advances in Engineering Research and
                Education Under Way at U.S. Engineering Programs

        Student Teachers.--Question. What do you get when you put a
    teacher, a kindergartener, and an engineering graduate student together
    in the same room? Answer. The NSF's GK-12 Fellows Outreach Program at
    the University of Colorado-Boulder's College of Engineering and Applied
    Science. The GK-12 program infuses pre-engineering education into
    public school classrooms from the K-12 grade levels. The result is a
    better education for school children, who are introduced to engineering
    and science concepts in a hands-on manner that promotes more effective
    learning.
        Risky Business.--The U.S. electric utility industry is undergoing
    major functional and structural changes. Traditionally, prices of
    electric energy and related services have been determined through
    endorsement by regulatory authorities of rates proposed by utilities.
    As a result, this industry has been very much risk-averse and the
    utilities could pass on the risk to the end users because of their
    regulatory protections. But, little is known however about how
    financial risk management techniques apply to the electric power
    industry. Researchers from the Illinois Institute of Technology are
    planning to investigate the application of financial risk management
    techniques to technical innovation problems facing the electric utility
    industry today, hoping to craft a viable solution for the assignment of
    risk in a rapidly deregulating market.
        Water Contaminant Removal.--Scientists at Penn State University are
    working to alleviate a common type of water contaminant called
    perchlorate which is extremely mobile and persistent in the surface and
    ground water of some areas in the U.S. Perchlorate has been detected in
    the water supplies of approximately twelve million people, and has
    proved difficult to remove through conventional water treatment
    technologies. Penn State researchers are investigating biological
    treatment of perchlorate where microbes reduce the contaminant to
    innocuous oxygen and chloride. The commercial effect of this would be
    to save large amounts of money, that has been currently ear-marked for
    water purification to be used for both future development and current
    residential and commercial usage.
        Recycled Paper.--University of Florida researchers have developed a
    technique to remove ink from paper that is both cheaper and more
    effective than current methods, thereby increasing the viability of
    paper recycling enterprises. This new technique replaces traditional
    ink-removing surfactants with a blend of cheaper chemicals. The blend
    is not only more effective with a broader variety of paper stocks than
    the surfactants, it also nearly doubles the amount of recycled paper
    that can be used to produce new product for the same cost, researchers
    say.
        Tired Tires.--In the wake of the recent mishaps plaguing the tire
    industry, researchers at Oakland University in Rochester, Michigan,
    have developed a technique to highlight areas of structural weakness of
    an object. This technique called shearography is finding use in some
    segments of the tire industry. The FAA has just approved the process
    for use in aircraft tires. Shearography, which uses a laser and a
    digital camera to compare views of the surface of an object under
    stress and normal conditions, serves to highlight areas of weakness and
    help prevent stress-related accidents. As well, the tire retread
    industry has adopted shearography, to determine which tire casings are
    suitable for reprocessing.
        Manufacturing Education.--Lehigh University in conjunction with
    Focus: Hope and the Society for Manufacturing Engineers have created a
    new coalition named the Greenfield Coalition designed to teach
    engineering education to minority students from inner city Detroit. The
    Coalition has created and developed curricula and learning materials,
    delivered courses in Greenfield knowledge areas, taken the first steps
    in integrating experiential learning within the academic programs, and
    has graduated students from degree granting schools. A current focus is
    the application of new computer-based technologies to improve
    educational outcomes.
        Jury Duty.--How can the views of ordinary citizens be used in
    making decisions about managing risks? Researchers in the Department of
    Engineering and Public Policy at Carnegie Mellon University have
    developed methods, which allow representative ``jury-like'' groups of
    lay people to become knowledgeable about scientific risks of government
    policies, and then rank them in order of concern. Repeated experiments
    have demonstrated that the method produces robust results, and that the
    people participating find it highly satisfactory. Such methods should
    help government and industry to make better, more democratic risk-
    management decisions.
        A Family Affair.--At the Mother-Daughter Saturday Engineering
    Academy, sponsored and created by California State University-Los
    Angeles, technology runs in the family. Here mothers and daughters can
    work together alongside female engineers to explore engineering
    careers, visit high-tech companies, and take part in lectures and
    contests. Hands-on experiments include building a mini-bridge tower,
    subjecting a raw egg to a two-story bungee jump and racing a mini solar
    car. The program's four main goals are:
        (1) To encourage high schools female students to consider
    engineering as a viable option for their future careers, thereby
    dispelling the myth that engineering is physically difficult and ``non-
    feminine,''
        (2) To provide bonding between teenage girls and their mothers.
    During six 4-5 hour sessions, girls and their mothers work as a team:
    they listen to lectures, work on computers and hands-on projects, and
    compete in contests.
        (3) To raise the level of scientific knowledge and foster
    appreciation for engineering professions among the general female
    population.
        (4) And to create a network of supporters and collaboration between
    different constituencies interested in women's education. Classes are
    small (20 teams per course), so attendees receive individual attention
    and have many opportunities to ask questions.

                  Attachment B.--Building Tomorrow's Workforce

        Engineering schools are forging new relationships with K-12
    teachers to make science and math more exciting to kids. By Alvin P.
    Sanoff
        Several times a week, University of Washington engineering students
    Lisa Behmer and Jessica Yellin enter Marcus Whitman Middle School in
    Seattle and head for the classroom of math teacher Joseph Hardy. There
    Behmer, a senior majoring in materials engineering, and Yellin, a
    doctoral candidate in mechanical engineering, join Hardy in teaching
    math to eighth graders. Rather than using a traditional approach of
    lectures and drills, the trio uses an inquiry-based teaching method
    designed to engage students in the learning process. Recently, they
    asked students to design bicycles for a fictitious race across the
    state of Washington. As part of that project, Behmer and Yellin brought
    three bicycles into the classroom, each with a different gear ratio,
    and asked the students to figure out which would work best given the
    terrain that the bike riders would have to traverse. ``We set up the
    class as if it were a consulting engineering firm designing bicycles
    for the race,'' says Yellin. Behmer and Yellin are among some 15
    University of Washington graduate students and undergraduates who, with
    National Science Foundation support, are working with teachers in
    middle schools in the Seattle area to make math and science more
    exciting for students. Denice Denton, dean of the College of
    Engineering at the University of Washington, says that the program
    ``puts role models in front of kids who can get them excited about
    careers in math, science, and engineering and, at the same time, helps
    teachers get a better handle on what mathematicians, scientists, and
    engineers do so that they can better advise kids on these careers.''
        The project is one of many in which engineering schools are engaged
    in an effort to address a growing national problem: the weak
    performance of American students in math and science in comparison to
    their peers in other industrialized nations. Recently released results
    from the Third International Mathematics and Science Study-Repeat
    showed that American eight graders were outperformed in math and
    science by students in more than a dozen nations, including Singapore,
    Taiwan, South Korea, Japan, Hong Kong, Belgium, and the Netherlands.
    France and Germany did not participate in the test. The results are
    particularly disappointing because in recent years one blue ribbon
    commission after another has issued warnings about the perilous state
    of science and math education in the nation's schools, yet little has
    changed as a result. Dean Karl Reid of the College of Engineering,
    Architecture, and Technology at Oklahoma State University says that
    while the warnings have produced a number of programs that he describes
    as ``islands of excellence,'' a coordinated national effort has been
    lacking. Says Reid: ``We have to recognize there is a crisis and then
    attack the crisis in a much broader, well-planned way.''
        Last fall, in a report entitled ``Before It's Too Late,'' the
    National Commission on Mathematics and Science Teaching for the 21st
    Century, chaired by former Senator John Glenn, warned that time is
    running out for action and laid out an ambitious agenda to improve the
    performance of American students. At the center of the agenda: an
    intensive program with a price tag of $5 billion to upgrade the
    quality, skills, and knowledge of math and science teachers.
        Citing studies that show a linkage between student achievement in a
    subject and whether their teachers are certified and have majored in
    that subject, the commission argued that ``the most direct route to
    improving mathematics and science achievement for all students is
    better mathematics and science teaching.'' A member of the commission,
    Rep. Rush Holt of New Jersey, has introduced legislation to fund the
    commission's recommendations. Holt said the legislation would establish
    ``grant programs for states to improve the recruitment and retention of
    math and science teachers'' as well as `` the quantity and quality of
    their professional development programs.''
        The legislation would also create academies throughout the nation
    to train 3,000 fellows in math and science teaching. The fellows would
    be recruited for a one-year intensive course in effective teaching
    methods in math and science and, in return, would agree to teach for
    five years in districts with math and science teaching shortages, of
    which there are many. According to the National Commission, more than
    one in four high school math teachers and nearly one in five high
    school science teachers ``lack even a minor in their main field of
    teaching.''
        Shortly before the Glenn Commission issued its report last fall, a
    committee of the National Research Council also focused on the need to
    upgrade math and science teaching. Its recommendations included a call
    for the nation's colleges and universities to work with local school
    districts to ``establish a comprehensive, integrated system of
    recruiting and advising people who are interested in teaching science,
    mathematics, and technology.''
        Leaders in engineering education have long realized that they have
    a major stake in the quality of science and math teaching at the K-12
    level. Students who are deficient or lack interest in math and science
    are unlikely to consider engineering as a career. Rep. Vernon Ehlers of
    Michigan, who along with Holt has led the charge on Capitol Hill for
    federal support to improve math and science teaching, says that ``a
    preponderance of evidence indicates that our schools aren't preparing
    our students adequately for the knowledge-based, technologically rich
    America of today and tomorrow.''
        The test results from the international exam as well as the
    decisions made by today's college students about what to study bear
    Ehlers out. Despite the growing demand for trained engineers,
    enrollment in engineering schools has remained relatively flat for
    almost a decade, with the number of bachelor's degrees granted annually
    hovering between 62,000 and just over 63,000. The supply of engineers,
    say engineering educators, is simply not adequate to meet demand. In
    computer science alone, the Department of Labor estimates that
    postsecondary institutions will have to produce nearly four times as
    many graduates as they now do to meet demand. The lack of supply has
    led many employers to hire computer scientists from abroad under the H-
    1B visa program.
        Despite a seemingly endless string of front-page stories about the
    growth of information technology and the availability of technology-
    related jobs, OSU's Reid says college students are more interested in
    pursuing the social sciences than in studying engineering. One reason
    for this, he says, is the lack of an adequate number of well-trained
    math and science teachers: ``We simply do not place a value on teaching
    in science and math that is necessary to attract the caliber of people
    we need to stimulate young people to consider science and math-related
    careers. There ought to be differential pay scales to reward those who
    have the special abilities that are needed to teach science and math.''
                                 lending a hand
        As the lack of student interest in pursuing careers that require
    expertise in science and math has become more apparent, a number of
    engineering schools, like the University of Washington, have entered
    the fray, developing a wide variety of initiatives to help classroom
    teachers do a better job of engaging students. Some of the initiatives
    send engineering students into the classroom to work with teachers and
    students, while others bring teachers to university campuses where they
    hone their skills and upgrade their knowledge under the tutelage of
    engineering faculty.
        One of the most ambitious ventures has been launched by Rensselaer
    Polytechnic Institute's Center for Initiatives in Pre-College
    Education. The center's main focus is on working with students and
    teachers in elementary and middle schools in the Troy, N.Y., area.
    Lester Rubenfeld, a math professor who directs the center, says that it
    has emphasized ``trying to get teachers to change their pedagogical
    style to take a more interactive approach rather than to just be
    purveyors of information--and we are integrating computer technology
    into the process.''
        The center sends ``technology mentors''--RPI undergraduates and
    graduate students in education from the nearby State University of New
    York at Albany campus, many of whom majored in math or a science as
    undergraduates--into 15 schools twice weekly. The mentors serve as
    resources for the teachers and, says Rubenfeld, ``they become part of
    the educational environment in the building.'' The mentors help the
    teachers integrate technology into their classrooms and serve as
    sounding boards. ``We thought a lot about how to really gets kids
    interested in math and science,'' says Rubenfeld, ``and decided that
    you can't go in at the high school level. You have to go back further
    in time and get kids interested when they are about to lose interest,
    somewhere between the 4th and 7th grades.''
        Educators agree that the elementary and middle school years are
    crucial. If students get turned off to math and science when they are
    young, it is very difficult to turn them back on in high school. Yet it
    is in the earlier grades that teachers are least likely to be well-
    trained in math and science. Janie Fouke, dean of the College of
    Engineering at Michigan State University, recalls that shortly after
    graduating from college she took education courses so she could be
    licensed as a middle and high school science teacher. ``I found that a
    lot of my classmates, especially those interested in elementary
    teaching, lacked a strong interest in science or math,'' says Fouke.
        Rick Cleary, associate dean for undergraduate programs at Cornell
    University's College of Engineering, says that ``a lot of elementary
    teachers didn't have a good experience in science and math and that
    makes it hard for them to excite their students.'' RPI is attempting to
    address this problem by obtaining funding for a program that would
    bring a number of elementary and middle school teachers to campus for a
    year and two summers. The teachers, who would be called Rensselaer
    Technology Fellows, would learn how to use technology in their teaching
    and then would return to their school districts to work with other
    teachers.
        As for RPI's existing ``technology mentors'' program, it is unusual
    in that it involves cooperation between two institutions of higher
    education, RPI and SUNY-Albany, and between faculty and students from
    different disciplines--the sciences and education. It is relatively
    rare for there to be close cooperation between science and education
    faculty members, in part because scientists often view their peers in
    education with a certain disdain. Stephen Director, dean of the College
    of Engineering at the University of Michigan, sees the lack of
    cooperation as unfortunate since each has distinctive strengths.
    ``Engineering colleges understand the content, while education schools,
    in spite of all the criticism that is lodged against them, understand
    how students learn.''
                                new partnerships
        Michigan is one of several universities at which a partnership has
    developed between education and engineering faculty members, with the
    goal of improving math and science education. At Michigan a member of
    the engineering faculty is collaborating with an education professor on
    an approach to teaching science in the middle schools that emphasizes
    having students actually do science. For example, says Director, rather
    than simply absorbing the basic facts about why earthquakes occur, the
    students are asked to ``think about deep and interesting questions such
    as `Why do earthquakes stop?' ''
        At Ohio State University, collaboration between faculty in the
    sciences and in education has gone a step further. The College of
    Mathematics and Physical Sciences has hired a director of math and
    science education who is working with OSU's College of Education to
    increase the number of ed-school students who will become math and
    science teachers. Ohio State's College of Engineering, meanwhile, is
    sending teaching fellows--graduate students and upper level
    undergraduates--into several Columbus public schools to work with
    teachers in grades three to five.
        Much like the participants in the University of Washington program,
    the fellows, who take a course in education and teaching methodology,
    spend six to 10 hours a week in the classroom working with teachers and
    their students. ``Historically, it was the College of Education that
    was principally involved with grades K-12,'' says engineering dean
    David Ashley. ``But in the last few years the university has made a
    serious outreach and engagement initiative that includes the College of
    Engineering. If you had asked someone in engineering five years ago
    what we did in K-12, there would be nothing we could point to. But now
    K-12 is something that we are doing across the university.''
        Similarly, at the University of Colorado at Boulder graduate
    students from the engineering college spend parts of two days a week in
    middle and high schools in the Boulder area introducing engineering
    concepts to students and teachers. ``The schools are very receptive
    because we do not try to teach an engineering curriculum,'' says
    engineering dean Ross Corotis. ``We try to let them know that science
    and math principles can be used to create things that make society
    better.''
        A different kind of partnership between engineering and education
    professors exists at Pennsylvania State University at University Park.
    There education and engineering professors co-teach a course for would-
    be math and science teachers called ``Fundamentals of Science,
    Technology, and Engineering Design.'' David Wormley, dean of Penn
    State's College of Engineering, says that students in the course ``gain
    a sense of the impact that engineering has on solving societal
    problems. It is an opportunity for us to impact secondary education.''
        Many colleges and universities have focused their efforts on
    special summer programs for teachers. The University of Virginia, the
    Georgia Institute of Technology, the University of Texas at Austin and
    the University of Colorado at Boulder are among a number of
    institutions that bring teachers to campus for training in engineering,
    math and science.
        At Georgia Tech, about a dozen teachers from high schools around
    the state participate in a summer long program that involves working
    with a faculty member on a research project. ``The teachers very often
    become co-authors of a paper and they go back to school with lots of
    ideas for the classroom,'' says Engineering Dean Jean-Lou Chameau. At
    the University of Colorado, the engineering school's Integrated
    Teaching and Learning Laboratory is utilized for summer programs
    involving both middle school and high school teachers and students. The
    programs for teachers range from a few days to a few weeks in length
    and emphasize projects they can replicate in their classes for under
    $20.
                                  a tough sell
        Still, getting engineering faculty interested in K-12 education can
    be an uphill battle at times. Administrators acknowledge that faculty
    members who operate in an environment where tenure and promotion are
    based primarily on research see little immediate payoff in putting a
    lot of time and effort into K-12 education. RPI's Lester Rubenfeld says
    flatly that such efforts ``are not rewarded on research campuses. I do
    not recommend it for people without tenure.'' Rubenfeld says that
    faculty members are more likely to become engaged with K-12 education
    ``when their kids get into high school and they realize the
    deficiencies of the system. Then they get concerned about why their
    kids' education in math and science is not what it should be.''
        In that regard, RPI has been instrumental in the development of a
    program called Project Lead the Way, which began in the 1980s when
    faculty members helped a teacher at a local high school develop a
    series of technology oriented courses. Project Lead The Way, which has
    since become an independently run national program, offers high schools
    a five-course sequence of pre-engineering courses and provides training
    for those who teach the courses. Some 175 high schools are
    participants. The Project has also created a middle school program
    called Gateway to Technology, a single course with four stand-alone
    units. Lester Gerhardt, associate dean of engineering at RPI, says that
    the program is ``geared for students who like math and science and are
    curious about how things work.''
        In fact, a number of the K-12 initiatives in which engineering
    schools are involved focus not on average students, but on students who
    show promise and/or interest in engineering and related fields. Many of
    these programs are aimed at women and minorities. Cornell's Engineering
    School operates what it calls the Curie program, which brings about 150
    female high school students to the campus for a week each summer to
    expose them to doing research. Michigan State's College of Engineering
    participates in a program to enrich math and science opportunities for
    students in the Detroit schools. Every summer 30 to 40 high school
    sophomores and juniors take part in a four-week residential experience
    focused on math, computing and engineering. A number of universities
    not only offer summer programs, but also run programs of much shorter
    duration during the school year that have a more modest goal than
    improving K-12 science education. These programs are designed simply to
    expose students to engineering and the sciences. A case in point is
    Michigan State's mechanical engineering design day. Twice a year
    several hundred students from schools around the state are bused to
    East Lansing for the event, which takes place at the end of each
    semester. They watch mechanical engineering students demonstrate the
    projects they have designed and take part in a design competition
    themselves, building bridges out of cardboard and tape or constructing
    models of the Leaning Tower of Pisa out of Popsicle sticks and tape.
        Yet, despite the best of intentions, there is no indication thus
    far that the proliferation of programs is likely to measurably change
    the performance of U.S. students in science and math. ``All these small
    efforts won't become synergistic if we continue to do them as ad hoc
    entities,'' says the University of Washington's Denton. ``We need to
    make the sum greater than the parts. We need a national campaign.''

             Attachment C.--Coalition for National Science Funding

        The Coalition for National Science Funding (CNSF), a group of
    eighty scientific, engineering, and professional societies,
    universities, and corporations, commends Congress and the
    Administration for providing the National Science Foundation (NSF) with
    the largest dollar increase in the agency's history. The Coalition
    appreciates the efforts of Senators Christopher ``Kit'' Bond and
    Barbara Mikulski to double the NSF's budget, and the support of
    Representatives James Walsh and Alan Mollohan for the NSF. We applaud
    the goal of doubling the NSF budget and the fiscal year 2001
    appropriation clearly sets us on the right path.
        To maintain this momentum, CNSF strongly urges the Administration
    and Congress to provide no less than $5.1 billion, a 15 percent
    increase, for the NSF in fiscal year 2002. We believe this increase to
    be a necessary step toward doubling the NSF's budget by 2006.
        Our national knowledge base in the sciences, mathematics, and
    engineering is increasingly important to broad economic and social
    interests. Doubling the NSF budget by 2006 will fund the crucial
    investments that the agency makes in key components of this vital
    knowledge base. These funds will permit investments in the basic
    research needed to rejuvenate and stimulate core disciplines of
    science, mathematics, and engineering, which are the underpinnings of
    technological innovation.
        The primary source of federal support for non-medical basic
    research in colleges and universities, the NSF is the only federal
    agency whose mission consists of comprehensive support for the sciences
    and engineering. Equally important are investments in people who will
    apply new knowledge and expand the frontiers of science and
    engineering. Through its support of research and education programs,
    the agency plays a vital role in training the next generation of
    scientists, engineers, and mathematicians. Currently, the NSF must
    decline almost as many highly-rated grant proposals as it can fund.
    Increased funding for the NSF will not only enable the funding of more
    outstanding proposals that will help broaden the nation's knowledge
    base, it will also enable the agency to increase the size and duration
    of its grants.
        Over the past half century the NSF has had monumental impact on our
    society. The NSF investment has paid dividends in building the
    infrastructure of the individual scientific disciplines, as well as
    laid the groundwork for innovative interdisciplinary research to meet
    modern day scientific and technical challenges. Many new methods and
    products arise from the NSF investment in research, such as geographic
    information systems, World Wide Web search engines, automatic heart
    defibrillators, product bar codes, computer aided modeling (CAD/CAM),
    retinal implants, optical fibers, magnetic resonance imaging
    technology, and composite materials used in aircraft. NSF-sponsored
    research has triggered huge advances in understanding our planet's
    natural processes, which lead to providing a sound scientific framework
    for better decision-making about earth's natural environment. These
    methods, products, and advances in understanding accrue from basic
    research performed over many years, not always pre-determined research
    efforts aimed toward a specific result. Furthermore, the NSF
    traditionally receives high marks for efficiency--less than four
    percent of the agency's budget is spent on administration and
    management.
        For these reasons, CNSF highly recommends that Congress and the
    Administration continue to invest in NSF by providing, at a minimum,
    $5.1 billion for fiscal year 2002, and work to double the NSF's budget
    by 2006.
                                     ______

      Prepared Statement of the American Institute of Biological Sciences

        The American Institute of Biological Sciences, which represents 79
    scientific societies with a cumulative membership of over 190,000
    biologists spanning all of biology--from basic to applied, from
    molecular to organismal, from agronomy to zoology--submits the
    following written testimony regarding the fiscal year 2002 funding for
    the National Science Foundation (NSF).
        The American Institute of Biological Sciences strongly supports the
    bipartisan effort to double the budget of the NSF by fiscal year 2006.
    To that end, we encourage the Committee to provide at least $5.1
    billion for NSF, an increase of 15 percent over fiscal year 2001.
        We recognize that the Subcommittee needs to know why an increase of
    this magnitude is justified. The answer--with regard to the kind of
    research conducted by our members--is that NSF funding is the primary
    source of federal support for basic research on the biology of the
    natural world (the non-biomedical life sciences) in colleges and
    universities. This funding is critical to some disciplines which have
    little private sector funding because research in these areas rarely
    results in marketable products. Yet, the knowledge gained in this kind
    of research is critical in many ways. The most obvious way this
    knowledge is used is in the management of our natural resources. Making
    choices about the often conflicting needs to extract and use resources
    and the competing need to protect our environment requires a strong
    foundation of biological knowledge. In fact, that knowledge can often
    help us develop solutions that allow us to minimize the impact of the
    use of our natural resources. But there are many other ways in which
    biological information affects our lives. For example--the anti-cancer
    drugs Vincristine and Vinblastine were first extracted from the
    Madagascar rosy periwinkle, while the anti-cancer drug Taxol was first
    extracted from the Pacific yew. Just this week, a an announcement was
    made that a new anti-cancer drug made from shark cartilage has been
    found to be effective. Without funding for the basic, biological
    research on our natural resources, we might never have known of these
    species, much less their usefulness to humans. And without
    understanding how human activities affect these species, we might not
    be able to prevent them from disappearing from the planet. We might not
    recognize the environmental threats that could have dire effects on
    humans. We again ask the Congress to take note of the recommendations
    of the National Science Board in its report, ``Environmental Science
    and Engineering for the 21st Century: The Role of the National Science
    Foundation.'' The report calls for a $1 billion increase in funding for
    environmental research, assessment, and education, to be phased in over
    5 years. It bears repeating that much research of this sort receives
    very little private sector funding.
        Much biological and ecological research is inherently long-term
    research, because biological systems change slowly and it takes years,
    if not decades, to assess the change and determine the underlying
    causes. Two NSF programs--Long-term Ecological Research Network and
    Long-term Research in Environmental Biology (LTERB)--recognize the need
    for sustained funding for biological research, yet LTERB is limited to
    a five-year award. It is often said that research awards need to be
    longer so that scientists won't have to spend all their time writing
    grant proposals. While we share this valid concern, the justification
    for longer grants in the biological sciences is actually scientifically
    appropriate.
        The research funded by NSF--particularly the Biocomplexity in the
    Environment Initiative--is therefore critical in understanding our
    complex environmental systems. The resolution of many important
    environmental and societal problems depends on our gaining sufficient
    understanding of these systems. The Biocomplexity Initiative gives us
    the rare opportunity to tackle these problems on a cross-disciplinary
    basis, with chemists, geologists, hydrologists, and biologists working
    together to learn how systems work and how to rectify imbalances that
    have grave consequences for humans, wildlife, and our ecosystems. For
    instance, a team of scientists funded by the Biocomplexity Initiative
    are looking at oceanic algal blooms, which absorb nitrogen and carbon
    from the atmosphere. Someday, this information could help us to
    mitigate the effects of greenhouse gasses. This kind of research is
    necessarily large in scope and often requires a long-term monitoring of
    the system. It is expensive but worthy research. Last year, NSF
    requested a $136 million increase for this initiative; Congress
    provided $75 million. We encourage the Congress to provide NSF with at
    least $150 million for this initiative in fiscal year 2002.
        In fiscal year 2001, NSF was able to fund only 16 Biocomplexity
    proposals (a success rate of 5 percent), along with 57 small awards for
    ``incubation'' activities to allow research groups to begin smaller,
    preliminary efforts to undertake this complex research. These promising
    activities will have no future if the NSF does not receive a
    substantial increase for the Biocomplexity initiative.
        Last year, NSF sought funding under the Major Research Equipment
    account to start a new effort to be known as the National Ecological
    Observatory Network (NEON). The goal of NEON was to create a nationwide
    virtual laboratory for research to obtain a predictive understanding of
    the environment. Each of 10 planned observation sites would consist of
    a partnership of universities, government facilities, and private
    research organizations that would share equipment and be linked through
    a computer network for the purpose of sharing information with one
    another, other researchers, and the public. Congress declined to
    provide the requested $12 million start-up funding for NEON last year.
    We urge the Congress to fund this project in fiscal year 2002.
        As important as the new ideas and knowledge generated by scientific
    research are, the people educated to apply them appropriately and those
    educated to keep the knowledge continuum growing are just as important.
    For the last several years the number of U.S. students studying
    science, mathematics, and engineering has decreased to alarming levels.
    These students are the future of science and math research and
    education. Continuing investment in their education, at the
    undergraduate and graduate levels, is a critical need for this country.
    Students at all levels need strong training in biology and should have
    opportunities to study the natural world around them.
        We appreciate the opportunity to submit this written testimony to
    the Senate Appropriations Subcommittee on VA, HUD, and Independent
    Agencies.
                                     ______

       Prepared Statement of the American Society of Mechanical Engineers

        The National Science Foundation (NSF) Task Force of the Council on
    Education of the American Society of Mechanical Engineers (ASME
    International) is pleased to provide comments on the NSF fiscal year
    2002 budget request.
        ASME International is a worldwide engineering society focused on
    technical, educational and research issues. It conducts one of the
    world's largest technical publishing operations, holds some 30
    technical conferences and 200 professional development courses each
    year, and sets many industrial and manufacturing standards. This
    testimony represents the considered judgment of the NSF Task Force of
    the Council on Education and is not necessarily a position of ASME
    International as a whole.
                  nsf fiscal year 2002 budget request overview
        The National Science Foundation plays a critical leadership role in
    directing the nation's non-defense related scientific and engineering
    research. Through thoughtful and visionary planning, NSF has greatly
    contributed to the technological superiority that the United States
    enjoys today. The Task Force shares NSF's broad-based, cross-cutting
    vision for basic engineering and scientific research. As such, we
    strongly endorse the Foundation's efforts to continually improve and
    expand the ``innovative ideas, outstanding people, and cutting-edge
    tools'' that comprise the nation's technological and scientific
    infrastructure.
        While NSF had experienced substantial funding increases in recent
    years, the Budget Request for fiscal year 2002 reflects only a 1.3
    percent increase to $4.47B. Within this request, funding for the
    Engineering Directorate would remain virtually unchanged in current
    dollars at $431M. In justifying this modest request, President Bush
    points back to the 5.8 percent and 17.3 percent increases in fiscal
    year 2000 and fiscal year 2001 respectively. In stark contrast,
    however, the funding rate for the National Institutes of Health will
    continue with the fourth year of a ``doubling in five years'' plan,
    increasing by 13.5 percent to more than $23B. In terms of the overall
    budget proposal, research funding for NIH would constitute about 50
    percent of the nation's non-defense related science and technology
    portfolio.
        NSF's four priority areas from the previous fiscal year continue to
    headline the fiscal year 2002 budget request. These are:
      --Information Technology Research (ITR),
      --Nanoscale Science and Engineering (NNI),
      --Biocomplexity in the Environment (BE),
      --Learning for the 21st Century (SMET).

