[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


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                                 senate
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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
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                                                                                                                                                   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.
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    \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.
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    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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