                      TABLE I--NSF BUDGET OVERVIEW WITH AND WITHOUT SPENDING IN THE PRIORITY AREAS.
                                                 [DOLLARS IIN MILLIONS]
    ----------------------------------------------------------------------------------------------------------------
                                                               NSF Agency Wide               Engineering (ENG)
                                                       -------------------------------------------------------------
                                                          Fiscal                         Fiscal
                                                        year 2001    Fiscal   Percent  year 2001    Fiscal   Percent
                                                         current   year 2002   change   current   year 2002   change
                                                           plan      request              plan      request
    ----------------------------------------------------------------------------------------------------------------
    Total Budget......................................  $4,416.39  $4,472.49     $1.3    $430.84    $431.05     <0.1
        Salaries and Expenses.........................     160.54     170.04      5.9        n/a        n/a      n/a
        Inspector General.............................       6.27       6.76      7.8        n/a        n/a      n/a
                                                       =============================================================
    Total Program Budget..............................   4,249.58   4,295.69      1.1     430.84     431.05     <0.1
        ITR...........................................     259.43     272.53      5.0       8.17       9.17     12.2
        NNI...........................................     149.68     173.71     16.1      55.27      70.30     27.2
        BE............................................      54.88      58.10      5.9       2.69       3.69     37.2
        SMET..........................................     121.46     125.51      3.3       2.70       3.40     25.9
                                                       =============================================================
    Remaining Funds...................................    3664.13    3665.84     <0.1     362.01     344.49     -4.8
    ----------------------------------------------------------------------------------------------------------------
    Comparisons include both agency-wide and the engineering directorate.

        Funding has been requested to expand ITR by 5.0 percent (to $273M),
    NNI by 16.1 percent (to $174M), BE by 5.9 percent (to $58M) and SMET by
    3.3 percent (to $126M). Each of these priorities, but NNI and SMET in
    particular, continue to be strongly supported by ASME.
        In light of the 1.3 percent overall increase, expansions in the
    priority areas necessarily imply reductions in other areas. Table 1
    clearly shows the impact on funding for core programs. Agency-wide,
    there will be virtually no change from current year plans, while the
    Engineering Directorate (ENG) would experience a 4.8 percent decrease
    in funding for core research programs.
        The Task Force endorses the leadership role that NSF has played in
    guiding the nation's basic research and development activities. By
    maintaining a balance between exciting new developments, and the core
    programs, which incubate such breakthroughs, NSF has built an
    outstanding record of supporting a broad spectrum of research of the
    highest quality. We continue to recognize the importance and timeliness
    of the four priority investment areas, ITR, NNI, BE, and SMET. These
    address major national needs for the 21st century and are being
    implemented at a critical juncture in the nation's technological
    development. (However, as will be discussed in the next section, it is
    not clear that an optimum balance has been achieved.)
        There are a number of particularly noteworthy items in the fiscal
    year 2002, beginning with the planned increase in graduate fellowship
    stipend levels. Ensuring a continuous stream of well-trained, highly
    qualified research scientists into leadership positions is critical to
    the survival and growth of the nation. In this respect, the Task Force
    strongly endorses NSF's planned increase in stipends for graduate
    fellows from $18,000 to $20,500. The logical extension of providing the
    nation's children with a strong science and technology knowledge base
    is simultaneously maximizing the pool of science and technology
    educators and leaders. Making fellowship stipends attractive to the
    nation's best and brightest students is certainly a positive step.
        Overall increases in the number of graduate fellowships awarded is
    also especially positive. NSF is the only federal agency with the
    direct charter of training graduate students for advanced research and
    development careers. It is therefore important that this continue to be
    a major priority area in perpetuity. It is not clear, however, that the
    correct balance in types of graduate fellowships has been struck. Plans
    to stabilize the Graduate Research Fellowship (GRF) program at 900 new
    offers per year while increasing the number of GK-12 Fellowship could
    be interpreted that research is becoming a lesser priority. If true,
    such a direction would not only compromise the vitality of NSF, it
    would also jeopardize the nation's world leadership role in research
    and development.
        In general, we also support and applaud the activities within ENG.
    NSF's vision of a committed balance between people, ideas and tools is
    exemplified within ENG. The Directorate is justifiably proud of the
    large numbers of CAREER and GRF awards it supports. Integrating ITR and
    SMET principles into the Network for Earthquake Engineering Simulation
    (NEES) to create one of the three Major Research Equipment (MRE)
    accounts is an excellent example of the long-range cross-cutting focus
    of the ENG leadership.
        ASME has strongly supported the nanotechnology initiative since its
    inception as an NSF emphasis area in fiscal year 2000. In the past two
    years, funding for this initiative has grown substantially. With a
    growing record of research and development successes, the transitioning
    of nano-science and engineering into commercially viable technologies
    is becoming a pressing challenge for NNI. For this reason, the
    introduction of Nanotechnology Experimentation and Testing Facilities
    (NEXT) by ENG is timely. It is recommended that NSF look toward
    developing this effort in MRE in upcoming fiscal year planning.
        Finally, the Task Force endorses NSF's participation in K-12 math,
    science and engineering education initiatives consistent with the
    agency's broader mandate to lead the nation's research and development
    enterprise. Most notably, NSF has included $200M in its fiscal year
    2002 budget request to kick-off the Math and Sciences Partnership (MSP)
    program. The goal of MSP is coupling K-12 and higher education SMET
    education into a single integrated effort by encouraging universities
    to adopt SMET into their core missions.
        Clearly, the future of this nation depends on how well its children
    are prepared to meet the socio-technological challenges that will arise
    in their adult lives. In this technological age, providing the highest
    quality math, science and technology education to all children should
    be a national imperative. We, therefore, applaud President Bush's ``no
    child left behind'' policy and NSF's willingness to contribute to
    making it a reality. However, it is important to note that the overall
    fiscal year 2002 Budget Request, coupled with this added emphasis on K-
    12 education, changes the balance between K-12 education and research.
    The Task Force cautions that a `proper balance' must preserve the
    integrity of NSF's fundamental research and development mission.
                             questions and concerns
        Sky rocketing gasoline prices and the ongoing energy crisis in
    California serve as stark reminders of the need for balance in long
    range R&D planning. Thus, as in previous years, the Task Force's key
    questions and concerns arising from the fiscal year 2002 budget request
    center on matters of balance. In particular, we are concerned with:
      --the gross funding imbalance in the federal R&D portfolio between
            life sciences and engineering/physical sciences
      --insufficient support for core engineering programs at NSF, and
      --inadequate funding levels for existing grants.
        The fiscal year 2003 R&D budget request reflects continued
    imbalance. Funding for the life sciences (i.e. NIH) continues to
    increase at a rate that would result in a doubling from fiscal year
    1998 to fiscal year 2003. At the same time, however, funding for all
    other non-defense agencies with a significant R&D component have seen
    moderate to negative increases over the same five year period. If the
    current budget request is enacted, funding for R&D in the life sciences
    will be roughly equal to all other non-defense R&D combined.
        There is clearly no argument against attempting to eradicate life-
    threatening illnesses and developing technologies to improve the
    quality of life of those challenged by debilitating diseases. However,
    one must question the singular focus, which has already left the nation
    lacking adequate power and transportation infrastructure to provide a
    sustainable quality of life. Can the nation afford to pursue the ideal
    of eradicating diseases without concomitant advances in the nation's
    basic technological infrastructure?
        NSF's conflicting commitments to building on its emphasis areas
    while effectively maintaining current spending levels in fiscal year
    2002 has resulted in plans for dramatic cuts to core programs,
    particularly within ENG. As indicated in Table I, requested spending
    for core research in ENG not related to any of the four emphasis areas
    is 4.8 percent less than the fiscal year 2001 current plan. Since the
    4.8 percent figure is a composite over the entire ENG directorate,
    obviously specific programs will be impacted differently.
        One example of programs particularly affected by initiative driven
    spending is Chemical and Transport Systems (CTS). The fiscal year 2002
    budget request for CTS is $50.15 M, down $0.57 M or -1.1 percent from
    fiscal year 2001 projections. Of the $50.15 M, CTS plans to spend
    $16.98 M (or 34 percent of its budget) on NNI alone,. Coincidentally,
    this is the same program from which basic R&D for future power
    generation and oil refinery technologies should come.
        Ensuring adequate numbers of core and initiative efforts has been
    accomplished to-date in large part by limiting grant sizes. The
    projected median research award size for fiscal year 2002 will remain
    at about $77,000 per year. This continues to be in general sufficient
    to support one graduate student and a senior investigator. However, an
    extended period of constant grant sizes has eroded buying power and the
    ability to adequately support professional development. Further,
    forming small teams (2-3 senior investigators) to pursue and define the
    major initiative areas of the future is virtually impossible. Thus to
    truly advance the frontiers of science and technology, significant
    increases must be made not only to the number of grants, but to the
    size of each grant as well.
                                    summary
        ASME continues its enthusiastic support for the National Science
    Foundation and its leadership in articulating the nation's basic
    research and development vision. In fiscal year 2002, NSF has requested
    funding to expand major, cross cutting initiatives addressing pivotal
    technological issues facing the nation. This includes the
    nanotechnology initiative strongly endorsed by ASME. Expansion of the
    graduate fellows programs coupled with increases in stipend levels
    reinforces NSF's commitment to graduate education (i.e. developing
    people). The focus on developing people and ideas in general is
    certainly reflected throughout the ENG directorate's budget request as
    well. The challenge for this year appears to be maintaining a healthy
    balance between maintaining world R&D leadership and incorporating K-12
    math, science and engineering education and between supporting core
    programs and expanding key initiatives.
        There is great concern over the growing imbalance between life
    sciences funding and the rest of the nations research and development
    portfolio. Crises, such as those occurring in the gasoline and power
    production industries, reflect long term failure to value and support
    core research focussed at advancing the nation's technological
    infrastructure. The current budget plan does not appear to permit NSF
    to meet key fiscal year 2002 Performance Goals (i.e. Goals III-1a and
    III-2) By increasing the number and size of its awards, NSF will be
    better positioned to fulfill its leadership responsibility in directing
    the nation's research and development activities.
                                     ______

            Prepared Statement of the American Psychological Society

        Mr. Chairman, Members of the Committee: Thank you for this
    opportunity to present the views of the American Psychological Society
    (APS) on the fiscal year 2002 appropriations of the National Science
    Foundation (NSF). I am Alan Kraut, Executive Director of APS. We are a
    15,000-member organization of scientists and academics, most of whom
    are located in colleges and universities across the country. Many
    members of the American Psychological Society are supported by NSF, and
    much basic research in our field could not exist without NSF funding.
                 recommendation for fiscal year 2001 nsf budget
        As a member of the Coalition for National Science Funding, APS
    supports the Coalition's recommendation of $5.1 billion for the
    National Science Foundation in fiscal year 2002. This would be the
    second installment of the five-year plan to double the NSF budget. The
    increase that you and your colleagues in the Senate provided for NSF in
    fiscal year 2001 was an important first step in offsetting the
    comparative underfunding that has been experienced in NSF's budget in
    the past several years. The scientific community is grateful for your
    support and it is our greatest hope that you will continue to support
    the much-needed expansion of NSF's budget.
        Within the NSF budget, we ask the Committee to continue its history
    of support for behavioral and social science research at NSF. This
    Committee was instrumental in encouraging NSF to establish its Social,
    Behavioral, and Economic Sciences (SBE) Directorate a decade ago, and
    over the years has directly encouraged many of the initiatives coming
    out of that directorate.
        Before discussing specific activities of the SBE directorate, I
    first want to provide a brief overview of basic psychological research,
    to give you an idea of the scope and breadth of the field that I
    represent.
                  an overview of basic psychological research
        APS members include thousands of scientists who conduct basic
    research in areas such as learning and memory, and the linked
    mechanisms of how we process information through visual and auditory
    perception. Others study decision making and judgement; mathematical
    reasoning; language development; the developmental origins of behavior;
    and the impact of individual, environmental and social factors on
    behavior. This basic psychological research conducted by APS members
    has implications for a wide range of applications, from the design of
    airplane cockpit control panels, to how to teach math to children; to
    how humans can best learn using technology; to the development of more
    effective hearing aids; to increasing workforce productivity; and to
    the amelioration of social problems such as prejudice or violence.
        While this is a diverse range of topics, all of these areas of
    research are related by the notion that understanding the human mind
    and behavior is crucial to maximizing human potential. That places them
    squarely at the forefront of many of the most pressing issues facing
    the Nation, this Congress, and the Administration.
        Turning now to the SBE Directorate, I'd like to highlight two
    programs, one in cognitive neuroscience, and one in child development.
    These initiatives exemplify SBE's essential leadership on the cutting-
    edge frontiers of research, and they illustrate the important work that
    will either languish or flourish, depending on the size of the increase
    for the NSF budget this year.
                       cognitive neuroscience initiative
        Basic behavioral science supported by SBE traditionally has
    included research in cognition, perception, language, development,
    emotion/affect, and social psychology. These have been funded primarily
    through its Division of Behavioral and Cognitive Sciences. Recognizing
    the potential contributions of neuroscience to these and related areas,
    the directorate has added funds to these programs for the express
    purpose of bringing more neuroscience perspectives to bear on these
    topics--to map these psychological mechanisms onto the physical
    dimensions of the brain.
        Theoretical work in behavioral science has greatly advanced our
    understanding of the basic mechanisms underlying memory, emotion,
    learning, and other psychological and cognitive processes. Now, with
    brain imaging and other non-invasive techniques, we are poised to
    confirm and extend these theories through studies of the living brain.
    Scientists from a range of areas will be able to test theories about
    normal brain functioning; assess the behavioral consequences of brain
    damage; and reach new levels of understanding of how the brain develops
    and matures, in terms of both structure and function.
        This initiative will usher in a new era in cognitive and behavioral
    science research, one that has enormous implications for virtually all
    sectors of our society, including education, industry and technology,
    and health care. But reaching this new era depends on the basic science
    that only NSF can provide.
        I should also note that NSF is providing larger and longer grants
    under this initiative, in recognition of the higher cost of conducting
    these kinds of interdisciplinary, technology-dependent studies. This
    new funding policy is an important development for behavioral science,
    in part because it reverses a previous trend toward smaller, shorter
    grants on average in behavioral science in comparison to the average
    grants in other disciplines.
                         children's research initiative
        Recognizing that a combination of perspectives--cognitive,
    psychological, social, and neural--is needed to fully understand how
    children develop and how they acquire and use knowledge and skills, the
    SBE directorate will support new interdisciplinary research centers
    that will focus primarily on integrating traditionally disparate
    research disciplines concerned with child development. Known as the
    Children's Research Initiative (CRI), this program will bring together
    such areas as cognitive development, cognitive science, developmental
    psychology, linguistics, neuroscience, anthropology, social psychology,
    sociology, family studies, cross-cultural research, and environmental
    psychology, to name only some of the relevant disciplines. Basic
    researchers from these areas will focus on problems that cannot be
    solved through single investigator studies. This initiative aims to
    enhance the content knowledge of the fields involved; build an
    intellectual infrastructure within and among disciplines; and build a
    program of research in relevant aspects of developmental, learning, and
    human sciences.
        As with the cognitive neuroscience initiative, the CRI program
    illustrates the critical role NSF plays in creating and capitalizing on
    basic scientific opportunities that will have enormous implications for
    our nation's ability to realize the potential of all of its citizens.
        The two initiatives I just described are in the Division of
    Behavioral and Cognitive Science. SBE's other main component, the
    Division of Social and Economic Sciences, also supports a substantial
    amount of basic psychological science. Examples of research topics
    being addressed in that division include: human dimensions of global
    change, group and individual decision making, risk management, and
    human factors. Research in these areas has the potential to increase
    employee and organizational productivity, improve decision making in
    critical military or civilian emergency situations, and inform the
    public policymaking processes across a range of areas. We ask the
    Committee to support this division's behavioral and social science
    research programs.
                            the science of learning
        Another core area of interest at NSF is the science of learning.
    This field draws from a variety of research topics across psychology,
    such as brain and behavior, learning, memory, perception, social
    psychology, development, and so on. We have the knowledge base and a
    critical mass of scientists to help solve the educational and learning
    issues that have been identified by the government as high priorities.
    But getting that knowledge into the classroom is going to require a
    multi-disciplinary, multi-agency effort. The basic challenge is this:
    How can we apply and extend our knowledge of how people think, learn,
    and remember to improve education?
        In early March, a diverse group of psychologists and other
    scientists and educators met at Kellogg West conference facilities on
    the campus of California State Polytechnic University at Pomona, to
    address this and similar questions about the problems and possibilities
    of linking the science of learning to educational practice. More
    specifically, our focus was on using science to improve learning in the
    university and beyond. The conference was supported by the Spencer
    Foundation, the Marshall-Reynolds Trust, California State University,
    San Bernardino and APS. Several representatives of NSF attended the
    meeting, as did Cal Poly President Robert Suzuki, a member of NSF's
    National Science Board and chair of the Board's Committee on Education
    and Human Resources.
        It was agreed that although researchers know what cognitive,
    psychological, and social factors affect learning, this knowledge too
    often has not been put to use in the classroom or in industrial
    training settings. In fact, it would be difficult to design an
    educational model that is more at odds with current research on human
    cognition than the one that is used in most colleges and universities
    in the United States. For example, virtually all college science and
    math courses, especially at the introductory level, involve a lecture
    where a lone professor mostly talks (and writes on the board or on
    overheads) and the student takes notes. This is a satisfactory
    arrangement for learning if the desired outcome is to produce students
    who can repeat or recognize the information presented, but one of the
    worst arrangements for promoting in-depth understanding. We need
    instructional designs that maximize transfer to the real world, enhance
    critical thinking abilities, and encourage the habit of life-long
    learning.
        The ultimate goal of the initiative that began with the March
    conference is to develop new models of learning that will help pave the
    way for our educational system to become more global, more integrative,
    more diverse, and more flexible. One step in reaching this goal will be
    the development of a research agenda that identifies critical questions
    that can advance the science of learning and provide help in solving
    national educational problems.
        More generally, the science of learning is a topic that cuts across
    many areas at the Foundation, from Education and Human Resources to
    NSF's Workforce Initiative. For example, the Foundation has been
    planning a program of Centers for the Science of Learning under the
    cross-cutting 21st Century Workforce initiative. But these centers are
    in jeopardy in fiscal year 2002 unless adequate funding is provided. A
    delay in this and similar programs would mean a delay in the nation's
    ability to respond to the urgent, technology-driven need for new ways
    of training and education at all levels of learning.
        We ask this Committee to monitor and support NSF's efforts to bring
    the science of learning to bear on the nation's educational needs. The
    expanded budget we recommend for fiscal year 2002 will allow NSF to
    capitalize on the growing momentum surrounding this issue both at NSF
    and in the field.
                        public understanding of science
        NSF has made public understanding of science one of its science
    education priorities. We applaud NSF's leadership in this area, and we
    believe that the success of these efforts will be enhanced by focusing
    on examples from behavioral and social science research. These sciences
    have unique potential to increase science literacy because of their
    intrinsic relevance to daily life. That is, in addition to promoting
    understanding of questions in physics and math, NSF could also be
    promoting scientific understanding by showcasing how processes of
    learning and remembering take place, or the scientific validity of
    certain organizational management structures in industry, or any one of
    a hundred other areas of NSF support in social and behavioral science.
        Public understanding of psychological science is also a priority at
    the American Psychological Society. Last year we launched a new
    journal, Psychological Science in the Public Interest, which presents
    reports modeled after those generated by the National Research Council.
    Developed by panels of distinguished scientists, these reports focus on
    issues where psychological science can contribute to our understanding
    of topics of national importance. The first issue described ways to
    improve diagnostic decision-making over a wide range of situations
    using techniques from psychological science. Scientists have developed
    rigorous statistical procedures that have enormous potential to
    increase the accuracy and usefulness of such diverse applications as
    detecting breast cancer; improving weather forecasts; analyzing
    structural flaws in airplanes; and possibly even predicting violence.
        The second issue of PSPI assessed the validity of popular
    psychological tests such as the well-known Rorschach and other
    projective tests, finding that the tests have limited value despite
    their widespread use in everything from diagnosing mental disorders to
    determining which parent gets custody in a divorce. Upcoming reports
    will address such questions as: Does class size matter? Do herbal
    remedies improve memory or intelligence? Does SAT coaching work?
        To ensure that PSPI reports will reach the widest possible
    audience, we have been working with Scientific American to develop
    articles for the magazine that will be based on the studies published
    in Psychological Science in the Public Interest. We also are working
    with nationally-known newspapers and radio and television networks to
    reach an even wider audience. Our reports recently have been featured
    in the New York Times, on National Public Radio, and in many other
    outlets. I would be pleased to provide you with copies of the PSPI
    reports and their Scientific American counterparts, or you can view
    them on our website at www.psychologicalscience.org.
        NSF is helping to support this initiative through a small grant
    that is allowing the PSPI editorial board to evaluate and refine its
    review and vetting processes, and is enabling the dissemination of the
    research reports to a broader audience.
        In closing, I want to note that building and sustaining the
    capacity for innovation and discovery in the behavioral and social
    sciences is a core goal of the National Science Foundation. We ask that
    you encourage NSF's efforts in these areas, not just those activities
    I've described here, but the full range of activities supported by the
    SBE directorate and by NSF at large. As one example, NSF Director Rita
    Colwell has announced that a major new initiative will be launched in
    the behavioral and social sciences in fiscal year 2003. Your support in
    fiscal year 2002 will help NSF lay the groundwork for this long-overdue
    emphasis on these sciences.
        Thank you again for the opportunity to appear before you to present
    our recommendations. I would be pleased to answer questions or provide
    additional information.
                                     ______

    Prepared Statement of the National Association for Equal Opportunity in
                                Higher Education

                                   background
        Mr. Chairman and distinguished Members of the Subcommittee, I am
    Dr. Henry Ponder, Chief Executive Officer and President of the National
    Association for Equal Opportunity in Higher Education (NAFEO). I want
    to thank you for allowing me to appear before you today as you consider
    funding priorities relevant to the fiscal year 2002 VA-HUD-Independent
    Agencies Appropriations bill. In the time that I have, I would like to
    highlight many of the accomplishments of NAFEO as well as some of the
    initiatives that we support and are looking to begin and/or expand upon
    in the new millennium.
        NAFEO is the national umbrella organization representing the
    nation's 118 predominately and Historically Black Colleges and
    Universities (HBCUs). Our mission is to champion the interests of HBCUs
    through the executive, legislative and judicial branches of federal and
    state government, and to articulate the need for a system of higher
    education where race, ethnicity, socio-economic status, and previous
    educational attainment levels are not determinants of either the
    quantity or quality of higher education. The organization takes lead
    responsibility for the development and dissemination of public policy,
    programmatic efforts, and strategic and educational materials that: (1)
    enhance the role of HBCUs generally, and (2) promote minority student
    enrollment and attainment specifically. NAFEO is comprised of
    institutions of higher education that represent a broad spectrum of
    interests--public and private, large and small, urban and rural,
    liberal arts, agricultural, research, scientific and technological
    institutions. Of all of the HBCUs that belong to NAFEO, 46 percent are
    public, and 54 percent are private. The organization's membership is
    comprised of 2-year and 4-year institutions, as well as schools that
    offer advanced and professional degrees, and they are situated in every
    quarter of the country, the District of Columbia and the Virgin
    Islands.
        NAFEO was founded in 1969 at a time when the nation had before it
    overwhelming evidence that educational inequality in higher education
    remained manifest. The 1954 Supreme Court decision, ``Brown'' vs.
    ``Topeka Board of Education,'' and its progeny, focused national
    attention on the dual and unequal primary and secondary education
    systems nationwide and spurred two decades of litigation and
    legislation designed to redress the inequalities. But, the initial
    debate neither paid much attention to the inequalities in higher
    education nor focused on the nation's HBCUs as equal opportunity
    institutions; thus, a solution to some of the nation's higher education
    issues was eluded.
        NAFEO institutions historically are responsible for educating the
    vast majority of African Americans. Today, while NAFEO institutions
    enroll approximately 16 percent of all African American college
    students, they confer about 30 percent of all the baccalaureate degrees
    earned by African Americans annually. In some disciplines, such as
    engineering and teacher education, the number is significantly higher.
    Moreover, these schools produce the largest number of African American
    baccalaureate recipients who eventually go on to receive doctorates,
    especially in the sciences.
        During the last two decades, many of the educational achievements
    African Americans have experienced are directly attributable to NAFEO
    and its member institutions. However, despite the progress, the
    increases in college-going rates for African American high school
    graduates have not kept pace with those of the white population. Ten
    years ago, African American high school graduates enrolled in college
    at a rate that was only 5 percentage points below that of white
    graduates (28.0 percent vs. 33.0 percent). Today, there is a difference
    of 8 percentage points (34.0 percent vs. 42.0 percent). Much of the
    responsibility for ensuring greater educational access for African
    Americans, closing the college entrance gaps and addressing emerging
    trends at the national level, rests on the shoulders of NAFEO and its
    member institutions. As a result, additional resources will be required
    from the federal government and the private sector if achievement gaps
    are to be closed in African American communities.
        I would first like to acknowledge various programs under this
    subcommittee that have been beneficial to HBCUs in the past.
    Specifically, NAFEO supports additional funding in the areas identified
    in the table below, which details our specific requests by relevant
    department.

       programs of special significance: expansion of undergraduate and
                 graduate research & development opportunities
    The HBCU-UP Program
        NAFEO is very concerned about the underrepresentation of African
    Americans in the science, engineering and mathematics (SEM) fields,
    which is a serious problem that affects our ability to compete in the
    nation's scientific and technological workplace. This situation results
    in the loss of opportunity for a large segment of society. As a result,
    throughout the U.S., sweeping changes in social policy designed to
    increase the self-reliance and self-sufficiency of citizens from
    disadvantaged backgrounds are taking place. In order to ensure access
    to employment opportunities in the emerging field of high technology
    and other scientific areas, it is essential that vigorous efforts be
    undertaken to increase the number of African Americans with degrees in
    mathematics, the physical sciences and engineering. HBCUs should play a
    critical role in addressing this problem because of their strong track
    record in annually producing a disproportionately large number of
    minority undergraduates with degrees in these fields. In this vein,
    NAFEO requests $20 million in funding for the Historically Black
    College and University Undergraduate Program (HBCU-UP), in an effort to
    address the basic investment deficits that HBCUs face today,
    particularly: faculty research grants, research experience for
    undergraduates, and scientific instrumentation.
    The HBCU Research University Science and Technology Initiative
        This year, NAFEO is supporting the establishment of an initiative
    that stimulates the competitive research and development (R&D) capacity
    of HBCUs that provide doctoral degrees in science-related fields.
    Specifically, we ask that $10 million be provided to support this
    effort. There are ten HBCUs that provide graduate and doctoral degrees
    in science-related fields--Alabama A&M University, Clark Atlanta
    University, Florida A&M University, Hampton University, Jackson State
    University, Morgan State University, Norfolk State University, North
    Carolina A&T University, Tennessee State University, and the University
    of Maryland, Eastern Shore. The National Science Foundation (NSF)
    should take the lead in establishing the program, ultimately working to
    expand the program to involve other relevant agencies. Appropriate
    funds should be made available to implement the program, with uses
    including, but not being limited to:
      --Start-up funding for new faculty;
      --Faculty exchanges and development;
      --Academic instruction in disciplines where African Americans are
            underrepresented;
      --Instrumentation, supercomputing and science facility renovations;
            and
      --Supportive services for students in the graduate and doctoral
            pipeline.
        The ultimate objective of the effort would be to stimulate
    competitive research and systemic change across the HBCU community.
        Data assembled and disseminated by the federal government reveal
    disturbing trends related to the participation of HBCUs in the federal
    R&D enterprise. Based on data compiled by NSF, for 1999, about $14
    billion was awarded by the federal government to all institutions of
    higher education for R&D. Of this amount, only $164 million was awarded
    to HBCUs, less than one percent. Even more disturbing is the fact that
    these funding levels represent a decline in the amounts provided in
    previous years ($202 million in 1995, and $188 million in 1996), while
    overall funding in this area has increased (up from $12.8 billion in
    1995 to over $14 billion today). Looking specifically at R&D funding
    awarded by the National Science Foundation, while overall funding to
    institutions of higher education was $1.9 billion in 1998, only 2.2
    percent, or $43 million was awarded to HBCUs. This averages out to less
    than $400,000 per HBCU institution, while the top 100 institutions
    average $19 million per institution. Furthermore, data prepared by the
    White House Initiative on HBCUs, shows the total NSF funding awarded to
    HBCUs for fiscal year 1999 was just 1 percent of the total awarded to
    all institutions of higher education.
        Forty-two percent of all doctorates for African Americans are in
    education compared to 19 percent for all U.S. citizens. Conversely,
    African American representation in the sciences is very low. In 1999,
    African Americans received the following number of doctorates of all
    those awarded to U.S. citizens in the following fields: mathematics--10
    of 538 (1.8 percent); computer science--16 of 412 (3.8 percent);
    chemistry--46 of 1,251 (3.7 percent); physics--6 of 651 (0.9 percent);
    engineering--84 of 2,474 (3.4 percent); and biological sciences 109 of
    3,654 (3.0 percent).
        Additionally, as noted previously, data reveal that HBCUs are the
    primary producers of African American undergraduate students who pursue
    graduate and doctoral degrees in science and technology (S&T) areas.
    Specifically,
      --Forty-two percent of all the PhDs earned each year by African
            Americans are earned by graduates of HBCUs; 18 of the top 23
            producers of African Americans who go on to receive science-
            related PhDs are HBCUs.
      --HBCUs are 4 of the top 10 producers of successful African American
            medical school applicants. Those four HBCUs produce 20 percent
            more African American applicants than the other six combined.
      --Eight of the top 10 producers of African American engineers are
            HBCUs.
        the role of the federal government in educational research and
                                  development
        Historically, funding for federally-sponsored R&D activities have
    been concentrated in a very small number of institutions of higher
    education and states that were in the best position to take advantage
    of an explosion in federally-funded academic research following World
    War II. As A. Hunter Dupree notes in his book, ``Science in the Federal
    Government'' (1957), this targeting of resources resulted from a
    federal science policy that provided resources primarily to a select
    group of federally-initiated and supported institutions. He also notes
    in the concluding paragraphs of his treatise that a ``democracy that
    has in fact enjoyed the results of science has been more tolerable,
    more humane, and more able to fulfill its responsibilities to its
    people . . . a government without considerable scientific competence
    could not have governed at all . . . science has not only contributed
    to the power of the government but to the ability of the people to
    maintain their freedom.''
        In taking a first step across the threshold of the new millennium,
    industry, academia and policy makers increasingly are using federal R&D
    resources as a way to strengthen our nation's global competitiveness
    and to ensure economic stability. Most recently, they have embraced a
    complex strategy that involves, in part, (1) doubling funding, over a
    multi-year period, for the National Institutes of Health (NIH) and NSF;
    (2) importing workers by expanding usage of H-1B certificates as an
    anecdote to the difficult challenges presented by the ``digital
    divide'' and growing shortage of technologically-skilled workers; and
    (3) increasing funding for internet development and expansion, and
    other programs related to telecommunications and information
    technologies (IT). In this climate, Dupree's supposition that science
    contributes not only to the power of government, but also to the
    ability of a people to maintain their freedom, has serious implications
    not only for the nation, but for African Americans and other
    underrepresented groups.
        However, in order to participate more actively in the federal R&D
    enterprise, and to support national efforts to increase the number of
    Americans equipped with advanced science and technology (S&T) skills, a
    much larger number African Americans and persons from other minority
    groups will need to receive graduate degrees in S&T fields. In fact,
    reiterating disturbing trends that have been widely reported for almost
    two decades, an April 2000 report published by the National Science and
    Technology Council (NSTC) concludes that:
      --Many types of science, technology, and engineering (ST&E) jobs are
            among the fastest growing in the U.S. workforce, to the point
            that demand for workers has outstripped supply;
      --There is already evidence that worker shortages are limiting
            economic growth;
      --The potential shortage of skilled workers could have devastating
            consequences for the future. Since it takes many years to train
            a scientist or engineer, we must invest now to guarantee the
            availability of a skilled and competent workforce for the 21st
            century;
      --Agencies should expand or add programs that effectively overcome
            barriers such as the transition from one educational level to
            the next;
      --It is in the national interest to vigorously pursue the development
            of domestic ST&E workers from all ethnic and gender groups. We
            should pay special attention to groups that are currently
            underrepresented in the ST&E workforce, because it is with
            these groups that much of our nation's growing talent pool
            resides.
        Originally authorized in 1950, explicit in the NSF's mandate was a
    caveat to refrain from any ``undue concentration'' of funding for
    research and development. The legislation states:

        ``In exercising the authority and discharging the functions
    referred to in the foregoing subsections, it shall be an objective of
    the Foundation to strengthen research and education in the sciences and
    engineering, including independent research by individuals, throughout
    the United States, and to avoid undue concentration of such research
    and education.'' (42 U.S.C. 1862, Sec. 3e)

        In light of this legislative guidance and for the reasons stated
    previously, NAFEO seeks sufficient funding to for programs that will
    engage more fully HBCUs in mainstream federally-sponsored research and
    development efforts.
        This concludes my testimony. Again, on behalf of the National
    Association for Equal Opportunity in Higher Education, I want to thank
    you for the opportunity to appear before you today.
                                     ______

                 Prepared Statement of the NAHB Research Center

        Mr. Chairman, Senator Mikulski and Members of the Subcommittee: I
    am pleased to appear before you today to request continued funding for
    the Partnership for Advancing Technology in Housing (PATH) initiative.
    I commend this Subcommittee for its foresight and leadership in
    providing funding for the PATH initiative. We believe PATH should not
    only be maintained but also increased, for if the PATH program is to
    achieve its 2010 goals it has to have a long term federal commitment,
    leveraging even greater investment by industry.
        As you know, PATH is a voluntary initiative which seeks to
    accelerate the creation and widespread use of advanced technologies in
    order to radically improve the quality, durability, environmental
    performance, disaster resistance, energy efficiency and affordability
    of our nation's housing by 2010. These are ambitious goals. In fact,
    the National Academy of Sciences has suggested that they may be too
    ambitious given the limited funding allocated to the program to date.
    The industry steering committee agrees with the Academy's finding in
    this regard and has put together a task force to address redefining the
    goals in such a way that progress can be measured and the
    reasonableness of the goals evaluated.
        I am pleased to report significant progress over the past year on
    many of the activities that were presented to the Subcommittee in the
    PATH Operating Plan. Yet, if America's homes are going to be more
    affordable, safer to build and to live in, more environmentally
    sensitive, and more durable, PATH still has a long way to go. In that
    regard, I would like to emphasize the research and technology
    activities that are underway as they speak to the long-term success of
    the program.
        Technology roadmapping is the process of organizing research and
    development activities to help decide which technologies are worth
    spending time, money, and resources on. A roadmapping effort for PATH
    takes into consideration those home building technologies with the most
    potential to impact the PATH goals as well as ways to fund their
    research, development, dissemination, and use. The roadmapping process
    has, for the first time, brought together a broad and diverse segment
    of the home building industry together with government and academia to
    identify what technological developments are needed for PATH to achieve
    its goals. There have been hundreds of industry participants in this
    process working primarily in three areas: information technology to
    accelerate and streamline home building; advanced panelization systems;
    and, whole-house and building process redesign.
        To illustrate both the complexity and the potential, I will talk
    specifically about just one area, that of information technology.
    Advancements in information technology offer exciting opportunities to
    build better homes at lower cost, but it is a complex undertaking.
    Process change that takes advantage of the benefits of current and
    emerging information technologies is critical to the undertaking. For
    example, if electronic permitting involves just electronic delivery of
    plans, little time is saved out of what could be a months-long process.
    However, if the application is checked in parallel by the various code
    departments and required changes are immediately transmitted to the
    contractor for initiating corrective actions, much more time can be
    saved during the process. Just this one example has to involve
    builders, manufacturers, local government leadership, code departments,
    software manufacturers, and other players. But, the payoff can be very
    significant, and potentially a significant contributor to meeting the
    2010 goals set for the program.
        Industry investment in PATH is considerable. Although there was
    skepticism at the outset that a government partnership could make a
    difference, industry participation has been exceptional. Private sector
    commitments to cooperative research projects with the federal
    government under PATH now exceed $5 million. In addition, it is
    estimated that PATH leverages another $50 million in private sector
    research and development that is directed toward APTH program goals.
    New Cooperative Research and Development initiatives have been
    instigated with seed funding from HUD and the PATH Program. A program
    with the CertainTeed Corporation is aimed at increasing the
    affordability and quality of homes by finding efficiencies in the basic
    approach used to build homes, with an emphasis on business and
    construction processes. Results will provide savings to be shared with
    subcontractors and their labor crews to build a more stable workforce.
    Other exciting cooperative efforts include: optimizing the use of steel
    in production home building, 11 grants to 9 Universities co-funded by
    PATH and NSF for basic research on new technologies that will support
    the next generation of U.S. housing, and multiple projects in
    partnership with NIST and industry leaders from Dow Corning, GE
    Plastics, Rohm & Haas, and others on nonproprietary research to improve
    long-term performance of building materials.
        Field Evaluations and Demonstrations are underway involving the
    support of approximately thirty builders and remodelers across the U.S.
    who are helping the Research Center to evaluate emerging technologies
    in their housing projects. In addition, there are field evaluations
    underway with non-profit groups such as Habitat for Humanity and
    several projects with the American Lung Association to monitor indoor
    air quality which are coming up with interesting findings. The results
    of these evaluations and demonstrations will be communicated broadly to
    the industry through the ToolBase program described below, as well as
    through the HUD website. Industry commitment to date in these
    evaluation activities is substantial and will continue to grow as new
    technologies are developed to address the PATH goals and builders from
    across the country offer to evaluate their performance, installed cost,
    installation issues, and consumer acceptance in real world housing
    projects.
        Both industry and government agree that essential to improving the
    bricks and mortar of our housing and achieving the PATH goals is a
    strong information dissemination effort.
        Communications and Outreach for the PATH program is accomplished
    through the NAHB Research Center's ToolBase program. Because the
    building industry is comprised of over 200,000 firms, many innovations
    do not achieve market acceptance for 15-20 years. The Research Center
    built a new communications infrastructure for reaching these companies
    quickly and efficiently to let them know of emerging problems in the
    field but also to help them find technical solutions that they can
    immediately put into practice. Through PATH program support this
    ToolBase program has expanded its technical offerings to builders and
    contractors and has set up new mechanisms for learning about problems
    in the field that can be solved through technical research and
    development. A technical hotline is in place that fields between 8,000
    and 10,000 calls each year. Hotline staff help builders understand what
    resources are available to help them make decisions on the use of new
    technologies. A technical newsletter is distributed six times per year
    to over 80,000 companies through their local home builder associations.
    A wide range of resources is now available on the Internet, including
    an Ask the Expert page that allows the industry to find solutions on-
    line and a new E-News monthly technology news service that is
    distributed for free to subscribers. The ToolBase program reports the
    results of PATH program results directly to the industry so that we can
    help them reduce the time that it takes to bring innovative new
    products to market. ToolBase is another source of industry investment
    in the PATH program. Over $3 million has been invested by the private
    sector to date in the development of the ToolBase communications
    infrastructure.
        Outreach to the industry is also accomplished through the specialty
    trade shows and conferences. In February, PATH co-sponsored TecHOMExpo
    in Atlanta, Georgia putting on over 20 educational programs and over
    100,000 square feet of exhibits. Both PATH and EPA are sponsors and
    advisors for the National Green Building Conference. This year's
    conference in Seattle, Washington March 18-20, included participation
    from the Sierra Club and the American Association for the Advancement
    of Science (AAAS). PATH is a contributing sponsor for this event, sits
    on the advisory committee, and led two education sessions for
    attendees.
        While much has been accomplished, there is still much to do. The
    current PATH budget level of $10 million will not fully support, in a
    timely manner, the research and development needs identified through
    the roadmapping process. If the subcommittee's budget allocation
    permits, we believe an additional $3 million, for a program level of
    $13 million, could leverage a much higher rate of industry involvement
    and increased private sector research and development.
        Again, members of the subcommittee, we thank you for your
    leadership in support of the PATH initiative, and please let me know if
    we can answer any questions.
                                     ______

               Prepared Statement of the Society for Neuroscience

        Mr. Chairman my name is Donald Price. I am the President of the
    Society for Neuroscience and a Professor of Pathology, Neurology, and
    Neuroscience at The Johns Hopkins University School of Medicine. I am
    also Director of the Division of Neuropathology and Director of the
    Alzheimer's Disease Research Center. I also serve as the Co-Director of
    the Parkinson's Disease Research Center and Co-Director of the
    Amyotrophic Lateral Sclerosis Research Center at The Johns Hopkins
    Hospital and The Johns Hopkins University School of Medicine. I am
    testifying on behalf of the Society for Neuroscience, the largest
    scientific organization in the world dedicated to the study of the
    brain and nervous system. Neuroscience forms the fundamental basis of
    the medical specialties of psychiatry, neurology, neurosurgery, and an
    important portion of many other medical specialties including
    anesthesia, endocrinology, geriatrics, internal medicine,
    ophthalmology, otolaryngology, pediatrics, and rehabilitation medicine.
    The Society for Neuroscience numbers among its members more than 28,000
    basic and clinical researchers affiliated with universities, hospitals
    and scientific institutions throughout North America and in other
    countries.
        Chairman Bond, the Society appreciates this opportunity to give
    testimony, and we thank the members of this Subcommittee and the entire
    Congress for the priority that was placed on funding biomedical
    research at the National Science Foundation (NSF) and the Veterans
    Administration (VA) last year.
        The Society for Neuroscience requests increased research funding
    for the National Science Foundation and for the Department of Veterans
    Affairs to facilitate the progress of research already being conducted
    at these institutions, and to aid in the funding of future projects and
    grants.
                          national science foundation
        The NSF is one of our nation's premier scientific agencies and is
    responsible for extraordinary contributions to a broad range of
    scientific knowledge cutting across numerous scientific disciplines.
    The success of the research funded by NSF is evidenced by the over 100
    Nobel prizes that have been awarded to researchers supported by NSF
    grants. The cross-cutting nature of the scientific research supported
    by NSF grants has allowed investigators from each of the separate
    scientific disciplines to benefit from the work performed by colleagues
    in other fields. NSF-supported research embodies a collaborative
    enterprise and the results have provided immense benefits in our search
    for knowledge, and in our search for treatments and cures to deadly
    diseases.
        The President's fiscal year 2002 budget for the National Science
    Foundation requests $4.5 billion, a one percent increase over fiscal
    year 2001. While additional details regarding the President's budget
    have not yet been made available, this recommendation is particularly
    disappointing considering the strong support the Congress demonstrated
    last year by providing NSF with a nearly 14 percent increase. The
    Society for Neuroscience strongly recommends substantial increases in
    funding for the National Science Foundation in line with the increase
    provided by Congress last year.
        NSF-supported neuroscience research has played a major role in
    improving our understanding of neurological and mental disorders. The
    quality of this research was once again recognized by the Nobel
    Assembly with the awarding last year of the Nobel Prize in Physiology
    or Medicine to Dr. Paul Greengard, an NSF grantee. (This was a joint
    award to Dr. Greengard and two other scientists). Dr. Greengard's
    research has resulted in a substantially increased understanding of how
    the brain and nervous system function at the molecular level.
    Greengard's work has helped us understand how dopamine and several
    other chemical transmitters exert their effects in the nerve cell.
        In addition to the pioneering research conducted by Dr. Greengard,
    NSF funds hundreds of studies in the area of basic neuroscience, and
    these studies have contributed immensely to our knowledge of the brain
    and central nervous system. The cross-disciplinary approach employed by
    NSF is particularly beneficial to research on the brain and central
    nervous system. New engineering advances, for example, have led to new
    and more powerful imaging technologies, which have greatly aided
    researchers in their study of the brain.
        The Society for Neuroscience strongly supports the National
    Nanotechnology Initiative announced last year. Nanotechnology--the
    ability to manipulate individual atoms and molecules--has the potential
    to change the way in which almost everything is made, including new
    medicines. The Society urges continued support for this important
    initiative and recognition of nanotechnology as a high priority area of
    research.
                         department of veterans affairs
        VA-sponsored research is unique among many of the federal research
    programs in that the majority of its work involves clinical research
    performed by physician investigators. The nation's medical research
    enterprise benefits, our nation's veterans benefit, and we all benefit
    from the VA's ability to integrate clinical and basic research. This
    integration allows the VA to effectively promote the rapid transfer of
    new medical knowledge from bench to bedside.
        The Society for Neuroscience asks that this Subcommittee provide
    sustained increases in funding for medical research at the VA that is
    in line with the nearly 10 percent increase provided last year. We
    support the recommendations of the Friends of the VA Medical Care and
    Health Research (FOVA) coalition and the Independent Budget for the
    Veteran's Administration. Both organizations have recommended an
    increase of $45 million for the VA's Medical and Prosthetic Research
    Program, an increase of 12.5 percent over last year's funding level.
        Funding for the VA Medical and Prosthetic Research Program has gone
    through periods of stagnation and sporadic increases over the last
    several years. This important medical research program was suffering
    from relatively flat funding levels for several years with the notable
    exception of fiscal year 1999 and fiscal year 2001 when Congress
    provided increases of 16 percent and 9 percent respectively. I would
    also note that the VA has consistently stated that it could do much
    more if it is provided with additional resources. Last year, for
    example, the VA requested an increase of $76 million. Unfortunately,
    this request did not make it past the Office of Management and Budget
    (OMB), which slashed the agency's request for an increase in research
    funds to $0. Congress wisely rejected this recommendation.
        The VA has identified four major areas in which it would put
    additional funds to use. The neurosciences are included in all of these
    major areas. First, are major new treatment studies in Parkinson's
    disease, Post-Traumatic Stress Disorder (PTSD), diabetes, and other
    areas. Second is improvement in the VA's quality enhancement research
    initiative. The VA has stated that this initiative is severely
    underfunded in vitally important areas including mental health, spinal
    cord injury, stroke, cerebral vascular disease, and AIDS. The third
    major area identified by the VA is brain disease, with a focus on nerve
    regeneration and its application to spinal cord injury. This area of
    research represents a prime example of the importance of linking basic
    and clinical research. The fourth and final major area identified by
    the VA is what the agency refers to as bioscience. The VA noted in its
    testimony last year that its research efforts in diseases such as
    schizophrenia are severely underfunded. The agency also noted that it
    would be reducing its commitment to the VA centers of excellence by
    half in fiscal year 2000.
        Mr. Chairman, the VA medical system serves a critically important
    role by providing our nation's veterans with access to highly skilled
    medical care while also providing researchers with an opportunity to
    conduct large, long-term, pivotal clinical trials benefiting all
    Americans. Unfortunately, flat funding levels for several years, with
    sporadic increases, have inhibited the VA's ability to recruit and
    maintain high-quality researchers.
                                    summary
        The Society for Neuroscience asks that this subcommittee support a
    $674 million, or 15 percent, increase over fiscal year 2001 for the
    total NSF budget, bringing it to $5.1 billion. The Society for
    Neuroscience recommends $395 million for the VA Medical and Prosthetic
    Research program in fiscal year 2002, an increase of $45 million, or
    12.5 percent, over fiscal year 2001. We strongly believe that the
    research programs we advocate area worthy investment in our country's
    future, and we urge you to place NSF and VA research among the
    Subcommittee's highest priorities.
        Thank you for the consideration of our request.
                                     ______

              Prepared Statement of the Coalition of EPSCoR States

        Mr. Chairman and members of the Subcommittee, thank you for the
    opportunity to submit this testimony on behalf of the Coalition of
    EPSCoR \1\ regarding the National Science Foundation's Experimental
    Program to Stimulate Competitive Research (EPSCoR). I am the State
    Program Director for Alabama EPSCoR.
    ---------------------------------------------------------------------------
        \1\ Alabama, Alaska, Arkansas, Idaho, Kansas, Kentucky, Louisiana,
    Maine, Mississippi, Montana, Nebraska, Nevada, North Dakota, Oklahoma,
    Puerto Rico, South Carolina, South Dakota, Vermont, West Virginia, and
    Wyoming.
    ---------------------------------------------------------------------------
        As most of you know, the Experimental Program to Stimulate
    Competitive Research (EPSCoR) was established at the National Science
    Foundation about 20 years ago to assist those states, which
    historically had not participated fully in federal research and
    development (R&D) funding to become more competitive, especially for
    NSF funding and later for NIH, DOD and other federal R&D funding.
    Historically, these states were less competitive than others throughout
    the nation for a variety of reasons--some tended to be rural and
    geographically isolated (at least prior to the Internet); others tended
    to be among the states with large numbers of students who were under-
    represented minorities or disadvantaged economically; and some were
    states that traditionally invested more heavily in an agriculture and a
    natural resource research base than a technological one. For these
    reasons the EPSCoR states simply did not benefit from the large federal
    institutional development investments made to universities and colleges
    in the 1950s and 1960s, as part of a national effort to broaden and
    strengthen the U.S. public university system and its R&D capability.
        Helping these ``less research intensive'' states grow to be more
    competitive has become more important in recent years in order to
    overcome the concentration of federal R&D funding in a few states and
    institutions and to create a broader research community throughout the
    nation. Today, all states should be full participants in federal R&D
    efforts and federal R&D support should be available to qualified
    students and researchers wherever they are.
        The EPSCoR program started with only five states. It grew to its
    current number of nineteen states and Puerto Rico as more states came
    to realize the need to raise the research capabilities to new levels in
    certain states, and the value of a program that emphasized
    infrastructure and capacity building. Simply funding faculty research
    proposals was never going to move these states to a level where they
    could contribute to local, state and national S&T needs and economic
    competitive goals.
        The EPSCoR program remained a very small program for the first half
    of its life. Its budget was only $8 million federal-wide in 1990 for
    all the states. It has only been in the last seven to eight years that
    we have seen real increases in funding and the extension of the program
    to agencies outside of the NSF. For those of us in the EPSCoR states,
    these have been welcome advances but we also understand that they have
    been extremely modest in comparison to the overall increases in total
    federal R&D funding. We also know that research infrastructures are not
    developed overnight, especially with these modest investments.
        Today, however, I want to emphasize the importance of this program
    to my state of Alabama and other participating states. Let me give you
    a few examples from Alabama. The Quantum Research Corporation in its
    2000 State-at-a-Glance report to NSF indicated that, over the life of
    the Alabama EPSCoR program, the NSF investment of $13 million in EPSCoR
    researchers in Alabama through 1996 has resulted in $56.1 million in
    non-EPSCoR awards to those same researchers from NSF, NASA and NIH; a
    4.3 to 1 return. The return would be higher if DOE, EPA and other
    agencies were included.
        How has the EPSCoR program allowed us to achieve such a return on
    NSF's investment? First and most importantly, the EPSCoR program builds
    capacity. It does not simply support research by individual faculty,
    but rather, assists us in securing the equipment, faculty start-up
    packages, graduate students, professional development opportunities and
    other things that enable our institutions to compete for other funding.
    These are the basic infrastructure needs in most institutions seeking
    to expand their research programs.
        The cornerstone of the NSF EPSCoR program is the Research
    Infrastructure Improvement (RII) awards. It is these awards that have
    proven to be so highly successful and critically important to the
    states' efforts to increase and sustain a more focused and competitive
    academic science and technology base. It is the RII awards that
    strengthen our ability to compete favorably for mainstream program
    funds at the NSF, other agencies and for private sector dollars.
        In addition to infrastructure, there is a component in the NSF
    EPSCoR called co-funding. This is designed to help EPSCoR researchers
    obtain research support from the regular NSF funding streams. The co-
    funded projects are supported by a combination of funds from the EPSCoR
    program itself and also from funding in the NSF Research Directorates.
    NSF plans to continue and expand co-funding, which we also support, but
    again, we do not want co-funding to divert resources from the critical
    need for infrastructure development.
        To give you a concrete example of an EPSCoR program, I will
    highlight Alabama's NSF EPSCoR programs. On February 1, 2001, the
    Alabama EPSCoR was awarded a Research Improvement Infrastructure grant
    from NSF that will bring $9 million of NSF funds along with $5.9
    million of non-federal matching funds over three years. This new RII
    grant will fund research development activities at eight institutions
    of higher learning in Alabama: Alabama A&M University (AAMU), the
    University of Alabama (UA), the University of Alabama at Birmingham
    (UAB), the University of Alabama at Huntsville (UAH), Tuskegee
    University (TU), the University of South Alabama (USA), Shelton State
    Community College and education efforts at K-12 institutions: Alabama
    School of Math and Science in Mobile and Tuscaloosa County Schools. The
    project includes thirteen industrial partners from Alabama, Colorado,
    Kansas, New York, and California and additional partnerships with NASA
    and Oak Ridge National Laboratory. While the specific R&D areas under
    development vary across states, Alabama's program is similar to EPSCoR
    efforts in the other 19 participating states.
        Within the EPSCoR programs in every state, efforts continue to
    identify (1) research areas in which to concentrate limited state
    resources and (2) the barriers that must be removed to attain
    nationally competitive science and engineering research and education
    programs in Alabama. A critical need for EPSCoR states and universities
    is to overcome a lack of critical mass (i.e. too few faculty in a given
    area of research) by collaborating inside the state and with outside
    partners. In Alabama, to build critical mass, increase shared
    resources, and improve human resource development, the new NSF project
    supports the development of three Centers of Excellence and an
    Interconnective high-speed computing networking infrastructure:
      --Alabama Structural Biology Consortium (ASBC).--At three
            universities (UAH, USA, and UAB) researchers are addressing
            important scientific problems through collaborative use of
            expensive instrumentation and specialized expertise, while
            fostering partnerships with our biotech industries;
      --Integrated Micro-Electromechanical Systems (IMEMS).--UAH, AU, TU,
            and UA propose a new IMEMS facility on the University of
            Alabama at Huntsville campus that will expand existing
            technology in the State by improving and building on
            micromachining and nano/microfabrication capabilities for
            fiber-optics and chip production ( a critical need for local
            industry.
      --Large-Scale Electromechanical Systems (LEMS).--Composed of two
            Alabama universities, one community college, one university
            from another EPSCoR state, a K-12 institution, 11 industrial
            partners, and two federal laboratories/agencies, LEMS will
            expand existing capabilities for economic development in
            medium-and large-scale mechanical systems used by industry
            while increasing the pool of researchers and training
            practitioners/technicians to meet Industry's need for a highly
            skilled workforce.
      --Internet2 Initiative.--The NSF recognized Alabama's leadership in
            the computational sciences by supporting the ``Alabama Internet
            2'' project which has constructed a high performance
            communications network connecting the Alabama Supercomputer
            Center and seven of Alabama's research universities. This
            network has begun to allow Alabama to become more competitive
            with other states that already have a high performance network
            for research and education. Internet 2 has reduced research
            costs and time. Any faculty member on a given research campus
            now has direct, and timely, access to resources that are not
            physically close to the campus. The ability to access data,
            instrumentation, and collaborate electronically allows both
            increased interaction and competition equal with the rest of
            the research community.
        I would like to point out that when NSF announced several years ago
    a vBNS connections program that was to create a second generation
    Internet for research purposes, the early announcements mentioned
    connecting up to 100 institutions to the new network. In the first
    three competitions, of the more than 70 awards granted, only one went
    to an EPSCoR state. Almost one-third of the country was again being
    left out of a major program that was likely to impact research
    competitiveness for many years to come. Furthermore, it was this same
    one-third of the country--the EPSCoR states and universities (which
    needed this infrastructure most and which stood to gain more than
    others because of geographic isolation.
        Fortunately, through the excellent efforts of the EPSCoR office at
    NSF, the program officers in the NSF's Computer Information Science and
    Engineering (CISE) Directorate, and perhaps a little noise from our
    states, there is now at least one high-speed connection in every state,
    including all the EPSCoR states. Furthermore, we have been brought into
    a number of the associated programs, which are working on a national
    supercomputing grid, applications and uses of the network, and distance
    education.
        We currently have many of the same concerns that we had over
    networking--that is, exclusion--from other new initiatives such as
    nanotechnology, biodiversity, information technology, workforce
    training and development. These are new initiatives at NSF. They are
    important initiatives for the economy of our states and the U.S.
    competitiveness in the global marketplace. They are important to future
    economic vitality and growth in every state. In a mobile society and a
    global economy that is highly dependent upon science and technology, no
    state can afford to be left behind in these important endeavors.
        NSF EPSCoR is helping us ensure, through its research
    infrastructure improvement awards and co-funding, that our states have
    an opportunity to develop these new fields. This is vitally important
    to the economy of each of our states and especially to our young people
    who live therein. Despite increased mobility, the vast majority of
    students still attend college within 100 miles of home. EPSCoR helps to
    guarantee that students and residents of all states have the access to
    high-quality education, front-line research, and the quality of life
    and jobs that comes with an active and competitive R&D base.
        The EPSCoR program solicitation, released in January 2000 allowed
    states to request up to $3 million a year for three years during the
    competitions held after July 2000. Consequently, we urge the
    subcommittee to continue support for EPSCoR by appropriating $90
    million in fiscal year 2002 funding for the NSF EPSCoR core program in
    the NSF Education and Human Resources Directorate. This funding will:
    (1) allow the NSF EPSCoR program to implement its expanded core program
    to continue building our infrastructure and expertise in areas of
    scientific importance to the states and nation; and (2) increase co-
    funding and assistance to our states so that the number of scientists
    and engineers in the EPSCoR states and universities that receive
    competitive federal R&D support continues to grow.
        In this regard we are particularly supportive of NSF efforts to
    increase our participation in large-scale initiatives such as the
    Integrative Graduate Education and Research Traineeship (IGERT),
    materials science initiatives, nano-scale initiatives, and the new
    large-scale centers for learning and teaching. I would like to note
    that in Alabama, the Talladega Wetland Ecosystem recently won a
    prestigious NSF-IGERT grant to fund faculty in the departments of
    biological sciences, geography and geology; allowing research into
    real-world problem solving via ``externships'' with federal/state
    agencies, and a new course curriculum using distance learning
    technology.
        While EPSCoR is very important to us, on behalf of the Coalition of
    EPSCoR states, I would like to express our support for a strong NSF
    budget in fiscal year 2002. NSF is the only federal agency whose
    singular mission is the support of basic research and education across
    scientific, mathematical, and engineering disciplines. Furthermore, NSF
    awarded more than two-thirds of the NSF budget to colleges and
    universities for research and education activities in fiscal year 1999.
    As Federal Reserve Board Chairman Alan Greenspan said, ``If we are to
    remain preeminent in transforming knowledge into economic value,
    America's system of higher education must remain the world's leader in
    generating scientific and technological breakthroughs and in meeting
    the challenge to educate workers.'' NSF's programs are at the heart of
    a new knowledge generation across all fields.
        On behalf of the Coalition of EPSCoR states, I am here to tell you
    that the relatively modest NSF investment in EPSCoR is playing a unique
    role in developing a truly nationwide science and technology
    capability. A strong EPSCoR is a sound investment for our nation's
    future. A strong budget for NSF however, is critical to increased
    inclusion of talented scientists and students in science and
    technology.
        The activities sponsored by the Alabama EPSCoR affect the lives of
    Alabama citizens in numerous ways. Our activities have increased
    economic development, health care, technology, education, research and
    communication in Alabama.
        We appreciate the strong support you have given us in the past. We
    have used the EPSCoR funding wisely to benefit our states and the
    nation, and we hope that you will continue to work with us on this
    issue in the coming year.
        As you also know, Congress has appropriated $10 million for the
    NASA EPSCoR program in each of the last three fiscal years. Currently,
    there are twenty states that are eligible for NASA EPSCoR, but only
    half have ever received a NASA EPSCoR implementation award. We ask for
    a $12 million appropriation in fiscal year 2002 to increase state
    participation in NASA EPSCoR. In the fall of 2000, following a planning
    process in each state, NASA issued a new solicitation for EPSCoR
    proposals in the states. Each state has now submitted proposals and new
    awards will be made shortly. The $12 million requested would provide
    continued support for 10 states currently in the program and new
    research infrastructure awards to more states. Also, a small amount,
    less than $1 million would be available, for outreach and technical
    assistance to the states. EPSCoR is a small program at NASA but it is
    very important for the 20 states that participate in it. Its high
    technology focus truly allows these states to become research partners
    in activities that would otherwise likely be closed to them.
        Thank you for your consideration of this request.
                                     ______

                 NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

         Prepared Statement of the Association of American Universities

        The Space Science Working Group (SSWG) of the Association of
    American Universities includes several hundred space scientists at
    approximately fifty universities nationwide. SSWG scientists work in
    all three NASA science areas (Office of Space Sciences, OSS; Earth
    Science Enterprise, ESE; Office of Biological and Physical Research,
    OBPR), building instruments for NASA missions, carrying out
    experimental and theoretical investigations, and bringing hands-on
    experience of exciting NASA science to graduate and undergraduate
    students. Areas of interest and concern to us this year include:
      --International Traffic in Arms Regulations (ITAR),
      --International Space Station (ISS) descoping,
      --Research & Analysis and Data Analysis funding, and
      --Cancellation of the UnESS program in the Office of Earth Science.
                                 general issues
    International Traffic in Arms Regulations (ITAR)
        Last year, this Subcommittee included language in both the House
    and conference reports that directed the Office of Science and
    Technology Policy (OSTP) to work jointly with the National Security
    Council, NASA Administrator, and the Secretary of State to
    expeditiously issue clarification of ITAR in order to relieve pressure
    on university collaborations and personnel exchanges. The review was to
    be completed within 120 days of enactment.
        Over the last year, increasingly strict interpretations of the ITAR
    regulations have continued to frustrate university scientists.
    Clarification has yet to be issued, although we understand that
    negotiations are continuing between NASA, OSTP, and the State
    Department. We appreciate the attention that OSTP and the NASA
    Administrator's office have given to this issue. The State Department's
    Science Advisor has also been very supportive. Nevertheless, given the
    change in administrations and the resultant loss of knowledgeable
    personnel, we are concerned that if clarification is not issued within
    the next few weeks, we may find ourselves back at the starting point
    once again.
        Science is an international activity, and space science in
    particular has long thrived through collaboration with foreign-born
    colleagues. We continue to believe that ITAR restrictions on scientists
    carrying out unclassified research on civilian spacecraft do not serve
    any national security purpose. Carrying out spaceflight missions is a
    difficult task for researchers in and of itself; carrying out this
    activity in a thicket of legal restrictions with threats of huge
    personal fines is impossible. It will shut off collaboration with our
    foreign colleagues, causing U.S. researchers to ``go it alone'' in
    space research, to everyone's loss. Some universities have already
    declined to participate in certain NASA projects given the legal
    uncertainties.
        While recognizing that ITAR is not a budget issue, we nevertheless
    ask for your continued support in clarifying that these ITAR
    restrictions are not applicable to civilian, unclassified, fundamental
    space science research. We note that an existing directive, National
    Security Decision Directive 189, competently addresses the issue we are
    facing and that, by simply affirming its viability and its
    applicability to U.S. universities' aeronautics programs and space-
    based research, the need for a complicated fix can be avoided. We
    recognize that other Congressional committees have jurisdiction over
    this matter as well, and we will also work with them to resolve this
    matter.
    Possible Impacts on Science of the International Space Station (ISS)
            Decsoping
        The SSWG is aware of the potential $4 billion cost overrun of the
    International Space Station (ISS) over the next five years. We are
    greatly concerned, however, that the resultant descoping will
    jeopardize the science programs and urge that steps be taken to protect
    research capabilities. The quality of the research facilities is a
    crucial factor in determining the value of the ISS scientific program.
    Experience accumulated over the last fifteen years has taught us how to
    design experimental instrumentation that will maximize the productivity
    of on-orbit research. This includes the availability of versatile and
    reconfigurable scientific capabilities that will be ``permanently''
    available on the ISS and hardware that mimics Earth-based instruments.
    Such basic infrastructure is required to minimize the amount of traffic
    to and from low-Earth orbit. The availability of the currently
    scheduled major science facilities must be protected from any budget
    cutback. Productivity on the ISS will be shown to be a major
    improvement over the old Shuttle-Spacelab-Mir era through the use of
    dedicated research facilities.
        There is already a queue of over one hundred flight investigations
    waiting their turn for access to these on-orbit facilities. These
    investigations encompass five disciplines in the physical sciences in
    addition to biological and biomedical research. Although NASA
    emphasizes the biomedical research associated with crew health
    maintenance and preservation, a large number of investigations address
    cutting-edge scientific problems of fundamental importance, but also
    with direct application to Earth-based technological, industrial, and
    health issues. Advances in the scientific understanding of these issues
    can be significantly advanced through low-gravity experiments.
        The astrophysics community is also concerned about possible large
    scale descoping. One highly rated near-term mission concept, the
    Advanced Cosmic Ray Composition Experiment for the Space Station
    (ACCESS), is critically dependent on an ISS berth. This mission will
    measure the composition of high-energy cosmic rays, the origin of which
    is problematical. This information will be used to directly test the
    idea that these relativistic particles originate in supernova
    explosions. The astronomical community is committed to development of
    ACCESS, and the mission is an important part of the Office of Space
    Science Strategic plan, a consensus document crafted with strong
    participation by academic scientists. The mission is featured
    prominently in the priority lists of the recently issued National
    Research Council report on ``Astronomy and Astrophysics in the New
    Millenium'', the McKee-Taylor Decade report. This massive mission would
    be vastly more expensive as a free-flyer, and the SSWG wishes to
    underscore the importance of a berth for it on the ISS. The same P3
    berth on the truss will be used later for the X-Ray Imaging Survey
    Telescope (EXIST) which will survey the universe for black holes.
                         office of space science (oss)
    Current and Future Initiatives
        The launch and successful deployment of Chandra, the third of four
    in the Great Observatories series, has marked our country's leadership
    in X-ray astronomy, and has already resulted in important and
    fascinating discoveries. The observatory has identified the distant
    galaxies that account for the diffuse X-ray background, and has worked
    with the Hubble Space Telescope to provide a new understanding of
    supermassive black holes in the centers of galaxies like our own.
    Galileo and Mars Surveyor have uncovered evidence of large quantities
    of water on Mars and two moons of Jupiter. The touchdown of the NEAR
    spacecraft on the asteroid Eros was an event that, in particular,
    captured public enthusiasm. All of these missions have strong academic
    components, and much of the key science has come out of the university
    environment. Moreover, their success augurs well for future
    achievements by the Mars and Discovery programs.
        The budget blueprint refers to funding for development of critical
    technology to support future decisions on high-energy astrophysics
    missions. The SSWG enthusiastically supports such funding, and points
    out that such funds have been virtually non-existent for several years.
    With the successful development of the Chandra Observatory, our
    community looks ahead to top priority projects like Constellation-X and
    LISA. While these mission concepts are well understood and have goals
    that are clearly achievable, the economy with which they are developed
    and realization of their full capabilities will benefit from a
    strategic investment of resources in, for example, detector technology
    and formation flying. As part of the Supporting Research and Technology
    (SR&T) line, these funds will be actively competed for by academia.
    Strategic Planning
        The SSWG notes that the triennial strategic planning exercise for
    NASA is now complete, with responsibly prioritized missions. The OSS
    strategic plan is entirely consistent with the community needs for
    astrophysics that have been expressed in the McKee-Taylor Decade
    Report. Hard choices have been made, and our community is ready to move
    forward.
    Research and Analysis (R&A) and Data Analysis (DA)
        The SSWG would like to thank the committee for its interest in and
    support for the Research and Analysis program line in the last fiscal
    year. This program line is built on the recognition that creative ideas
    for future missions can come out of basic, non-mission-specific
    research. Such research includes laboratory studies, theoretical
    studies, and development and validation of new instrument concepts. The
    SSWG would like to underscore the importance of this funding line to
    academic institutions around the country. Distributed mostly in the
    form of small grants, the line provides for on-the-job training for the
    next generation of space scientists, and engages them in far-term
    thinking about strategic needs. The SSWG applauds the triennial Senior
    Review of this funding. Such reviews allow NASA to allocate the limited
    funding in a way that is best suited to meeting the long-range goals of
    the strategic plans of the agency.
        The SSWG also notes that many of the R&A needs of astronomy
    programs supported by the National Science Foundation parallel those
    supported by NASA. Flexible resources for research are a critical
    element of a healthy national science policy, and are, in fact, a major
    part of the mission of the NSF. The ongoing lean budgets for R&A at
    NASA and for the astronomy grants program at NSF are, therefore, major
    weaknesses in U.S. astronomical research efforts.
        Problems continue to exist in Supporting Research and Technology
    line, however. For example, in the solar system exploration area, funds
    for mission operations and data analysis continue to be tight, meaning
    that important scientific research is not being supported. Slow
    processing of research grants that have been selected for funding has
    exacerbated the problem.
                office of biological and physical research (bpr)
        The life and microgravity science communities were generally
    encouraged last year by the creation of a new Enterprise for biological
    and physical research. Establishing the new Office of Biological and
    Physical Research (OBPR) underscored the growing importance of these
    disciplines within NASA. However, recent events have led to extreme
    concerns regarding the future of these disciplines and their
    communities. Rather than demonstrating the expected significant growth
    of a new Enterprise, the complete loss of one, or more, of these
    disciplines is a real possibility.
        The fiscal year 2002 proposal for the OBPR shows no significant
    increase over fiscal year 2001, except for modest gains in the level of
    support to the National Space Biomedical Research Institute. This was
    not unexpected considering the recent creation of the Enterprise.
    However, the recent budget outline announced by the Administration
    projects only slightly increased funding for NASA, concurrent with
    significant cost overruns in the International Space Station (ISS)
    Program. To internally absorb these deficits, as noted earlier, NASA
    has identified significant reductions in ISS infrastructure (deferral
    of habitation and propulsion modules, deletion of the crew return
    vehicle, and reduction of solar array power capacity). As these
    measures will be insufficient to meet the deficit requirement,
    additional ISS assets (i.e., the centrifuge accommodation module (CAM)
    and its research equipment complement--all items of international
    barter agreements), discipline ground research programs, and recently-
    added Shuttle research missions are also threatened with cancellation.
    As NASA has removed all other alternatives to flying existing hardware
    (Spacelab and free-flyers), these disciplines have only one access
    mechanism to the microgravity environment--ISS. Thus, for example, a
    fifty percent reduction in ISS crew size, coupled with a loss of the
    CAM, glovebox, habitats and habitat holding racks is tantamount to
    elimination of the Fundamental Biology Program within NASA.
        A significant multi-disciplinary microgravity research community
    also has evolved over the years. All the supported research is
    nationally competed and rigorously peer-reviewed. One part of the
    research program (fundamental physics) includes seven Nobel laureates
    who are still active investigators. There is a very strong ground-based
    component of the program in addition to the flight investigations
    portion. Like the biology program, this discipline would be severely
    impacted by significant descoping.
        The SSWG recognizes and appreciates the Congressional support these
    disciplines have received in the past. We are requesting continued
    Congressional support in urging NASA to protect the biological and
    physical research communities. This requires strengthening and
    protecting the ground-based research programs, including expansion of
    the investigator-initiated research initiatives. We would also request
    that NASA, in collaboration with these communities, be urged to
    undertake a review of options for a free-flyer program to provide an
    alternate mechanism of access to the microgravity environment for these
    communities.
                         earth science enterprise (ese)
        The SSWG was pleased to see in the budget blueprint recognition
    that the outyear plan for the second generation of Earth Observing
    System (EOS) satellites has been underfunded in recent years, and that
    the fiscal year 2002 request will include a five-percent increase for a
    science-driven EOS Follow-On program. We hope that such a program will
    be fully supported by Congress.
        As is the case in the Office of Space Science, funding of the R&A
    components of the Earth Science program continue to be of concern. We
    urge that the ESE R&A program be strengthened and shielded from
    budgetary raids.
        We were perplexed by the cancellation of the University Class Earth
    System Science (UnESS) program in NASA's fiscal year 2002 request. The
    UnESS program provides an ideal framework for the education and
    training of students for future roles in the United States space
    industry, and for leadership by faculty and universities in the Earth
    Science Enterprise (ESE). Dr. Ghassem Asrar, Associate Administrator
    for Earth Sciences, has described UnESS as a key program for educating
    the next generation of Earth system scientists, engineers, and
    managers. This connection between education and training is vital to
    the continued technical excellence of academic programs in the space
    sciences throughout the country. The size and scope of the UnESS
    missions are specifically limited to enable a university-led team to
    conceptualize, design, develop, test, launch, and operate a useful
    scientific mission in a relatively short time frame. Because of its
    education role, UnESS is a critical element for maintaining U.S.
    leadership in the space science of Planet Earth during a period when a
    major fraction of our nation's technical workforce is nearing
    retirement.
        In developing UnESS, NASA aims to remove the most significant
    obstacle to the productive use of ESE science and technology in the
    public and private sector by ensuring that end-users of mission
    products are a part of the mission team from development to
    applications. We believe that the UnESS program is of tremendous value
    to both the scientific and educational missions of NASA and would urge
    its continuation.
                                  other issues
    Space Grant Colleges
        The SSWG has often pointed out the important outreach role that
    space research plays. A glance at news media, educational television,
    or the crowds at the Air and Space Museum makes it clear that the high
    technology ``Aerospace Adventure'' engages young and old alike.
    Probably more than any other area of modern research, space science has
    the capacity to interest young people in the hard questions of
    research, and to focus their interests onto pursuing technical studies
    in school that prepare them for the workplace of tomorrow. The Space
    Grant College system continues to play an important and successful role
    in workforce development through its university programs and its
    outreach to elementary and secondary school students. Its matching
    funds result in a highly leveraged program. We hope that the
    Subcommittee will fund the Space Grant effort at its authorized level
    of $28 million for the coming year.
        Thank you for your attention to these matters.
                                     ______

          Prepared Statement of the American Museum of Natural History

        Good afternoon, Mr. Chairman and Members of the Subcommittee. My
    name is Darrel Frost, and I am Associate Dean of Science for
    Collections at the American Museum of Natural History. I very much
    appreciate the opportunity to submit testimony in support of the
    National Aeronautics and Space Administration [NASA] and the National
    Science Foundation [NSF], and to summarize both our accomplishments
    during the past year and our planned initiatives and objectives for
    fiscal year 2002. Most of all, I want to thank this Subcommittee for
    all the contributions it has made to scientific research and education
    in this nation and at the American Museum.
        This Subcommittee, with a scope that includes the NSF and NASA,
    plays a pivotal role in our nation's science and education enterprises.
    The future of our research and development; our science, math,
    engineering, and technology education; and our 21st century workforce
    in many respects rests here.
        The National Science Foundation, under distinguished leadership, is
    pursuing key initiatives that include research on information
    technology, mathematics, biocomplexity, and the nation's workforce.
    These initiatives, as well as the core research and education programs,
    require funding at significantly increased levels for real growth.
        NASA, under its skilled leadership, captures the nation's spirit
    and invigorates the thirst for exploration into the unknown. Every day
    at the Museum we see evidence that NASA powers the public's
    imagination. To continue to expand understanding of our planet, our
    solar system, and the universe, investment in NASA must be strong. We
    ask the Subcommittee to fund NASA at the increased levels necessary to
    advance its goals in cutting-edge R&D, breakthrough technologies,
    educational excellence, and collaborations and partnerships. As this
    testimony will demonstrate, such funding is vital for NASA to maintain
    the national science education leadership it has asserted through its
    successful partnerships with the American Museum and others in the
    informal science education community.
        Let me now review for you the American Museum's accomplishments and
    plans.
                  about the american museum of natural history
        The American Museum of Natural History is one of the nation's
    preeminent institutions for scientific research and public education.
    Since its founding in 1869, the Museum has pursued its mission to
    ``discover, interpret, and disseminate--through scientific research and
    education--knowledge about human cultures, the natural world, and the
    universe.'' It is renowned for its exhibitions and collections of more
    than 32 million specimens and cultural artifacts. Its audience of
    nearly five million annual visitors--approximately half of them
    children--is one of the largest, fastest growing, and most diverse of
    any museum in the country. More than 200 Museum scientists conduct
    groundbreaking research, in fields ranging from systematic biology and
    comparative genomics to earth sciences and astrophysics. Their work
    forms the basis for all the Museum's activities that seek to explain
    complex issues, dispel misconceptions, and help people to understand
    the events and processes that created and continue to shape the Earth,
    life and civilization on this planet, and the universe beyond.
                                nasa partnership
        In 1997, under the leadership of Congress, the American Museum
    joined in a close educational and scientific partnership with NASA to
    advance the shared goal of fostering scientific literacy nationwide.
    This partnership has been extraordinarily productive and has helped to
    build a unique national education resource created with private funding
    catalyzed by the federal contribution. Together the American Museum and
    NASA have been exploring the frontiers of science and reaching millions
    of Americans with joint science education efforts. We have established
    the National Center for Science Literacy, Education, and Technology
    [NSCLET] and partnered in life and microgravity, space, and earth
    sciences research. Together we have asserted critical national
    leadership in science education, conveying the excitement and awe of
    research and exploration for a rapidly expanding audience of many
    millions of visitors onsite and online.
    Rose Center for Earth and Space
        In the past year, a dramatic and exciting one, we have deepened and
    enhanced our NASA partnership, as the overwhelming response to the
    Museum's new Rose Center for Earth and Space demonstrates. February
    2001 marked the Rose Center's first anniversary. Greeted with critical
    and popular acclaim and record-setting attendance surpassing all
    projections, the Rose Center includes a rebuilt Hayden Planetarium,
    Cullman Hall of the Universe, and Gottesman Hall of Planet Earth.
    Throughout this dramatic facility, innovative exhibits and up-to-the-
    minute science displays attest to the ongoing success of our
    collaborations with NASA. The Digital Galaxy Mapping Project, for
    example, has come to spectacular fruition in the Planetarium's Space
    Show. In this joint effort, the AMNH scientific and technical team,
    working in concert with NASA scientists and engineers, have brought
    together diverse datasets to create a scientifically accurate three-
    dimensional map of the galaxy that has enthralled and educated the more
    than one million new visitors who have visited since the Rose Center
    opened.
        Concurrent with the Rose Center, the Museum also launched an
    ambitious and thriving astrophysics research program that now includes
    eight scientists. The Planetarium's Space Theatre provides an
    assemblage of the most powerful and sophisticated scientific
    visualization tools ever designed and full-dome, three-dimensional
    views of massive datasets. Museum astrophysicists use these
    unparalleled tools for three-dimensional data ``mining'' and display
    their observational, theoretical, and computational research programs.
    These tools are, in fact, a resource to the international scientific
    community and were showcased at a spring 2000 Museum conference,
    ``Stellar Collisions, Mergers, and Their Consequences.''
    National Center Science Bulletins and Families of Products
        The Museum's National Center for Science Literacy, Education, and
    Technology has developed high quality, technology intensive education
    materials and programs that bring cutting-edge science to students and
    teachers, to families and community settings. Since its inception the
    National Center has created more than 70 different websites; CD-ROMS;
    books; magazines for students, teachers, parents, and families;
    exhibition guides, and more. Fueled by our NASA collaborations, we have
    been able to forge partnerships with Time For Kids, Discovery,
    Classroom Connect, and others for disseminating these standards-based
    educational materials to a large national audience. And to help meet
    the need for well trained K-12 science teachers, NSCLET has introduced
    an innovative series of online science courses for teachers, taught by
    Museum scientists.
        In the past year the National Center has also expanded the
    complexity and reach of its three interrelated Science Bulletins--the
    BioBulletin, EarthBulletin and AstroBulletin--in the Halls of
    Biodiversity, Planet Earth, and the Universe, respectively. These video
    reports, developed by AMNH teams in active collaboration with NASA
    facilities such as Goddard Space Flight Center, Goddard Institute for
    Space Studies, Langley Research Center, and the Jet Propulsion Lab,
    feature breaking global and space news in high definition wall
    displays. The BioBulletin presents stories on global biodiversity,
    using data accessible through remote sensing, Geographical Information
    Systems, and other technologies. The EarthBulletin broadcasts news on
    earth events such as earthquakes, floods, and atmospheric conditions.
    The dramatic 13.5-foot-long AstroBulletin showcases NASA news and data,
    displaying up-to-date images and events in space, including a log of
    current NASA missions. The public first saw the TRACE satellite's
    dramatic pictures of surging solar gases when NASA released them for
    public display in the AstroBulletin.
        Near the Bulletins in each hall are touch screen computer kiosks
    that enable visitors to delve more deeply into the stories, and the
    Bulletins are also accessible to visitors everywhere on the Museum's
    website. The National Center has, as well, developed a coordinated
    distribution plan for sharing the Bulletins broadly in varied formats
    at science centers, museums, and informal learning venues around the
    country.
                            fiscal year 2002 agenda
        The Rose Center's thrilling exhibitry, scientific visualization,
    the Digital Galaxy and Space Show, the National Center's technology
    intensive science education products, the popular Science Bulletins--
    these are some of our partnership's many benefits in promoting science
    education while delivering NASA education and research resources to a
    vast national and international audience.
        To leverage the Museum's and NASA's investment in improving science
    education and literacy and to further our work together, the American
    Museum now seeks to institutionalize our partnership, building on our
    joint accomplishments while drawing fully on the Rose Center's reach
    and resources. We therefore request $4 million to establish at the
    Museum a NASA Program for Immersive and High Definition Education
    Display. Our proposed joint activities will include:
      --Scientific visualization.--The Museum now has the vast
            technological and scientific capacity to produce digital
            programs to display the phenomena of the astrophysical
            universe. Drawing on the Digital Dome's unique visualization
            capacity, we propose ongoing advancement of the Digital Galaxy
            database and images to support new Hayden Planetarium space
            show components, coupled with dissemination of those components
            in varied formats suitable for partners in diverse venues.
      --Science Bulletins.--The Museum proposes the Science Bulletins'
            advanced development, production, and systematic distribution
            to multiple audiences and sites. In the BioBulletin,
            EarthBulletin and Earth Event Wall, and AstroBulletin and
            Universe Wall, established under prior NASA agreements, we will
            continually enhance science content and coverage; expand
            capability for exploiting Geographical Information Systems
            [GIS], remote sensing, and other emerging technologies; and
            improve data structure to present breaking science news and
            NASA data to the public. We plan to distribute the Bulletins
            widely at sites of varied size and capacity throughout the
            country.
      --Networks.--Access to ultra high speed communications networks is
            critical to the planned Museum-NASA activities. From
            computational astrophysics and scientific visualization to
            exhibition multimedia displays and distribution, the ongoing
            partnership requires access to state-of-the-art high-speed
            networks and advanced research and education applications.
        As we seek to institutionalize the Museum's successful NASA
    partnership, let me stress the full power and reach of the platform we
    bring to our collaboration. Since the Rose Center opened, the American
    Museum's annual onsite audience has increased 45 percent, to nearly
    five million annual visitors. The number of visiting school groups has
    increased 28 percent. In addition to these onsite visitors, the
    Museum's website enjoys an average of more than 16,000 unique online
    visitors each day. The shared NASA and Museum efforts therefore are
    positioned in the years ahead to reach a combined onsite and online
    audience that could reasonably approach 10 million children, adults,
    families, teachers, and communities. This is a national and
    international museum audience without equal.
        It is also important to point out that this partnership has
    succeeded on many levels, including the leveraging of the federal
    investment with nonfederal support, and the Museum plans to carry out
    all proposed programs with funds from nonfederal as well as federal
    sources. The federal participation to date has fueled our successful
    fundraising efforts, enabling the Museum to more than match the federal
    investment with contributions from private donors, foundations, and
    corporations. We are confident that with continued congressional
    leadership, we will be able to continue to leverage federal investment
    so very favorably.
        In closing, the AMNH-NASA partnership has brought together two
    entities with unique resources and a shared commitment to improving
    science education and science literacy. Institutionalizing this
    partnership will help to assure that this productive and far-reaching
    relationship will endure and will grow. Through a rich program of
    science education pursuits and displays based on immersive and high
    definition technologies, the Museum and NASA will continue to advance
    the nation's knowledge, understanding, and appreciation of the
    scientific enterprise.
                                     ______

                 Prepared Statement of Florida State University

        Mr. Chairman, I would like to thank you and the Members of the
    Subcommittee for the opportunity to present testimony before this
    Committee. I would like to take a moment to briefly acquaint you with
    Florida State University (FSU).
        Located in Tallahassee, Florida's capitol, FSU is a comprehensive
    Research I university with a rapidly growing research base. The
    University serves as a center for advanced graduate and professional
    studies, exemplary research and top quality undergraduate programs.
    Faculty members at FSU maintain a strong commitment to quality in
    teaching, to performance of research and creative activities and have a
    strong commitment to public service. Among the faculty are numerous
    recipients of national and international honors, including Nobel
    laureates, Pulitzer Prize winners as well as several members of the
    National Academy of Sciences. Our scientists and engineers do excellent
    research, have strong interdisciplinary interests, and often work
    closely with industrial partners in the commercialization of the
    results of their research. Having been designated as a Carnegie
    Research I University several years ago, Florida State University
    currently is approaching $125 million per year in research awards.
        FSU will soon initiate a new medical school, the first in the U.S.
    in over two decades. Our emphasis will be on training students to
    become primary care physicians, with a particular focus on geriatric
    medicine--consistent with the demographics of our state.
        Florida State attracts students from every county in Florida, every
    state in the nation, and more than 100 foreign countries. The
    University is committed to high admission standards that ensure quality
    in its student body, which currently includes some 192 National Merit
    and National Achievement scholars, as well as students with superior
    creative talent. We consistently rank in the top 20 among U. S.
    colleges and universities in attracting National Merit Scholars to our
    campus.
        At Florida State University, we are very proud of our successes as
    well as our emerging reputation as one of the nation's top public
    universities.
        Mr. Chairman, before I discuss the project we are pursuing with
    NASA, let me first mention the recent renewal of funding for the
    National High Magnetic Field Laboratory (NHMFL) by the National Science
    Foundation. Citing outstanding progress in enabling researchers to
    address critical problems in science ranging from materials research to
    chemical and biological sciences, the National Science Foundation has
    awarded the National High Magnetic Field Laboratory $117.5 million for
    the next five years. This is a 30 percent increase over previous
    allocations and is a clear indication that the NSF views the research
    and development being done at the NHMFL as a top priority investment
    and one that is critical to our nation. Thanks to the work being done
    at this facility, and the recognition of you and your colleagues to the
    importance of this work, the U.S. is on the forefront of magnetic
    research and technology.
        Next, let me tell you about a project we are pursuing this year,
    which is a collaborative endeavor involving natural hazards research.
    southeastern virtual consortium for extreme events (seveer) project on
                    natural hazards r&d using remote sensing
        This is a joint initiative with several academic institutions:
    Florida State University, University of Alabama, Georgia Tech,
    Louisiana State University, Texas A&M, and Mississippi State
    University. This initiative will allow these universities to work
    together to share resources, technology and expertise to conduct
    research as well as provide professional and public education to
    citizens, state governments and Federal agencies crucial information on
    prediction and mitigation related to all kinds of natural hazards.
    SEVEER recognizes the impact of the information technology revolution
    on the United States and creates a virtual center to study the
    prediction and mitigation of all types of natural disasters including
    hurricanes, tornadoes, forest fires, floods, droughts, and other
    unexpected natural disturbances. This particular project will uniquely
    utilize remotely-sensed data from the $50B public/private space and
    ground-based observing system developed during the last decade to
    provide the time-sensitive data necessary in predicting these extreme
    events. Specifically, this project will advance the timeliness and
    accuracy of severe environmental event detection and warning
    capabilities in the SE United States using operational and research
    remote sensing systems and advanced land/ocean/atmospheric predictive
    models. Expertise and assets from universities in every Gulf Coast
    state and across the Nation, in cooperation with state and federal
    agencies, will be integrated to address the impacts of natural hazards
    on the coastal ocean, land hydrology, and atmosphere. Extensive use of
    FSU's supercomputing resources will be made so that the new extreme
    event prediction system can be developed and tested in an operational
    environment.
        We are requesting $3 million from the National Aeronautics and
    Space Administration, on behalf of our consortium of universities, to
    develop and implement this initiative.
        Mr. Chairman, this project is just one of the many exciting
    activities going on at Florida State University and in the southeast
    that will make important contributions to solving some key problems and
    concerns our Nation faces today. Your support would be appreciated,
    and, again, thank you for an opportunity to present these views for
    your consideration.
                                     ______

                     Prepared Statement of The Mars Society

        Mr. Chairman and Members of the Subcommittee: My name is Dr. Robert
    Zubrin, President of The Mars Society. I would like to thank you for
    this opportunity to offer comments regarding the fiscal year 2002
    budget for the National Aeronautics and Space Administration
    (``NASA''). As detailed below, we strongly believe that NASA's budget
    should include a program funded at a level of at least $140 million per
    year (about 1 percent of NASA's current budget) within the NASA Human
    Exploration and Development of Space (``HEDS'') organization to develop
    the technologies necessary to lay the groundwork for future human Mars
    exploration missions.
    I. The Mars Society
        The Mars Society is an international grassroots organization
    created to further the goal of the exploration of the planet Mars. Our
    efforts to further this goal have involved broad public outreach to
    instill the vision of pioneering Mars, support of ever more aggressive
    government funded Mars exploration programs around the world, and
    conducting Mars related research on a private basis. Our first major
    project was building the Flashline Mars Arctic Research Station in the
    Canadian Arctic last year to serve as a test-bed for technologies and
    practices that will be needed for human Mars exploration. We recently
    secured funding for, and are in the process of building, a second
    research station, which will be located in the American Southwest.
        I am the author of The Case for Mars and Entering Space, as well as
    dozens of technical papers and articles. In the early 1990s, I
    developed a plan (``Mars Direct'') that showed how a robust mission to
    Mars could be achieved for $20-$30 billion and in 10 years or less, by
    maximizing the use of existing technologies and resources found on
    Mars.
    II. Need for Technology Development Funding
        We believe there is no question that eventually this Nation's
    scientific curiosity and pioneering spirit will lead to a decision to
    send people to Mars--a world of spectacular mountains three times as
    tall as Mount Everest, canyons three times as deep and five times as
    long as the Grand Canyon, vast ice fields, and thousands of kilometers
    of mysterious dry riverbeds. The planet's unexplored surface may hold
    unimagined riches and resources for future humanity, as well as answers
    to some of the deepest philosophical questions that thinking men and
    women have pondered for millennia. The discovery last year of surface
    features that may have been produced by the recent flow of liquid water
    further supports the idea that Mars once had (and may still have)
    conditions conducive to life. To find evidence life, though, will
    likely take more than robotic eyes and remote control. In fact, all
    that Mars holds will remain beyond our grasp until men and women--
    agile, autonomous, intuitive beings--walk upon its surface.
        Whether the decision to send people to Mars is made tomorrow or in
    10 years, there are many technologies that need to be developed in
    order to conduct such a mission in a safe and cost-effective manner. By
    investing a modest amount of money now to develop these technologies,
    both the ultimate cost and the time needed to assemble such a mission
    could be significantly reduced. In addition, such a program would
    provide the core of the talent and expertise that will be required to
    achieve such an ambitious goal.
        Until a few months ago, a very modest amount of NASA funds
    (primarily agency discretionary funds) were used to fund such a
    program. However, after the recent disclosure of Space Station cost
    overruns, an order was issued to stop or eliminate all technology
    development projects supporting eventual human Mars exploration. While
    The Mars Society is in full agreement that many hard choices have to be
    made to remedy the cost overruns relating to the Space Station, we
    believe that this technology development program is too important to
    this Nation's future in space to be sacrificed to feed Space Station
    overruns. In our opinion, Space Station overruns must be dealt with
    within the Space Station's own budget.
        Rather than shut down the tiny amount of human Mars technology
    development work that was underway, such funding should be
    significantly expanded. A program should be funded at a level of at
    least $140 million per year (about 1 percent of NASA's current budget)
    within the NASA HEDS organization, to develop the technologies
    necessary for human Mars exploration missions. When our Nation is ready
    to make a commitment to send humans to Mars, this modest program will
    have already laid a portion of the technological groundwork for the
    mission, saving both time and money.
        Below are some of the technologies that should be investigated in
    such a program.
        1. In-Situ Resource Utilization.--Cost effectiveness is a necessity
    for future human space exploration. Mars provides us with a tremendous
    opportunity to lower the cost of exploration by ``living off the
    land.'' The atmosphere of Mars, composed largely of carbon dioxide, is
    the resource that makes this possible. Using a century-old technology,
    it should be possible to use the Martian atmosphere, as well as a
    relatively small amount of hydrogen brought from Earth, to create
    oxygen, water, and all of the fuel (methane) for the return trip. This
    would dramatically reduce the mission mass and save billions of dollars
    in mission costs. The cost-cutting potential of this technology
    certainly justifies further investigation and development.
        2. Propulsion.--Using current chemical rocket technology, it would
    take at least six months for a crew to reach Mars and at least another
    six months for them to return after their stay on the surface. With
    improved propulsion systems, transit times could be reduced, which
    would increase the safety and reduce the cost of human missions to
    Mars. In addition to improved chemical propulsion systems, we should
    look at new propulsion ideas, such as plasma technology, ion drives,
    nuclear rockets, and many other possibilities that have the potential
    to take months off the voyage. Creating a technology research program
    would allow us to examine the best way to approach this technological
    problem.
        3. Life support.--Without proper life support systems, any future
    Mars explorers could not survive. We should build on the systems
    already developed for the Space Station to achieve systems that can
    more fully recycle wastes and withstand the rigors of a long-duration
    mission where re-supply from earth is not feasible.
        4. EVA suits.--We currently do not have space suits that would be
    useful on Mars. Our current EVA suits are designed for zero gravity
    conditions. They would be far too heavy and unwieldy on the surface of
    Mars. A Mars EVA suit must be light, durable, and allow it's occupant
    to move around freely and perform such simple tasks as bending over and
    getting back up without difficulty. Without a new EVA suit design, the
    astronauts would not be able to leave their habitat.
        5. Human habitats for interplanetary transit and surface use.--As
    noted above, The Mars Society is currently using private funds to
    investigate various aspects of this technology. Although we hope to
    make significant contributions to habitat design, our projects will not
    address many of the technological requirements for these habitats. In
    addition, The Mars Society does not have the means to examine the needs
    for a habitat during interplanetary transit. A technology program would
    be able to focus on these critical issues.
        6. Human surface mobility systems (manned rovers).--While the first
    humans on Mars would be able to make innumerable discoveries on foot,
    their range would be limited. Because of this, it would be prudent to
    study various options for a pressurized rover, which would give the
    astronauts a vastly larger exploration range, allowing them to explore
    tens or even hundreds of kilometers from their habitat module.
        7. Heavy lift vehicles.--Such a mission would be much more
    expensive without heavy lift capabilities. Our Nation has not had a
    heavy lift vehicle capable of launching such a mission since the Saturn
    5 rocket. In addition to a Mars mission, such a vehicle would be useful
    in numerous civilian and military space-related endeavors. Such a
    vehicle could be designed to make use of existing Space Shuttle
    facilities and hardware.
        8. Advanced power systems, both nuclear and non-nuclear.--We need
    to determine the best source of power during Mars surface habitation.
    This is more challenging than any power issue we have had to deal with
    in the history of the space program. We will be on the surface of Mars
    for at least a year, so a reliable power supply is a critical
    technology that will need to be developed.
    III. Some Reasons to Support Human Mars Exploration
        1. Economic/Social/Technology.--Some will say that we need to solve
    problems at home before we invest in space exploration. In reality, it
    is just the opposite. Dollar for dollar, the space program has provided
    more benefits to our Nation and the world than any program in United
    States history; the largest number of benefits coming as a result of
    the Apollo program. A Mars exploration program will likely accelerate
    economic and social benefits as Apollo did. By investing in space, we
    benefit Earth.
        2. Education.--Apollo inspired children around the country to
    pursue science and math careers. They saw that they could participate
    in events larger than themselves. A human mission to Mars will
    certainly have the same impact. Inspiring our children to learn is the
    best education program.
        3. Science.--The scientific ramifications of a human mission to
    Mars are enormous. The study of Martian geology and atmospheric
    conditions will not only teach us much about the future habitability of
    Mars but also about our own planet. By sending humans to Mars, we will
    be much more likely to answer the question of whether there was ever
    life on Mars. In the search for signs of fossilized life on Mars, a
    human crew could likely achieve in their first few days more than what
    could be accomplished in many years by any series of robotic probes.
        4. Exploration.--Without a great history of exploration the United
    States would not exist. We need to continue our great heritage of
    exploring the unknown so that we can guarantee that our society will
    remain vital and will not fall into stagnation. Mars is not just a
    scientific curiosity; it is a world with a surface area equal to all
    the continents of Earth combined, possessing all the elements that are
    needed to support not only life, but technological society. With the
    International Space Station operational, it is time to lay the
    groundwork for the next logical step--the human exploration of Mars.
        5. National Optimism.--We need to rekindle the national optimism
    that made the United States the greatest country on Earth. A human
    mission to Mars is the natural vehicle for this revitalization. A
    strong sense of national optimism is the best vehicle for continued
    prosperity.
        6. Public Support.--A recent Roper poll shows that about two-thirds
    of the American public support sending a human mission to Mars. The
    American public has had an enormous appetite for Mars for years. This
    appetite has fueled countless science fiction accounts of Mars and
    unprecedented interest in NASA exploration missions to Mars. When Mars
    Pathfinder landed in 1997, there were over 100 million hits on the
    Pathfinder website in the first day. There have been well over half a
    billion hits since. All together, NASA's Mars related websites have
    received over 1.2 billion hits since 1997.
        7. Self Definition.--A humans to Mars program would be a forceful
    reaffirmation of the fundamental nature of America as a nation of
    pioneers. We Americans owe everything we have today to our predecessors
    who were willing to go to a wilderness and build where no one had built
    before, to take on challenges that had never been faced, and to do what
    had never been done. Were we to abandon that tradition, we would become
    something less. That is a form of decline that we cannot afford and
    cannot accept. Ultimately the issue of whether we embrace the challenge
    of Mars is one of who we are.
    IV. A New Direction
        Our space program has been literally and figuratively going around
    in circles since the end of the Apollo Program. Few people under the
    age of 40 have any direct recollection of our Nation's greatest
    technological and exploration achievement; landing humans on the Moon.
    In addition, more people are even beginning to deny that the Moon
    landing ever took place. While this opinion used to be limited to
    fringe elements of our society, it has now become main stream. Earlier
    this year, the Fox Network aired a program that claimed that the Moon
    landing was a hoax. An estimated 20 million people watched this
    program. It was so popular that the network aired it for a second time,
    several weeks later. Since then, teachers around the country have been
    forced to do damage control, responding to many of their students who
    now believe that the Moon landing was a hoax.
        Should we be surprised by this phenomenon? Absolutely not! In the
    late 1960s and early 1970s, the possibilities in space exploration
    looked limitless. What should have been ``one giant leap for mankind,''
    the Moon landings have turned out to be just a few ``small steps.''
    After launching the Nation, and the world, into what looked like our
    greatest age of exploration and learning, we retreated and have never
    returned. We now need to engage in a new and great age of exploration
    and discovery--an age that will again inspire our Nation and the world.
                                   conclusion
        As the past few years have demonstrated, Mars is an extraordinary
    planet that yields her mysteries only grudgingly. If we are ever to
    gain a complete understanding of its complexities, we will need to send
    human explorers to that world to fill in the enormous gaps in knowledge
    left by our robotic probes. We urge Congress to establish a modest
    program (at least $140 million per year) to develop the technologies
    necessary to lay the groundwork for what will certainly be the next
    great Age of Discovery.
        Once again, I would like to thank you for the opportunity to
    present this testimony.
                                     ______

                         DEPARTMENT OF VETERANS AFFAIRS

              Prepared Statement of the American Heart Association

                    medical and prosthetic research program
        It is highly likely that heart attack or stroke will cause your
    death or disability or that of a loved one. Heart attack, stroke and
    other cardiovascular diseases remain America's leading cause of death
    and a main cause of disability. Cardiovascular diseases account for
    nearly 1 of every 3 deaths in the U.S.
        The American Heart Association, along with 22 million volunteers
    and supporters, works to reduce death and disability from heart attack,
    stroke and other cardiovascular diseases. We commend this Committee's
    support of the Department of Veterans Affairs' Medical and Prosthetic
    Research program.
                                still number one
        Heart attack, stroke and other cardiovascular diseases have been
    America's No. 1 killer since 1919. Nearly 61 million Americans of all
    ages suffer from cardiovascular diseases. Americans of all ages!
    Hundreds of millions of Americans have major risk factors for
    cardiovascular diseases--about 50 million have high blood pressure, 41
    million adults have high blood cholesterol (240 mg/dL), 49 million
    smoke, 107 million adults are obese or overweight and 10 million have
    physician-diagnosed diabetes. As the baby boomers age, the number of
    Americans afflicted by these lethal and disabling diseases will
    increase substantially. Cardiovascular diseases cost Americans more
    than any other disease--an estimated $300 billion in medical expenses
    and lost productivity.
        While heart disease and stroke occur at all ages, they are most
    common in Americans over age 65--an age group that is about 13 percent
    of the U.S. population and will be 16.5 percent by year 2020. By the
    year 2020, the percentage of veterans over 65 years of age will be
    about three times that of the general population. The VA's planning
    models recognize that its aging patient population demands more care.
    More than 4.49 million or 16.4 percent of the veteran population
    reported suffering from ``heart trouble'' in the 1993 National Survey
    of Veterans. More than 998,000 or 3.6 percent of the veteran population
    are stroke survivors. As the veteran population ages, the number of
    veterans afflicted by heart disease and stroke will increase
    substantially.
                         how you can make a difference
        We recommend an fiscal year 2002 appropriation of $395 million for
    the VA Medical and Prosthetic Research program. Our recommendation,
    consistent with that of the Friends of VA Medical Care and Health
    Research and the Independent Budget, a detailed analysis of VA funding
    needs developed by four of the major veterans service organizations and
    endorsed by more than 60 other organizations. An appropriation of $395
    million would allow maintenance of fiscal year 2001 initiatives and
    implementation of new initiatives for fiscal year 2002, allowing an
    increase in investigator-initiated research, expanded training programs
    to attract the next young generation of clinician-scientists and
    accommodate medical research inflation. We challenge our government to
    significantly increase funds for heart and stroke research through the
    VA Medical and Prosthetic Research program. We strongly urge the VA to
    establish heart and stroke research centers to advance the battle
    against heart attack, stroke and other cardiovascular diseases--
    America's No. 1 killer and a leading cause of disability. Our
    government's response to this challenge will help define the health and
    well being of citizens in this new century.
         insufficient va resources devoted to heart and stroke research
        The VA Medical and Prosthetic Research program plays an important
    role in heart and stroke research and deserves the strong support of
    Congress. In fiscal year 1999, VA support for research on heart disease
    was $23.7 million (a 13 percent increase from fiscal year 1998),
    accounting for 7.4 percent of the fiscal year 1999 VA's Medical and
    Prosthetic Research budget. In fiscal year 1999, VA-supported stroke
    research represented $4.2 million or 1.3 percent of the VA's Medical
    and Prosthetic Research budget. We are concerned that insufficient
    money is being devoted to America's No. 1 killer--heart disease--and
    our No. 3 killer--stroke. Both are major causes of permanent
    disability. Besides its own program, VA investigators spent another
    $40.5 million on heart research and $7.8 million on stroke research
    from outside sources.
              va heart and stroke research benefits all americians
        The mission of the VA Medical and Prosthetic Research program is to
    ``discover knowledge and create innovations to advance the health and
    care of veterans and the nation.'' While the primary purpose of the VA
    health care system is the provision of quality health care to eligible
    veterans, VA-supported research contributes to the quality of care by
    bringing talented and dedicated physicians into the VA system.
    Discoveries from VA-supported research benefit veterans, science and
    the world's health. VA cardiovascular research is an integral part of
    the scientific effort in this field. VA researchers include nationally
    recognized, distinguished scientists and several Nobel Laureates. The
    VA had supported Ferid Murad, M.D., 1998 Nobel Prize winner for
    research demonstrating the role of nitric oxide in regulating blood
    pressure. Several VA investigators have been acclaimed for their work
    in cardiovascular research. For example, American Heart Association
    volunteer Gerald F. DiBona, M.D. was awarded the prestigious VA
    Middleton Award in 1995 for internationally recognized research on
    kidney and cardiovascular diseases.
        The Medical Research component of the VA Medical and Prosthetic
    Research program supports basic and clinical research, mainly
    investigator-initiated peer reviewed studies. It provides funds for
    support of VA-based faculty members (M.D.s or Ph.D.s) at various stages
    in their careers, multicenter cooperative studies--a large portion of
    which are cardiovascular studies--and research equipment. Also, VA
    investigators provide core faculty support at major medical schools
    affiliated with VA institutions. The presence of a VA research program
    aids the VA. This small but internationally recognized, highly
    competitive research program in fiscal year 2000 supports 2,157
    investigators at 132 VA-supported facilities.
        VA cardiovascular research is largely clinical. The VA is a major
    contributor to clinical research, playing a unique role because of its
    ability to immediately translate research findings into practice.
        VA-supported research has produced landmark results and
    revolutionized treatment in the cardiovascular area. You and your
    family have benefited directly from VA heart and stroke research.
    Several cutting-edge examples follow.
      --Heart Attack Treatment.--VA's Quality Enhancement Initiative
            Ischemic Heart Disease Study found that VA medical facilities
            provide equivalent or superior treatment for heart attack
            patients when compared with the private sector. Quality
            measures for these veterans surpass those in the private sector
            in the use of aspirin, beta blockers, ACE inhibitors and in the
            evasion of calcium channel blockers. Similar findings were
            found for angioplasty patients.
      --Heart Bypass Surgery.--In 1998, an estimated 553,000 heart bypass
            surgery procedures were performed on 336,000 patients in this
            nation at an average cost of $44,820 per procedure in 1995.
            Generally, one year after surgery, 10 to 15 percent of the vein
            grafts used in these procedures become blocked. VA research has
            found that reducing the temperature of the solution used to
            harvest the vein grafts may stop heart arteries from becoming
            narrowed with atherosclerosis. The study also found that while
            a daily aspirin stops artery vein blockage for a year after
            surgery, long-term survival depends on the extent of underlying
            disease before the procedure and the length of time of the
            procedure. In a landmark study, VA researchers found that heart
            medication works just as effectively as heart artery bypass
            surgery for certain groups of patients with narrowed arteries.
            In 2000, VA surgeons were the first to perform this surgery on
            patients without anesthesia.
      --Gene Therapy And Heart Failure.--About 4.7 million Americans suffer
            from congestive heart failure, a major cause of hospitalization
            for Americans age 65 and older. VA researchers have found in
            animal studies that inserting a gene in heart cells affected by
            heart failure started an active increase in the chemical that
            triggers the cells to beat more strongly. Additional research
            in this area could provide a new lease on life for millions of
            Americans. Also, VA scientists, using gene therapy in animals,
            increased the number of blood vessels that transport oxygen to
            the heart.
      --Stroke Risk Reduction.--About 9 percent of older Americans suffer
            from the most common type of an irregular heart beat, atrial
            fibrillation, a stroke risk factor. Research has shown that low
            doses of the blood thinner warfarin can lower stroke risk by
            about 80 percent in sufferers of atrial fibrillation.
      --Stroke Survivor Improvements.--Stroke is a leading cause of
            permanent disability in this country and the No. 3 killer. VA
            studies have produced therapies to enhance quality of life for
            survivors. VA researchers have created a software program to
            assess and treat the stroke-related speech disorder aphasia.
            Also, they have shown that strenuous exercise can benefit
            stroke survivors who are paralyzed on one side of their body,
            and have developed a rehabilitation procedure to restore arm
            movement. Researchers have identified seven pathways associated
            with motor recovery from stroke, allowing more precise
            predictions about functional recovery of stroke survivors.
      --Aspirin and Angina.--About 6.4 million Americans suffer from angina
            (chest pain) due to insufficient blood supply to the heart. In
            another landmark study, VA research found that aspirin cuts
            deaths and heart attacks by 50 percent in patients suffering
            from unstable angina.
      --Angioplasty Benefits.--In 1998, an estimated 926,000 angioplasty
            procedures were performed in this nation to restore blood flow
            to the heart by widening narrowed arteries. VA research was the
            first to evaluate angioplasty. Results showed that after
            undergoing angioplasty, patients suffered less pain and can
            exercise longer than those taking only medication. Another
            study found clot-busting drugs had similar results to
            angioplasty for heart attack survivors at savings of $3,000 per
            patient. Annually more than 150,000 people are candidates for
            clot-busting drugs, according to VA.
      --Heart Failure.--The growing number of sufferers from heart failure
            has earned this disease the title of ``the new epidemic.'' A
            major VA study, in conjunction with the National Heart, Lung,
            and Blood Institute and Intercardia Corporation, showed
            unexpectedly that the beta blocker bucindolol did not reduce
            death from heart failure. This was the first study to include
            large numbers of African Americans and patients with advanced
            heart failure.
      --Heart Failure Drugs.--An estimated 4.7 million Americans suffer
            from congestive heart failure, the often-disabling inability of
            the heart to pump sufficient blood throughout the body. A VA
            study showed that heart medications can enhance the heart's
            pumping ability and keep sufferers of congestive heart failure
            alive. These study results have revolutionized heart failure
            treatment.
      --High Blood Pressure.--An estimated 50 million Americans have high
            blood pressure, the leading stroke risk factor and a major
            cause of heart attack. VA research found that like private
            sector statistics, physicians increase anti-hypertensive
            medicine in only 25 percent of patients with higher blood
            pressure and that the patients who had their blood pressure
            monitored were poorly controlled. More aggressive management of
            these patients will reduce the number of heart attacks and
            strokes, America's No.1 and No. 3 killers, respectively. An
            inexpensive computerized reminder system helps doctors manage
            patients and cut costs by reducing use of calcium channel
            blockers.
      --Cholesterol.--An estimated 11 million veterans are at increased
            risk of heart disease due to high cholesterol levels, according
            to the VA. A groundbreaking VA-supported clinical trial found
            that daily use of the drug gemfibrozil, raises HDL by 6
            percent, reduces coronary heart disease risk by 22 percent with
            reductions in heart attack, stroke, transient ischemic attack
            and carotid endarterectomy for heart disease sufferers with low
            levels of both ``good'' and ``bad'' cholesterol. Results could
            mean cost savings because gemfibrozil is cheaper than statin
            drugs. This is the first study to show significant reduction in
            risk of major cardiovascular diseases by raising HDL, the
            ``good'' cholesterol, lowering triglycerides and not changing
            LDL, the ``bad'' cholesterol. VA research showed the
            effectiveness of cholesterol screening, when broken down into
            HDL and LDL for adults--even those older than age 65. Another
            study found that the addition of soy protein to a low-fat diet
            substantially lowers cholesterol in those with moderately high
            cholesterol levels.
      --Irregular Heart Beat Treatment.--An estimated 1 million Americans
            suffer from atrial fibrillation, the most common irregular
            heartbeat, which causes more than 75,000 strokes a year. VA
            researchers found that the drug digoxin was not effective in
            controlling heart rate. But, they discovered when digoxin was
            combined with a beta-blocker, patients achieved almost perfect
            heart rate. These results will enhance treatment for atrial
            fibrillation and reduce stroke risk.
      --Wheelchair Aerobic Fitness Trainer.--This trainer is an alternative
            to drug-induced stress testing for cardiorespiratory fitness
            and coronary artery disease in people with lower limb
            disabilities.
      --Psychoeducational Program for Stroke Family Caregivers.--Most
            stroke survivors are helped in the recovery process by a family
            caregiver, usually the spouse. A pilot study testing a program
            to reduce physical and psychological demands on family
            caregivers found this intervention reduced depression and
            caregiver burden and better prepared them for their role.
            Preliminary results found that a telephone intervention may be
            as helpful as the in-home program. Execution of this program
            could have vital results for family caregivers of 4.5 million
            American stroke survivors.
      --Non-Q-Wave Heart Attack.--Of the estimated 1.1 million Americans
            who will suffer a heart attack this year, about 600,000 will
            experience non-Q-wave--EKG classification--version. VA research
            showed that noninvasive treatment of non-Q-wave heart attack
            patients saves money, an estimated $20 billion a year, and is
            just as effective or in some cases better than invasive
            procedures such as heart bypass surgery or angioplasty. Higher
            death rates were associated with invasive procedures. Results
            could change treatment for sufferers of this type of mild heart
            attack. An economic study is examining cost-effectiveness on
            initial stay and follow-up care and estimating impact of
            adoption of these recommendations on American health care costs
            and pioneer VA cost determination methods.
      --Heart Attack Treatment.--VA researchers found aspirin is as
            effective as aspirin and the blood thinner, Coumadin, for heart
            attack victims. Aspirin is cheaper and does not need dose
            regulation.
         heart and stroke research challenges and opportunities for va
        Research advances outlined above and other progress have been made
    possible by congressional support of the VA Medical and Prosthetic
    Research program. Thanks to research, more of our patients, our
    families and our friends survive their heart attack or stroke and with
    a better quality of life. However, while more Americans are surviving,
    heart attack and stroke are still are No. 1 and No. 3 killers,
    respectively, and can cause permanent disability, requiring costly
    medical care and loss of productivity and quality of life. Clearly more
    work is needed if we are to win the fight against heart disease and
    stroke. Challenges and research opportunities to advance the battle
    against heart disease and stroke abound. Examples of on going VA
    research are highlighted below.
      --Heart Failure Studies.--A VA study is comparing effects of three
            anti-clotting therapies (aspirin, warfarin or clopidogrel) in
            heart failure patients. Another study is creating a large DNA
            bank of sufferers to examine genetic basis of heart failure. A
            third study, the first large scale, international, randomized
            clinical trial, is evaluating effects of digitalis, a 200-year
            old treatment in preventing heart failure deaths. Heart failure
            is a major cause of hospitalization of Americans age 65 and
            older. Another study is determining if sleep apena oxygen
            treatment will improve survival and quality of life of veterans
            with heart failure and reduce hospitalizations. It will
            identify sleep apnea risk factors in those with stable heart
            failure. A blood test developed by VA researchers may help
            emergency department doctors diagnose congestive heart failure.
            This test may offer an alternative to physical exams, x-rays,
            stress tests and echocardiography for diagnosing heart failure.
            Heart failure represented more than 22,000 VA hospitalizations
            in 1990 at a cost of about $100 million. Results will improve
            treatment of heart failure that affects 4.7 million Americans.
      --Inflamed Arteries.--Many heart attacks and strokes are the end
            result of atherosclerosis, the disease process that causes
            obstructed blood vessels. VA-supported research has shown that
            inflammation may cause atherosclerosis or hardening of the
            arteries. Scientists have identified large numbers of a certain
            receptor on inflammatory cells in heart blood vessels. If
            researchers can create a way to block that receptor,
            progression of atherosclerosis might be prevented.
      --Heart Attack Research.--An estimated 1.1 million Americans suffer a
            heart attack each year. VA research is assessing cost-effective
            ways to diagnose and treat suspected heart attack without
            costly invasive procedures, including a computer analysis of
            the heart's electrical signals during exercise and a new
            scoring system in treadmill tests. Scientists are examining
            long-term outcome and risk factors for heart attack sufferers,
            for those who have heart attack during surgery and for those
            who have heart bypass surgery. Researchers have identified a
            molecular marker that may help predict heart attack or
            insufficient blood supply to the heart. They are studying
            whether such attacks can be prevented by increasing levels of a
            protein that stimulates blood vessel growth and helps repair
            damaged tissue. Findings could save money, improve health care
            and reduce surgery.
      --Warfarin and Aspirin Study.--Heart attack is America's single
            largest killer. A VA-sponsored study is analyzing effects of
            the blood thinner warfarin plus aspirin versus aspirin alone in
            reducing deaths from heart attacks. If results confirm the
            hypothesis, VA estimates that 20,000 lives could be saved.
      --Angioplasty.--Heart disease, the No. 1 killer in the United States,
            affects about 20 million Americans. In the first of its kind
            study, COURAGE, VA is comparing the effectiveness of
            angioplasty with medical therapy versus aggressive medical
            therapy alone in patients with heart disease. The results of
            this study could revolutionize treatment of heart disease. In
            1998 an estimated 926,000 angioplasty procedures were performed
            to restore blood flow to the heart by widening narrowed
            arteries. The average cost of angioplasty in 1995 was $20,370.
      --Atherosclerosis and Iron Research.--Atherosclerosis is a major
            heart attack and stroke risk factor. VA research is evaluating
            the concept that too much iron in the blood stream contributes
            to atherosclerosis. Research results could revolutionize the
            treatment of heart attack and stroke.
      --Stroke Research.--Stroke strikes about 600,000 Americans each year;
            many survivors are permanently disabled. Researchers found
            restricting use of limbs unaffected by stroke can help patients
            recover use of limbs affected by stroke more quickly and fully.
            Progress in deciphering language of the brain's motor cortex,
            the section that helps control muscle movement, could lead to
            new technology that may reconnect damaged areas or
            communication pathways of the brain and may restore lost
            function after a stroke. Scientists implanted electrodes in leg
            muscles of stroke patients and used sophisticated software to
            electronically stimulate muscles. VA researchers were the first
            to demonstrate that robot-assisted therapy is more effective
            than conventional treatment in restoring upper limb movement
            following stroke. Researchers are studying genetic
            susceptibility to carotid atherosclerosis, a major cause of
            stroke. Scientists are examining quality of care at VA
            hospitals, because of findings that blacks suffer more severe
            strokes than whites and that blacks are less likely to receive
            imaging tests or carotid endarterectomy, surgery to remove
            buildup of atherosclerotic plaque in the main artery to the
            brain, located in neck, to prevent stroke.
        The number of VA research applications has grown slightly over the
    last five years, but funding cuts and/or inflationary increases
    severely restrict support for approved applications. For the programs,
    which were reviewed for fiscal year 1999 funding, more than 30 percent
    of approved applications were funded. Ten years ago, 40 to 50 percent
    of the approved applications were funded.
        Through fiscal year 2000, total dollars appropriated for the
    Department of Veterans Affairs Medical and Prosthetic Research program
    have increased $128 million since 1985 at an approximate annual rate of
    about 3 percent. But, there has been a decrease in terms of constant
    ``1985 dollars'' of $14.7 million. The Medical Research programs
    highlighted below are of interest to the American Heart Association.
      --Investigator-Initiated Studies.--During fiscal year 2000 this
            program constituted an estimated 71 percent of the Medical and
            Prosthetic Research appropriated budget. These investigators
            comprise the core of all VA research and provide the
            preceptorship for career development awardees.
      --Cooperative Studies.--In fiscal year 2000 this program supported an
            estimated 38 clinical trials. The VA offers a unique
            opportunity for cooperative studies due to close linkage among
            hospitals. These studies provide a mechanism by which research
            on the effectiveness of diagnostic or therapeutic techniques
            can achieve statistically significant results by pooling data
            on patients from a number of VA hospitals. The Cooperative
            Studies Evaluation Committee evaluates proposals developed by
            teams of clinicians and biostatisticians. The VA has supported
            landmark clinical trials in the cardiovascular field (e.g. high
            blood pressure treatment and coronary artery bypass surgery).
      --Career Development Awards.--Applications for these awards are
            reviewed both locally and by the VA Central Office. This
            program experienced a decrease in the number of awards by 58
            percent from a high in 1991 of 212 awards to a low of 88 awards
            in fiscal year 1997. In response to the Research Realignment
            Advisory Committee's suggestion to rejuvenate this program, a
            renewed emphasis began in fiscal year 1997 for the VA's Medical
            Research Service, Health Services Research and Development
            Service and, for the first time, Rehabilitation Research and
            Development Service. This will result in an anticipated 176
            Career Development Awards in fiscal year 2000.
                                 action needed
        Today's investment in medical research will lead to future returns.
    Returns include continued decreases in death rates from heart attack,
    stroke and other cardiovascular diseases, reduced federal outlays for
    hospital and long-term care, a well-trained cadre of medical
    researchers and a healthier society.
        Consistent with the Friends of VA Medical Care and Health Research
    and the Independent Budget, we recommend an fiscal year 2002
    appropriation of $395 million for the VA Medical and Prosthetic
    Research program. This appropriation will allow maintenance of fiscal
    year 2001 initiatives and implementation of new initiatives, including
    continuation of research momentum in heart disease and stroke and
    maintenance of VA's vital role in this field. We urge VA to establish
    heart and stroke centers to fight cardiovascular diseases--America's
    No. 1 killer and a major cause of disability.
                                     ______

        Prepared Statement of the Lac du Flambeau Band of Lake Superior
                                Chippewa Indians

        My name is Henry St. Germaine, Sr. and I am the Tribal Chairman for
    the Lac du Flambeau Band of Lake Superior Chippewa Indians. The Lac du
    Flambeau Reservation is in the ``North Woods Area'' of Wisconsin and
    our homeland is called Waswagoning. The Lac du Flambeau tribal members
    always want us to remind Congress about the special and unique
    relationship the Federal government has with Indian tribes. The Federal
    government is obligated by Treaty and Executive Order to provide for
    critically needed social, education, health and governmental services
    to the Band and its members in exchange for the land, water, natural
    resources and peace our forefathers provided. As Congress and the
    President begin work on the fiscal year 2002 Budget, the obligations
    and commitments to provide for these services must not be forgotten and
    should be given the highest priority. The Lac du Flambeau Band submits
    the following issues and concerns to the Subcommittee concerning
    veterans affairs, housing and the environment.
                            veterans' administration
        I would first like to address how the system is failing our
    American Indian veterans with regard to accessing veterans' benefits.
    American Indians across the country have the highest record of military
    service per capita when compared with other ethnic groups. These men
    and women have put their lives at risk to ensure the survival of future
    generations, yet they consistently have problems accessing basic
    benefits and services. I share in their frustration as they attempt to
    get to the local county veterans service office (``CVSO'') located
    almost 50 miles away. Many of our tribal members lack any form of
    transportation. Our winters are severe and travel is difficult even if
    you have reliable transportation. Many tribal members do not have
    telephones, contributing to further decreased access to the local
    CVSOs. Additionally, many veterans are intimidated by the myriad of
    paperwork and the various eligibility criteria for different veterans
    benefits.
        According to a resolution prepared by the Great Lakes Inter Tribal
    Council in Lac du Flambeau, there are approximately 40,000 American
    Indian veterans in Wisconsin. It is estimated that only 5 percent of
    these veterans are aware of the benefits programs for veterans. Lac du
    Flambeau has recently started collecting information regarding tribal
    members who are veterans. Currently, 130 veterans have registered and
    we expect this statistic to double since we are in the early stages of
    gathering this information and the numbers do not include family
    members. This list also does not include veterans who are non-enrolled
    descendants and other American Indians living on the reservation.
        We come before you to urge the Committee to establish a tribal
    veterans service office (``TVSO'') on the Lac du Flambeau Reservation
    to render services to American Indian veterans and their families.
    Currently, the Band is not a recipient for Federal or State grants in
    regards to securing tribal veterans' benefits. By Congress
    appropriating $150,000 as a proposed budget, we can finance and secure
    office space for a TVSO at Lac du Flambeau. We ask that this TVSO have
    autonomy and the same benefits and opportunities as the CVSO. We
    respectfully request that Congress honor our warriors and ensure that
    these American Indian veterans can access veterans' benefits with fewer
    barriers by placing a TVSO on the Lac du Flambeau Reservation.
                                    housing
        There is a shortage of housing on the Lac du Flambeau Reservation
    and the housing that is in place is substandard. This problem is
    exacerbated by the barriers to lending and the population growth in the
    area. In March 2000, the Bureau of Indian Affairs released a Labor
    Force Survey that shows the Lac du Flambeau enrolled membership
    population is 3,056 with a projected population growth of 4 percent by
    the year 2005. The tribal housing authority's NAHASDA Block Grant is
    $1,513,632. The Band's housing stock is 191 rental units and 112 Mutual
    Help units--a total of 303 units and over half the units are considered
    to have overcrowded living conditions. The rental units are 15 to 36
    years old and are in substandard condition, most of which require major
    rehabilitation and modernization. There are currently 300 Lac du
    Flambeau members on the waiting list for housing. Band members continue
    to move back to the reservation only to find overcrowded living
    conditions and no housing.
        The Band faces a housing shortage and inadequate funds exist to
    rehabilitate existing units. The NAHASDA Block Grant level of funding
    is below inadequate and often it is a balancing act to leverage funds
    for new housing development or to rehabilitate the current housing
    stock. We must address rehabilitation and modernization needs
    simultaneously. Unfortunately, the lack of funds is an obstacle to
    moving forward to provide affordable housing for our members. The
    urgent need for rehabilitation is equal to the need for additional
    housing and the costs are equally substantial.
        President Bush's fiscal year 2002 budget proposal for HUD is 30.4
    billion, a 7 percent increase over last year. However, most of the
    increase is required to cover existing contracts for rental assistance.
    For NAHASDA, the Administration has requested funding at last year's
    level of $650 million. I strongly urge the Committee to increase the
    NAHASDA appropriations to a level that is responsive to the growing
    housing needs on the reservation. The current level of funding is
    simply not enough to provide safe and healthy homes for our families
    and children.
                                  environment
        The Lac du Flambeau Reservation is rich with lakes and forests and
    nearly 50 percent of the reservation is saturated with water. The total
    resource areas are as follows: Wetlands--24,000 acres (27.7 percent),
    Lakes & Rivers--17,897 (20.7 percent), Forested Uplands--41,733 (48.2
    percent), and Other--3,000 (3.5 percent). Approximately 25 percent of
    the reservation area is owned by non-Band members and is considered fee
    land. The Band was blessed with a very diverse ecosystem and a huge
    responsibility to protect, enhance, and conserve the natural resources
    for present and future generations.
        Under the Clean Water Act, the Band has the responsibility and the
    authority to manage the water resources of the Lac du Flambeau Indian
    Reservation. The Band has adopted water quality standards which, once
    approved by EPA, will be applicable to all who reside within the
    exterior boundaries of the reservation. To effectively manage the water
    resources of the reservation, this authority must remain with the Band.
    It would be impossible to manage water resources under any other
    authority than that provided by the Lac du Flambeau themselves. The
    notion that the State's level of protection is adequate is not a
    responsible one. Lac du Flambeau, and other subsistence-based Tribes,
    require more stringent water quality standards to support their culture
    and lifestyle. Of particular concern is the fact that Tribal members,
    on the whole, have a larger portion of fish in their diet than the non-
    Indian population of Wisconsin. Some fish on the Lac du Flambeau
    Reservation are inedible even by State of Wisconsin standards that were
    developed using consumption levels below those of the Band. States do
    not incorporate subsistence lifestyles into their water quality
    standards. Presently, toxic pollutants, such as mercury, have entered
    reservation waters and caused a tribal ban on all fish consumption of
    walleye from one of the best fisheries and most beautiful lakes on the
    Reservation. These toxic pollutants have entered Lac du Flambeau waters
    under current State of Wisconsin standards, which are in place until
    the Band's water quality standards are recognized.
        This is not the only environmental problem facing the Band.
    Shoreline development is an ever-increasing problem on the reservation.
    The greatest source of this non-point source pollution is shoreline
    development, both tribal and non-tribal. Natural shoreline areas
    provide important terrestrial and aquatic habitats. Natural shoreline
    areas also contain important native plant species that filter out
    contaminants and protect reservation waters from pollution. Lake
    riparians often remove the native vegetation and attempt to replace it
    with a bluegrass lawn they brought with them from urban areas. These
    lawns often require the use of chemicals and fertilizers that wash into
    reservation waters causing excessive growth of algae and pollution of
    the lake (or stream) ecosystems. Moreover, in Lac du Flambeau, it is
    cost prohibitive to establish and maintain a traditional bluegrass lawn
    due to topsoil and fertilizer requirements. Therefore, sparsely
    vegetated or bare ground areas often result. These areas quickly erode
    and negatively impact the Band's water quality and may disturb
    archeologically significant areas.
        The Lac du Flambeau Reservation has unique characteristics and a
    shoreline restoration project needs to be encouraged among lake
    residents. Education and outreach are essential in changing attitudes
    about shoreline buffer areas. Current EPA funding programs do not allow
    the Band to adequately address non-point source pollution, which is the
    major source of water quality degradation on the Reservation.
        In 1998, the Band completed a Unified Watershed Assessment. At the
    initial meetings introducing these Assessments, EPA Administrator Carol
    Browner indicated that EPA would be requesting the bulk of new water
    quality management dollars under the 319 Program. She suggested that,
    while other programs, such as 314, may be drastically under-funded, the
    resources would be available within the 319 Program to address these
    concerns. While this may be reassuring to States, Tribes are left out
    in the cold. Unless Congress removes the Tribal 319 cap, Tribal
    governments will be unable to compete for 99.66 percent of total EPA
    319 allocation. In fiscal year 2001, this congressionally imposed cap
    was lifted for one year only. A separate tribal set aside for the 319
    Program, similar to the successful 106 Water Pollution Control Program,
    may be necessary if Tribes are to adequately manage non-point source
    pollution on reservations.
        Over the past decade, EPA funding has played a vital role in
    environmental management on the Lac du Flambeau Reservation by
    assisting the Band in water quality monitoring. The purpose of these
    activities was to gain valuable baseline water quality data and to
    utilize it while writing Water Quality Standards for the reservation's
    surface waters. Currently, the standards have been submitted to EPA and
    the Band has applied for regulatory authority to operate a water
    quality standards program.
        Clean Water Act Programs, such as the 106 Water Pollution Control
    Program, are essential to water quality protection on the Reservation.
    The Band is grateful that recent increases have been achieved under
    this important program. Proposed funding levels show the
    Administration's commitment to resource preservation in Indian country.
    The future of this funding must continue to be strong in order for the
    Tribes to carry out the vast array of Federal programs. States have
    been receiving funding for nearly thirty years and have used this money
    to build an environmental infrastructure. Indian Tribes must be
    afforded time and money to bring environmental programs on par to those
    of the States. The Band requests that Congress, at a minimum, maintain
    106 funding at the levels proposed in the President's Budget. In the
    upcoming years, the Band must continue to protect and manage water
    resources on the reservation. We will accomplish this through a variety
    of water quality projects and the assumption of additional Federal
    regulatory programs. The Band is requesting $130,000 106 Program
    dollars in fiscal year 2002 to accomplish the following: implementation
    of a drinking water protection plan, non-point source management,
    public education for lakefront property owners, water quality
    standards' revisions, and interactive kiosk sites for zoning and
    environmental protection information.
        Besides surface water resources, EPA has also helped the Band in
    developing underground storage tank, radon, and solid waste programs on
    the reservation. These programs have succeeded largely due to the
    General Assistance Program (``GAP''). GAP has been used to increase
    environmental awareness and compliance on the reservation. Continued
    support of GAP will allow the Band to build on past accomplishments and
    ensure proper compliance with various environmental regulations and
    mandates. Although GAP was originally created as a four-year program,
    these monies need to be set aside annually if tribal governments expect
    to make continued progress in environmental management. The Band
    receives approximately $110,000 annually through GAP. The monies
    received since 1992 have allowed the Band to make significant progress,
    however $110,000 is not adequate to support the implementation of these
    government mandated programs. Indian Tribes are required to comply with
    many environmental mandates. We need an increase to at least $135,000
    for fiscal year 2002 to support additional staff which are needed to
    assist the Band in protecting and conserving our natural resources.
    There are more than 200 underground storage tanks on the reservation,
    most on non-Indian fee land, that need to be investigated or removed in
    order to protect the Band's groundwater supply. The solid waste
    management program also needs to be continued and expanded to comply
    with Federal, State, and Tribal solid waste regulations. This is a
    monumental task for one individual. Therefore, we urge the Committee to
    increase the appropriations for GAP so that we may hire additional
    staff to help us comply with these environmental mandates.
        In addition, the recently enacted Tribal Cooperative Agreement
    Authority, which allows the EPA to award cooperative agreements to
    Tribes to assist in implementing Federal environmental programs, should
    be renewed for additional years. A specific tribal set aside for this
    new program would also be helpful to the Band in achieving necessary
    environmental goals. Currently this Cooperative Agreement Authority
    does not carry any additional funding allocation for Tribes. Tribes are
    precluded from obtaining any State dollars allocated for similar EPA/
    State Cooperative Agreement Authority.
        Wetland resources are a valuable commodity in today's environmental
    landscape and are being lost at an alarming rate nationwide. Current
    set asides for the State/Tribal Wetland (104) Programs are inadequate.
    Tribal funding levels for this program are often less than those of the
    106 Program and GAP. Fierce competition between Tribes and States often
    results in Tribes gaining little overall funding. The Lac du Flambeau
    Reservation is 27.7 percent wetlands and the Band has applied for 104
    dollars. To date, the Band has only received money from the fiscal year
    1996 grant funding cycle. As development pressures increase on the
    reservation, greater demands will be placed upon the wetlands of the
    reservation. Additional monies must be budgeted for the 104 Program to
    meet these demands.
        We request the Committee's strong support to enable us to preserve
    and expand our environmental programs.
                                     ______

             Prepared Statement of the Assiniboine and Sioux Tribes

        The Assiniboine and Sioux Tribes of the Fort Peck Indian
    Reservation, in Montana. appreciate the opportunity to present this
    testimony.
                                veterans affairs
        The Tribes would like to bring to the attention of the Subcommittee
    the significant needs of Native American veterans. As the Subcommittee
    no doubt knows, in proportion to Indian representation in the Nation's
    population, Native American men and women have served in this country's
    armed forces in far greater numbers than any other group in our
    society. In Vietnam alone, more than 42,000 Indians served. More than
    90 percent of these individuals volunteered. One study has shown that
    one in every twelve eligible white American man served in Vietnam, but
    for Indians it was one in four. This same study showed that most
    Indians who served in combat in Vietnam were assigned to front-line
    combat assignments. Thus, at least in Vietnam, not only did Indian men
    serve in disproportionate numbers, Indian men were in the most
    dangerous line of fire in a higher number, as well.
        The Veterans Administration has begun to understand that it needs
    to do a better job of meeting the needs of native veterans. The Tribes
    were very pleased by the recent statements of Secretary Anthony
    Principi at the National Congress of American Indians and the
    commitments that he has made to improve the quality of service that
    native veterans receive. We urge the Subcommittee to support his
    efforts.
        Some of the VA's recent efforts include a sharing agreement with
    the Oneida Tribe Community Health Center, which enables treatment for
    veterans on or near the Oneida Reservation. In the Black Hills, the VA
    has established six community-based healthcare clinics throughout South
    Dakota close to reservations. On the Hopi Reservation in Arizona, the
    VA established the first Vet Center to be located on a Reservation. We
    understand that there is now also one on the Navajo Reservation in
    Chinle, Arizona and others planned. These types of initiatives should
    be expanded to better meet the needs of Native Veterans.
        In particular, the Fort Peck Tribes are very concerned that except
    for a community health initiative with the Fort Harrison VA, there are
    no programs in the State of Montana to ensure that the VA is meeting
    its obligations to the native veterans in Montana. At Fort Peck alone,
    there are more than two-hundred veterans residing on the Reservation.
    The majority of these veterans are Korean war and Vietnam war veterans.
    Thus, the average age of our veterans is well over fifty. Because of
    the advancing age of our veterans, the medical and other VA needs of
    our veterans are significant. Unfortunately, in order to receive any
    type of medical service, these veterans must travel long distances to
    either Miles City or Glasgow, Montana. The VA offers no transport
    services to our veterans. Some of our veterans are disabled and cannot
    drive and some of the veterans lack the financial resources to make the
    trip. Moreover, there is no place on the Reservation for veterans to
    learn about the services and benefits of the VA, including burial
    services, the new medical benefits for Medicare eligible veterans, and
    educational opportunities for the younger veterans.
        Thus, the Tribes urge the Subcommittee to dedicate funds for a Vet
    Center on the Fort Peck Reservation to provide services not only to
    native veterans but all veterans of Northeast, Montana. This Vet Center
    could serve as a resource center on VA services, provide counseling and
    referral services, and provide transportation services to and from the
    health facilities for veterans in the area.
        Of great concern in all Indian communities is the impact of
    diabetes on our people. Even more alarming is the Air Force's recent
    study confirming the link between the use of Agent Orange and adult-
    onset diabetes. As a result of this study, the VA now treats diabetes
    as a war time disability. Thus, we urge the Subcommittee to continue to
    support the treatment and prevention of diabetes among veterans.
                                    housing
        Severe housing deficiencies continue to plague Indian communities.
    The tragedy of homelessness and substandard housing is only too
    familiar to Indian tribes within this country.
        The last census documented that 16 percent of all Indian homes had
    no electricity, 21 percent had no piped water and over half had no
    central heating and 43 percent of Indian households were below the
    poverty line. Today, there are about 160,000 units of Indian public
    housing in existence. But approximately 16,700 need replacement and
    53,000 need substantial rehabilitation. The Department of Housing and
    Urban Development estimates that there is a need for about 87,000 new
    housing units for Indian families. On the Fort Peck Reservation, there
    is a waiting list of 600 people. The Tribes annual grant from the
    Department is $5.5 million. However, because of O&M obligations to
    existing stock, the Tribes are only able to build 20 new units every
    other year. The federal government's trust responsibility demands that
    this Indian housing crisis be addressed. Funding for Indian housing
    programs, we want the Subcommittee to know that the needs are
    significant and that increasing the funding over last year's funding
    level of $650 million is critical.
        I would like to thank the Committee for the opportunity to testify
    before you today.
                                     ______

    Prepared Statement of the Great Lakes Indian Fish & Wildlife Commission

              glifwc's fiscal year 2002 appropriations priorities
        $318,000 to maintain its (1) Crandon Mine assessment project, and
    (2) Lake Superior environmental protection programs that currently are
    funded by EPA's Coastal Environment Management (CEM), Great Lakes
    National Program Office (GLNPO), and Environmental Justice programs.
        1. Ceded Territory Mining Assessment.--$168,000 to continue
    technical and scientific work relating to a proposed zinc and copper
    mine near Crandon, Wisconsin. The mine will impact ceded territory
    natural resources that are subject to the tribes' treaty reserved
    rights to hunt, fish and gather.
        2. Lake Superior Programs and Projects.--$150,000 to continue (a)
    participation in the BiNational Program to Restore and Protect Lake
    Superior, including the Lake Superior Lakewide Management Plan (LaMP),
    and (b) research projects related to the Lake Superior basin and the
    LaMP. Historically, GLIFWC has received this amount through a
    combination of funding from EPA's CEM, GLNPO, and Environmental Justice
    programs.
            treaty rights and glifwc's environmental protection role
        Eleven Minnesota, Michigan, and Wisconsin Chippewa tribal
    governments established GLIFWC to assist them in:
      --implementing treaty guaranteed rights to hunt, fish, and gather in
            treaty ceded territories;
      --protecting Lake Superior fishing rights; and
      --cooperatively managing and protecting ceded territory natural
            resources and their habitats.
        Tribal members rely upon fish, wildlife, and plants for religious,
    cultural, medicinal, subsistence, and economic purposes. A number of
    state and federal court rulings have affirmed the rights of GLIFWC's
    member tribes to hunt, fish, and gather from the lands and waters ceded
    by these treaties. However, these rights mean little if contaminated
    natural resources threaten the health, safety, and economy of Chippewa
    people, or if the habitats supporting these resources are degraded.
                         glifwc programs funded by epa
        GLIFWC currently administers EPA funding for:
        1. Study of Proposed Crandon Mine in Wisconsin.--GLIFWC's work
    includes hydrological modeling, contaminant transport analysis, and
    baseline biomonitoring studies.
        2. Participation in the Lake Superior Bi-National Program.--Since
    fiscal year 1996, EPA has provided CEM funds for a 1 FTE equivalent to
    facilitate GLIFWC's participation in the BiNational Program to Restore
    and Protect Lake Superior, including preparation of the Lake Superior
    LaMP and participation in various International Joint Commission (IJC)
    and State of the Lake Ecosystem Conference (SOLEC) forums.
        3. Research and Special Projects.--Since fiscal year 1997, EPA has
    provided a combination of CEM, GLNPO, and Environmental Justice funds
    for GLIFWC to conduct scientific research to produce data relevant to
    the Bi-National Program/Lake Superior LaMP and to human health.
                    specific fiscal year 2002 funding needs
        GLIFWC would use fiscal year 2002 funds to:
        1. Work on the Proposed Crandon Mine.--$168,000 for GLIFWC's
    review, analysis and GIS mapping related to the mine, particularly as
    to groundwater modeling and contaminant transport issues, analysis of
    the proposed reflooded mine management plan, and continuation of
    ongoing baseline biomonitoring projects.
        Rationale.--Both the state and federal permit processes are moving
    toward draft Environmental Impact Statements. GLIFWC has been an active
    player in reviewing the state mining and federal 404 permit
    applications since 1994, particularly regarding hydrological issues. It
    has established a groundwater modeling component to its program that
    has contributed to greater precision and accuracy of computer modeling
    programs used by both state and federal agencies. It is working to
    establish similar capabilities regarding contaminant transport issues.
        In December 2000, the mining company modified its reflooded mine
    management plan. The modified plan predicts violations of Wisconsin's
    groundwater quality standards. This plan must be analyzed, in
    particular regarding its proposed contaminant control technologies and
    the computer models underlying its contaminant predictions.
        In addition, GLIFWC has established a biomonitoring program
    designed to gather baseline data for contaminants found in certain
    plants and animals near the proposed mine site. For many of the species
    involved, GLIFWC has obtained only one year of funding for a three-year
    project. Data must be collected over a three-year period to provide an
    adequate number of samples for statistically determining changes in the
    environment. Fiscal year 2002 would be the second year of this project.
        2. Participate in the Lake Superior Bi-National Program.--$80,000
    for continued funding of GLIFWC staff (1 FTE equivalent) who will
    participate in the BiNational Program, in the preparation and
    implementation of the Lake Superior LaMP, and in IJC and SOLEC forums.
        Rationale.--GLIFWC has been actively involved in the BiNational
    Program and preparation of the Lake Superior LaMP since 1993. It
    currently serves on the BiNational Program's Task Force and Workgroup,
    and on the Workgroup's chemical and habitat committees. It is
    participating in the preparation of the LaMP 2002. It also helps to
    liaison with other relevant Great Lakes institutions, such as the Great
    Lakes Fishery Commission, on issues of mutual concern between
    environmental and natural resource managers.
        As for IJC forums, GLIFWC staff regularly attend the biennial IJC
    meetings and provide periodic comments when issues arise in the
    interim, such as on the matter of Great Lakes water diversions. As for
    SOLEC, GLIFWC staff addressed the 2000 plenary session on the topic of
    wild rice and organized a breakout session on wild rice.
        3. Continue Research and Special Projects.--$70,000 for Lake
    Superior habitat and human health research projects.
        Rationale.--GLIFWC has undertaken a number of studies related to
    the Lake Superior ecosystem. For example, with GLNPO and CEM funds,
    GLIFWC is preparing a report on the threat of wetland and terrestrial
    exotic plants to Lake Superior, is studying sturgeon in the Lake
    Superior basin, and is GIS-mapping fish spawning and nursery locations
    for both native and exotic species. In addition, as part of its ongoing
    natural resource contaminant/human health research, GLIFWC used
    Environmental Justice grants to update its fish consumption advisory
    database and to undertake wild rice contaminant research for heavy
    metals.
        For fiscal year 2002, GLIFWC would explore EPA funding for three
    projects:
      --Inventory zebra mussels in Chequamegon Bay and establish an
            interagency workgroup to inventory, monitor, and develop
            strategies to minimize the spread of zebra mussels in Lake
            Superior and inland waters.
      --Assess impacts from mining waste (stamp sands) dumped into Lake
            Superior during the late 1800s, map an important whitefish and
            lake trout spawning reef in Keweenaw Bay, and determine the
            distribution of stamp sands in relation to the spawning reef.
      --Assess chemical contaminants in archived and newly collected
            samples of whitefish and lake trout, focusing on dioxins, PCBs,
            and polybrominated dyphenyl ethers (PBDEs).
                    benefits of glifwc's epa-funded programs
        Securing GLIFWC's EPA funding base provides the benefits of:
        1. A Constructive, Stabilizing Tribal Natural Resource Management
    Institution.--Over the years, GLIFWC has become a recognized and valued
    partner in natural resource management and in providing accurate
    information to the public. Because of its institutional experience and
    staff expertise, GLIFWC provides continuity and stability in
    interagency relationships and among its member tribes, and contributes
    to social stability in the ceded territory in the context of treaty
    rights issues.
        2. Cooperative, Cost-effective Partnerships.--Since its inception
    in 1985, GLIFWC has built many partnerships with other government
    agencies, schools and universities, and nongovernmental community
    groups and conservation organizations. This is particularly true
    regarding Lake Superior and its ecosystem. These partnerships have: (a)
    identified mutual natural resource concerns, and implemented
    conservation and enhancement projects; (b) maximized each partner's
    financial resources and avoided duplication of effort and costs; (c)
    achieved public benefits that no one partner could have achieved alone;
    and (d) engendered cooperation rather than competition.
        3. Sound Science and Research, and Better Integration and
    Consolidation of Data.--GLIFWC recognizes that rational policy
    decisions are based upon sound science and accurate information. That
    is why, with funds provided by EPA, GLIFWC has undertaken a number of
    projects intended to promote good decisions based upon facts and proven
    scientific data.
     adequate funding for tribal participation in lake superior initiatives
        GLIFWC asks Congress to provide adequate, long-term funding for
    CEM, GLNPO and Environmental Justice programs that are essential for
    continued tribal participation in both the policy and technical aspects
    of these initiatives. Specific programmatic and general assistance
    program funding designed for the exercise of tribal environmental
    protection authority does not meet all of GLIFWC member tribes' needs
    relating to their ceded territory treaty rights, particularly regarding
    Lake Superior. That is why EPA's CEM, GLNPO and Environmental Justice
    programs have been so important in helping tribes, and their duly
    authorized agencies like GLIFWC, to participate in Lake Superior
    initiatives.
        GLIFWC and its member tribes are working hard to do their share in
    protecting the Lake Superior ecosystem. They want to remain active
    partners in ensuring that it continues to provide for the well being of
    all those--tribal members and their neighbors--who rely upon this vital
    resource to meet so many needs.
                                     ______

                Prepared Statement of the Joslin Diabetes Center

                                  introduction
        Mr. Chairman, thank you for this opportunity to provide a status
    report on the Diabetes Project conducted jointly by the Joslin Diabetes
    Center in Boston, MA and the Department of Veterans Affairs, for which
    you provided $5 million in the fiscal year 2001 Appropriations Act. Our
    request for fiscal year 2002 to continue and expand this project with
    the VA is $6 million, of which the VA's costs represent approximately
    50 percent. I am Dr. Sven Bursell, Principal Investigator of the
    project and Associate Professor of Medicine at the Harvard Medical
    School.
                                   background
        Joslin Diabetes Center has been involved with the Department of
    Defense and the Department of Veterans Affairs in a pilot demonstration
    project for the advanced detection, prevention, and care of diabetes.
    The Joslin Vision Network (JVN) has been deployed in VA sites in VISN
    21 in Hawaii (Honolulu, Hilo and Maui), VISN 1 in New England (Boston,
    Brockton and Togus Maine) and VISN 19/20 (Seattle and Tricities in
    Washington, Anchorage in Alaska and Billings in Montana). The JVN
    employs telemedicine technology to image the retina of patients with
    diabetes, through an undilated pupil, and produces a digital video
    image that is readable in multiple formats.
        This project was funded initially through the Department of Defense
    Appropriations Act. The Department of Veterans Affairs medical staff
    was eager to expedite the deployment of this advanced diabetes
    technology beyond the limited resources available through participation
    in the DOD funded project. We petitioned this Subcommittee for
    additional resources to be made available to the VA for discretionary
    diabetes detection and care.
        This Committee provided $2 million in fiscal year 2000 and $5
    million in fiscal year 2001 for expansion of this project within the
    VA. The VA is eager to continue expansion, citing the JVN as the model
    of the future telemedicine in a recent conference of the Association of
    Military Surgeons-General of the US (AMSUS). We are seeking $6 million
    to continue this expansion, and are supported by the VA medical policy
    staff.
        The leadership shown by this Subcommittee has enabled the VA to
    provide its patient population the best diabetes care, prevention, and
    detection in the world. We extend our sincere appreciation to you for
    your response to that request.
                          fiscal year 2001 activities
        The policy and program officials of the VA have established the
    appropriate contracts and statements of work that resulted in consensus
    with respect to deployment of the Joslin Vision Network (JVN)
    technology to three sites: Anchorage, Alaska, TriCities, Washington,
    and Billings, Montana. A Reading Center will be created and utilized in
    Seattle, Washington. In addition, the refinement of JVN technology,
    both hardware and software, will move toward developing a scalable
    system that is capable of widespread deployment agency-wide. This
    system will be completed by March 31, 2001 and it is anticipated that
    this next generation of the system will be completely integrated into
    the VA's VISTA Medical Records System and the VA communications
    infrastructure.
        Results from our various demonstration installations have shown
    that appropriate clinical resources can be efficiently allocated with
    respect to appropriate ophthalmology referral. For example, the
    installation in Togus Maine where there is no ophthalmology resources
    on site has shown that the use of the JVN system can effectively
    prioritize patients that need to be seen by the opthalmologist at the
    time when the ophthalmologist plans to visit that clinic. This site is
    imaging approximately 10 patients per day and they find the JVN program
    extremely resource efficient in providing the appropriate eye care to
    their patients. The same experience was noted from the VA clinics in
    Hilo and Maui where the Optometrist from the Honolulu VA visits these
    island clinics once a month and was able to effectively focus his time
    on the patients that really needed his expertise for managing their
    diabetes eye complications. Technologically, we will be providing an
    application that automatically detects retinal pathology from the JVN
    images. Using this first step approach it is anticipated that we can
    reduce the load on the reading center by as much as 50 percent. This is
    achieved through the use of a computer application that scans the
    images and detects any abnormalities that may be associated with the
    development of diabetic retinopathy. In those cases where the computer
    detects pathology a reader will be notified to perform the appropriate
    reading for retinopathy assessment. In the case where the computer does
    not detect any pathology the patient can be assigned to a low risk
    priority where the computer findings can be rapidly confirmed by the
    reader and the patient asked to return for repeat JVN imaging in a
    year. This application will be clinically validated using the existing
    JVN data base of patients in April and May of 2001 and if the
    sensitivity and specificity of the algorithm meet clinical standards
    then it is anticipated that this will be deployed to existing reading
    centers over the latter half of 2001.
                            fiscal year 2002 request
        For fiscal year 2002, we request that in the VA Medical Account $6
    million be allocated to continue and expand this project. The positive
    response within the VA system indicates that with sufficient resources,
    the JVN technology would be deployed in a number of sites with the
    ultimate goal of incorporating the JVN technology throughout the VA
    Medical Care system. I understand that with the funding that this
    request for fiscal year 2002, and perhaps one additional year, we will
    no longer need to request explicit funds through this route. That is,
    the VA Budget Request by the fiscal year 2004 cycle will include
    provisions for full deployment for the JVN throughout the VA Medical
    Care system. As the technology, systems and production of equipment are
    standardized to off the shelf specifications, the expense per site will
    decrease. The request of $6 million includes $1.5 million to complete
    the proof-of-concept business model to the point where the system
    operation and clinical programs are autonomous within any particular VA
    environment and that the VA, and any other medical system, can utilize
    the this advanced detection tool and reading center technology to cost
    effectively augment their clinical programs.
        With the other $4.5 million, the VA and Joslin would determine the
    sites with the most need for portable advanced detection and begin to
    train personnel and equip additional VA facilities to utilize the JVN
    technology.
        The specific goals for fiscal year 2002 include the following:
      --Establish specific medical codes that will allow the VA to track
            performance with respect to these JVN examinations and to
            ensure that it conforms with VA performance criteria in
            multiple remote VA outpatient settings;
      --Improve adherence to scientifically proven standards of diabetes
            eye care and diabetes care;
      --Improve/promote access to diabetes eye care;
      --Increase number/percentage of patients with Diabetes Mellitus
            obtaining eye care;
      --Provide education patients and providers in the clinical setting.
        The use of the JVN equipment and expansion of screening
    opportunities are a continuing major focus for fiscal year 2002
    activities. The actual number of sites deployed to will be determined
    on the locales with the greatest need for diabetes care in conjunction
    with the telecommunications infrastructure at the identified sites and
    the ease and costs associated with interfacing the JVN technology into
    the existing infrastructure.
        An equally important concentration of resources in fiscal year 2001
    was focused on refining the technical core using outcomes based medical
    and case management scenarios to develop a diabetes healthcare model
    that is modular, customizable and that can be seamlessly integrated
    into the existing VA telemedicine systems. This is the stated goal of
    the medical leadership in the VA, DOD and HIS health care systems. The
    overarching vision for the VA/JVN project is a web-based comprehensive
    diabetes health care system that can be interactively used by both
    patients and providers, that incorporates diagnosis specific education
    and training modules for patients and providers and that incorporates
    software applications that allow outcome measures to be statistically
    assessed and individual treatment programs to be interactively adjusted
    based on these outcome measures. The JVN Eye Health care system exists
    as a component of a comprehensive diabetes management system,
    incorporating other clinical disciplines such as endocrinology,
    vascular surgery and internal medicine.
        In order to make the above vision a reality we have expended
    considerable effort in migrating the JVN demonstration technology
    platform into an application that is totally compliant with existing
    medical informatics infrastructures and the existing VISTA
    infrastructure of the VA system. This will encompass the integration of
    hardware and software in close collaboration with available resources
    from the VA VISTA program that will allow a highly scaleable
    transparent integration of the JVN Diabetes Eye Health Care system into
    the existing health informatics infrastructures of the VA system. The
    proposed development effort for fiscal year 2002 will result in the
    development of modular applications associated with different aspects
    of total diabetes disease management such as clinical risk assessment,
    outcomes assessments, behavior modification in an interactive
    electronic environment, and education programs. These applications will
    be designed in collaboration with participating VA sites to provide an
    ultimate product that appropriately assesses the clinical diabetes risk
    and provides treatment plans and behavior modifications that are
    tailored to any particular patients needs. The programs will also be
    designed so that they can realize a significant cost and resource
    efficiency with respect to support and maintenance of the JVN component
    and the diabetes management programs that will facilitate an
    accelerated deployment in the future.
        For the fiscal year 2002 project phase, we have established the
    following tasks, targets, and activities:
      --Deployment of a viable, sustainable, and refined operating JVN
            Diabetes Eye Health Care model and Comprehensive Diabetes
            Management program.
      --Develop a modularized medical outcomes based telemedicine diabetes
            management program in continued collaboration with the VA with
            outcome measures incorporated into software based on clinical
            results and research experiences of the fiscal year 2001
            efforts.
      --Develop curriculum based patient and provider educational modules.
      --Integrate internet based portals that are accessed by patients for
            reporting of glucose values and receiving feedback with respect
            to goals for self management of their diabetes and adjustments
            of their treatment plans based on these goals. These portals
            will also provide regular education modules for the patients
            that are customized to their particular needs and clinical
            diabetes risk assessment.
                                   conclusion
        Continuation and maintenance of this Committee's policy of support
    for the improvement of the diabetes care in the VA medical system
    through funding of this $6 million request, the benefits by the close
    of fiscal year 2002 will include:
      --Deployment of JVN detection and care at 5 different VA centers
            where each center will provide services for 6 different remote
            sites for a total 35 sites;
      --JVN accessibility to increase VA patient compliance to eye
            examinations to at least 95 percent of the diabetic patient
            population in any area being serviced. From an estimate of the
            VA diabetic patient population we would estimate that the JVN
            would be accessing an estimated patient population of 196,000,
            or an estimated 11 percent of the total VA diabetic population
            after completing anticipated 2002 deployments.
      --The model for VA's deployment of the JVN as a diabetes detection
            and disease management platform for expansion to availability
            for the entire VA patient population.
        Thank you for this opportunity to present this request for $6
    million for fiscal year 2002 and status report for fiscal year 2001 on
    a medical technology breakthrough for the patients and health care
    system within the Department of Veterans Affairs.
                                     ______

     Prepared Statement of the American Association of Nurse Anesthetists
                  and the Association of VA Nurse Anesthetists

        The American Association of Nurse Anesthetists (AANA) is the
    professional association that represents 29,000 certified registered
    nurse anesthetists (CRNAs) across the United States. The Association of
    Veterans Affairs Nurse Anesthetists (AVANA) represents over 500
    certified registered nurse anesthetists across the United States and
    Puerto Rico. We appreciate the opportunity to present our testimony to
    the subcommittee and to offer recommendations on ways to cut costs
    without sacrificing quality of care for our nation's veterans.
                       background information about crnas
        In the administration of anesthesia, CRNAs perform virtually the
    same functions as physician anesthetists (anesthesiologists) and work
    in every setting in which anesthesia is delivered including hospital
    surgical suites and obstetrical delivery rooms, ambulatory surgical
    centers, health maintenance organizations, and the offices of dentists,
    podiatrists, ophthalmologists, and plastic surgeons. Today CRNAs
    administer approximately 65 percent of the anesthetics given to
    patients each year in the United States. CRNAs are the sole anesthesia
    provider in at least 70 percent of rural hospitals, which translates
    into anesthesia services for millions of rural Americans. CRNAs are
    also the sole anesthesia providers in numerous VA facilities.
        CRNAs have been a part of every type of surgical team since the
    advent of anesthesia in the 1800s. Until the 1920s, anesthesia was
    almost exclusively administered by nurses. In addition, nurse
    anesthetists have been the principal anesthesia providers in combat
    areas in every war the United States has been engaged in since World
    War I. Data gathered from the U.S. Armed Forces anesthesia communities'
    reveal that CRNAs have often been the sole anesthesia providers, both
    at home and while forward deployed. For decades CRNAs have staffed
    ships, isolated U.S. Bases, forward deployed Combat Hospitals (Kosovo .
    . .), and Forward Surgical Teams without physician anesthesia support.
    The US Army Joint Special Operations Command Medical Team and all Army
    Forward Surgical Teams are staffed solely by CRNAs. Military CRNAs have
    a long proud history of providing independent support and quality
    anesthesia care to military men and women, their families and to people
    from many nations who have found themselves in harms way. CRNAs also
    provide anesthesia services in the medical facilities of the Department
    of Defense, the Public Health Service, the Indian Health Service, the
    Department of Veterans Affairs, and countless other public and private
    entities.
        The most substantial difference between CRNAs and anesthesiologists
    is that prior to anesthesia education, anesthesiologists receive
    medical education while CRNAs receive a nursing education. However, the
    anesthesia part of the education is very similar for both providers,
    and both professionals are educated to perform the same clinical
    anesthesia services. CRNAs and anesthesiologists are both educated to
    use the same anesthesia processes and techniques in the provision of
    anesthesia and related services.
        The practice of anesthesia is a recognized specialty within both
    nursing and the medical professions. Both CRNAs and anesthesiologists
    administer anesthesia for all types of surgical procedures; from the
    simplest to the most complex, either as single providers or in a ``care
    team setting''.
            nursing shortage predicted: how this committee can help
        While both types of health professionals can provide the same or
    similar services, it costs the Department of Veterans Affairs (DVA)
    significantly less to retain CRNAs because they draw a significantly
    lower salary than their physician counterparts. Therefore, it is in the
    best interest of the DVA, and this Committee, to implement policies and
    to support initiatives that assist in the effort to maintain adequate
    numbers of CRNA employees in the DVA.
        The current employment scenario for CRNAs and the DVA is
    complicated by the predicted national nursing shortage that has been
    well publicized in the press and professional journals. Enrollments in
    nursing education programs continue to decline and the nursing
    workforce continues to age and retire. The number of nursing students
    enrolled in education programs has decreased 5 percent per year over
    the last 5 years. Recent articles stated the average age of the CRNA in
    the VA was 50 years old. Recruitment of nurse anesthetists for the DVA
    becomes increasingly difficult when the civilian sector faces such
    critical shortages. According to a recent survey by the AANA
    Administrative Management Committee, as many as 59 percent of the
    civilian institutions in the country are also actively recruiting
    CRNAs.
        Data gathered by Loretta Wasse, Past Deputy Director, Anesthesia
    Headquarters, indicated that 10-12 percent of the CRNAs in the DVA
    retired in 2000. In real numbers this means the DVA lost over 50 CRNAs.
    These retirement numbers combined with nursing shortages, means that
    the DVA must work harder at recruiting and retaining nurse
    anesthetists. This Committee can greatly assist in the effort to
    attract and maintain essential numbers of nurse anesthetists in the DVA
    by their support of competitive salaries.
        One thing that consistently attracts and maintains good employees
    is an attractive salary. Competitive salaries could assist the DVA with
    retention of cost-effective CRNAs to provide anesthesia services for
    our nation's veterans. But providing competitive salaries for employees
    can be an ongoing battle, especially in the face of restricted budgets.
    This is where this Committee can help, by providing adequate funding
    for personnel.
        If salaries cannot stay competitive in the face of a national
    nursing shortage, then the DVA will surely face a shortage of CRNAs.
    Historically, the cost to correct such a problem has been steep. The
    DVA faced a severe shortage of CRNAs once before in the early 1990s,
    which was moderately corrected with the implementation of a locality
    pay system in 1991. In 1992, Congress expanded the authority of the
    local medical directors and allowed them to survey an expanded area to
    determine more competitive average salaries for CRNAs, which boosted
    pay and morale. Implementation of this expanded authority assisted the
    DVA in making great leaps in retention and recruitment of CRNAs at that
    time.
        In addition, new graduates in various cities are offered starting
    salaries equal to or exceeding the VA ceiling. Also, the new pain
    initiative, ``Pain as the 5th Vital Sign,'' will increase anesthesia
    workload and needs for education. Anesthesia Continuing Education funds
    are already insufficient for CRNAs employed by the VA.
        Ken Wetjen, CRNA, past president of AVANA, conducted a survey of
    education funding for CRNAs. He found many private hospitals are
    providing tuition assistance from $1,000-$1,500 a year. Many VA's have
    little or no funding to send staff to education programs.
        The current Veterans' Equitable Resource Allocation (VERA)
    reimbursement payment system funding lags data collection by two years.
    VAs are not receiving adequate funding to provide competitive wages and
    education to recruit CRNAs. History has shown the CRNA to be a quality,
    cost-effective health care provider. The Veterans Benefits and Health
    Care Improvement Act of 2000 is a step in the right direction. AVANA
    would like to thank the Committee for their support in getting the
    legislation passed last year. The legislation insured the VA nurse
    anesthetist the minimum COLA raises received by GS employees.
        We strongly encourage this Committee to take a role in facing this
    nursing shortage head on, by providing adequate funding for personnel.
    With the current shortage of anesthetists, we must insure competitive
    salaries and education funding to retain and recruit high quality,
    cost-effective anesthesia providers. We look forward to working with
    this committee to ensure that veterans have access to quality health
    care at the VA always.

           LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                                  ----------
                                                                       Page
    Alachua County Board of County Commissioners, prepared statement.   564
    Allbaugh, Joe M., Director, Federal Emergency Management Agency..   237
        Prepared statement...........................................   249
        Statement of.................................................   246
    American:
        Association of Community Colleges, prepared statement........   589
        Association of Nurse Anesthetists, prepared statement........   652
        Association of VA Nurse Anesthetists, prepared statement.....   652
        Chemical Society, prepared statement.........................   583
        Heart Association, prepared statement........................   637
        Institute of Biological Sciences, prepared statement.........   609
        Lung Association and the American Thoracic Society, prepared
          statement..................................................   516
        Museum of Natural History, prepared statement................   631
        Psychological Society, prepared statement....................   614
        Public Power Association, prepared statement.................   550
        Society for Engineering Education, prepared statement........   602
        Society for Microbiology, prepared statement.................   581
        Society of Mechanical Engineers, prepared statement..........   611
    Anderson, Oscar, Special Assistant to the Secretary for
      Legislation, Department of Housing and Urban Development.......   449
    Anderson, William, Deputy Chief Financial Officer, Corporation
      for National and Community Service.............................     1
    Assiniboine and Sioux Tribes, prepared statement.................   646
    Association of:
        American Universities, prepared statement....................   627
        Local Air Pollution Control Officials, prepared statement....   541
        Minority Health Professions Schools, prepared statement......   538

    Babyland Family Services, Inc., prepared statement...............   570
    Barger, Brenda S., letter from...................................   244
    Barile, Vincent L., Deputy Under Secretary for Management,
      National Cemetery Administration, Department of Veterans
      Affairs........................................................    65
    Boesen, Christopher, Special Assistant, Office of Legislation,
      Department of Housing and Urban Development....................   449
    Boesz, Dr. Christine C., Inspector General, National Science
      Foundation.....................................................   275
        Prepared statement...........................................   295
        Statement of.................................................   293
    Bohmbach, James W., Chief Financial Officer, Veterans Benefits
      Administration, Department of Veterans Affairs.................    65
    Bond, Senator Christopher S., U.S. Senator from Missouri:
        Opening statements of...............................1, 66, 179, 237
        Prepared statements........................................279, 362
        Questions submitted by............................30, 109, 342, 396
        Statements of.....................................43, 276, 361, 452
    Burns, Senator Conrad, U.S. Senator from Montana:
        Prepared statement...........................................   365
        Statement of.................................................   182
    Byrd, Senator Robert C., U.S. Senator from West Virginia,
      questions submitted by.........................................   141

    California Industry and Government Central California Ozone Study
      (CCOS) Coalition, prepared statement...........................   512
    Cassidy, Sean, General Deputy Assistant Secretary, Office of
      Housing, Department of Housing and Urban Development...........   449
    Catlett, D. Mark, Acting Principal Deputy Assistant Secretary for
      Management, Department of Veterans Affairs.....................    66
    Chicago State University, prepared statement.....................   585
    City of:
        Fairfield, California, prepared statement....................   580
        Gainesville, Florida, prepared statement.....................   578
        Miami Beach, Florida, prepared statement.....................   576
        Newark, NJ, prepared statement...............................   499
        Palo Alto, California, prepared statement....................   568
        Roseville, California, prepared statement....................   569
    Clark, Eligah D., Chairman, Board of Veterans' Appeals, Office of
      the Secretary, Department of Veterans Affairs..................    66
    Coalition of EPSCoR States, prepared statement...................   624
    College Partners, Inc., prepared statement.......................   562
    Colwell, Dr. Rita R., Director, National Science Foundation......   275
        Prepared statement...........................................   289
        Statement of.................................................   288
    Craig, Senator Larry E., U.S. Senator from Idaho:
        Prepared statement...........................................    96
        Questions submitted by.......................................   125
        Statements of...............................................95, 365

    DeWine, Senator Mike, U.S. Senator from Ohio:
        Prepared statement...........................................   183
        Questions submitted by.......................................   128
        Statement of.................................................   183
    Domenici, Senator Pete V., U.S. Senator from New Mexico,
      questions submitted by.........................................   127
    Doris Day Animal League, prepared statement......................   531
    Duffy, Dennis M., Principal Deputy Assistant Secretary, Assistant
      Secretary for Policy and Planning, Department of Veterans
      Affairs........................................................    66

    Egan, Nora E., Chief of Staff, Office of the Secretary,
      Department of Veterans Affairs.................................    65
    Eisenstein, Robert, Assistant Director for Mathematical and
      Physical Sciences, National Science Foundation.................   275
    English, Patricia, Acting Chief Financial Officer, Federal
      Emergency Management Agency....................................   237
    Epley, Robert J., Associate Deputy Under Secretary for Policy and
      Program Management, Veterans Benefits Administration,
      Department of Veterans Affairs.................................    65

    Feussner, John R., M.D., Chief Research and Development Officer,
      Veterans Health Administration, Department of Veterans Affairs.    65
    Florida State University, prepared statement.....................   633
    Fountain House, prepared statement...............................   567
    Frost, Dr. Floyd J., Jr., Ph.D., Senior Scientist, Lovelace
      Respiratory Research Institute (LRRI), prepared statement......   505

    Garthwaite, Thomas L., M.D., Under Secretary for Health, Veterans
      Health Administration, Department of Veterans Affairs..........    65
    Gibbons, Dave, Deputy Chief Financial Officer for Budget,
      Department of Housing and Urban Development....................   449
    Goldin, Daniel S., Administrator, National Aeronautics and Space
      Administration.................................................   179
        Prepared statement...........................................   187
        Statement of.................................................   185
    Great Lakes Indian Fish & Wildlife Commission, prepared statement   647
    Griffin, Richard J., Inspector General, Office of the Secretary,
      Department of Veterans Affairs.................................    66

    Hauser, Richard, General Counsel, Department of Housing and Urban
      Development....................................................   449
    Henderson, Rogene F., Senior Scientist, LRRI, The Lovelace
      Respiratory Research Institute, prepared statement.............   501
    Hopper, Thomas L., letter from...................................   244

    Integrated Petroleum Environmental Consortium, prepared statement   513

    Johnson, Senator Tim, U.S. Senator from South Dakota:
        Prepared statements........................................181, 282
        Questions submitted by.......................................   145
        Statements of.............................5, 83, 181, 242, 281, 363
    Joslin Diabetes Center, prepared statement.......................   649

    Kelly, Dr. Eamon M., Chairman, National Science Board, National
      Science Foundation.............................................   275
        Prepared statement...........................................   285
        Statement of.................................................   283
    Kelly, Margaret H., Deputy Executive Director, Neighborhood
      Reinvestment Corporation.......................................    43
    Kicklighter, Claude M., Director for Special Events, Assistant
      Secretary for Public and Intergovernmental Affairs, Department
      of Veterans Affairs............................................    66
    Klein, Art, Director of Budget Office, Veterans Benefits
      Administration, Department of Veterans Affairs.................    65
    Kohl, Senator Herb, U.S. Senator from Wisconsin, statement of....   454
    Kowalczyk, Gary, Coordinator, National Service Programs,
      Corporation for National and Community Service.................     1
    Kroon, Casey, Chairman, Board of Supervisors, Sutter County,
      California, prepared statement.................................   548

    Lac du Flambeau Band of Lake Superior Chippewa Indians, prepared
      statement......................................................   642
    Lazar, Ellen, Executive Director, Neighborhood Reinvestment
      Corporation:
        Prepared statement...........................................    47
        Statement of.................................................    43
    Lubell, Jeffrey, Director, Policy Development Division, Office of
      Policy Development and Research, Department of Housing and
      Urban Development..............................................   449

    MaGaw, John, Acting Deputy Director, Federal Emergency Management
      Agency.........................................................   237
    Mars Society, prepared statement.................................   634
    Martinez, Mel, Secretary, Department of Housing and Urban
      Development....................................................   449
        Prepared statement...........................................   461
    McClain, Tim S., General Counsel, Office of the Secretary,
      Department of Veterans Affairs.................................    66
    McMichael, Guy H., III, Acting Principal Deputy Assistant
      Secretary, Assistant Secretary for Information and Technology,
      Department of Veterans Affairs.................................    66
    Metropolitan Water Reclamation District of Greater Chicago,
      prepared statement.............................................   551
    Mickey Leland National Urban Air Toxics Research Center, prepared
      statement......................................................   525
    Miklos, Steve, Mayor, City of Folsom, California, prepared
      statement......................................................   549
    Mikulski, Senator Barbara A., U.S. Senator from Maryland:
        Opening statements of.............................60, 275, 357, 449
        Prepared statement...........................................   359
        Questions submitted by.................................37, 129, 316
        Statements of.......................................3, 80, 200, 239
    Moran, Michael, Assistant General Counsel, Department of Housing
      and Urban Development..........................................   449
    Murphy, Daniel, Chief of Staff, Department of Housing and Urban
      Development....................................................   449
    Murphy, Frances M., M.D. MPH, Deputy Under Secretary for Health,
      Veterans Health Administration, Department of Veterans Affairs.    65

    NAHB Research Center, prepared statement.........................   620
    Nappi, Patrick, Deputy Under Secretary for Benefits, Veterans
      Benefits Administration, Department of Veterans Affairs........    65
    National:
        Alliance to End Homelessness, Inc., prepared statement.......   558
        American Indian Housing Council and Coalition for Indian
          Housing and Development, prepared statement................   556
        Association for Equal Opportunity in Higher Education,
          prepared statement.........................................   617
        Corn Growers Association, prepared statement.................   593
        Council for Science and the Environment:
            Letter from..............................................   597
            Prepared statement.......................................   594
        Federation of the Blind, prepared statement..................   572
        Jewish Medical and Research Center, prepared statement.......   537
        Treasury Employees Union, prepared statement.................   539
    New York University, prepared statement..........................   590
    Norris, Jimmy, Chief Financial Officer, Department of Veterans
      Affairs........................................................    65
    Nuclear Energy Institute, prepared statement.....................   522

    People for the Ethical Treatment of Animals, prepared statement528, 553
    Person, Mary A., letter from.....................................   243
    Peterson, Malcolm L., Comptroller, National Aeronautics and Space
      Administration.................................................   179
    Principi, Hon. Anthony, Secretary of Veterans Affairs, Department
      of Veterans Affairs............................................65, 86
        Prepared statement...........................................    89

    Rapp, Roger, Acting Under Secretary for Memorial Affairs,
      National Cemetery Administration, Department of Veterans
      Affairs........................................................    65
    Riggin, E. Phillip, Deputy Assistant Secretary, Assistant
      Secretary for Congressional Affairs, Department of Veterans
      Affairs........................................................    66
    Rubin, Dr. Robert, President and CEO, Lovelace Respiratory
      Research Institute (LRRI), prepared statement..................   504

    Sacramento County Regional Sanitation District, prepared
      statement......................................................   548
    Schultz, Robert W., Deputy Assistant Secretary for
      Administration, Assistant Secretary for Human Resources and
      Administration, Department of Veterans Affairs.................    66
    Segerdahl, Nancy, Press Secretary/Senior Communications Advisors
      to the Secretary, Department of Housing and Urban Development..   449
    Shelby, Senator Richard C., U.S. Senator from Alabama, statements
      of...........................................................183, 455
    Snugs, Clarence J., Deputy Executive Director/Treasurer,
      Neighborhood Reinvestment Corporation..........................    43
    Society for Neuroscience, prepared statement.....................   622
    Southwest Center for Environmental Research and Policy, prepared
      statement......................................................   544
    State and Territorial Air Pollution Program Administrators,
      prepared statement.............................................   541

    The Nature Conservancy, prepared statement.......................   533
    Thompson, John H., Deputy General Counsel, Department of Veterans
      Affairs........................................................    66
    Thompson, Joseph, Under Secretary for Benefits, Veterans Benefits
      Administration, Department of Veterans Affairs.................    65
    Tucker, Daniel, Director, Budget and Planning Service,
      Departmental Administration, Department of Veterans Affairs....    65

    University Corporation for Atmospheric Research (UCAR), prepared
      statement......................................................   493
    University of:
        Medicine and Dentistry of New Jersey, prepared statement.....   586
        Miami, Coral Gables, Florida, prepared statement.............   508
    Upper Mississippi River Basin Association, prepared statements.519, 521

    Venneri, Sam, Associate Administrator for Aerospace Technology,
      National Aeronautics and Space Administration..................   179

    Weicher, John, Assistant Secretary for Housing Federal Housing
      Commissioner, Department of Housing and Urban Development......   449
    Whitman, Christine Todd, Administrator, Environmental Protection
      Agency.........................................................   357
        Prepared statement...........................................   369
        Statement of.................................................   366
    Woodson, Robert, Deputy to the Chief of Staff for Policy and
      Programs, Department of Housing and Urban Development..........   449

    Yarbrough, Charles V., Chief Facilities Management Officer,
      Department of Veterans Affairs.................................    65
    Young, Peggy, Senior Advisor to the Chief Financial Officer,
      Department of Housing and Urban Development....................   449

    Zenker, Wendy, Acting Chief Executive Officer, Corporation for
      National and Community Service.................................     1
        Prepared statement...........................................     8
        Statement of.................................................     6

                                 SUBJECT INDEX

                                  ----------

                 CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

                                                                       Page
    Additional committee questions...................................    30
    America's promise................................................    19
    AmeriCorps:
        Alumni organization..........................................    25
        Literacy achievements........................................    20
        Use of education awards......................................    24
    Baltimore Experience Corps.......................................    41
    Budget request summary...........................................    10
    CNCS programs, reporting the full cost of........................    33
    Continued management improvements................................    17
    Coordination with other organizations............................    30
    Detailed explanation of trust fund financing.....................    28
    Digital divide...................................................    25
        E-Corps......................................................    38
    Faith-based initiative...........................................33, 40
    Fiscal year 2000 audit...........................................    16
    Grantee oversight................................................    22
    Grants management and cost accounting............................    21
    Keeping national service strong under the new administration.....    37
    National Service Trust...........................................    31
        Funding, adequacy of.........................................    23
    New initiatives..................................................    32
    Performance reporting............................................    34
    Points of Light Foundation.......................................    18
    Procurement......................................................    37
    Silver scholarships..............................................    41
        Tax exemption................................................    27

                  DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

    Affordable rental housing........................................   464
    Building assets and skills among low-income families.............   466
    Community and economic development...............................   467
    Elderly housing..................................................   477
    Enforcing fair-housing laws......................................   471
    Faith based initiatives..........................................   491
    FHA..............................................................   486
    Helping low-income families achieve homeownership................   461
    Homeless assistance..............................................   489
    Homeownership counseling.........................................   478
        Initiative...................................................   487
    Hope VI..........................................................   489
    Housing production...............................................   485
    HUD:
        Improving management.........................................   472
        Local offices................................................   480
    Meeting the needs of special populations.........................   470
    Predatory lending..............................................473, 479
    Public housing...................................................   465
    Section 8......................................................475, 481

                         DEPARTMENT OF VETERANS AFFAIRS

    Acute illness and traumatic injury...............................   154
    Additional committee questions...................................   109
    Aging and age-related changes....................................   153
    Albuquerque VAMC.................................................   127
    Benefits backlog.................................................    92
    Cancer...........................................................   158
    CARES............................................................   128
        System.......................................................   107
    Chief Research and Development Officer, a message from the.......   151
    Chronic diseases.................................................   157
    Claims processing task force.....................................    91
        Processing times.............................................   138
    Cleveland Plain Dealer articles..................................   131
    Co-payments......................................................   120
    Collections......................................................   132
    Community based outpatient clinics.............................105, 126
        Nursing homes................................................   123
    Compensation for children of Vietnam veterans....................   123
    Demonstration project--Clarksburg VA Medical Center and Ruby
      Memorial Hospital..............................................   143
    Department of Defense/Department of Veterans Affairs (DOD/VA)
      sharing........................................................   119
    Department of Veterans Affairs, Veterans Health Administration,
      Office of Research & Development, May 2001.....................   151
    Designated research areas........................................   152
    Disability compensation for type II diabetes.....................    92
    Emergency room care..............................................   121
    Fort Howard....................................................103, 129
    Geriatric evaluations............................................   102
    Health services and systems......................................   171
    Heart disease....................................................   158
    Hepatitis C....................................................106, 139
        Screening....................................................   121
    Information technology...........................................   126
    Liver/kidney disease.............................................   164
    Long term care..................................................97, 131
    Medical care collections.........................................   100
        Care funding level...........................................    99
    Medical research................................................98, 135
        Services.....................................................   115
    Medicare reform, need for........................................   101
    Mental illness...................................................   166
    Military and environmental exposures.............................   155
        Retirees benefits............................................   126
    Millennium Act, regulations to implement the.....................    95
    National Cemetery Administration................................69, 121
    Neurological disorders...........................................   160
    Nursing home care unit at the Beckley Veterans Affairs Medical
      Center.........................................................   142
        Shortages....................................................    93
    Osteoporosis/Osteoarthritis......................................   163
    Outpatient clinic in Charleston, West Virginia...................   141
    Priority 7's.....................................................   104
    Recovery audit program...........................................   121
    Sensory disorders................................................   165
    Special needs populations........................................   119
        Populations..................................................   169
    St. Louis VAMC parking needs.....................................   109
    State home program...............................................   122
        Veterans homes...............................................   125
    Substance abuse..................................................   168
    Tampa study--automatic clinical guidance.........................   104
    Travel rates.....................................................   126
    Tricare for life.................................................    96
    VA:
        Construction.................................................   174
        Health Care--Community-based Clinics Improve Primary Care
          Access (GAO-01-678T).......................................    69
        Healthcare information security..............................   144
        Medical care program.........................................    67
        Research.....................................................   149
    VERA.............................................................   129
    Veterans Benefits Administration.................................    68
        Claims.......................................................   177
        Education....................................................   145
        Health care..................................................   146
        Issues.......................................................   109
    VHA staff shortages..............................................   125
    Waiting times....................................................   135

                        ENVIRONMENTAL PROTECTION AGENCY

    Acrylamide rulemaking............................................   434
    Additional committee questions...................................   396
    Addressing global warming........................................   372
    Air pollution....................................................   377
    Arsenic..........................................................   379
        In drinking water............................................   360
        Study group..................................................   386
    Arsenic standards:
        Enforcement grant program....................................   369
        Farm bill....................................................   389
        New..........................................................   383
            Mandate for..............................................   393
        Source review..............................................380, 435
    Attainability analysis to determine cause of impairments.........   428
    Best management practices for secondary standards for collection
      systems........................................................   439
    Brownfields..................................................360,   370
    Chesapeake Bay program...........................................   360
    Clarify and define concentrated animal feedlot operation
      regulation.....................................................   437
    Clean air violations from bakeries...............................   439
        Water infrastructure.......................................360, 374
        Water state revolving fund...................................   376
    Climate change...................................................   360
    Compliance assistance............................................   396
    Concentrated animal feeding operation............................   438
    Coordination with other agencies to solve problems...............   390
    CWA technology-based standards, impact of zero discharge standard
      on.............................................................   439
    Drinking water SRF...............................................   371
    Enforcement......................................................   408
        Breakout of Federal enforcement activities between multi-
          State and single-State actions.............................   410
        Cuts.........................................................   381
        In Milwaukee.................................................   377
        Of environmental laws........................................   360
        Of new source review regulations.............................   381
        Program......................................................   376
        Targeting....................................................   424
    Ensuring clean air...............................................   371
        Safe food and protecting the public from harmful chemicals...   372
    Environmental riders.............................................   361
    $500 million cut.................................................   375
    Fox River, cleanup of............................................   378
    FTE reduction: enforcement program...............................   389
    Genetically modified foods.......................................   388
    Grants...........................................................   413
    Hydrologic issues, cost of determining...........................   438
    HWIR rulemaking..................................................   446
    Impact of concentrated animal feeding operations rule on use of
      chemical pesticides............................................   438
    Information burden...............................................   415
        Exchange network.............................................   369
        Management...................................................   440
    Iron & steel (mini-mill).........................................   436
    Kyoto protocol...................................................   382
    NPDES:
        Permit backlog, efforts to reduce the........................   418
        Resources to reduce backlog..................................   424
    Other significant cases..........................................   436
    PBT list.........................................................   430
    Performance goals................................................   417
        Measures.....................................................   417
    Power plants.....................................................   436
    Preventing duplicative reporting and record keeping requirements.   438
    Price of farm chemicals: Canada vs. U.S.A........................   387
    Public comment on alternative regulatory principles..............   440
    Pulp and paper mills.............................................   436
    Refineries.......................................................   436
    Region 3: enforcement redeployment...............................   392
    Reinvention......................................................   429
    Science and technology reduction.................................   394
    Small business...................................................   432
    Snap rule........................................................   446
    Sound science..................................................360, 373
        Arsenic drinking water standard..............................   393
    Superfund........................................................   370
    Supporting core water quality programs...........................   370
    TMDLs:
        Adequate agency funds for....................................   427
        Cost to approve..............................................   427
        Estimated number and cost savings from bundling..............   428
        Length of time required to approve all.......................   427
        Number of required by section 303(d) list....................   425
        State non-point source data to prepare.......................   426
            Resources to prepare TMDLs...............................   427
        Total estimate of cost to prepare by State...................   426
        Two-tiered list to set priorities............................   428
    TRI..............................................................   444
    Voluntary monitoring programs....................................   429
    Water infrastructure funding.....................................   370
    Waters:
        Distribution of impaired in two-tiered system................   428
        Impact of placing on preliminary list........................   429
    Weather impact on concentrated animal feeding operations
      requirements...................................................   438
    Wiper rulemaking.................................................   435
    Wood products....................................................   436
    Workforce development............................................   447
    Working with our partners........................................   391

                      FEDERAL EMERGENCY MANAGEMENT AGENCY

    Alaska, rising sea levels in.....................................   241
    Cerro Grande:
        Claims and settlements for...................................   264
        Fire.........................................................   254
        Personal property claims from................................   256
        Self-certification for claims................................   260
    Consequence management...........................................   263
    Disaster reforms.................................................   238
    Disasters, funds for.............................................   239
    Emergency reserve in 2002........................................   255
    FEMA:
        As all-hazards agency........................................   240
        Ever expanding assignments...................................   264
        Terrorism role.............................................239, 249
    Fire grant program...............................................   271
    Fire programs....................................................   240
        Support for..................................................   270
    Flood insurance program..........................................   272
        Insurance reforms............................................   238
        Mapping......................................................   268
    Hazard mitigation:
        Cost share of................................................   259
        Grants as a discretionary program............................   262
    Mitigation.......................................................   263
        Coordination of programs.....................................   260
        Importance of pre-disaster...................................   247
        In Iowa......................................................   248
    National mitigation plan.........................................   261
    Office of National Preparedness..................................   257
    Preparedness initiatives.........................................   243
    Project impact.................................................248, 260
        Recovery.....................................................   256
    Repetitive loss properties.......................................   269
    Responsibility and accountability in budget......................   247
    Review of consequence management.................................   258
    State and local:
        Measurement of capabilities..................................   266
        Preparedness for disasters...................................   266
        Plans for disaster prevention in Maryland....................   267
    Teleregistration.................................................   256
    2002 budget......................................................   238
        Reductions...................................................   240
    Unspent hazard mitigation dollars................................   261
    West nile virus..................................................   265

                 NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

    A new vision for continued vitality..............................   215
    Air traffic management, a revolutionary approach to..............   227
    Advanced health monitoring system................................   221
    Aeronautics, blueprint for the future of.........................   217
    Aeronautics is vital to the nation...............................   213
        Program......................................................   223
        Vision for the 21st century..................................   213
    Air traffic control..............................................   225
        Current modernization efforts................................   226
    Budget, overview of the fiscal year 2002.........................   188
    Combustion and fluid physics research program....................   206
    Computer software/loud noise/vibration problems..................   210
    Crew return vehicle............................................203, 208
    Critical issues................................................217, 229
    Earth science....................................................   205
        Science budget...............................................   211
    Energy, increasing cost of.......................................   234
    EPSCoR...........................................................   182
    EROS Data Center.................................................   182
    Glenn Research Center (GRC)......................................   207
    Habitation module/crew return vehicle............................   202
    In-space propulsion..............................................   220
    Major challenges to overcome.....................................   214
    Mars, manned mission to..........................................   233
    Microgravity research program....................................   221
    NASA:
        Contract management..........................................   234
        Enterprise detail............................................   190
        Space transportation mission.................................   222
    National airspace system, a technological revolution for the.....   225
    Other key initiatives............................................   197
    Polymer energy rechargeable system/Glenn microsystems initiative.   208
    Space shuttle, privatization of remaining tasks..................   222
    Proposed national objectives.....................................   228
    Propulsion research infrastructure...............................   220
    Qualified scientist/engineers....................................   231
    Senn High School students, introductory of.......................   185
    Skill--scientific knowledge for Indian leadership and learning...   181
    Space launch initiatives (SLI)...................................   212
        Station cost overruns........................................   201
    Tourism........................................................209, 210
    The system is reaching saturation................................   225
    Today's air transportation system................................   225
    What is needed...................................................   226

                          NATIONAL SCIENCE FOUNDATION

    Additional committee questions...................................   316
    ALMA.............................................................   304
    Antarctic, emergency medical evaluation from the.................   332
    Assisting smaller research institutions..........................   354
    Astronomy........................................................   347
        Review.......................................................   319
    Attention to broadening participation in the science and
      engineering workforce by groups that are currently
      underrepresented...............................................   308
    Basic award administration.......................................   295
    Biocomplexity and the environment................................   291
    Budget:
        Doubling goal and oversight goals............................   298
            Request provides $1.5B for new awards with only a 1
              percent increase?......................................   321
        Fiscal year 2002 guidance....................................   298
    Building on education program results............................   301
    Candidates for the major research equipment account..............   337
    Cost sharing...................................................295, 337
    Decadal study in astronomy and astrophysics......................   320
    Digital divide...................................................   339
        And historically black colleges and universities.............   323
    Education and human resources....................................   335
    Education programs, redirection of funds and evolution of........   302
    Elimination of innovation program for smaller institutions.......   324
    EPSCoR...........................................................   348
    Funding needs....................................................   296
        Priorities.................................................342, 353
    Rates............................................................   328
    Graduate student stipends......................................290, 333
    Grant size and duration..........................................   327
    H1-B visa funds..................................................   349
    High-tech education..............................................   305
        Workers....................................................342, 350
    Importance of basic research.....................................   297
    Information technology...........................................   343
        Research.....................................................   291
    Integrated graduate research and education traineeship program...   331
    Interdisciplinary mathematics....................................   290
    Learning for the 21st century....................................   291
    Major research equipment.........................................   292
    Management of large infrastructure projects......................   295
    Math and science education.....................................346, 351
        Partnership programs in the Elementary and Secondary
          Education Act..............................................   327
        Partnerships.................................................   301
            Initiative...............................................   290
        System reform program evaluation.............................   325
    MRE status reports...............................................   329
    Multi-year budgeting.............................................   347
    Nanoscale science and engineering................................   291
    Nanoscience and technology.......................................   317
    Nanotechnology...................................................   345
        Information technology and math and science education........   300
    NSF:
        Budget request...............................................   285
        Funding needs and priorities.................................   297
            Inspector general review of the EPSCoR program...........   338
            Programs: High tech workforce............................   305
        IG and White House critical of management of construction
          projects...................................................   328
        Impact of new math/science partnership program on current
          programs...................................................   326
        Long-term vision for.........................................   352
        Vision.......................................................   299
    Nuclear engineering education....................................   314
        Technologies...............................................344, 351
    Other fiscal year 2002 highlights................................   292
    Peer review system.............................................305, 344
    Planning and evaluation..........................................   341
    Plant genome.....................................................   343
    Post-docs........................................................   347
    Priority areas...................................................   291
    Questions submitted to the.......................................   316
    Reduction in ``Core'' disciplines................................   336
    Science and engineering:
        Support for minorities in is frozen..........................   322
        Workforce, direct preparation of specific elements of the....   306
    Science, public understanding of.................................   340
    Science Board Committee on Budget and Strategy:
        New..........................................................   325
        New math and science partnership program-role of the.........   327
        On NSF submission to OMB.....................................   317
        Strategic plan...............................................   350
        View on the balance of Federal R&D...........................   316
    Senior NSF vacancies.............................................   335
    South Pole, rebuild of the station...............................   328
    Staffing resources.............................................342, 354
    Strengthening the curricular and instructional infrastructure for
      providing high quality science, mathematics, engineering, and
      technology education to all students...........................   312
    Teacher training efforts.........................................   327
    Telescope system instrumentation program.........................   321
    The health of the science and engineering enterprise: some issues   286
    Top 50 institutions versus lower.................................   315
    Training programs--research directorates.........................   314
    Undergraduate student support....................................   332
    Unexpected energy costs..........................................   334
    Very large array telescope.......................................   303
    WIPP versus homestake............................................   304

                     NEIGHBORHOOD REINVESTMENT CORPORATION

    Affordable multifamily developments..............................    57
    Budget request, fiscal year 2002.................................    44
    Campaign for home ownership......................................    44
    Exciting new initiatives.........................................    53
    Low-income renters, examples of serving extremely................    58
    Neighborworks multifamily initiative...................    45
    NeighborWorks Vision:
        For fiscal year 2002: building on the........................    56
        Inspired leadership and the..................................    48
    Outcomes and achievements........................................    56
    Predatory lending................................................46, 60
    Proven successes.................................................    49
    Section 8 home ownership.........................................44, 59
    Neighborhood reinvestment, vision for............................    46

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